Introduction of corporate rights to the authorized capital of the company

Entering corporate rights into the authorized capital of the company is one of the forms of capital formation of the enterprise.

Corporate rights that can be included in the authorized capital include:

• The right to participate in the management of the company. The participant has the right to vote at the general meeting and the opportunity to influence decision-making.
• The right to receive part of the profit (dividends). The participant has the right to receive part of the net profit, which is distributed among the participants.
• The right to receive a share of the property in case of liquidation of the company. The participant has the right to receive part of the company’s assets after meeting the demands of creditors in the event of its liquidation.

The legislation imposes certain requirements for corporate rights that can be included in the company’s authorized capital:

• Corporate rights must be properly formalized and confirmed by documents.
• Corporate rights must be liquid, that is, those that can be exercised or transferred to another person.
• Corporate rights should be valued according to market value.

The procedure of entering corporate rights into the company’s authorized capital includes several stages, each of which is important to ensure the legality and efficiency of this operation.

Assessment of corporate rights.

The evaluation is carried out by an independent appraiser who determines the market value of corporate rights.

This assessment is necessary to determine the value of the contribution to the authorized capital and, accordingly, the participant’s share in the company.

Decision-making by the general meeting of participants.

This decision must be approved by a majority of votes or unanimously, depending on the provisions of the company’s charter.

The decision specifies specific corporate rights, their assessment, the size of the contribution and the order of contribution.

Conclusion of an agreement on the introduction of corporate rights.

After the decision is taken by the general meeting of participants, an agreement is concluded on the introduction of corporate rights to the authorized capital.

This contract must be concluded in writing and contain all the necessary conditions, including the subject of the contract, its value, the procedure for transferring rights and the responsibilities of the parties.

Amendments to the charter and registration.

The introduction of corporate rights to the authorized capital requires the introduction of appropriate changes to the company’s charter. After that, changes to the charter must be registered in the state register of legal entities.

Registration of changes completes the procedure of entering corporate rights into the authorized capital.

At the same time, the process of adding corporate rights to the company’s authorized capital is associated with certain legal risks and restrictions.

• Risk of incorrect assessment. If the rights are valued above or below their market value, this may lead to conflicts between the participants of the company or to legal problems related to the recognition of such contributions as invalid.
• Restrictions on transfer of corporate rights. Corporate rights, which are included in the authorized capital, may be limited in circulation. For example, the charter of the company to which these rights belong may contain restrictions on their transfer to third parties. This can create problems when introducing such rights to the authorized capital of another company.
• Rights of creditors. Adding corporate rights to the authorized capital may affect the rights of the company’s creditors. Creditors can challenge such contributions if they believe that this will reduce the company’s assets and affect its ability to meet its obligations to them.
• Tax risks. Adding corporate rights to the share capital may have tax consequences for the company and the participants. For example, such a transaction may be considered a sale of assets and subject to taxation. Therefore, participants should pay attention to the tax consequences before carrying out this transaction.