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By valero
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But what does a capital increase mean?
A capital increase means that your company opens to receive new funds by issuing new shares. This can be done by the shareholders putting in more money or by bringing in new investors.
Another option is debt capitalisation, which involves converting claims into shares so that creditors become shareholders.
Any of these moves change the share capital structure, so you must do it properly and notify the authorities.
When is it necessary to increase capital?
You may need to increase your company’s capital for a few reasons. One of them is that you need to launch a new product on the market, so you need funds. Similarly, you may want to open new offices or hire more staff, as well as bring another investor into the business. Another reason is that you want to formalise the shares of a partner who is already providing resources.
Requirements for increasing the capital of a company in the UK
To increase the capital of a limited company (Ltd), you need to check your company’s articles of association. Some articles of association provide that, in order to carry out a capital increase, there must be approval from the existing partners.
On the other hand, there are the partners and the director. A special resolution of the members may be required to approve an increase in the capital of your company in the UK. However, the director can approve the issue of shares if he is competent to do so.
It is essential that you are clear on a couple of points in relation to the new shares. Firstly, how many shares are to be issued; secondly, at what price. In the latter case, it may be the same, higher or lower, depending on the strategy you have determined. Finally, be clear about who is going to acquire them.
Once these points are clear, the shares are formally issued. The company’s share capital is updated and the corresponding certificates are issued to the shareholders.
You cannot fail to notify Companies House of this step. You can, as always, do this online by submitting two forms. The first, the SH01 form, is used to register the issue of new shares and must be filed within 30 days of the issue. The second, the updated CS01 form or Confirmation Statement.
Practical tips for capital increase
As with any move you make with your company, when it comes to increasing capital, it is essential that you keep all documentation well organised. This includes minutes, agreements, forms and certificates.
Don’t bring in any new partners without first signing a shareholders’ agreement. With this signed document you will be able to avoid future misunderstandings.
The figure of an accountant or advisor is again essential if you have doubts about the tax or accounting treatment of the operation.
Other ways to raise capital for your business in the UK
Don’t hesitate to consider other options such as taking out a loan or running a crowdfunding campaign. Don’t forget about angel investors, which can be one of the most interesting options.
But if you are looking to strengthen your own capital and bring in partners, a capital increase is the most direct, transparent and legally sound option.
The process of raising capital in a UK company is clear, accessible and you can manage it yourself if you are clear about the steps. However, it is essential to comply with the legal requirements and keep all documentation to avoid future problems.
Conclusion on how to increase the capital of a company in the UK
Whether it is to grow, professionalise the structure of the company or incorporate new partners, a capital increase can mark a turning point in the life of your company.