What Is a Capital Increase?

Stock market terms. Established joint stock companies issue new shares, called capital increase. Listed companies often deal with capital increase (paid rights issue) or capital reserve increase (no rights issue) for business needs.

Capital increase

Stock market terms. Established joint stock companies issue new shares, called capital increase. Listed companies often deal with capital increase (paid rights issue) or capital reserve increase (no rights issue) for business needs.

Chinese name

Capital increase

Category

Stock market terms

Definition

New shares issued by established stock companies

the way

Increase registered capital of enterprises

The concept of capital increase: an enterprise's act of increasing registered capital in accordance with law in order to expand the scale of operations, broaden its business, and increase the company's creditworthiness.

Foreign capital increase regulations:

The specific regulations for increasing the registered capital of foreign-invested enterprises shall be in accordance with the Ministry of Foreign Trade and Economic Cooperation and

Increase registered capital of enterprises

The most intuitive manifestation of the size and strength of an enterprise is the size of its registered capital. A company with a registered capital of 1 million and a company with 10 million have given the impression that they are two completely different companies. The registered capital of an enterprise plays an important role in the development of the enterprise.

1) Application for Registration of Enterprise Change signed by the legal representative of the company;

Contains "Application Form for Registration of Enterprise Change", "List of Unit Investors (Unit Shareholders, Promoters) after Change", "List of Natural Person Shareholders (Promoters), List of Individual Sole Proprietors, Partners of Partnership Enterprises", " Payment of Investor's Registered Capital (Registered Capital, Contribution Amount) after the Change "," Registration Form for Legal Representatives of Enterprises "," Certificate of Appointment of Board Members, Managers, and Supervisors "and other forms

2) The shareholders' meeting or the board of directors that made the decision to increase the capital and share;

3) "Designation (Entrustment)" signed by the legal representative of the company and a copy of the ID card of the principal;

4) The original and copy of the Business License of Enterprise Legal Person;

5) For capital increase in currency, submit the capital verification report issued by the statutory capital verification agency; for capital increase in non-monetary mode, an evaluation report and a report of the statutory capital verification agency to verify the evaluation results and handle the transfer of property;

6) Amendments to the articles of association or the corresponding amended articles of association;

7) Investment agreement (a capital increase agreement);

8) New shareholder qualification certificate (that is, a copy of the new shareholder's ID card or official seal stamped with the official seal).

List of currency capital verification information

Foreign Economic and Trade Cooperation Bureau Approval for Capital Increase

Foreign-funded enterprise approval certificate

Articles of Association and Supplementary Articles of Association approved by the Foreign Investment Bureau

business license

Foreign exchange administration approval (original)

Foreign exchange registration certificate (original)

Bank statement

Capital verification report before capital increase

Investor's business license and accounting statements

Receipt of capital increase of paid-in capital

Other required information

List of capital verification information in kind

Foreign Economic and Trade Cooperation Bureau Approval for Capital Increase

Foreign-funded enterprise approval certificate

Articles of Association approved by the Foreign Investment Administration

Temporary business license

Foreign exchange administration approval (original)

Foreign exchange registration certificate (original) Physical customs declaration form

Physical value appraisal (except for wholly foreign-owned enterprises)

Letter of commitment

Physical transfer checklist

Previous Capital Verification Reports (when investing in installments)

Investor ID card or business registration certificate, business license, accounting statements

Rental contract

Receipt certificate

Other required information

List of capital information for profit increase

business license

Tax registration certificate

Verification report

Board profit reinvestment resolution

Original Articles of Association and Supplementary Articles of Association

Foreign exchange registration certificate

Approval of the foreign exchange business of the capital project of the State Administration of Foreign Exchange

Foreign Investment Administration agrees to increase capital approval

Annual Corporate Income Tax Settlement Notice

Corporate income tax payment certificate and tax payment certificate

Approval for preferential corporate income tax policies

Reinvestment annual accounting statements and audit reports

Other required information

1. The capital increase company authorizes the operator to bring the original and copy of his company license and his ID card to the corresponding branch of the Bureau of Industry and Commerce where the license is issued. Pick up at the domestic consultation counter. Done the same day

2. When receiving the form, the relevant personnel in the Administration for Industry and Commerce will inform you of the information items that need to be prepared and the content to be filled in the form.

required materials:

(1) Application for registration of company change

(2) Certificate of designated representative or co-trust agent

(3) Capital verification report

(4) Resolution of company shareholders

(5) Amendments to the Articles of Association

(6) Original and copy of license

(7) Agent ID

3. Fill in the company's application for change of registration, the certificate of the designated representative or the jointly authorized agent, and the relevant person shall sign and affix the official seal. Prepare shareholder resolutions and amendments to the company's articles of association. Can be served in multiple copies. The relevant person signs and stamps the official seal. (This step can be successfully completed in 1 working day)

If you have any doubt about whether the resolution of the company's shareholders and the amendments to the company's articles of association can be passed, you can bring these two documents and licenses to the branch of the Bureau of Industry and Commerce where the license is issued for consultation. Domestic-funded counters.

4. Contact the accounting firm and the bank, and remit the amount of the capital increase to the company's temporary account for capital verification. The bank where the account is located issues a certificate (receipt of receipt, statement of account, and bank letter of reply) (3-4 working days) . Submit the certificate (mailed to the office by the bank), business license and previous capital verification report to the accounting firm, and the firm will issue a capital verification report (1-2 working days). (If you need to save the frozen time, you can open a zero-time capital verification account after the third step is completed.)

Fees: Accounting firms charge fees based on one-thousandth of the registered capital. (Report on capital increase of import and export companies)

5. After the required materials are prepared, the agent will submit it to the branch of the Bureau of Industry and Commerce where the license is issued for on-site review. Passed and issued the Certificate of Receipt of Application for Enterprise Registration.

6, 5 working days to complete the review, you can take this document to obtain a new business license on the date indicated in the "Enterprise Registration Application Receipt".

7. Fees: The sum of the increased registered capital (registered capital) and the original registered capital (registered capital) does not exceed 10 million yuan, and an additional part of 0.8 and the entire cost of 10 yuan are charged. (For detailed charges, please refer to the "List of Administrative Charges")

8. After receiving the new license, use the corporate identity card to unfreeze the company's temporary capital verification account and transfer the funds to the corresponding account.

Summary of capital increase process:

1.All shareholders agree to increase capital

On October 27, 2005, the eighteenth meeting of the Standing Committee of the Tenth National People's Congress passed the newly revised "Company Law", which is a major event in China's economic and legal life. The "Company Law" is an important law regulating the main body of the market. Since it was adopted at the fifth session of the Standing Committee of the Eighth National People's Congress on December 29, 1993, it has been revised twice in 1999 and 2004. The third amendment is also the largest one, with a total of 126 amendments, 78 deletions, and 64 new additions, which concern the company establishment system, corporate legal person governance structure, corporate social responsibility, corporate financing system, corporate financial accounting system, and company The merger, division and liquidation system, the protection of the interests of one-person limited liability companies and minority shareholders, etc., among them also involve the content of asset evaluation. The implementation of the newly revised "Company Law" will not only have an important impact on China's company management and company operations, but also the development of the asset valuation industry. Therefore, the people in the appraisal community must study the Company Law carefully, and especially the provisions on asset evaluation in the Company Law.

The provisions of the "Company Law" that directly involve asset evaluation are mainly the content of company establishment and legal liability, which are as follows:

I. Article 27 states: "Shareholders may make capital contributions in currency, or they may use non-monetary assets such as real property, intellectual property rights, land use rights that can be valued in currency and transferable in accordance with the law; however, laws and administrative regulations provide Except the property that cannot be used as capital contribution. Non-monetary property as capital contribution shall be evaluated and valued, and the property shall not be overvalued or undervalued. If there are provisions in laws and administrative regulations on the value of valuation, the provisions of all shareholders shall not be used for capital contribution Less than 30% of the registered capital of a limited liability company. "This is a regulation on the form of capital contribution for a limited liability company. This provision has the following meanings:

1. Form of investment. The shareholders of a limited liability company may make capital contributions in currency; they may also make capital contributions in kind, such as in kind, intellectual property rights, and land use rights. A combination of generalization and enumeration was adopted for non-monetary property as capital contribution. The enumeration method is adopted because it is relatively intuitive, easy to understand, and easy to operate. The reason for listing several types of investment forms of currency, in kind, intellectual property rights, and land use rights is because currency investment is indispensable. In kind, intellectual property rights, and land use rights are the most commonly used forms of investment in company establishment. The general method is adopted because there are many types of capital contributions by companies in the real worldit is impossible to list them, and with the development of the economy, new capital contributions will continue to appear. Therefore, after the "land use right" there is a " ", Etc.", which means that in addition to the three forms of physical objects, intellectual property rights, and land use rights, other non-monetary properties that meet the investment requirements, such as creditors' rights and equity, can also be used as capital contributions with the unanimous consent of shareholders. It can be seen that there are many types of non-monetary property that can be used as capital contributions. The purpose of such regulations is to relax the conditions for company establishment, encourage entrepreneurship, encourage investment, and respect the diversity of the company's operating methods and the initiative of entrepreneurs and operators. According to the "Administrative Regulations on the Registration of Registered Capital of Companies" of the State Administration for Industry and Commerce, shareholders may not make capital contributions in the form of labor services, credit, names of natural persons, goodwill, franchise rights or property with guarantees. In kind is the most common form of non-monetary property investment, including houses, machinery and equipment, vehicles, raw materials, etc. There are many types. The form of in kind to choose as the investment should be determined according to the actual needs of the company's operations. The company needs a variety of material resources to operate. Allowing in-kind contributions can save money resources, reduce the company's purchase costs, and improve the company's operating efficiency. When many state-owned enterprises are restructured into companies, they use the real assets of the original enterprise as their capital, and their proportion is relatively high. Intellectual property is an intangible asset with a very wide scope. According to the provisions of the World Intellectual Property Convention, patent rights, trademark rights, copyrights, discovery rights, and performance rights are all intellectual property rights. Intellectual property in the narrow sense refers to patent, trademark and copyright. The original company law used the term "industrial property rights", which included only patent rights and trademark rights. The new company law replaced "industrial property rights" with "intellectual property rights," meaning that copyright could also be used as a means of funding. Widening, on the other hand, the value of copyright has also been reflected. In modern society, science and technology are changing with each passing day, and the influence on economic society is increasing. High-tech companies are constantly emerging, and the weight of science and technology factors in general companies is also increasing. Not only has it become a means and condition for company operations, in many cases It has also become an important factor that determines the company's core competitiveness. Land is an important economic resource and the most basic place for production and operation of a company. However, since land in China is owned by the state or a rural collective, no unit or individual may occupy, trade, or otherwise illegally transfer land. But land use rights can be transferred. Therefore, it is only land use rights that can be funded as a company, but collective land use rights cannot be used as capital. The land use right used for capital contribution can only be the transfer of land use right, not the allocation of land use right. If the land use right obtained through allocation is invested, the land transfer fee must be paid to the state first. The land use right as a capital contribution shall not have a right burden, such as mortgage, guarantee, etc .; otherwise, the land use right is uncertain.

2. There are certain qualifications for non-monetary property as capital contributions.

First, it must be property that can be valued in currency, because non-monetary capital is also part of the company's registered capital, and the registered capital is ultimately reflected in the amount of money. Therefore, property that cannot be valued in currency cannot be used as capital contribution;

Second, it must be property that can be transferred in accordance with the law, because once the shareholder's property is invested, it becomes the company's assets, and all relevant property transfers must be handled. If it cannot be transferred, it cannot become the company's assets. Such as labor services, natural person names cannot be transferred, and therefore cannot become capital contributions. Non-monetary property contributed as capital cannot be transferred, and there is uncertainty in the use of these properties in the company's business operations. The company cannot use it as secured property, and the company cannot legally transfer these properties to creditors when paying off debts to the outside world. , Affecting the company's credit. It should be noted that it is not enough to be able to transfer. It must be a tradable material permitted by law. What is not allowed by law cannot be used as capital contribution. Third, even if it can be valued in currency, it can also be transferred according to law. Regulations stipulate that property that cannot be used as capital contribution cannot be used for capital contribution. For example, monopoly items such as tobacco cannot be used as capital contribution by non-monopoly enterprises.

3 Determining the value of non-monetary property as a contribution should go through the assessment process. There are three levels of meaning here, namely why should we evaluate the price? Who evaluates the price? What are the requirements for valuation? For why should the valuation be evaluated?

First, as mentioned above, the amount of a company's registered capital must be reflected in monetary amounts. Non-monetary property must be converted into currency. At the same time, Article 29 of the "Company Law" stipulates that after the shareholders pay the capital contribution, they must be verified by a capital verification institution established in accordance with the law and issued a certificate. The evaluation result of non-monetary property is an important basis for the capital verification agency to issue a capital verification report. Second, the company's registered capital is part of the company's property. When a company has a debt dispute, it needs to pay compensation for the company's property, including the registered capital. Without the evaluation and valuation of non-monetary property, compensation cannot be made, and non-monetary cannot be determined. Whether the actual value of the property is true and reliable. Who will evaluate it? In the process of amending the "Company Law", it has been advocated that shareholders can make a valuation of non-monetary property as a capital contribution in writing, or an independent appraisal agency, which has led to heated discussions. Many experts believe that the shareholders should There are obvious shortcomings in the valuation of written non-monetary property as a capital contribution. First, shareholders as the company's investor have an overestimation of non-monetary property as a capital contribution;

Second, there are many types of non-monetary property as capital contributions. Valuation is a highly professional job. Shareholders generally do not have specialized valuation knowledge and it is difficult to accurately evaluate the value of non-monetary assets as capital contributions. Third, even if shareholders have specialized Valuation knowledge is also difficult to gain the trust of creditors and the public because of its independent status. Fourth, shareholder self-assessment may also lead to the use of company establishment for money laundering. For example, shareholders investing in non-property and deliberately underestimate the value of the property. The purpose of high-money cash through company operations is to achieve the purpose of money laundering. Fifth, shareholders 'self-assessment and valuation facilitate the state-owned shareholders' deliberate underestimation of state-owned assets for private gain. Therefore, there should be a professional asset appraisal agency to conduct valuation. The "Company Law" has no provision for shareholders to self-assess the price, and there is no doubt that the valuation should be performed by a legally qualified asset appraisal agency. What are the requirements for valuation?

The "Company Law" contains these meanings:

First, the property should be verified during the evaluation. The first is to verify whether the property as a contribution actually exists. The second is to verify whether the property is owned by the shareholders. The property that is not owned by the shareholders cannot be used as a contribution. Second, it must not be overvalued or undervalued. Valuation requires the appraiser to have the relevant professional competence to be able to perform the appraisal of the property as capital contribution. At the same time, it requires the appraisers to adhere to the principles of independence, objectivity and fairness, independent of the influence of shareholders, to conduct appraisal and appraisal independently. 4 The ratio of monetary contributions to non-monetary contributions is regulated. The "Company Law" stipulates: "The monetary contribution of all shareholders must not be less than 30% of the registered capital of a limited liability company." This means that non-monetary contributions (including intangible assets) must not be higher than the company's registered capital. seventy. The original "Company Law" stipulated that "the amount of capital contribution paid by industrial property rights and non-patent technology shall not exceed 20% of the registered capital of a limited liability company." Compared with the original, the proportion of non-monetary capital contribution has been greatly increased. From the perspective of shareholders, capital contribution is more flexible. From the perspective of evaluation agencies, the evaluation business has increased significantly. The reason why the law also stipulates the minimum proportion of monetary contributions, and does not allow all non-monetary contributions, is mainly to avoid the value uncertainty and difficulty in realizing the company's property if it is all non-monetary property, which helps maintain The company's debt solvency.

A. Raising operating funds

B. Maintain existing operating capital and reduce shareholder income distribution.

C. Adjust shareholder structure and shareholding ratio.

D. Improve company credit and obtain legal qualifications.

E. Let the enterprise obtain higher benefits

Must increase capital

The company law stipulates that registration of registered companies can be completed with 20% of the funds, and special groups can also register with zero funds (such as starting a business for college students who have graduated less than two years). The remaining funds will be replenished within two years. When registering a company, because of insufficient funds, only 20% of the registered capital is realised. For example, to register 2 million companies, only 400,000 is required. Therefore, when a company is established nearly two years ago, it must increase its capital. If capital cannot be increased within 2 years, the registered capital must be reduced (reduction).

2. Expanding the operating platform

The company had insufficient funds when registering, but the registered capital reflected the strength of the company to a certain extent. The larger the registered capital, the impression was that the company was strong, it can increase the first-time trust of unfamiliar customers in the company, and the registered capital reached a certain standard. Participating in some tenders, the company can only expand its operating platform through capital increase.