Change of authorized capital, increase and decrease

Change of the company’s authorized capital size

In Ukraine the authorized capital is formed from the moment the founding meeting is held and until the end of one year after state registration. Subsequent changes in the size of the authorized capital are possible for legal entities whose supreme body at a meeting adopted a corresponding decision to increase or decrease the authorized capital.

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Anna Gaidukova Senior Lawyer

In the authorized (contributed) capital, company members can contribute money, items, property rights or transferable rights – all of which must have a monetary valuation.

The authorized capital is formed from the moment the decision to establish an LLC is made and, as mentioned above, until the end of one year after state registration. If after one year from the date of registration the authorized capital has not been properly formed by the members, the company convenes a meeting of the supreme body, at which it adopts one of the following decisions: exclude all company members who did not make their contribution and distribute the unpaid part among the remaining members, or reduce the authorized capital, or liquidate the company. It should be noted that a reduction of an LLC’s authorized capital is not allowed if it has not been agreed with the creditors.

Only after the authorized capital has been formed in full can the company continue its activities. A change in an LLC’s authorized capital is possible at any stage of activity. If necessary, the increase of an LLC’s authorized capital can be made with property, money, various types of income, etc.

The procedure for increasing an LLC’s authorized capital in Kyiv is quite lengthy if done for the first time; however, if you act in accordance with the law, there will be no difficulties when changing the authorized capital.

The capital of a joint-stock company is formed from the sum of the nominal value of all shares. The decision to increase the authorized capital of a closed (private) joint-stock company (ZAO/ChAO) is made at a shareholders’ meeting, and thereafter the joint-stock company acts in accordance with the procedures of the National Securities and Stock Market Commission.

An increase in the authorized capital of an open (public) joint-stock company (OAO/PAO) occurs by raising the nominal value of shares or by the public offering of additional shares.

Since 2011, amendments have been made to the Law of Ukraine “On Joint-Stock Companies”, bringing the names of joint-stock companies into line with international standards: from “closed joint-stock company” (“ZAO”) and “open joint-stock company” (“OAO”) to “private joint-stock company” (“ChAO”) and “public joint-stock company” (“PAO”). In the Ukrainian version the changes are as follows: “ЗАТ” and “ВАТ” became “ПрАТ” and “ПАТ”.

Legislation provides the possibility to increase or decrease authorized capital by various means. For example, the company’s authorized capital can be increased at the expense of retained earnings through reinvestment, or through contributions from third parties – so-called charitable contributions and donations (as a source of forming the company’s assets), or by increasing the LLC’s authorized capital with property. The main thing is to assess the contributed rights in monetary terms. An increase in authorized capital through property is possible by transferring, for example, a car or a plot of land to the company. It is worth noting that the authorized capital can also be decreased by means of the company’s property.

Our specialists will resolve all issues of increasing/decreasing the authorized capital depending on the organizational form of your company. We will help document the changes and go through all state authorities in Kyiv.

Changing the authorized capital is a rather complex process, as it has many nuances regulated by the Civil Code of Ukraine and the Law of Ukraine “On Business Associations”. One such nuance is the mandatory notification of all creditors in the event of a decrease in authorized capital and the early performance or termination of the relevant obligations and compensation of their losses upon request.

The price includes EVERYTHING:

• notarization of the new edition of the charter;
• all state fees.

Our services for changing the authorized capital include:

To change the amount of authorized capital we need from you: