EQUITY INCREASE AND DECREASE OF LIMITED LIABILITY COMPANIES (LLC) – Law Office Knežević Belgrade
Within business law and corporate law, the Law Office Knežević Belgrade represents clients in the procedure of increase and decrease of equity with limited liability companies (LLC) in the Business Registers Agency which includes preparation of relevant acts and submission of appropriate registration applications.
EQUITY INCREASE OF LIMITED LIABILITY COMPANIES (LLC) – ATTORNEY AT LAW BELGRADE SERBIA
In line with the Law on Companies the equity of a limited liability company may be increased by:
-new stakes of existing shareholders or shareholders joining the company;
-converting reserves or profit into equity;
-converting receivables of the company into equity;
-status changes that result in equity increase;
-converting additional payments into equity.
During the registration of the monetary capital increase with the Business Registers Agency, the registration application for the equity increase of the limited liability company shall be accompanied with the Decision of the General Assembly of the Company on Equity Increase, as well as the certificate of the bank on monetary stake payment.
If equity is increased by non-monetary stake it is necessary (in addition to the registration application and Decision of the General Assembly) to submit the agreement between shareholders on the assessment of the non-monetary stake or certificate from competent authority on the value assessment of the non-monetary stake (if equity increase is executed by new stakes of company members of converting additional payments into equity). If equity is increased by converting reserves of profit of the company into equity, it is necessary to submit annual financial statements (if not registered in line with the law).
It is important to note that, if the increase of equity is performed by entering real estate, the decision on equity increase must be in the form of solemnized private document certified by the competent notary public.
EQUITY DECREASE OF LIMITED LIABILITY COMPANIES (LLC) – CORPORATE LAW FIRM BELGRADE
Equity of limited liability companies may be decreased, but never below the minimum equity (that is, in line with the Law on Companies, RSD 100).
Decrease may be performed for:
-creating or increasing reserves of the company for covering future loss or increase of equity from net assets of the company;
-in case of release of obligation taken to pay, that is, enter stake into the company;
-in case of share withdrawal and cancellation;
-in case of cancellation of own share due to lack of disposal.
With equity decrease we can differentiate between situations in which decrease is performed without the application of provisions of creditor protection (executed in one step in BRA) and situations in with decrease is performed with the application of provisions of creditor protection (executed in two steps in BRA).
Equity of the limited liability company is performed in one step only in certain cases, namely:
-cancellation of own shares of the company that the company acquired without burdens and for which the stakes are paid, that is, entered in full;
-withdrawal and cancellation of shares that are completely paid/entered by payment to the member charged to reserves that can be used for that purpose;
-covering loss from previous business year (possible only in case the company holds no undistributed profit and reserves that can be used for that purpose, in the amount that cannot exceed the loss covered);
-creating or increasing reserves for the covering of future loss or increase of equity from net assets of the company (these reserves, upon reduction of equity, cannot be over 10% of equity).
During the equity decrease without the application of provision on creditor protection only the Decision of the General Assembly on Equity Decrease shall be submitted to the Business Registers Agency (with the registration application for the equity decrease and evidence on tax payment).
In all other cases of equity decrease it is necessary to apply provisions on creditor protection and execute the equity decrease in the Business Registers Agency in two steps.
When the equity decrease is performed with the application of provisions on creditor protection it is necessary for the first step to be the registration and publication of the Decision on equity decrease in the continuous duration of three months starting from the date of registration. Decision on equity reduction with the application of provisions on creditor protection must include the invitation to creditors to report their claims for securing such claims.
In the second step that actually represents the decrease of equity by the execution of the published decision on decrease, with the registration application of equity decrease of the limited liability company and evidence on tax payment, the statement of competent authority of the company that all claims of the creditors are secured that is, settled is submitted (that is, that such creditors did not submit suits to competent courts in prescribed periods or evidence that the court rejected the order to establish security for such creditors).
Equity shall be considered decreased on the date on registration in the Company Register.
If you are interested in cooperation with a law office in Belgrade that practices business law, for the execution of procedure of increase or decrease of equity of the company, feel free to contact us.