Capital Increases

Capital Increase Process:

• To raise liquidity
• To replenish the share capital
• The procedures for the capital increase are carried out in two ways, depending on the company’s needs:
• With direct capital increase
• Capital increase with a foreign controlled company (ltd or other jurisdiction)

Direct Capital Increase:

• Opening of a current account for the srl or spa at the bank with which we have an agreement.
• Granting of a credit line to the members proportional to the value of the capital increase to be carried out in the subsidiary company.
• Transfer of the sum approved for the members to the company account
• Communication to the company of the availability of the value of the capital increase by the bank.
• Release of the company’s bank certification to the Italian notary where the deposit of the funds from the company account is evident, with the related account statement.
• Signing of the company’s capital increase at the notary. (with minutes of the shareholders’ meeting resolution)
• The notary will carry out the formalities of the capital increase at the Chamber of Commerce and the following will appear on the Chamber of Commerce certificate:
• Signed capital increase fully paid.

Naturally, the sums in the company account that were used to highlight the capitalization amount cannot be used, as they are a guarantee of the credit line issued to the shareholders.

Capital increase with a foreign controlled company (Ltd or other jurisdiction):

• Opening of a Ltd under English law (fully owned by the members of the Italian company)
• Opening of a current account for the Ltd. at the associated bank.
• Assignment of the L.E.I. code (Legal Entity Identifier) ​​to the Ltd., with worldwide registration of the certificate, naturally preparatory to exercising capital increases.
• On the account opened for the ltd., activation of a credit line of an amount equal to the capital increase to be carried out, the line will be guaranteed by the members.
• Communication to the Ltd. of the availability, by the bank, of the sum equal to the value of the capital increase.
• With this bank-certified document, with attached L.E.I. certificate, the capitalization has been completed to the company house and after one day such capitalization appears on the English register company.
• We therefore have a Ltd. company with capital increased by the value guaranteed by the members.
• Acquisition by the Ltd of partial or total shares of the Italian company (to be assessed).

Notarial deed of transfer of shares of the members of the Srl (already owners of the entire Ltd.), with a simultaneous increase in capital in the srl, through the opening of an account for the Srl at the Ltd.’s bank, with transfer of funds from the ltd. to the Srl equal to the value of the agreed capitalization. Upon transfer, the notary who must certify the capitalization will receive the certification (in the name of the Srl) from the bank that transferred the funds from the Ltd to the Srl. Naturally, each operation must be finalized on a case-by-case basis.

Advantages:

The advantage offered by these operations is determined by the low cost compared to the benefit received, furthermore the ltd. Capitalized and owned by the members of the Italian company, in commercial relations can offer third parties the appropriate guarantees of solidity and commercial seriousness (example: with the issuing of letters of patronage on behalf of the Italian subsidiary), or the same bank that capitalizes the ltd. Can issue a block of funds (via swift) to third parties to be guaranteed, for commercial needs, up to the amount of 5 (five) times the value of the subscribed share capital.

Practically the srl has established its own financial company for economic support.

Why the proposed procedure is absolutely regular:

It is very simple, the bank or the financial company makes a loan to the administrator or the partners, which is transferred to an account with an active balance in the name of the company. The capital is simply transferred from the partner to the company, exactly as a partner could do from his own pocket. Capitalization through holding is a more complex procedure for more structured companies, but the principle is the same.

Why the procedure is convenient:

The bank that finances the partner for the capital makes a loan aimed only at the capital, not usable for current expenses, therefore for the bank it is not a first risk operation and the cost is defined from the beginning. Given the modest cost of the operation and that the partners do not use their own funds, given the greater solidity that derives from the company, the low costs are largely covered by the savings deriving from the costs of access to credit resulting from the improved company rating. Furthermore, the greater bankability allows the development of further new projects and developments.

It is a procedure that can make things more efficient and therefore be useful to many companies, both to increase access to bank credit and possibly obtain deferred payments from suppliers who ensure the credit.