How to Increase the Paid Up Share Capital of a Public LTD Company
A public limited company is a company whose securities are listed and traded on a stock exchange and can be bought and sold by anyone. Public companies are strictly regulated and are required by the International Financial Reporting Standards to publish their complete and true financial position so that investors can determine the true worth of their shares. Paid-up capital is the portion of authorized share capital for which the company has issued and received payment. Authorized share capital is the par value of the maximum number of shares that the company has been allowed to issue. Par value -- nominal value -- on the other hand, is the minimum value set for each share and it normally ranges between $1 and $0.25. The total value of paid-up capital is determined by multiplying total number of authorized shares by par value of each share.
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Instructions
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Determine the total amount of called-up share capital. This is the total of the par value of shares that shareholders have paid plus any other amounts that they have pledged to buy at a future date. Approach the Securities Exchange Commission to seek an approval to alter the company's share capital as per the provisions of the U.S. Securities Act of 1933.
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Compare the called-up share capital with the paid-up share capital. Send reminder letters to the shareholders who pledged to buy additional shares to honor their pledges if paid-up capital is less than the called-up share capital. Top up the paid-up share capital with the additional par value of the shares generated from the pledged share purchases of shareholders.
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Confirm whether the authorized share capital is fully issued and allot a segment or the entire portion of the authorized share capital depending on the number of the outstanding authorized share capital. Add the total par value of the additional share allotment to the current paid-up capital.
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Convene a an extraordinary general meeting to seek shareholders' approval to conduct a share split to increase the current authorized share capital if the company has exhausted its maximum authorized share capital. A share split involves issuing a certain number of additional shares to the current shareholders of the company in proportion to a given number of shares. For example, you can split shares by issuing five additional shares for every 10 shares held.
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Tips & Warnings
You may also allot bonus shares to shareholders to increase the paid-up capital. If your company has funds available for the purpose may also pay up any unpaid amount for its shares that will amount to use any undistributed profits, or any sum credited to the company's share premium account or capital redemption reserve to finance an issue of wholly or partly paid-up bonus shares to the members in proportion to their existing holdings.
You should not make an offer of securities to the public, or seek admission to trading on a regulated market, unless a prospectus approved by the SEC has been published because it will be rendered void
