Alteration of Share Capital
Alteration of Share Capital in Singapore
A company may alter its share capital for a variety of reasons, such as to raise additional capital, to restructure its capital structure, or to comply with regulatory requirements. In Singapore, the Companies Act 2014 (CA) sets out the procedures for altering share capital.
Types of Share Capital Alterations
There are two main types of share capital alterations:
Increase in share capital: This involves issuing new shares to raise additional capital.
Reduction in share capital: This involves canceling existing shares or reducing their nominal value.
Procedures for Altering Share Capital
The specific procedures for altering share capital will vary depending on the type of alteration and the type of company. However, the general steps are as follows:
Pass a resolution at a general meeting of shareholders. The resolution must be approved by at least a simple majority of the shareholders present and voting.
File a notice of the alteration with the Accounting and Corporate Regulatory Authority (ACRA). The notice must be filed within 30 days of passing the resolution.
Update the company's constitution (if necessary). The company's constitution is the document that sets out the rules for the company's operation. It may need to be updated to reflect the change in share capital.
Additional Requirements for Reduction in Share Capital
In addition to the general steps above, there are some additional requirements for reducing share capital. These requirements include:
Obtaining a solvency declaration from the company's directors. The solvency declaration must state that the company is able to pay its debts after the reduction in share capital.
Giving creditors an opportunity to object to the reduction in share capital. Creditors have 6 weeks from the date of the notice to ACRA to object to the reduction.
If a creditor objects, the company must apply to the court for an order approving the reduction in share capital. The court will only approve the reduction if it is satisfied that the company is solvent and that the reduction would not be unfair to creditors.
Altering share capital can be a complex process, and it is important to seek professional advice to ensure that the process is carried out correctly.
Seek Bestar Professional Advice
Altering share capital is a complex process with many legal and financial implications, so it is important to seek professional advice from a qualified Bestar advisor.
A Bestar advisor can help you to:
Understand the implications of different types of share capital alterations
Choose the right type of share capital alteration for your company
Draft the necessary resolutions and other documents
File the required notices with ACRA
Update the company's constitution (if necessary)
Comply with all applicable laws and regulations
By seeking professional advice, you can help to ensure that the process of altering share capital is carried out smoothly and efficiently, and that your company's interests are protected.
Here are some specific examples of how a Bestar advisor can help you with altering share capital:
If you are raising additional capital, a Bestar advisor can help you to determine the best way to structure your share capital and to issue new shares in a way that is compliant with all applicable laws and regulations.
If you are reducing share capital, a Bestar advisor can help you to ensure that you meet all of the solvency and creditor protection requirements.
If you are restructuring your capital structure, a Bestar advisor can help you to develop a plan that is both tax-efficient and commercially viable.
Overall, seeking professional advice from a Bestar advisor is the best way to ensure that the process of altering share capital is carried out correctly and in the best interests of your company.
Contact Bestar today!