The purpose of this FAQ is to clarify:
(a) the concepts of authorized share capital and paid up share capital; and
(b) how you might deal with the situation of investors who intend to buy shares in a collective company but who are presently unable to fund same.
Just for clarification authorized share capital is the amount of share capital a company can raise. If the maximum authorized share capital of a company is $100,000 then the company can only issue and sell $100,000 worth of shares (eg 100,000 shares of one US Dollar each or 10,000 shares of Ten US dollars each or say 1,000,000 shares of say 10 cents each, etc). If the maximum authorized share capital is $US1,000,000 (1 Mill USD) then a company can issue and sell $1,000,000 worth of shares (eg 1,000,000 shares of one US Dollar each or 100,000 shares of ten USDollars each etc or ten million shares of 10 cents each).
It is obviously in the clients’ interests to have a higher authorized share capital as it means the client can raise (or sell shares to the value of) up to one million USD (instead of just 100,000) as-of-right (and without having to come back to the registry to amend the Memo and Articles and pay a further fee to the registry).
The law has changed here recently. Previously the maximum amount of share capital you could have, and still pay the minimum incorp/annual government fee, was one hundred thousand USD ($US100,000).
Now you can have up to one million dollars ($US1,000,000) or more authorized share capital for the same minimum fee.
I guess one of the first thing you will want to work out is how much of the company do you want to sell from the outset at how much do you want to leave “unsold” so you can sell further shares later?
• Say you have 7 shareholders committed to investing 20,000 each
• Say you want to be able to sell more shares later
• Say 2 of the investors don’t presently have the money
What we can do is this:
• When we set up the company we could tailor the company to provide for both Class A shares ie voting shares and Class B shares ie non-voting shares
• You could issue 2000 Class A shares (ie voting shares to each of the 5 shareholders) from the outset
• You could issue an Option (to purchase 2,000 shares at a price of 10 cents each for say 6 months) to the 2 committed but presently non-financial investors
• In the Option document we could stipulate that the price is to rise by x% per month for each month that the shares are not paid for. This extra amount is called a share premium. The initial price per share at which shares are offered/sold is called the par value.
• New (ie non manager/non executive) shareholders may be brought in later. The board can decide at that time whether to offer further shares for sale and if so at what price.
Point to note: If the total paid up share capital is say $100,000 (ie 5 lots of 20,000) and only 10,000 shares have been issued in total, if you hold 2,000 of those shares you own 20% of the company.
I hop this clarifies the concept of authorised and paid up share capital (and share options) for you. .
Should have any further queries please do not hesitate to contact us (or to seek independent legal/accounting/financial advice, as you may prefer).
No announcement yet.
Seychelles Company Share Capital, Paid In Capital without any tax complications how?
- accept credit card payments (1)
- Belize Company Registration (2)
- bermuda (1)
- BVI Company Registration (2)
- cclogic (1)
- cclogic.com (2)
- cclogic ltd (1)
- cyprus company (1)
- cyprus company formation (2)
- cyprus company registration (14)
- formation (1)
- incorporate cyprus company (1)
- offshore bank account (5)
- offshore company (2)
- offshore company forum (18)
- offshore jurisdiction (1)
- open cyprus bank account (2)
- payment gateway (1)
- register (1)
- register cyprus company (1)
- seychelles company registration (9)
- tax (1)
- tax haven (2)
- virtual office service (1)
- virtual office uk (1)
Are you considering offshore company formation for your business? Then it is time for you to visit CCLogic. We are the only online forum that is dedicated to providing companies with the information they need to successfully set up offshore. Whether you are an existing company that wants to incorporate offshore or a new business that wants to establish itself in a tax-friendly jurisdiction, everything that you need to know is here. CCLogic prides itself as a comprehensive source for all things...06-02-2015, 08:16 AM
One offshore jurisdiction does not fit all requirements so it is important for you to get straight to the point and find the tax haven that fits your e-commerce business and your target market.
Latest news and stats about the best and cheapest offshore company formation services are found below.
...03-09-2015, 09:28 AM
To make this forum handy and like a wiki to our users we from time to time collect the best threads available on our offshore forum! Below you find the links to various official / public available Registry of Companies in the major offshore jurisdictions around. You may want to bookmark this page because it will be updated on a regular basis when we have new threads add or old removed. If you have any questions or you think something is missing you're welcome to write to us and we will get it online if we find it relevant to the topic / forum. Thank you so ...02-23-2015, 03:21 PM
Find more statistics at Statist a02-02-2015, 12:26 PM
CCLogic Offers Cyprus Company Formation Services at Affordable Rates Incorporating a company in Europe can be difficult and expensive, and this is why CCLogic has launched a service that will enable businesses to register their company easily and with the least cost possible. Cyprus company formation offers several advantages. First of all, the country has a unique tax system and has most of the benefits of a tax haven country. Secondly, it is an EU member since 2004 which ensures that it benefits from EU regulations, treaties and directives. It is also part of the white list of all the countri...01-30-2015, 03:22 PM