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  • Cristina Lefter

Share capital increase and bringing in new shareholders as way of business financing

An article from the series: The Entrepreneur and their Business in Romania



One of the ways to raise capital in an existing company is to increase the share capital through contributions Finanțarea unei societăți prin participarea la o operațiune de majorare de capital social poate fi atractivă pentru investitori întrucât deținerea unei participații în societatea în care au decis să investească poate reprezenta o garanție suplimentară în sensul că activitatea și rezultatele societății se îndreaptă în direcția dorită. from investors, individuals or other companies, which implies that investors will become partners/shareholders in the company in exchange for a stake in the share capital and receiving shares in return. Contributions from new (or existing) shareholders can take the form of cash, in-kind or by offsetting certain, liquid and payable claims.


According to the Companies’ Law 31/1990 ("Companies Law")[1] the increase of share capital is decided by a resolution of the extraordinary general meeting of shareholders, with the participation of the existing shareholders and those who will become shareholders. The resolution shall also provide for the additional contributions and the related shareholdings. It should be stressed that, depending on the specific situation of the company in question (e.g. if we are talking about a joint stock company with several existing shareholders) it may be necessary to take into account the observance of certain preferential rights of the existing shareholders in order to avoid their dilution. The provisions of Article 216 of the Companies Law suggest that such pre-emptive rights would only exist for shareholders in a joint stock company. However, the law does not prohibit the creation of similar rights for shareholders in a limited liability company by its articles of association.


Financing a company by participating in a share capital increase operation can be attractive to investors as holding a stake in the company they have decided to invest in can be an additional guarantee that the company's business and results are moving in the desired direction. On the other hand, the involvement of investors may mean less control of the entrepreneur over the business.


In order to establish clearly from the outset what the rights of the new shareholders are and the level of control they can exercise, the share capital increase could be accompanied by the signing of a shareholders' agreement - which we will discuss in detail in a separate article.


Carrying out a share capital increase operation requires going through certain formalities at the Trade Register Office. But this is the last stage of the whole process - what should be of particular interest is the outcome of the operation and how the company operates once the new shareholders/partners join.

[1] Article 113 letter f) of the Companies Law.

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