Contribution and increase of the share capital of a limited liability company without changing the articles of association

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Provisions of a limited liability company agreement providing for the possibility of increasing the share capital without amending the articles of association should indicate the maximum amount of such an increase and its date. However, the provisions of the Commercial Companies Code do not directly regulate whether in-kind contributions, i.e. in-kind contributions, may be made to increase the nominal value of the existing shares or the creation of new shares. Contribution and increase of the share capital of a limited liability company - how does this issue develop in practice?

Contribution to cover the increased or created shares in the case of increasing the share capital without changing the contract

As a rule, the partners of a limited liability company to cover shares in the company, they can make both cash and in-kind contributions.

Important!

A contribution in kind in capital companies is referred to as an in-kind contribution. In order for a given contribution to be an in-kind contribution, it must have an in-kind capacity, which includes:

  • carrying capacity - the ability to designate, estimate and record the contribution on the asset side

  • transferability of the right - transferable to another person

  • liquidation or bankruptcy capacity - the subject of the contribution may be included in the components of the liquidation or bankruptcy estate.


The subject of the contribution is verified by registration courts at the stage of submitting the share capital increase to the registration court.

The general requirement for a limited liability company agreement, when the subject of the contribution are in-kind contributions, in whole or in part, is their precise marking in the articles of association by:

  • specification of the subject of the contribution,

  • persons of the contributing partner,

  • an indication of the number and par value of the shares awarded in return for this contribution.

However, it should be emphasized that the provision listing the above requirements in the event of an in-kind contribution being made concerns the registration of the articles of association. Hence the emerging doubt as to whether the contribution in kind to cover the increased nominal value of shares or newly created shares while increasing the share capital on the basis of contractual provisions, i.e. the simplified procedure, will not require a change in the articles of association of the limited liability company.

Contribution and increase of the share capital of a limited liability company without changing the articles of association - case law

The jurisprudence indicates the possibility of increasing the share capital of a limited liability company. by making a contribution in kind without changing the contract. This was emphasized by the Supreme Court in its decision of May 21, 1991, file number III CRN 44/91, at the same time indicating that in this case it is required to indicate the conditions under which this increase may take place. The Supreme Court mentioned the amount of the increase, the method of request for payment, the time of payment and the subject, value and person of the partner making the in-kind contribution.

Regional courts adopt an analogous line of jurisprudence. The District Court in Szczecin, as a result of examining the appeal, in its decision of November 13, 2015 with the reference number VIII Ga 326/15, found that it was incorrect to directly apply the provision of Art. 158 of the Commercial Companies Code, i.e. the requirement to precisely define the subject of the in-kind contribution already at the stage of drafting the articles of association, to increase the share capital of a limited liability company. on the basis of the existing provisions of the contract.

Pursuant to Art. 257 of the Code of Commercial Companies, for the increase of the share capital without changing the articles of association to be possible, the contract should specify the maximum amount and date of the capital increase. It is the minimum content of the contractual provision that will allow this increase procedure to be applied. In the justification of the decision, the court indicates that if the contract is limited only to indicating the minimum conditions for increasing the share capital, their specification should be included in the resolution. Therefore, in the event of an increase in the share capital of a limited liability company by making an in-kind contribution, it is the shareholders' resolution to increase the capital that should meet the requirements set out in Art. 158 of the Commercial Companies Code.

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Contribution in the form of real estate and an increase in the share capital of a limited liability company without changing the articles of association

Among the elements that make up the procedure of increasing the share capital in a limited liability company without changing the articles of association, there are, among others:

  • shareholders' resolution on increasing the share capital,

  • shareholders' declarations on the acquisition of shares,

  • contract for the transfer of in-kind ownership.

The shareholders' declaration on the acquisition of the increased or new shares pursuant to Art. 257 §3 should be submitted in writing under pain of nullity. Therefore, for a declaration of taking up shares, the same form as for the transfer of ownership of the object of in-kind contribution is not required. This form is required for the in-kind transfer agreement to the company.

It should therefore be pointed out that if the subject of the in-kind contribution made to cover the increased shares or new shares in a limited liability company is the ownership of real estate or another right for which a special form is required, the requirement to maintain this form applies to the contract for the transfer of the subject of this contribution. on the company, which does not apply to the shareholders' declaration of taking up these contributions. For this declaration, the act reserves only the written form, otherwise null and void.