Share Capital Increase of Unlisted Limited Companies
SHARE CAPITAL INCREASE OF UNLISTED LIMITED COMPANIES Limited companies nowadays have undoubtedly established their importance in the development and evolution of the global economy. Their particular legal and actual form, in conjunction with the financial figures they usually represent have turned these specific entities into a springboard of capital growth and expansion. Because of the great importance held by limited companies in the functioning of the national, but also the global economy, the need to offer to each of them the possibility of adjusting its capital arises. Thus, a limited company can meet the special circumstances that occur at any time in the industry and in the place(s) it is active in1. However , in several cases, in order to expand its turnover or upgrade the services provided a limited company is required to increase its share capital so as to meet new needs2. This increase of capital, commensurate with the special characteristics and the way it is implemented, is divided into several classifications. In the context of this piece of work, reference will be made to a relatively unusual way of share capital increase by capitalization of liabilities. This can be considered as an outstanding case of application of creative accounting from a limited company, since we can identify an effort to ‘embellish’ the company’s financial data. In that way the company covers the needs of capital change by utilizing liabilities. This case is a sub case of the so-called real capital growth as the company receives the financial assets necessary for the capital increase from external sources and not through self-financing3. Through the conversion of liabilities into capital the company shall be exempted from its debts and also, given the increase of its capital, be reinforced in the markets. There are three main methods of converting liabilities/debt to capital4. Firstly the conversion of convertible bonds, which the company has