Resolution by Shareholders Increasing Capital Stock is a legal document used by a company's shareholders to authorize an increase in the company's total number of shares of stock. This type of resolution is typically used when a company needs additional capital to finance operations or investment opportunities, or to meet the demands of a potential merger or acquisition. The resolution must be approved by a majority of the shareholders in order to be valid. There are two types of Resolution by Shareholders Increasing Capital Stock: 1. Subscription-Based Capital Increase: This type of resolution is used when shareholders agree to buy additional shares of the company's stock directly from the company. 2. Rights-Based Capital Increase: This type of resolution is used when the company issues rights to existing shareholders allowing them to purchase additional shares at a discounted price. The rights are usually transferable, meaning they can be sold or traded among shareholders.
Resolution by Shareholders Increasing Capital Stock
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FAQ
If a company wishes to issue additional shares to a new shareholder, all existing shareholders within the company must pass a special board resolution to that effect.
Three forms of resolutions are available: ordinary resolution, special resolution and unanimous resolution. There is no concept of special resolution in board meetings and very few unanimous resolutions are also required. However, all three are covered in the case of general meetings.
A company can increase share capital by issuing (i.e. allotting) new shares to existing or new shareholders. The company's constitution would typically provide that the Board of Directors (the ?Board?) has the authority to issue shares in the company.
An increase in the authorised share capital of a company necessarily requires an amendment to the share capital clause of the Memorandum.
Any shareholder has the right to propose a valid resolution for voting on at a meeting of shareholders, called a general meeting. If a valid resolution were passed by the requisite majority, the resolution would bind the company, the directors, the company secretary and all shareholders.