The procedure for the issue (issue) of shares, approved by the Bank of Russia on August 11, 2014 428-P, includes the stage of making a decision on their placement. The decision to issue shares through an open or closed subscription is necessary when establishing a joint-stock company, increasing or decreasing the authorized capital, converting some valuable papers in others and in some other situations.
The decision must be prepared in a special form established by the Bank of Russia (Appendix No. 10 to the “Regulations on the standards for issuing securities, the procedure for state registration of an issue (additional issue) of equity securities, state registration of reports on the results of an issue (additional issue) of equity securities and registration of securities prospectuses” (approved by the Bank of Russia on August 11, 2014 No. 428-P)). In case of successful registration of the issue of securities, the applicant is issued two copies of the decision on the issue of securities with a mark on its registration and state registration number (clause 5.13 of the Regulations).
The document contains:
The decision on an additional issue of shares must be approved by the board of directors of the company. If the board of directors is not elected and the number of shareholders is less than fifty, the document may be approved by the GMS. At the same time, the charter should provide that the functions of the Board of Directors may be performed by the GMS.
The rights conferred on each share must be in accordance with the charter of the JSC.
The document must be signed by the sole executive body ( CEO). If the company has a seal, then the decision must be certified by the seal.
All pages of the decision to issue shares of a bank or other organization must be filed and numbered.
In the life of organizations and enterprises, a lot of operations take place every day, which are not always clear and transparent without appropriate education. There are operations that are carried out quite rarely under certain circumstances. Each of them has a specific purpose. One of these is an additional issue of shares by a joint-stock company. This article discusses the definition of the operation, its meaning, goals and methods of implementation.
The issue of shares, also known as the issue, can only be carried out in a joint-stock company. An additional issue of shares may have various purposes, but is most often carried out to attract money supply to the authorized capital. For many companies, shares are the only way to generate initial capital. With the help of these funds, the company develops, expands, innovates in the workflow, and so on.
In many ways, the process of additional release is similar to the primary one, but there are some nuances. Like all processes occurring in organizations, emissions must be properly formalized and registered with state control bodies.
An additional issue of shares may pursue one of the following objectives:
Depending on the purpose, organizational and legal form, the number of participants, a joint-stock company may choose various methods of additional issue of shares. The issues are distinguished by serial number and by the type of shares issued: convertible, preferred, ordinary, and so on. Each type of securities has its own provisions in the legislation. For example, preferred shares cannot exceed 25% of the authorized capital.
Often additional issuance is carried out in structures such as banks, Insurance companies and others financial institutions whose activities are strictly regulated by law. The state regularly raises the lower bar for the size of the authorized capital for them, even if there is no business cases or crisis need. In this case, the issue of shares is carried out solely to raise the existing level of equity to the required level.
Before deciding on an additional issue of shares, it is necessary to make sure that three conditions are met:
Methods of placement of shares of additional issue are determined by the state. A joint-stock company has three possible placement options:
The issuance procedure includes a number of successive steps, none of which should be skipped. The issue of additional shares occurs according to the following algorithm:
In the following paragraphs, we will analyze all these stages in more detail.
At the decision-making stage, an analysis of the state of the company is carried out, as well as perspective development. Usually these actions are within the competence of the board of directors. On the general meeting the issue of emission is displayed in case of exceeding certain limits established by the state (amount, type of community, placement conditions).
The second stage - approval of the decision - is also subject to approval by the board of directors. Only in especially difficult situations it is submitted for consideration by the general meeting of shareholders. The stage includes more detailed studies of the situation and analytics. The idea of the release acquires specifics: indicators, conditions, and so on.
After the decision on the additional issue of shares is made and approved, the bank must register it. Of course, not just any bank, but the Service of the Bank of Russia, which supervises the financial markets.
An application is submitted to the Bank of Russia Service no later than 30 days after the approval of the issue decision. In addition to the document itself, it is necessary to provide a number of papers reflecting information about the legal and economic status of the company, an issue prospectus that transparently reflects calculations, analytics and other data necessary for future investors to decide on the appropriateness of investing. Depending on the type of joint-stock company and issued securities, other documents may be required.
The easiest way to place is to distribute securities among existing shareholders. The only condition is that the rights of none of them should be violated.
Placement by closed subscription- sending proposals for the purchase of shares to a certain circle of persons who have priority in the purchase of securities of this organization.
Placement by open subscription- Anyone can buy shares. Existing shareholders still have the advantage, but the auction is public.
The hardest way - conversion of securities. Features of this method should be spelled out in the charter of a particular enterprise.
Payment for securities can be made both in cash with the execution of a sale and purchase agreement, and in other forms, implying the execution of special documents for the transfer of ownership.
The terms of placement depend on its method, as well as on the type of shares. If the securities are placed among their shareholders, usually the terms are not specified. In the case of an open or closed subscription, bidding goes from 1 month to a year.
The completion of the issue is also registered by the Service of the Bank of Russia. The report on the issue of securities is submitted no later than 30 days after the placement of the last share. The service checks the report and all related documents within 14 days. After that, a verdict is issued to the joint-stock company on the results of entering into the register.
Registration of additional share issues is not just a formality. Civil servants will thoroughly study all Required documents for compliance with laws and regulations. If the inspection reveals a violation of existing rules, sanctions may be imposed on the organization. Depending on the severity of the violations, the additional issue of shares may even be invalidated.
In most cases, it is carried out with the aim of attracting funds to the company, and its result is an increase in the authorized capital. In addition, the purpose of this procedure may be to expand the circle of shareholders or carry out some form of reorganization.
From the point of view of the procedure for conducting an additional issue, it has much in common with the initial placement of shares, however, there are still a number of specific features that are characteristic of it.
Before carrying out an additional issue of securities, it is necessary to make sure that the following conditions are met.
The legislation defines the following methods of placement of additional issue securities:
Conventionally, the procedure for conducting an additional issue of shares can be divided into several interrelated stages.
The body competent to make such a decision may be either the general meeting of shareholders or the board of directors, if such a right is granted to it by the charter of the company. However, there are restrictions defined by law (volumes of issue, terms of placement, type of company, etc.), upon the occurrence of which the council is obliged to transfer its right to make the said decision to the meeting.
The decision to issue securities is developed on the basis of already decision about the additional issue and contains more detailed information about the forthcoming issue. As a rule, it is approved by the board of directors of the company, but in some cases (usually provided for by the charter) these powers are transferred to the general meeting.
An approved decision on an additional issue of securities is subject to state registration, which must be carried out by the Bank of Russia Service for financial markets within 30 days from the date of application. The company shall attach to the application documents containing information on its economic and legal status, as well as information on the forthcoming issue of shares. The list of documents to be submitted is determined by law and depends on the type and method of placement of securities, as well as on the characteristics of the company.
Registration of an additional issue of shares is invariably accompanied by disclosure of information on the basis of which shareholders and potential investors can judge the appropriateness of investments. The procedure for disclosing information is determined by the relevant provisions of the law.
In some cases, when carrying out an additional issue of shares, registration of an issue prospectus is required (for companies conducting an open subscription, or a closed one, the list of subscribers of which exceeds 500).
The algorithm for placing shares of an additional issue is established in the decision on the issue, and, as already mentioned, in most cases it can be carried out in one of the following ways.
Payment for shares of additional issue may be in cash or non-monetary form.
In the first case, the purchase of securities is carried out on the basis of a purchase and sale agreement. The second case involves the implementation of additional actions and the execution of special documents determined by the procedure for registering property rights.
Term of placement of securities set in the release decision. The law defines the time limits of the subscription: it cannot last less than one month or more than one year.
In the case of distribution of securities to shareholders or conversion of shares, the period is usually not indicated, since the process of reissuing securities takes approximately one day.
The report must be submitted to the appropriate government agency no later than 30 days from the date of issue expiration, or (if the issue is completed ahead of schedule) from the date of placement of the last share. Consideration of the report and making a decision on it must be carried out within fourteen days from the date of receipt of all documents.
This final stage is not difficult, but it determines the success of the entire event. Non-submission of documents required by law, violation of deadlines, errors or non-compliance with established rules may be a reason for denial of registration. The refusal of the Financial Markets Service of the Bank of Russia to register the report will mean that the issue of securities has been declared invalid.
Obviously, conducting an additional issue of securities is a process that requires special legal knowledge, understanding of the nuances, experience, attentive attitude, and responsibility. It is advisable to entrust its implementation to an organization dealing with issues of this kind at a professional level.
The procedure for state registration of a joint-stock company represents a further initial issue of shares and their registration. Documents for this issue of shares must be submitted within 30 days to the Federal Financial Markets Service, after the state registration of the company. In order to register the issue of shares, it is necessary to make a decision on the issue of shares.
Must be approved within the framework of the agreement on the creation of a joint-stock company, and be based on it. And the date of state registration of a joint-stock company is the date of placement of shares between shareholders. The charter of a joint-stock company must contain information about the rights of the owner for a particular share. The decision on the issue of shares must contain a description of the shares, including what rights this share gives its owner, but taking into account the charter of the joint-stock company.
When drawing up a decision on the issue of securities and a report on the results of the issue, the following should be taken into account:
If the number of founders of the Company exceeds 500 and/or if the nominal value of the share issue exceeds 50 thousand minimum dimensions wages (5 million rubles), then state registration such issue must be accompanied by the registration of a prospectus, the form of which is also strictly prescribed by the Standards.
The decision to issue shares must be signed by the chief director and accountant, then stitched and numbered, and confirmed by the seal of the joint-stock company.
