Thursday, 21 March, 2019
3Tel Aviv23:43
Page specific SEO text here
Share capital of the company

The concept of share capital has fundamentally different interpretations between civil law jurisdictions such as Switzerland, Denmark, Russia or Latvia and common law jurisdictions such as the United Kingdom, United States of America as well as most offshore jurisdictions.

In civil law jurisdictions, the term “share capital” refers to the amount of funds set aside by the founders of the company to start its operations. Frequently, this amount must be credited to the company’s account at the time of its incorporation or within a specified period after incorporation of the company. This means that the “concept of the fixed capital” is observed.

In common law jurisdictions, the authorised capital specified in the corporate documents means merely the amount equal to the value of shares the company is allowed to issue. In several common law jurisdictions, a fixed state duty both at incorporation of the company and its subsequent annual extension depends on the amount of the authorised capital specified in the corporate documents of the company so a larger amount of authorised share capital will result in a higher amount of the fixed state duty. In these cases, the company is usually incorporated with the maximum share capital allowed for the minimum state duty. The amount of the authorised capital does not mean that all shares are already issued or the amount specified in the constituent documents is already paid to the company’s current account in full. To commence the company’s operations, often it is enough to make payment for just a few shares which normally amounts to a few dollars. The amount of shares actually issued is referred to subsequently as the “issued share capital”.

The distribution of the share capital of the company among its founders being the shareholders is confirmed by the issue of the relevant share certificates as well as making the appropriate entries in the register of shareholders. The register of shareholders or members, depending on the specific jurisdiction, may be either kept in the company files or recorded in the public register.

In certain jurisdictions the names of shareholders are kept confidential whereby bearer shares may be issued. In some other jurisdictions information about shareholders is kept by the registered agent, while in particular jurisdictions the names of shareholders are entered in the register of companies and are publicly available.

Info Lines:
Tel Aviv:+972-37-382009