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What is the share capital and what is it for

Article image: What is the share capital and what is it for

Norms of the corporate law define the procedure of depositing share capital for the establishment of a legal entity for carrying out business and economic activities. Let’s try to understand what is the share capital and what are its main functions.

Share capital: definition and types

In fact, the share capital is the amount of money, which is invested into the statutory activities of the company by the owners of the company (shareholders, founders, participants). In other words, the share capital is a resource, which serves as a guarantee for business partners and creditors of the newly created legal entity. All the companies have to meet their obligations by the amount of the share capital.

Deposits of the share capital for the legal entity can be made not only in the form of financial assets, but it may also be securities, shares and other assets, as well as property rights, which have valuation in a particular currency or in monetary terms. In cases, when there is more than one shareholder, the share capital can be deposited in several installments, either same or different.

Clarify the cost of opening company, corporate or personal bank account, obtaining a residence visa, or another question regarding business in Dubai, UAE:

The purpose of the share capital

Formation of the share capital is one of the obligatory requirements during the registration of a legal entity. The amount of the capital can depend on both the particular activity of the company and the current corporate law. So, the rules of law of some countries have the minimum threshold of the share capital for registration of one or another type of the company.

Information about the share capital, its form and size, are recorded in the incorporation documentation, and particularly in the Statutes of the newly created legal entity. The following assets can serve as the parts of the share capital:

  • Cash;
  • Liquid assets (movable and immovable);
  • Various intangible assets.

Besides, the norms of the corporate law do not exclude the possibility of creating a mixed share capital, when it is formed at the expense of property and cash. Monetary funds and other financial assets are deposited into the special bank account. Such an account may be temporary, and subsequently it can be converted into the regular account of the company. Monetary funds, which were deposited into this account in the form of the share capital, can and must be used for carrying out the economic activities of the company.

In cases when the share capital is formed at the expense of the intangible assets or property, the procedure of the evaluation of property and assets is compulsory. Moreover, such evaluation can be made by an independent duly licensed appraiser.

Conclusion

Company registration in the UAE at all the stages, including the opening of an account for depositing a share capital, requires certain experience and knowledge. It is much more efficient to use the services of the professionals, so you will not have to spend your time on alteration of the documents and other formalities. Our qualified employees with long experience will perform everything in time and in accordance with your requirements.

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