Share capital of a limited liability company is also known as registered capital and it represents the monetary value of subscribed contributions of the company. During the company incorporation in Belgrade, it is very important to specify the value of share capital ( the minimum is 100 dinars).
Share capital can be expressed:
- Monetary contribution – when it paid in to the LLC,
- Non – monetary contribution – when it invested in the company.
The differences between subscribed and paid-in capital
In practice, it often comes to confusion when it comes to subscribed and paid–in capital, so it is important to emphasize the differences between these two. During the set up of a company, share capital doesn't have to be paid–in, but it must be subscribed. The founders are not obliged to pay the money during the set up , but they can do that during a specified deadline. The deadline in which the members of the LLC or the founder will pay in or invest capital is specified in the memorandum of association.
Monetary and non- monetary contribution in share capital of the LLC
Share capital of a company consists of the monetary and non-monetary contribution and there are important differences between these two. Monetary contribution, as the word says is expressed in money or it must be paid in money. Non-monetary contributions are invested in the company and is expressed in things and rights.
During the investment of non-monetary contribution, there must be a certain evaluation of its value, which is expressed in dinars. The evaluation of non – monetary contribution in the company can be done:
- By one member of the company,
- Determined by the agreement between all the members,
- By a competent and authorised person, in accordance with the Law. (expert witness, auditor and etc.).
The foreign founders can invest share capital and monetary contribution in foreign currency, which must be accounted for in domestic currency. So, if the monetary contribution is paid in a foreign currency than it is necessary to account that amount in dinar counter value according to the average exchange rate of the National bank of Serbia. The accounting of the amount is done on the day of payment on the business account of the company.
HLB T&M Consulting agency can ease to its clients the whole process with birocracy and procedure related to the set up of the company, the preparation of the memorandum of association, investing monetary and non-monetary contributions in the company, as well as the accounting of the foreign contributions.
Share capital in the memorandum of association
During the set up of the company and creation of the memorandum of association, this legal act defines these things: capital contributions of the limited liability company; all the decisions about the change of share capital – increase and reduction of share capital as well as deadlines for investing in the company. In accordance with that, monetary and non – monetary contributions must be paid in or invested in the LLC within the deadline determined in the foundation act.
The deadline for investing share capital starts from the day when the memorandum of association is officially registered ( or the day of passing the legal act). The founders are obliged to pay in or invest contribution in the company within five years deadline. If the contribution is monetary, than determined amount must be paid. If it is non-monetary, there is the evaluation of the value invested in the LLC. The payment deadline mustn't be longer than 5 years.
The members of the company get their stake in the capital as soon as they assume obligations to pay share capital, or invest the contribution. All the monetary and non – monetary contributions paid or invested in the LLC move into their ownership and become company's property.
In that case, the property consists of all the things and rights owned by the company. The property involves net property which represents the difference between the total value of the property and the commitments of the company.
Creating the memorandum of association is the first step in setting up of the LLC and one of the most important legal acts of the company. HLB T&M Consulting provides the services of founding the company, preparing and creating the memorandum of association.
Share capital as a part of the company's capital
When a certain contribution is invested in the LLC, it becomes stake in share capital. In accordance with the Law, one member can own only one stake and the total value of the individual stake is expressed proportionally and in percents. In the case where one member has more than one stake, they connect with the present stake and become one.
The stakes of company aren't and don't have the character of bonds, which means that they can't be acquired or disposed of in this way. The founders can acquire their stakes in the company in proportion with their contributions in the LLC.
Responsibilities and consequences of not investing the shareholding contribution
In case when founders don't meet their duty and invest their stake of share capital, they are obliged to pay the damage to the company because of missing or delay in meeting the commitment.
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The memorandum of association can include certain penalty clauses if the founder or the member doesn't meet his duties related to investing in share capital. The company can notify the member in writing about meeting the commitment in the additional deadline and it is obliged to notify him about the consequences in case of not meeting the commitment.
HLB T&M Consulting accounting company stands at your disposal for all the questions and the advice about: registering company, as well as payment of monetary and non- monetary contributions in the company's share capital.