Riqueza for Financial Consultancy examines the institution's portfolio accurately to choose the optimal ways to increase or reduce capital .

About Increase and reduction of capital

First: Increase of Capital

An extraordinary general assembly may decide to increase the capital of the Company once or several times provided that the original capital has been paid in full.

How to increase capital ?

1-   Issuance of shares

In case of capital increase in favor of new investors, the value of these shares is determined upon fair value at the time of issuance. This shall be based on a report by one of certified financial consultants accredited by Financial Regulatory Authority for this purpose. The consultant shall be independent of the company, the related persons, the board members and auditors, and shall not share any common interests. In the case of an increase for existing shareholders, capital shall increase in nominal value.

2-   Issuance of share premium

Is to issue new shares, whose value is greater than the nominal value, and their value is estimated by the auditor. The share premium shall be the difference between the nominal value and the market value of the share.

3-   Increase of capital by credit balances 

The company agrees with the creditors to increase its capital by the amount of their related debts, as it issues shares in the same value of the debt. The company does so in the absence of sufficient liquidity to pay the debt to creditors and then they are considered shareholders of the company instead of being creditors.

4-   Increase of capital by voluntary reserves

The Company may decide annually to deduct part of net profits under the name of a voluntary reserve, provided that the annual set amount shall not exceed 20% of the net profits for that year, and the voluntary reserve may be used as a capital increase.

5-   Increase of capital by revaluation of assets

If the joint stock company finds that its assets current value are less than their real value for a reason or another, the company has the right to revalue them, and to increase capital by the value of the revaluation.

Second: Reduction of Capital

An extraordinary general assembly may decide to reduce the capital if the amount is surplus to the need of the company or the company has incurred losses.

Reasons for capital reduction:

1-   Production of  a more efficient capital structure.

2-   Reduction of capital as much as losses by writing off the accumulated losses from the financial statements provided that the company transfers part of the capital equals the value of the accumulated losses.

3-   Reduction of capital by returning part of it to shareholders.