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.