Legal Capital: General
Legal capital is the sum of assets contributed to a company by shareholders when they are issued shares. This sum is disclosed both in the public register (being part of the instrument of constitution or of the statutes) and in the annual financial statements. This information is important for both shareholders and creditors.
ECL requires that SEs and public limited companies have a legal capital greater than a certain sum: i.e. the minimum capital.
Article 4 Regulation 2001/2157/EC
1. The capital of an SE shall be expressed in euros.
2. The subscribed capital shall not be less than EUR 120,000.
3. The laws of a Member State requiring a greater subscribed capital for companies carrying on certain types of activity shall apply to SEs with registered offices in that Member State.
Article 6(1) Directive 2012/30/EU
The laws of the Member States shall require that, in order that a company may be incorporated or obtain authorisation to commence business, a minimum capital shall be subscribed the amount of which shall be not less than EUR 25,000.
ECL provides rules assuring correct formation and maintenance of the legal capital. These rules also apply to SEs.
Article 5 Regulation 2001/2157/EC
Subject to Article 4(1) and (2), the capital of an SE, its maintenance and changes thereto, together with its shares, bonds and other similar securities shall be governed by the provisions which would apply to a public limited-liability company with a registered office in the Member State in which the SE is registered.
Capital formation rules mainly concern contribution of assets to the company and, in particular, the assessment of their value, in case these are other than contributions in cash: we will address capital formation rules in this Chapter. Capital maintenance rules are more heterogeneous, as they include rules requiring that dividends are not paid when a company is not showing a profit above the level of historically recorded legal capital, rules requiring that an action is taken in cases where the net assets fall below the legal capital (serious losses), other rules on capital increases and reductions, on the acquisition of the companies’ own shares and so on: we will discuss capital maintenance rules in Chapter 11.
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