Increase in Share Capital: A Complete Guide

Increasing share capital is a critical financial strategy for companies aiming to raise funds for business expansion, debt reduction, or improving liquidity. It involves issuing additional shares, either to existing shareholders or through public offerings, private placements, or other methods. Share capital is categorized into authorized, issued, and paid-up capital, each playing a crucial role in defining a company’s financial structure. Companies typically increase their share capital for several reasons, such as funding new projects, entering new markets, reducing debt, or financing mergers and acquisitions. Methods to raise capital include rights issues, where additional shares are offered to existing shareholders, ensuring they maintain proportional ownership, and private placements, where shares are sold to a selected group of investors for faster capital raising.