Shareholders' Resolution (shares decrease)
The general shareholders' meeting resolution (GSM Resolution) is a formal decision taken by the shareholders of a company on a specific matter that requires their approval. GSM decisions are crucial in the corporate governance and decision-making process of LLCs..
This GSM Decision is suitable for:
- limited liability companies.
- decreasing the shared capital by decreasing the number of shares.
What is a decision by the shareholders of an LLC to reduce the number of shares?
A decision by the shareholders to reduce the number of shares is a document adopted during the general meeting of the shareholders, through which the shareholders of a limited liability company (LLC) decide to reduce the number of shares in the structure of the share capital. The effects of adopting a decision by the general meeting of shareholders to reduce the number of shares may include reducing the share capital or redistributing the shares among the shareholders.
When might such a decision be necessary?
Reducing the number of shares may be necessary in the following situations:
- Reorganizing the structure of the share capital.
- Withdrawal or exclusion of a shareholder.
- Reducing the share capital for various financial or strategic reasons.
What are the steps for adopting such a decision?
The main steps for adopting a decision to reduce the number of shares of an LLC include:
- Convening the general meeting of shareholders (GMS): all shareholders must be convened to discuss the proposal, according to the bylaws of the company.
- Voting and approving the decision: the decision must be adopted during the GMS, in compliance with the majorities stipulated in the articles of incorporation of the LLC.
- Updating the articles of incorporation/bylaws: if reducing the number of shares involves amending the articles of incorporation, they must be updated and signed by all shareholders.
- Registering the amended articles of incorporation and the decision to reduce the number of shares at the Trade Register: the GMS decision and the updated articles of incorporation must be registered with the Trade Register Office to have legal effects.
What costs are associated with reducing the number of shares?
The costs may include registration fees at the Trade Register, fees for lawyers or consultants, and potential notary fees if document authentication is required.
Check the section dedicated to companies for more professional templates of contracts and legal documents that you can use for organizing your firm.
Download instantly from Docs & Deeds:
- Articles of incorporation for setting up an LLC, available in three versions: sole shareholder, multiple shareholders, bilingual format (RO/ENG)
- Contract between the founders of a start-up - contract template.
- Confidentiality agreement - NDA template.
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