Share Capital and Capitalisation under Gibraltar Law.

Share Capital and Capitalisation under Gibraltar Law

Capitalisation forms the foundation for structuring and growing a Gibraltar company, impacting everything from daily operations to cross border transactions. Gibraltar law offers modern and flexible frameworks for companies to raise, structure or return capital, accommodating a wide variety of commercial needs and investor profiles.

Share Capital: Fundamentals
Upon incorporation a Gibraltar company must define its share capital structure which can be minimal the law allows formation with even a single share. Most businesses choose a private limited company format with the minimum required share capital set at GBP 100. Companies may issue multiple share classes supporting tailored rights and distributions.

Capital Increases and Reductions
Gibraltar companies can alter their share capital with appropriate authorisation in their Articles of Association including increases (creation of new shares), consolidation, sub division, re classification, conversion and redenomination. Increasing capital typically requires a formal company resolution and statutory notifications with Companies House incurring a filing fee and stamp duty on the increased capital.

Reducing share capital involves a more stringent process: court approval is required to safeguard creditor interests. The reduction must be authorised under the company’s Articles and full compliance with the Companies Act and supporting regulations is essential.

Share Premium vs Capital Reserves
When shares are issued above their nominal value the excess forms the share premium. This premium cannot be freely distributed; repayment involves mechanisms such as redeemable preference shares. In contrast contributions to capital reserves (often made after share issuance) can be distributed more flexibly subject to solvency and director duty considerations.

Redemption of Shares
Companies may issue redeemable preference shares and redeem them either out of profits, proceeds of a fresh share issue or capital subject to procedures set out in the company’s Articles and the Companies Act. Each redemption transaction must be documented and associated filings made to Companies House ensuring transparency and proper regulatory compliance.

Debt for Equity Transactions
Gibraltar law provides flexible mechanisms for debt for equity swaps allowing companies to convert debt obligations into shareholdings often as part of restructuring or fundraising exercises. There are no fundamental restrictions on the structure of such transactions but any associated security interests must be properly registered. Legal due diligence is paramount not only to address compliance but also to negotiate effective documentation that clearly sets out all parties’ rights.

How Hassans Can Assist

As a specialist Gibraltar company law firm we advise clients through every stage of company capitalisation:

• Share Capital Structuring: Advice on optimal share capital arrangements including the use of multiple share classes and capital reserve strategies.
• Share Premium and Capital Reserve Planning: Guidance on the creation and management of share premium accounts and capital reserves for maximum business flexibility.
• Share Capital Alterations: Drafting resolutions, revising Articles/Memorandum and handling regulatory notifications for capital increases or reductions.
• Share Redemptions and Buybacks: Implementing redemption schemes and accompanying documentation ensuring compliance with local regulations.
• Debt for Equity Transactions: Structuring and negotiating debt to equity swaps including registration of any security interests and comprehensive due diligence support.
• Ongoing Support: Advice on annual filings, compliance and reporting for capital changes ensuring that your company meets all required legal standards.

Our team brings together deep regulatory expertise and practical experience across corporate, tax and transactional matters, helping business owners and investors navigate Gibraltar’s dynamic capitalisation environment with confidence. If you are considering capitalising, restructuring or optimising your Gibraltar company contact our me on matthew.torres@hassans.gi for tailored advice and precision in documentation.