The Superintendence of Companies has studied the following aspects regarding the “additional paid-in capital”, in order to determine whether it can be used to constitute reserves for the repurchase of shares:
1. Legal character – The “additional paid-in capital” is considered as part of the “contribution” delivered by the member or shareholder to a company. Thus, contribution shall be formed into two items: (i) the capital stock, and (ii) the additional paid-in capital.
2. Reimbursement of contribution – Due to the “additional paid-in capital” is part of the contribution, its reimbursement shall follow the rules for the reduction of capital, in accordance with article 145 of the Code of Commerce.
3. Decrease of contribution – After the contribution is recorded in the accounts, the companies shall decrease the amount equivalent to “additional paid-in capital” when the following facts happen: (i) The reimbursement of additional paid-in capital. (ii) The issued shares of the company paid by the additional paid-in capital.
4. Repurchase of shares – Due to the additional paid-in capital is considered as part of the “contribution”, it shall not be used to make a reserve for the repurchase of shares. Hence, the share repurchase procedure shall be executed only with the company’s net profits.
Superintendence of Corporations, Oficio 220-014167 date on January 23, 2023.
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