present moment economic uncertainty related to rise interest rates And inflation It is starting to show itself in business accounts as well. According to data from the trade registry analyzed by Iberinform, capital deduction The Spanish business fabric posted a 4% year-on-year increase in March and 6.5% increase over the whole of 2023. in terms of total balanceIn the first three months of the year, capital reductions fell by about 50%.
An increase in the number of equity reductions could be a leading indicator that more companies are experiencing poor business results. If these losses or poor sales create an imbalance between net worth and capital, it is possible to restore the accounting balance through a reduction in capital, thus ensuring third parties that the company can deal with the situation with your own resources.
These emerging data commercial registration They invite companies to consider that they are resorting to accounting regulations more in the future to minimize problems, but the decrease in the amount may be due to the fact that this practice is being done by smaller companies. The main reason for capital reduction is compensation for the impact of economic losses on net worth. In this sense, the company can reduce this in order to create a financial structure that is better suited to its new situation, such as lower sales, and not have to resort to more expensive bank financing.
Madrid (47% of the total) and the Community of Valencia (other 22%) are the Autonomous Communities that concentrate their capital reductions by quantity. They are followed by Catalonia (7%) and Andalusia (7%). By sectors, activities in finance (36% of the total) and transportation (21%) are predominant, followed by real estate (11%), construction (8.6%) and commercial services (8.3%).
There are various procedures for capital reduction As in practice it means a reduction in the total value of the company, all of them are regulated by law, which directly affects the interests of shareholders and creditors.
The procedure may be to reduce the nominal value of the company’s titles or shares without changing the total amount. Thus, the sum of these values will be equal to the new reduced capital figure. It is also possible to amortize or eliminate titles. In this case, the number of shares or participations required to reach the new reduced capital figure is eliminated and returned to the relevant shareholder. The third option is to group shares that have been eliminated or replaced with others with a new par value.
Capital increase in March
Related capital increaseThe number of transactions grew by 0.3% year-on-year in March and 7.4% year-over-year, according to tracking by Iberinform from data published in the Trade Registry. Data from the Trade Registry show that capital increases have been significantly more modest. The total balance of these operations, which strengthens operating solvency, accumulates an increase of 18% in 2023.
This capital increases In most cases, they create liquidity injections through the seizure of new equity funds through the contributions of partners. In other cases, the liquidity injection does not occur when it arises from the indemnification of loans against the company or the conversion of reserves or profits. Companies mainly resort to capital increase for two reasons: to rebalance their financial structures during the economic crisis when the accumulated losses threaten their continuity, or to expand their investment and growth capacities in the expansion phases of the cycle.
Madrid (39% of the total) and Catalonia (the other 15%) are the Autonomous Communities that have concentrated their capital increases by quantity. It is followed by Aragon with 9% and Andalusia with 9%. By sectors, activities in the financial sector (22% of the total), followed by real estate (19%), construction (15%), manufacturing (11%) and commercial services (10%). Iberinform is a subsidiary of Crédito y Caución, one of the main global credit insurance operators with a direct presence in more than 50 countries.