certificates – Muhasebe News

How to Calculate The Costs of Stock Certificates Obtained Through Capital Increase?

MuhasebeNews — Wed, 12 Dec 2018 14:30:28 +0000

Cost Value of Stock Certificates Obtained Through Capital Increase

In the case where the companies increase the capital with capital reserves, the cost value of stock certificates that are either previously obtained or obtained through the increase of capital will be determined by splitting the cost value of previously owned stock certificates to the number of stock certificates obtained after the increase of capital.

E.g. Mr. (A) bought 100 stock certificates of (B) Incorporated Company for TRY 45.000.000 on 03.02.1999. (B) Inc. increased its capital by 50% to be fully covered from the capital reserves on 09.03.1999. 500 stock certificates were given to Mr. (A) following this transaction.

Therefore, the cost value of every stock certificate that Mr. (A) obtained after the increase of capital will be TRY 30.000 by splitting the paid TRY 45.000.000 to the total number of stock certificates.

If the capital is increased through using the profit reserves, the cost value of stock certificates obtained through this transaction will be calculated by splitting the sum of cost value of previously owned stock certificates and the nominal value of the newly purchased stock certificates to the total number of stock certificates obtained after the increase of capital.

E.g. Mr. (A) bought 1000 stock certificates, whose nominal value is TRY 1.000, for TRY 15.000.000 from (B) Incorporated Company on 03.02.1999. (B) Inc. increased its capital by 50% to be fully covered from the capital reserves on 19.02.1999. Mr. (A) was given 500 stock certificates for this transaction.

The cost value of every stock certificate that Mr. (A) obtained after the increase of capital will be calculated as TRY 10.333 [(15.000.000+500.000)/ 1.500=] by splitting the total nominal price of stock certificates obtained through the increase of capital by paying TRY 15.000.000 for 1.000 stock certificates [(500×1000=) TRY 500.000], to the total number of stock certificates [(1.000+500)=1.500].

When companies aim to increase the capital in cash, the cost value of stock certificates which were obtained through paying their nominal values through owners’ exercising their right of priority will be calculated by splitting the total of cost value of previously owned stock certificates and the cost of newly purchased stock certificates to the number of stock certificates that are obtained after the increase of capital.

Source: Income Tax Law Numbered 232
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

How do we determine the date of acquisition of stock certificates resulting from capital increases?

MuhasebeNews — Wed, 12 Dec 2018 13:30:40 +0000

How do we determine the date of acquisition of stock certificates resulting from capital increases?

For the taxation of income resulting from the disposal of stock certificates, the date of acquisition of the stock certificates that are obtained through adding the capital and profit reserves to the capital will be based on the date of acquisition of the previous stock certificates.

E.g. Mr. (A) bought 1000 stock certificates of (B) Incorporated Company on 03.02.1999. (B) increased his capital by 50% to be fully covered from the capital reserves on 09.03.1999. Mr. (A) bought 500 stock certificates after this transaction. 03.02.1999 will be the basis of the date of acquisition of these 500 stock certificates.

When companies aim to increase the capital, the partners take the stock certificates that represent the increased capital by means of exercising their rights of priority. In the case where the partners sell the stock certificates that represent the capital increase by means of limiting their rights of priority, it will be deemed that a new purchase transaction took place.

Is it possible for the temporary certificates to replace stock certificates?

MuhasebeNews — Wed, 12 Dec 2018 12:30:58 +0000

Temporary Certificates

As you know, temporary certificates are securities that are issued by the incorporated companies to substitute for the stock certiciates. Temporary certificates allow its owners to gain the rights of share ownership such as attending the general assembly meetings, voting, getting dividends. They become invalid once the stock certificates are prepared by the incorporated company and delivered to the partners.

Therefore, for the taxation of incomes resulting from the disposal of the certificates, the provisions of the Income Tax Law regarding the taxation of incomes resulting from the disposal of stock certificates are applied.

Accordingly, in the case where the certificates are disposed within two years following the date of acquisition, the income will be subject to the income tax as gain from appreciation and if the certificates are disposed after two years following the date of acquisition, the income will not be subject to the income tax.

Furthermore, the replacing of certificates with stock certificate, hence the date when the stock certificates are obtained will be regarded as the date of acquisition of stock certificates.