Debt capitalization at the Anonymous joint stock companies

Abstract

The process of increasing the capital of anonymous joint stock companies by converting their debts into shares is one of the most important ways to increase the capital of companies, as this process avoids debtor and troubled companies from falling into bankruptcy. It is also considered an existing option that non-faltering companies can exploit according to the agreement, so that the debtor company agrees with the creditor company to convert this debt into shares according to specific controls , bases and  fair frameworks for all parties to the equation, taking into account the interests of the old shareholders.

Despite the importance of the issue of converting the debts of the joint stock company into shares, the Syrian legislator did not stipulate the ways to increase the capital of this legal form of companies except for one of the cases of debt capitalization, which is the case of converting the bonds into shares. While other legislations expressly permitted increasing the capital of the joint-stock company by capitalizing ordinary debts.

The Syrian legislator had to reconsider article 101 of the Syrian Companies Law and amend it in a way that allows companies to convert their debts into shares, according to certain procedures and controls. The main problematic of this topic revolves around the need for a special system that allows transferring the debts of anonymous joint-stock companies to shares according to specific conditions and controls that guarantee the preservation of minority shareholding rights in the company.

 Through this research, we will study the issue of converting the company's debts to shares as a method of raising capital. This is by clarifying the nature of increasing the company's capital by capitalizing debts on the one hand, and determining the ways to increase the company's capital by converting its debts into shares on the other hand.