Karen Chichoyan "Increasing Charter Capital Through Intellectual Property Contributions"

The purpose of increasing charter capital through intellectual property contribution? 

 

In the realm of business, there exists a multitude of enterprises where the primary wealth lies in the result of intellectual activity (i.e., Intellectual property or IP). Such intangible assets often hold the key to innovation and competitive edge and are the result of research and development incentives. Furthermore, in these ventures, shareholders are not only willing but enthusiastic about coming together, pooling their resources, and forging collaborative efforts to propel the growth and advancement of their intellectual property-driven businesses. There are several strategies based on which the companies decide to increase their charter capital by contributing intellectual property. 

 

Consider, for instance, a scenario where a company finds itself in need of or intends to secure substantial funding to fuel its growth ambitions. At such a juncture, one intriguing approach to entice potential investors lies in the strategic leverage of these intangible assets through their inclusion (contribution) in the company's charter capital. This move not only signals the company's commitment to innovation and progress but also serves as a compelling invitation for investors to become part of a venture enriched with intellectual assets poised for future success. 

 

Another compelling scenario for considering such a contribution is the amplification of a company's valuation. In the intricate world of business acquisitions, there are instances where company shareholders contemplate the sale of their prized enterprise. Often, the heart and soul of these businesses reside in their treasure trove of intellectual property, including trademarks, patents, and copyrighted assets. In such cases, a strategic move comes into play: incorporating these valuable intellectual assets into the company's charter capital. This maneuver not only inflates the company's charter capital but also sets the stage for the seller to reap the maximum returns from the heightened valuation, thus optimizing their profitability in the sale. It's a calculated approach to ensure that the full spectrum of a company's intellectual wealth is reflected in its market value, ultimately benefiting the stakeholders seeking to cash in on their investment. 

 

Who can contribute intellectual property to the charter capital of a company? 

 

In broad terms, charter capital can be expanded through three main avenues: (1) through contributions from the company's existing shareholders, (2) through the company's own initiatives, and (3) through external third-party contributions. 

 

However, it's important to note that restrictions and conditions may apply to third parties seeking to participate in a company's charter capital expansion, including limitations on the types of assets that can be contributed. These reservations are typically established to ensure compliance with legal regulations and alignment with the company's specific goals and interests. 

 

The peculiarities of contribution to the charter capital by intellectual property. 

 

There are several distinctive features that differentiate the contribution of intellectual property from the other types of contributions to the charter capital of a company.  Moreover, the contribution of certain types of assets may require additional efforts. 

  1. One of the fundamental challenges is the procedure of verification of ownership rights and the assurance that the intellectual property is devoid of any encumbrances or disputes. For instance, when dealing with copyrighted assets
  2. it's important to note that there may not be a formal state recognition of ownership for such assets. 
    It is imperative to ascertain whether the contribution to the charter capital entails a transfer of ownership of intellectual property. Such a transfer will undoubtedly have implications for the legal structure, valuation, and strategic framework of the contribution 
  3. To overcome the complexities associated inter alia with the determination of the fair market value of intellectual property assets and the presence of regulatory procedures, it is crucial that the valuation of intellectual property assets be arranged in strict compliance with the legal requirements of the Republic of Armenia. 
  4. Given the method chosen for contributing intellectual property assets, it is crucial to establish the legal structure of the contribution correctly. This is necessary to avoid procedural violations of legislative requirements and the company's charter, as such violations could potentially render the contribution invalid. 
    The necessity to appropriately structure the legal aspects of intellectual property contributions to the charter capital of a company. 

Let us discuss some of the important features that are necessary to take into consideration in the process of the contribution. 

  1. The proper valuation of the intellectual property: The accurate valuation of intellectual property presents unique challenges distinct from valuing other asset types. 

  2. Legal protection: Given the requirement to establish clear definitions of ownership and usage rights during the contribution process. Thus to safeguard the company's and/or contributor’s interests, it is vital to engage professional legal expertise for thorough structurization of the deal and safeguarding the involved interests with an additional level of protective measures. 

  3. Leveraging intellectual property for financing: In numerous instances, a company's primary assets crucial for its operations are intellectual properties. Throughout the course of conducting business, there arises a potential need to utilize these assets, including situations involving financing. The strategic approach taken in structuring the contribution will undoubtedly impact (favor) the company's position during negotiations in the leveraging process by serving durable reliability for such assets. 

Disclaimer: 

This material is produced by Legelata LLC. The material contained in this newsletter is provided for general information purposes only and does not contain a comprehensive analysis of each item described. Before taking (or not taking) any action, readers should seek professional advice specific to their situation. No liability is accepted for acts or omissions taken in reliance upon the contents of this material. 

LEGELATA LLC, 2023

Published on January 9 2024 by Legelata Law Firm.

Lexgoal Law Office

Beijing - China

Achour Law Firm | IP

Tunis - Tunisia

Bufete Mejia & Asociados

San Pedro Sula - Honduras

IP Villar

Valencia - Spain

Masnad IP Law Firm

Kabul - Afghanistan

Luis Elias & Asociados

Caracas - Venezuela

Producta Ltd

Zagreb - Croatia

Marks & Us Lawyers Marcas y Patentes SLP

Bilbao - Spain

J. Varbanov & partners

Sofia - Bulgaria

HSM IP

Grand Cayman - Cayman Islands

Eva Troiani’s law firm

Rome - Italy

Infini Juridique

New Dehli - India

A.SMIRNOV & Co

Riga - Latvia

Smart IP Law Associates

Dhaka , Bangladesh - Bangladesh

Inlex Europe

Paris - France

GN & CO.,LTD.

Ulaanbaatar - Mongolia

Ballas, Pelecanos & Associates L.P.C.

Athens, - Greece

Calderon & De La Sierra

Mexico City - Mexico

R. Kalashyan & Partners LLC

Yerevan - Armenia

Pierola & Asociados

Lima - Peru

Akkum, Akkum & Associates LLP

Yaounde - Cameroon

TRI VIET & ASSOCIATES

Hanoi - Vietnam

Goytia & Associates

Buenos Aires - Argentina

Z. Manoukian & Partners LLC Patent Office

Yerevan - Armenia

Starker IP

Bursa - Turkey

IP March

Beijing - China

Robinson Sheppard Shapiro LLP

Montréal - Canada

Fairbridges Wertheim Becker

Cape Town - South Africa

Romero Pineda & Asociados

Antiguo Cuscatlan - El Salvador

Johansson & Langlois

Santiago - Chile

INPROCHES Patent and Trademark Agency

Brno - Czech Republic

WizeCounzel Law Firm

Lagos - Nigeria

SPRUSON & FERGUSON

Singapore - Singapore

IP Consulting Ltd.

Sofia - Bulgaria

Sedin SA

Geneva - Switzerland

Shiga International Patent Office

Tokyo - Japan

Bustaman

Ampang - Malaysia

ElMar-IP Agency

Kharkiv - Ukraine

ADITYA & ASSOCIATES

Mumbai - India

MARPATAŞ PATENT BÜROSU LİMİTED ŞİRKETİ

Istanbul - Turkey

Adiel Solicitors

Ogudu-Lagos - Nigeria

P. C. & Associates

Beijing - China

Citadel Law Firm

Douala - Cameroon

Rácz Law Firm

Budapest - Hungary

Sonoda & Kobayashi Intellectual Property Law

Tokyo - Japan

LOVEN Patents & Trademarks

Lincoln - United Kingdom

Vellani & Vellani

Karachi - Pakistan

D&C Legal Services

Doha - Qatar

Scanlen & Holderness

Harare - Zimbabwe

O'Conor & Power

Buenos Aires - Argentina

BPV TAX & IP ATTORNEY Democratic Republic of CONGO Lawfirm

Kinshasa - Democratic Republic of Congo

Stillwaters Law Firm

Lagos - Nigeria

Estudio Colmenares & Asociados

Lima - Peru

DREON

Sao Paulo - Brazil

Shahid & Alliance, Intellectual Property Law Services, Bangladesh

Dhaka - Bangladesh

NEOVIAQ IP / ICT Solutions sàrl

Weiswampach - Luxembourg

Digip

Stockholm - Sweden

Walker Morris LLP

Leeds 24 - United Kingdom

VLG Brazil Intellectual Property

São José do Rio Preto-SP - Brazil

KTA Advocates

Kampala - Uganda

Kan & Krishme

New Delhi - India

Konstantin Tahtadjiev EOOD

Sofia - Bulgaria

Inlex Monaco

Monaco - Monaco

Patice

Reykjavík - Iceland

Schurman Advocaten N.V.

Paramaribo - Suriname

CLAIM S.A Consultores de Propiedad Intelectual

La Habana - Cuba

Chandrakant M. Joshi, Indian Patent & Trademark Attorneys

Mumbai - India

IPSOL Intellectual Property Agency Limited

Macau - Macau

GPIP PARTNERS LLC

Kyiv - Ukraine

Legelata Law Firm

Yerevan - Armenia

Oussi Law Firm

Damascus - Syria

Laminar IP

Sydney - Australia

OMC Abogados & Consultores

Lima - Peru

International Law & Corporate Services (Pty) Ltd

Victoria - Seychelles

Novopatent International Service, S.C.

Cuernavaca - Mexico

Agency of Patent Attorneys KIM & KIM

Bishkek - Kyrgyzstan

MacMillan's Intellectual Property Attorneys Ltd

Mahe - Seychelles

Oriti Patents - Franco Oriti

Lugano - Switzerland

Am Badar & Am Badar

Jakarta - Indonesia

Ashunchong and partners law firm(cabinet D,avocats)

Douala cameroon - Cameroon

Inlex Africa

Yaounde - Cameroon

David do Nascimento Advogados Associados

São Paulo - Brazil

Unitalen Attorneys At Law

Beijing - China

Annam IP & Law

Hanoi - Vietnam

Ananda Intellectual Property Ltd.

Bangkok - Thailand

DCLaw - Dispute Resolution and Intellectual Property Attorneys in Metro Manila, PH

Makati, Metro Manila - Philippines

Deep & Far Attorneys-at-law

Taipei - Taiwan

Asian Pacific Int'l Patent & Trademark Office

New Taipei City - Taiwan

Crane IP

Kyiv - Ukraine

IntellectPol IP Law Firm (Patents, trademarks, designs, copyrights Poland EU)

Kutno - Poland

Zorin Law Office

Moscow - Russian Federation

Helios IP

Tampa - United States

LOYAL PARTNERS API LAW FIRM

Galati - Romania

Estrategia Juridica

Bogota - Colombia

MARC Intellectual Property

Rio de Janeiro - Brazil

Dimitri Russo S.R.L.

BARI - Italy

TOVAR & CRUZ IP-LAWYERS

Mexico City - Mexico

Papula-Nevinpat

Helsinki - Finland

Olivares

Ciudad de México - Mexico

Onsagers

Oslo - Norway

Events & Trade Fairs

Events / Trade fairs

Events / Trade fairs

Goytia