Subscription law in public joint stock companies


  • 1 subscription
  • 2 public joint stock companies
  • 3 Subscription law in public joint stock companies
  • 4 types of subscription
  • 5 References


Subscription (English: Initial Public Offering) is the initial public offering of shares for public shareholding companies, providing these companies shares to the public of buyers; by listing on the stock exchange market, [1] defines the IPO as a sale of private equity companies for the first time to a group From the investors. [2] Another definition of IPO is the first sale of a company’s shares by offering its securities for an IPO, and most of the companies that offer their securities for IPO are small companies that seek to develop their capital by relying on increasing their stock stocks in the financial market Year. [3]

Public joint-stock companies

Corporate Public Shareholding (English: Public Shareholding Companies) are companies seeking to issue securities; by relying on the public offering to contribute to put forward within the stock market; for circulation among investors and shareholders, and are relying on the trading of these securities in order to develop companies, [ 4] Public shareholding companies are defined as establishments that depend on the stock market for the purpose of trading their shares in a free way. [5] Other definitions of public shareholding companies are companies whose shares can be purchased through the public, in order to trade among them in the financial markets, and must strive to maintain the legal limit of their capital . [6]

Subscription law in public joint stock companies

The subscription law in public shareholding companies is part of the companies law, and it includes a set of legal and legislative articles, which cover the subscription process in shares of public joint stock companies, and the following provides information on the most important articles of the subscription law: [7]
  • Covering the value of the founders ’ shares : It is the legal material that consists of the following points:
    • The founders of public joint-stock companies must cover all the shares that were subscribed to during the signing of its founding contract, provided that the percentage of shares subscribed in financial institutions and banks does not exceed 50% of the capital value, and that the number of individuals from the founders is not less than fifty individuals.
    • The percentage of the founder or group of founders of the joint-stock company should not exceed 75% of the incorporation contribution in the capital, and the remaining percentage of the shares must be offered in the public offering in accordance with the Securities Law .
    • The founders of the public shareholding company are prohibited from subscribing to the offered shares during the incorporation stage, but they may contribute to covering the remaining shares after three days have passed since the subscription ended.
  • Prohibition of disposing of the share used for incorporation and exemption from the prohibition: It is a legal article consisting of the following points:
    • At least two years before the date of incorporation of the public shareholding company, it is prohibited to deal or dispose of its founding share.
    • The following points are excluded from the ban:
      • Transfer of ownership of the founding share to the heirs of the founder or founders.
      • Transfer of the ownership of the founding share from one founder to another in the company.
      • Transfer of ownership of the share to another person, through issuing a judicial decision or selling by public auction.
  • Sharing the value of shares: It is a legal article that takes into account the existing texts of any other subscription law, and it is keen to cover the value of shares by relying on a hedging contractor. The law allows the board of directors of the public shareholding company or its founders to cover their shares by relying on a hiring contractor or more than one contractor.
  • Fundamentals of Subscription in Shares: It is the legal material consisting of the following points:
    • It is not permissible for more than one person to participate in submitting the subscription application with the offered shares, and it is prohibited for the subscription to take place in a fictitious manner or by using fake names; this leads to the nullity of the subscription.
    • Subscription must be applied to the shares of public joint-stock companies, in a manner consistent with the provisions of the underwriting law and all laws in force.
  • Providing subscribers with the names of the companies 'supervisor: It is the legal article stipulating the necessity of providing the company with the names of subscribers to the companies' supervisor, and the amount of the shares of each of them, during a period of time not exceeding a month from the date of closing the subscription of the company's shares.
  • Share allocation : In the event that the subscription in the value of the shares of the public joint stock company exceeds the number of shares that were offered in the subscription, the company is obliged to allocate the value of its shares offered to subscribers, based on the applicable legislation and regulations.
  • Returning the excess amounts when allocating shares : It is the legal material that defines the responsibility of the company to return the financial amounts in excess of the value of its shares that were offered for subscription. . In the event of the non-implementation of the provisions of this legal article, the beneficiaries of the sums will have a financial interest, and they will be counted on them from the beginning of the month following the legally stipulated month.

Types of subscription

Subscription to public joint stock companies is divided into two types: [8]
  • The founding subscription of the company: It is the subscription that is applied within the capital of the company when it is in the establishment stage, where half of the value of the company's capital is offered for subscription, and many opinions emerged about the nature of adapting the subscription contract for the establishment of public joint-stock companies, and the most important opinions on that :
    • The first opinion: is the opinion that considers the subscription as a contract between the company and the subscriber, as the company is a legal person in the establishment stage, and the founders represent it as agents for it.
    • The second opinion: is the opinion that the subscription is a contract between the founders and the subscriber, given that the company is still in the stage of establishment, and does not possess an independent legal personality in itself until it is formally established.
  • Subsequent subscription to incorporation of the company: It is the subscription that is applied to the shares of existing companies due to the pursuit of an increase in its capital, and this subscription is a contract between the subscribers and the company that represents itself with an independent and legal personality.