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By a capital increase one understands the increase of own capital funds of a finance company (e.g. a corporation). Subscription rights so mentioned make possible to hold their proportional participation in the AG for old shareholders by a participation in the capital increase (thus the purchase of new, additional shares) on same conditions.

Reasons for a capital increase

A capital increase can become necessary if:

  • a change of the legal form of the enterprise to take place is, e.g. from a OHG to kg
  • the business activity of the enterprise to be expanded is to be thus e.g. financed, a larger investment not by the admission of a credit, but by own means (own capital funds) is,
  • the soil quality (credit-worthiness) of the enterprise to be improved or (due to a smaller debt ratio) the outside capital costs be lowered are.

Possibilities for the capital increase

Tidy capital increase capital increase against inserts

The tidy capital increase is called also capital increase against inserts. Because the increase of the capital stock takes place via inserts of the partners or via emission (expenditure) of new shares. But an agreement of the general meeting is necessary, at which at least 3/4 of the capital stock represented during the adoption of resolutions must agree ("§"§182-191 AktG). The share nominal amount becomes from the drawn capital, which to agio seized by the capital reserve ("§"§ 182-191 AktG), see subscription right.

Caused capital increase

A capital increase, which takes place due to special situations:

  • Preparation of a fusion
  • Expenditure of staff shares
  • Rights to exchange for owners of convertible bonds or Optionsanleihen ("§"§ 192-201 AktG)

The agreement with three quarters of majority of the general meeting is necessary. The nominal amount of the shares may not exceed however half of the drawn capital. Past shareholders do not have a subscription right.

Authorized capital

A simplified form of the tidy capital increase bound at certain restrictions: The executive committee can be authorized for maximally five years after entry to increase the capital stock. A certain nominal value, which may amount to at the most 50 per cent of the capital stock, may not be exceeded. For the authorization of the executive committee it requires a three quarters majority of the represented voter of capital on the general meeting or an authorization by the statute of the corporation. ("§"§ 202-206 AktG)

Capital increase from company funds

Here the unappropriated earned surplus and/or the capital reserve are converted into drawn capital. It does not take place supply of new moneys; relating to the balance a passive exchange takes place. The shareholders gotten thereupon free or bonus shares assigned, in order to adjust the renouncement of declaration of dividend, necessary for the formation of reserves, ("§"§ 207-220 AktG). This can have as a goal the capital stock to increase by "“improves"” balance to have or thus e.g. when banks or insurance determined adhesion conditions be kept.

See also

Capital impairment, blanche

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