Capital Increase 2

Meaning of Capital Increase Part 2

Nominal capital increase at the AG

A nominal capital increase is always made from the company’s own funds . This is what is known as internal financing and no external capital flow is required. One possibility for this form is, for example, the use of reserves of the AG. However, you must note that only the reserves from the last annual financial statements may be used.

As a rule, the nominal increase takes place through the issue of so-called bonus shares. In this case, a shareholder receives more shares, but their total value remains unchanged and does not increase. You can also compare this form to a stock split . A stock corporation expects the nominal increase above all that the price of the shares will be low and that this will make the share more attractive for investors to purchase.

With the nominal capital increase, however, you must observe the following requirements.

  • It can only be carried out if the balance sheet has also been checked.
  • In addition, it is only possible if the balance sheet is not older than eight months .
  • The financial situation of the AG must not have deteriorated since the last balance sheet date .
  • In addition, it must always be registered in advance.

Special features of the capital increase of the legal form GmbH

According to FOODANDDRINKJOURNAL.COM, an increase in the capital in a GmbH can only be carried out if there is also an increase resolution that makes it possible to change the statutes. This is regulated in Section 55 of the GmbH Act. In contrast to the shareholders in the AG, a partner in a GmbH does not have an automatic subscription right. It is quite possible that the capital increase in the GmbH will result in a shareholder suffering losses. These losses can result from a reallocation of the shareholding.

The types of capital increases in a GmbH

With the GmbH capital increase, you have to distinguish between four types.

Art Description
Bring in new capital The shareholders inject new capital into the GmbH with an ordinary capital increase. This can be done either through cash , but also through assets. If it takes the form of assets, it is referred to as a capital increase in kind .
Conversion of reserves In the GmbH it is possible to increase the equity by converting reserves. The reserves, however, already belong to the shareholders, so that no new capital allocation takes place with this type.
Capital increase by the managing director With a GmbH it is possible to stipulate in the partnership agreement that a managing director may also increase the capital without authorization, but only up to a certain limit. This is not uncommon and is mainly used when hiring new employees or when investing in new machines.
Mixed forms for the capital increase Mixed forms are also possible in the GmbH . It is always a question of what goals are being pursued.

Special features of the capital increase in the legal form of partnerships

The so-called partnerships include, for example, the open trading company (OHG) and the limited partnership (KG) . With these two legal forms, you have two options for making a capital increase.

  1. Through self-financing : With this form, you do not distribute profit shares to shareholders, but use the profit from the increase in equity.
  2. Through additional contributions from existing or new shareholders: The consent of all previous shareholders is required for this type of increase. If an additional contribution is made, the respective voting and participation rights must also be renegotiated.

What is meant by a capital increase by silent partners?

Every company has the option of accepting silent partners in the company. However, the silent partners only participate in the profits and not in the possible losses. For this reason, this form is also referred to as the passivation of outside capital . In addition, the capital brought in by the silent partners does not count towards equity. There is no change in the legal form . Silent partners form their own internal company within the company .

Difference between a capital increase and a capital decrease

The capital reduction is exactly the opposite of the capital increase. A capital reduction is possible for both the AG and the GmbH. This measure reduces the company’s equity. The capital reduction serves to shareholders to distribute excess capital . If use is made of it, you speak of an effective capital reduction. However, you have to note that a capital reduction is always entered in the commercial register, both for AG and GmbH.

Conclusion

An increase in equity can be carried out by a stock corporation as well as a GmbH. The reasons for this can be very different. In order to carry out an increase in capital, some points must be observed in both the AG and the GmbH and certain requirements must be met. It can also lead to losses for the shareholder.

Frequently asked questions about capital increases

What is an ordinary capital increase?

A stock corporation carries out an ordinary capital increase by means of contributions and obtains additional equity by issuing new shares.

What is a capital increase through cash contributions?

In this form, the share capital of an AG is increased by issuing new shares for money .

What is the subscription right?

An existing shareholder is granted subscription rights in the form of new shares . He can acquire new shares for a certain proportion of his previous stake.

What is a dilution?

Dilution is the decrease in value of stocks, convertible bonds or options on stocks. The dilution arises from the issue of new shares, which are carried out without subscription rights .

Capital Increase 2