Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Chapter 2
Measures serving the procurement of capital
Subchapter 1
Capital increase in return for contributions
Section 182
Pre-requisites
(1) An increase of the share capital in return for contributions may only be resolved upon by a majority amounting to at least three quarters of the share capital represented at the time such resolution is adopted. The by-laws may stipulate a different majority ratio of capital, however, this may only be a greater majority ratio of capital should the matter involve the issuance of preferential stock without voting rights. The by-laws may impose further requirements. The capital increase may be performed only by issuing new shares of stock. In the case of companies with no-par-value shares, the number of the shares must increase in the same ratio as the share capital increases.
(2) Where several classes of stock exist of shares with voting rights, the resolution adopted by the general meeting shall require the consent of the stockholders of each class of stock in order to be valid. The stockholders of each class of stock are to adopt a separate resolution regarding such consent. Subsection (1) shall apply to such separate resolution.
(3) Where the new shares of stock are to be issued at a price higher than the minimum issue price, then the resolution regarding the increase of the share capital is to specify the minimum price below which the shares should not be issued.
(4) The share capital should not be increased for as long as outstanding contributions to the current share capital can still be obtained. In the case of insurance companies, the by-laws may stipulate otherwise. Where the scope in which contributions are outstanding is relatively insignificant, this shall not impede the increase of the share capital.
Section 183
Capital increase based on contributions in kind; repayment of contributions
(1) Where a contribution in kind (section 27 subsections (1) and (2)) is made, the resolution adopted as to the increase of the share capital is to specify its object, the person from whom the company is purchasing the object, and the nominal amount, and in the case of no-par-value shares the number of shares to be allotted in the context of the contribution in kind. The resolution may be adopted only if the fact that contributions in kind are being made have been expressly published by due and proper notice along with the specifications pursuant to the first sentence.
(2) Section 27 subsections (3) and (4) shall apply mutatis mutandis.
(3) Where the capital is increased based on contributions in kind, an audit is to be performed by one or several auditors. Section 33 subsections (3) to (5), sections 34, 35 shall apply mutatis mutandis.
Section 183a
Capital increase based on contributions in kind not subjected to an audit
(1) Subject to the pre-requisites set out in section 33a, the audit of a contribution in kind (section 183 (3)) may be refrained from. The following subsections shall apply of an audit is so refrained from.
(2) The management board is to give notice in the company’s publications of record of the date of the resolution adopted as to the capital increase while also citing the particulars pursuant to section 37a subsections (1) and (2). The implementation of the share capital increase may not be entered in the Commercial Register prior to expiry of four (4) weeks since the notice.
(3) Where the pre-requisites set out in section 33a (2) are given, the local court (Amtsgericht) is to appoint one or several auditors, upon a corresponding petition being filed by stockholders who, on the date on which the resolution as to the capital increase was adopted, jointly held five (5) percent of the share capital and continue to hold this ownership interest on the date of filing their petition. The petition may be filed up until the date on which the implementation of the increase of the share capital (section 189) is entered in the Commercial Register. Prior to its decision regarding the petition, the court is to hear the management board. A complaint may be lodged against the decision.
(4) For the further procedure, Section 33 subsections (4) and (5), sections 34 and 35 shall apply mutatis mutandis.
Section 184
Application for entry in the register of the resolution
(1) The management board and the chairman of the supervisory board are to file an application for entry of the resolution as to the increase of the share capital in the Commercial Register. The application for entry in the register is to state which contributions to the current share capital have not yet been made and why they cannot be obtained. If an audit of the contribution in kind is to be refrained from and the date of the resolution adopted as to the capital increase has been published by notice in advance (section 183a (2)), the parties filing the application for entry in the register need only give an assurance in same that since publication of the notice, they have not become aware of any circumstances in the sense of section 37a (2).
(2) The report on the audit of the contributions in kind (section 183 (3)) or the annexes specified in section 37a (3) are to be attached to the application for entry in the register.
(3) The court may refuse to make the entry applied for if the value of the contribution in kind is lower, to a greater than negligible degree, than the minimum issue price of the shares of stock to be allotted therefor. Section 38 (3) shall apply mutatis mutandis if an audit of the contribution in kind is refrained from pursuant to section 183a (1).
Section 185
Subscription of the new shares of stock
(1) The new shares of stock shall be subscribed by way of a written declaration (certificate of subscription) that must identify the ownership interest by the number of shares of stock, and in the case of par-value shares by their nominal amount and, where several classes of stock are issued, by the class of stock of said shares. The certificate of subscription should be issued in duplicate. It is to set out:
1. The date on which the resolution was adopted to increase the share capital;
2. The issue price of the shares of stock, the amount of the specified payments, as well as the scope of incidental duties;
3. The specifications intended to be made in the case of a capital increase based on contributions in kind and, if several classes of stock are issued, the amount of the share capital allocated to each class of stock,
4. The point in time at which the subscription will become non-binding, unless the implementation of the share capital increase has been entered in the Commercial Register by that time.
(2) Certificates of subscription that do not include all of the above information, or that provide for restrictions on the duty of the subscriber besides the reservation made in subsection (1) no. 4, are null and void.
(3) Where the implementation of the share capital increase has been entered in the register, the subscriber cannot take recourse to the certificate of subscription being null and void or non-binding if he has exercised rights or fulfilled duties as a stockholder by reason of the certificate of subscription.
(4) Any restriction not set out in the certificate of subscription shall have no validity vis-à-vis the company.
Section 186
Pre-emptive right for newly issued shares of stock
(1) Each stockholder must be allotted, upon his making the corresponding demand, a portion of the new shares of stock corresponding to his portion of the current share capital. A period of at least two (2) weeks is to be determined for exercising the pre-emptive right for newly issued shares of stock.
(2) The management board is to give notice, in the company’s publications of record, of the issue price or the basis on which it has established same and, concurrently, a subscription period pursuant to subsection (1). Where only the basis on which the issue price has been established is published, the management board is to give notice of the issue price in the company’s publications of record and via an electronic information medium, doing so at the latest three (3) days prior to expiry of the subscription period.
(3) The pre-emptive right for newly issued shares of stock may be precluded, as a whole or in part, only in the resolution adopted as to the increase of the share capital. In this case, besides needing to meet the requirements set out in the law or in the by-laws for the capital increase, the resolution shall require a majority comprising, at a minimum, three quarters of the share capital represented at the time such resolution is adopted. The by-laws may stipulate a greater majority ratio of capital and may impose further requirements. Precluding the pre-emptive right for newly issued shares of stock shall be permissible in particular in those cases in which the capital increase in return for contributions in cash does not exceed ten (10) percent of the share capital and the issue price is not significantly lower than the stock exchange price.
(4) A resolution by which the pre-emptive right for newly issued shares of stock is precluded as a whole or in part may be adopted only if the preclusion is expressly published by due and proper notice. The management board is to make accessible to the general meeting a written report on the reason for the partial or complete preclusion of the pre-emptive right for newly issued shares of stock; the report is to cite the reasons for the proposed issue price.
(5) It is not to be regarded as a preclusion of the pre-emptive right for newly issued shares of stock if, following the adoption of the resolution, the new shares of stock are to be acquired, along with the duty to offer them to the stockholders for subscription, from a credit institution or from an enterprise pursuing activities pursuant to section 53 (1), first sentence, or section 53b (1), first sentence, or subsection (7) of the Banking Act (KWG). The management board is to publish by notice this offer for subscription together with the particulars stated in subsection (2), first sentence, along with a final issue price pursuant to subsection (2), second sentence; the same shall apply if the new shares of stock are to be acquired, along with the duty to offer them to the stockholders for subscription, by a different party than a credit institution or enterprise in the sense of the first sentence.
Section 187
Commitment to grant rights to subscribe to new shares of stock
(1) A commitment to grant rights to subscribe to new shares of stock may be given solely subject to the reservation of the pre-emptive right of the stockholders for newly issued shares of stock.
(2) Any commitments given prior to the resolution being adopted as to the increase of the share capital shall have no validity vis-à-vis the company.
Section 188
Application for entry in the register and entry of the implementation
(1) The management board and the chairman of the supervisory board are to file an application for entry in the Commercial Register of the increase of the share capital having been implemented.
(2) Section 36 (2), section 36a, and section 37 (1) shall apply mutatis mutandis to the application for entry in the register. The payment towards such increase cannot be made by crediting the amount to an account of the management board.
(3) The following documents are to be attached to the application for entry in the register:
1. The duplicates of the certificates of subscription and a list of the subscribers signed by the management board specifying the shares of stock allotted to each of them and the payments made towards such shares of stock;
2. In the case of a capital increase based on contributions in kind, the contracts on which the determinations set out in section 183 are based, or that were concluded in order to implement such determinations;
3. A calculation of the costs that will arise for the company by the issuance of the new shares of stock.
4. (repealed)
(4) The application for entry in the register, and entry in same, of the increase of the share capital having been implemented may be tied to the application for entry in the register, and entry in same, of the resolution adopted as to the increase.
(5) (repealed)
Section 189
Entry into force of the capital increase
Upon the implementation of the increase of the share capital having been entered in the Commercial Register, the share capital shall be increased.
Section 190
(repealed)
Section 191
Prohibited issuance of shares of stock and temporary share certificates
Prior to the implementation of the increase of the share capital being entered in the register, the new rights to a share cannot be transferred, nor can new shares of stock or temporary share certificates be issued. The new shares of stock and temporary share certificates issued previously are null and void. The issuers shall be liable as joint and several debtors to the holders for any damages resulting from the issuance.
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