Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Subchapter 2
Conditional capital increase
Section 192
Pre-requisites
(1) The general meeting may adopt a resolution to increase the share capital that is to be implemented only insofar as a right of exchange or pre-emptive right for newly issued shares of stock is utilised (conditional capital increase) to which the company is itself entitled or which it grants with regard to the new shares of stock (shares of a new issue).
(2) The conditional capital increase should be resolved upon only for the following purposes:
1. In order to grant rights of exchange or pre-emptive rights to newly issued shares of stock based on convertible bonds;
2. In order to prepare for the merger of several enterprises;
3. In order to grant to the company’s employees and members of its management, or to those of an affiliated enterprise, pre-emptive rights to newly issued shares of stock by way of adopting a resolution granting consent or authorisation.
(3) The nominal amount of the contingent capital may not exceed half, and the nominal amount of the capital resolved upon pursuant to subsection (2) no. 3 may not exceed one tenth, of the share capital that is available at the time the resolution regarding the conditional capital increase is adopted. Section 182 (1), fifth sentence, shall apply mutatis mutandis. The first sentence shall not apply to a conditional capital increase pursuant to subsection (2) no. 1 that is resolved upon solely for the purpose of allowing the company to perform an exchange to which it is entitled in the event of its impending inability to pay its debts as they fall due, or for the purpose of averting an over-indebtedness. Where the company is an institution in the sense of section 1 (1b) of the Banking Act (KWG), the first sentence furthermore shall not apply to a conditional capital increase pursuant to subsection (2) no. 1 that is resolved upon for the purpose of allowing the company to perform an exchange in order to fulfil requirements of bank supervision regulations or requirements imposed on it for restructuring or liquidation purposes. Conditional capital to which the third sentence or the fourth sentence has application shall not be set off from other conditional capital.
(4) A resolution adopted by the general meeting contravening the resolution adopted as to the conditional capital increase is null and void.
(5) The following regulations governing the pre-emptive right for newly issued shares of stock shall apply mutatis mutandis to the right of exchange.
Section 193
Requirements to be met by the resolution
(1) The resolution as to the conditional capital increase shall require a majority of at least 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. Section 182 (2) and section 187 (2) shall apply.
(2) The resolution must also establish the following:
1. The purpose pursued by the conditional capital increase;
2. The group of persons having subscription rights to the shares of a new issue;
3. The issue price or the basis on which this amount is calculated; in the case of a conditional capital increase performed for the purposes set out in section 192 (2) no. 1, it shall suffice if the resolution, or the resolution pursuant to section 221 that is tied thereto, specifies the minimum issue price or the basis for determining the issue price or the minimum issue price; as well as
4. In the case of resolutions pursuant to section 192 (2) no. 3, also the allocation of the pre-emptive right for newly issued shares of stock to members of the management bodies and employees, the performance targets, purchase and exercise periods, and the waiting period until the subscription right first may be exercised (at a minimum four (4) years).
Section 194
Conditional capital increase based on contributions in kind; repayment of contributions
(1) Where a contribution is rendered in kind, its object, the person from whom the company is acquiring such object, and the nominal amount – in the case of no-par-value shares: the number – of the shares of stock to be allotted in the context of the contribution in kind must be specified in the resolution adopted as to the conditional capital increase. The exchange of bonds for shares of a new issue shall not be deemed a contribution in kind. The resolution may be adopted only if the fact that contributions in kind are being made has been expressly published by due and proper notice.
(2) Section 27 subsections (3) and (4) shall apply mutatis mutandis; in each case, the time at which the shares of a new issue are so issued shall take the stead of the time at which the application for entry in the register is filed pursuant to section 27 (3), third sentence, and the time of the entry pursuant to section 27 (3), fourth sentence.
(3) Subsections (1) and (2) shall not apply to the contribution of monetary claims to which employees of the company are entitled based on a share in the profits granted to them by the company.
(4) In the case of a capital increase based on contributions in kind, an audit is to be performed by one or several auditors. Section 33 subsections (3) to (5), sections 34 and 35 shall apply mutatis mutandis.
(5) Section 183a shall apply mutatis mutandis.
Section 195
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 in the Commercial Register of the resolution adopted as to the conditional capital increase. Section 184 (1), third sentence, shall apply mutatis mutandis.
(2) The following documents are to be attached to the application for entry in the register:
1. In the case of a conditional capital increase based on contributions in kind, the contracts on which the specifications pursuant to section 194 are based, or that were concluded in order to implement them, and the report on the audit of the contributions in kind (section 194 (4)), or the documents designated in section 37a (3) as enclosures;
2. A calculation of the costs that will arise for the company by the issuance of the shares of a new issue.
3. (repealed)
(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 196
(repealed)
Section 197
Prohibited issuance of shares of stock
The shares of a new issue may not be so issued prior to the resolution adopted as to the conditional capital increase having been entered in the Commercial Register. Prior to this time, no claim shall arise for the person having subscription rights to the shares of a new issue. Any shares of a new issue issued prior to this time shall be null and void. The issuers shall be liable as joint and several debtors to the holders for any damages resulting from the issuance.
Section 198
Declaration as to the exercise of the subscription right
(1) The pre-emptive right for newly issued shares of stock shall be exercised by a written declaration. The declaration (declaration as to the exercise of the subscription right) should be issued in duplicate. It is to state the ownership interest according to the number of the shares of stock – and, in the case of par-value shares, according to their nominal amount – and, if several classes of stock are issued, the class of stock of the shares, the specifications pursuant to section 193 (2), the specifications intended to be made pursuant to section 194 in the context of having the contributions in kind made, as well as the date on which the resolution as to the conditional capital increase was adopted.
(2) The declaration as to the exercise of the subscription right shall have the same effect as a declaration of subscription. Any declarations as to the exercise of the subscription rights shall be null and void where their content does not correspond to what has been set out in subsection (1) or where they provide for any restrictions on the duties of the party making the declaration.
(3) Where shares of a new issue are issued notwithstanding the fact that a declaration as to the exercise of the subscription right is null and void, the party making such declaration may not rely on its being null and void if he has exercised the rights of a stockholder, or has fulfilled duties incumbent on a stockholder, based on the declaration as to the exercise of the subscription right.
(4) Any restriction not set out in the declaration as to the exercise of the subscription right shall have no validity vis-à-vis the company.
Section 199
Issuance of the shares of a new issue
(1) The management board may issue the shares of a new issue only by way of fulfilling the purpose specified in the resolution adopted as to the conditional capital increase, and may not do so prior to the full performance of the equivalent value as set out in the resolution.
(2) The management board may issue shares of a new issue in return for convertible bonds only if the difference between the issue price of the bonds submitted to be exchanged and the higher minimum issue price of the shares of a new issue to be allotted in return for them is covered by other revenue reserves, insofar as they may be used for this purpose, or by an additional payment to be made by the person entitled to exchange the bonds. This shall not apply if the total price at which the bonds have been issued is at least equivalent to the minimum issue price of the shares of a new issue overall, or is higher.
Section 200
Entry into force of the conditional capital increase
Upon the shares of a new issue being issued, the share capital shall have been increased.
Section 201
Application for entry in the register of the issuance of shares of a new issue
(1) The management board shall apply to have the issuance of shares of a new issue entered in the Commercial Register at least once per year, doing so no later than by the end of the calendar month following the end of the financial year.
(2) The duplicates of the declarations as to the exercise of the subscription rights and a list of the persons who have exercised the pre-emptive right for newly issued shares of stock, such list having been signed by the management board, are to be attached to the application for entry in the register. The list is to state the shares of stock allocated to each stockholder and the contributions made in their regard.
(3) In its application for entry in the register, the management board is to declare that the shares of a new issue have been issued solely by way of fulfilling the purpose specified in the resolution adopted as to the conditional capital increase and that they were not issued prior to the equivalent value set out in the resolution having been fully paid or rendered.
(4) (repealed)
Leave a Reply