Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Subchapter 3
Authorised capital
Section 202
Pre-requisites
(1) The by-laws may grant authority to the management board, for a maximum period of five (5) years following entry in the register of the company, to increase the share capital up to a specified nominal amount (authorised capital) by issuing new shares of stock in return for contributions.
(2) The authorisation may also be granted by an amendment of the by-laws; it shall continue in force for a maximum period of five (5) years following entry in the register of the amendment of the by-laws. The resolution adopted by the general meeting 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) shall apply.
(3) The nominal amount of the authorised capital may not exceed one half of the share capital given at the time of the authorisation. The new shares of stock should be issued solely with the consent of the supervisory board. Section 182 (1), fifth sentence, shall apply mutatis mutandis.
(4) The by-laws may also provide for the new shares of stock to be issued to employees of the company.
Section 203
Issuance of the new shares of stock
(1) Sections 185 to 191 governing the capital increase on the basis of contributions shall apply mutatis mutandis to the issuance of the new shares of stock unless otherwise provided for by the regulations set out below. The authorisation to issue new shares of stock set out in the by-laws shall take the stead of the resolution adopted as to the increase of the share capital.
(2) The authorisation may provide that the management board is to decide on the preclusion of the pre-emptive right for newly issued shares of stock. Where an authorisation making this provision is granted by an amendment of the by-laws, then section 186 (4) shall apply mutatis mutandis.
(3) The new shares of stock should not be issued 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 issuance of the new shares of stock. The first application for entry in the register of the fact that the increase of the share capital has been implemented is to state which contributions have not yet been made to the current share capital and why they cannot be obtained.
(4) Subsection (3), first and fourth sentences, shall not apply if the shares of stock are issued to employees of the company.
Section 204
Terms governing the issuance of the shares of stock
(1) The management board shall decide on the substance of the rights to a share of stock and the terms governing the issuance of the shares of stock unless the authorisation has made provisions in this regard. The decision of the management board shall require the consent of the supervisory board; the same applies to the decision of the management board pursuant to section 203 (2) as to the preclusion of the pre-emptive right for newly issued shares of stock.
(2) Where preferential stock without voting rights exists, the preferential stock that is to take precedence before such stock, or that is to have equivalent rank, in the distribution of the profits or of the company’s assets may be issued only if this has been provided for in the authorisation.
(3) Where annual accounts certified by an unqualified audit opinion recognise a surplus for the year, shares of stock may also be issued to the employees of the company such that the contribution to be made for them is covered by that part of the surplus for the year that the management board and the supervisory board could allocate to other revenue reserves pursuant to section 58 (2). The regulations governing a capital increase in return for contributions in cash shall apply to the issuance of the new shares of stock, to the exception of section 188 (2). The annual accounts as approved and established are to be attached, along with the audit opinion, to the application for entry in the register of the fact that the increase of the share capital has been implemented. Furthermore, the parties filing the application for entry in the register are to also make the declaration pursuant to section 210 (1), second sentence.
Section 205
Issuance in return for contributions in kind; repayment of contributions
(1) Shares of stock may only be issued in return for contributions in kind if this has been provided for by the authorisation.
(2) Unless they have been specified in the authorisation, the management board is to specify and include in the certificate of subscription the object of the contribution in kind, the person from whom the company is purchasing the object, and the nominal amount – in the case of no-par-value shares the number – of shares of stock to be allotted in the context of the contribution in kind. The management board should take the decision solely upon having obtained the consent of the supervisory board.
(3) Section 27 subsections (3) and (4) shall apply mutatis mutandis.
(4) Subsections (2) and (3) shall not apply to the contribution of monetary claims to which employees of the company are entitled based on a share in the profits the company has granted them.
(5) Where the shares of stock are issued in return for 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. Section 183a is to be correspondingly applied. Instead of giving notice, in the company’s publications of record, of the date on which the resolution as to the capital increase was adopted, the management board is to publish in same its decision regarding the issuance of new shares of stock in return for contributions in kind as well as the particulars set out in section 37a subsections (1) and (2).
(6) Inasmuch as no audit is performed of the contribution in kind, section 184 (1), third sentence, and subsection (2) also shall apply mutatis mutandis to the application for entry in the register of the fact that the capital increase has been implemented (section 203 (1), first sentence, section 188).
(7) 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 206
Contracts as to contributions in kind prior to the company being entered in the Commercial Register
Where contracts have been concluded, prior to the company being entered in the Commercial Register, pursuant to which a contribution in kind is to be made to the authorised capital, the by-laws must include the specifications that are prescribed for an issuance in return for contributions in kind. In this context, section 27 (3) and 5, sections 32 to 35, 37 (4) nos. 2, 4, and 5, section 37a and section 38 subsections (2) and (3) as well as section 49 regarding the formation of the company shall apply mutatis mutandis. The management board shall take the stead of the founders and the application for entry in the register, and entry in same, of the fact that the increase of the share capital has been implemented shall take the stead of the application for entry in the register, and entry in same, of the company.
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