capital increase

Which translation, when

Why

The English route runs on authority and disapplication: the directors need authority to allot unless the articles or the statute give it, the statutory pre-emption right of s.561 of the Companies Act 2006 attaches to an allotment of equity securities, and a special resolution under s.570 can disapply it. No notary appears anywhere. The German route is heavier and splits by legal form. A GmbH increase changes the Gesellschaftsvertrag, so § 55 GmbHG borrows the machinery of § 53 GmbHG: three quarters of the votes cast and notarial recording of the resolution, followed by the new shareholder’s declaration to take up the share, which § 55 Abs. 1 GmbHG requires to be notarially recorded or at least notarially certified. In an AG the increase against contributions needs a majority of at least three quarters of the capital represented at the meeting, § 182 Abs. 1 AktG, which the Satzung may vary, and the Bezugsrecht of § 186 Abs. 1 AktG can be excluded only in the increase resolution itself and only with a further three quarter capital majority, § 186 Abs. 3 Satz 2 AktG. That majority does not fall away for smaller issues: § 186 Abs. 3 Satz 4 AktG makes the exclusion admissible without more where a cash increase stays within twenty per cent of the Grundkapital and the issue price is not materially below the market price, and the exclusion still has to have been announced in advance, § 186 Abs. 4 Satz 1. The GmbH sits in between: its Bezugsrecht is not written into the GmbHG but is recognised, and whether excluding it also needs three quarters of the Stammkapital by analogy to § 186 Abs. 3 Satz 1 AktG is genuinely contested.

Typical mistakes

• A GmbH capital increase resolved by written consent is not effective; § 55 GmbHG runs through the amendment rules of § 53 GmbHG, which means three quarters of the votes cast and notarial recording.
• An exclusion of the Bezugsrecht cannot be tidied up afterwards, because § 186 Abs. 3 Satz 1 AktG allows it only inside the increase resolution and § 186 Abs. 4 Satz 1 AktG requires it to have been announced beforehand.
• Treating the GmbH like the AG on pre-emption overstates the position: the right is recognised rather than codified, and the majority needed to exclude it is disputed, so an opinion here should say which view it follows.

What matters

Investment agreements promising a capital increase against a funding round have to name the German steps, because the closing depends on them: a notarial shareholders’ resolution under §§ 53, 55 GmbHG, the investor’s notarially recorded or certified declaration to take up the new share, and registration. Where the round is meant to dilute a holdout, the Bezugsrecht question decides whether the structure works at all, § 186 Abs. 3 AktG for the AG and a contested analogy for the GmbH.

Examples

More notes on these sections

articles of association Gesellschaftsvertrag