A capital increase is the raising of equity capital by increasing the authorized capital of a corporation. It must always be preceded by a resolution of the annual shareholders’ meeting. In the case of a capital increase through cash contributions, existing shareholders are allocated so-called “new shares” at a fixed price and in a specific ratio to their previous shareholding through subscription rights. As soon as the “new shares” are treated on an equal footing with the “old shares,” the term “new shares” is no longer used.
Subscription rights
A special preemptive or subscription right ensures that a shareholder’s existing ownership stake is maintained following capital increases or capital adjustments. This right is tradable during a specified period. The price of the subscription right is generally equal to the current price difference of the stock, but may change significantly due to supply and demand following the announcement of the capital increase.
