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18. January 2022 | Approved capital for the capital increase of employee shares and kapitaliststrukturer GmbH (this contribution)

Authorized capital is characterized by the fact that the managing director can increase the capital without a notarial resolution. It is therefore a flexible way of raising capital. Approved capital can be useful for large shareholders or start-up companies in the area of employee participation. This article explains why.

Approved capital is a method of increasing the capital of a GmbH or a public limited company (see §§ 202 ff. AktG). Accordingly, the managing director can increase the capital of a GmbH without a notarized decision. The authorized capital is regulated in § 55a GmbHG, where the formal requirements for raising authorized capital are also specified. Accordingly, authorised capital requires an authorisation basis in the statutes. This empowers the directors to increase the share capital up to a certain nominal amount by issuing new shares against deposits. However, this nominal amount may not exceed half of the share capital available at the time of authorisation. In addition, the managing director may be empowered for a maximum period of five years.

The authorization to use the authorized capital can be included in the founding statutes or determined by means of an amendment to the statutes. This can also regulate details of exploitation, which oblige the managing director. In addition, the shareholders can also issue instructions to the managing director about the use of the authorized capital by simple resolution. The creation of the authorized capital must be registered in the commercial register. Even if the authorized capital has already been included in the founding statutes, it must be specified in the registration application in accordance with § 10 (2) sentence 1 GmbHG.

Subscription rights are the result of a capital increase. This increases the capital in the hands of the shareholders. Therefore, the shareholders are to be granted the right to receive their shares in the previous share capital by means of a subscription right. Consequently, the subscription right ensures the preservation of the voting rights and assets. This is also called dilution protection. Each shareholder must therefore be allocated, at his request, a part of the new shares corresponding to his share of the previous share capital. Such a subscription right in the case of a capital increase by authorized capital is predominantly derived from § 186 (1) sentence 1 AktG. Nevertheless, the prevailing view assumes that such a subscription right can be excluded in the statutes.

In order to exploit authorized capital, certain steps must be observed. First, the managing director should report to the shareholders. Within the limits of the authorisation decision and subject to subsequent instructions from the shareholders, the directors may decide at their own discretion on the modalities of the capital increases. However, the subscription rights of the shareholders must be observed insofar as they have not been cancelled. Furthermore, the deposits must be made and the implementation of the capital increase must be notified to the commercial register. The new list of shareholders must then also be submitted to the commercial register.

Generally, authorized capital should serve to secure new capital for the company quickly and flexibly. Especially in the case of the public limited company this purpose applies. In the case of a public limited company, the administration can therefore, with the help of the authorized capital, take advantage of a favourable stock market situation for raising capital, issue employee shares, initiate a restructuring or use the capital to acquire companies and shareholdings. However, it seems questionable when these principles can be transferred to the GmbH.

3.1.1 Authorised capital at personalist structured GmbH

A personalized GmbH is one in which several shareholders are equally involved. In this case, there are usually no problems convening a shareholders’ meeting and deciding on a regular capital increase as required. Therefore, in principle, no authorized capital is required for a personalized GmbH and therefore usually plays no role.

3.1.2. Capitalistically structured GmbH

In the case of a capitalistically structured GmbH, on the other hand, the situation can be different. Capitalistically structured GmbH is a GmbH in which the capital employed is priority. Therefore, there are also a large number of partners. Consequently, it is difficult to convene and hold a shareholders' meeting. Thus, the capital there cannot be increased flexibly. Consequently, the purpose of the approved capital to achieve flexibility is achieved in a capital-structured GmbH.

3.1.3. Employee participation in start-ups

Another area of application of the authorized capital is also the participation of employees in the company. In the case of a GmbH, the administrative effort for a broad-based employee participation program is high, since each capital change, each transfer of shares as well as each entry or exit of shareholders requires corresponding shareholder resolutions and entries in the commercial register. For this reason, authorized capital is often used, because this enables new investors to be accepted into society quickly and easily. This means that the employees of a start-up can also be easily involved in society.

Approved capital can be exercised without further notarized modification of the articles of association and must only be registered in the commercial register. Consequently, there are no further notarial fees for the use of the authorized capital. Nevertheless, it should be noted that the amendment to the Articles of Association required as an authorization basis for approved capital according to § 53 (2) sentence 1 GmbHG requires a notarized shareholder resolution. Therefore, there are costs for the amendment of the articles of association. There are also costs for the subsequent registration of the statutory amendment to the Commercial Register.

In addition to these costs in the context of an amendment to the articles of association, there are costs for the use of the authorized capital. No notarized change to the shareholder contract is necessary. Nevertheless, the registration, registration and publication in the commercial register also costs money.

If the authorized capital is now used in a one-off manner, the costs for the commercial register must be expended twice, once for the amendment of the articles of association and then for the utilization of the authorized capital. In addition, there are the expenses for the notarization of the amendment to the statutes. On the other hand, in the case of a regular capital increase of the same amount, the costs for the notarial notarized and only once the costs for the commercial register arise, so that the authorized capital is more cost-intensive in the case of one-time exhaustive use.

In addition, there may be higher costs if there is no or only a significantly lower need for additional capital within the authorisation period. The notarial costs, which are calculated on the basis of the goodwill of the enabling decision, can then be significantly higher than the costs that would have been incurred if an ordinary capital increase had been carried out as required.

Thus, authorized capital can only have cost advantages in individual cases. For this purpose, the fee reduction or the fee cap of € 5,000 according to § 47 sentence 2 KostO must be used in various tranches. For example, if a GmbH has an authorized capital of 50 million euros, from which it makes use in four tranches of 12.5 million euros, the authorization in the context of the notarization of the shareholder resolution of the amendment of the articles of association is only a fee of 5,000 €. The additional fees for commercial registration applications as well as entries and notices are less than four ordinary capital increases with fees of € 5,000 each.

Therefore, this contribution shows that authorized capital makes sense only in individual cases. In particular, due to the financial risks that can arise from this, you have to plan exactly how much capital you need when. Therefore, the approved capital for the purpose of employee participation can be particularly useful for start-ups. We are happy to check whether the use of the authorized capital makes sense for you.