If a GmbH is founded, the founding shareholders must raise the share capital of the GmbH. During the life of a GmbH, however, it may be necessary or useful for various reasons to increase the original share capital. For example, a capital increase in many cases allows the inflow of new liquidity in the form of equity. In such cases, the shareholders have various methods for increasing their capital. However, the increase in share capital can also be a burden for individual shareholders, often minority shareholders. Therefore, a forward-looking planning of the implementation of a capital increase is recommended.
1. Share capital – fundamentals
The share capital of a GmbH is the liability fund, which primarily serves as collateral for creditors of the company. It represents the compensation under company law for the privilege of the liability exclusion of the shareholders of the GmbH. Therefore, the raising of the share capital is a foundation requirement of the GmbH, cf. § 7 para. 2 GmbHG. The shareholders are largely free to choose the amount of share capital. However, the minimum share capital is fixed at EUR 25,000,- for reasons of creditor protection, § 5 para. 1 GmbHG. Meanwhile, the minimum share capital of a UG (limited liability) is only EUR 1 (cf. §§ 5 para 2, 5a para 1 GmbHG). The participation of the shareholders in the share capital of the GmbH (through their shares) is in principle decisive for the voting rights (§ 47 para 2 GmbHG) and the profit participation (§ 29 para 3 GmbHG). Although the GmbH may deviate from this principle by corresponding provisions in the articles of association. However, this tends to occur less frequently in practice.
Advantages of a higher share capital include a higher creditworthiness of the company and a greater seriousness in legal transactions. A subsequent capital increase is provided for by law and therefore permissible. However, the increase in the liability fund necessarily always results in a larger capital commitment within the meaning of § 30 GmbHG (keyword: Capital Conservation Round Rate). In addition, disproportionate capital increases may dilute voting rights or participation in capital reserves. Therefore, minority shareholders in particular should closely monitor plans for increases in share capital.
2nd types of capital increase
In total, the shareholders of a GmbH are entitled to three variants of the capital increase:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.