The approved capital increase

The approved capital increase is a tool that allows the board of directors to increase the share capital within a specified timeframe. However, this right is subject to a time limit and a monetary restriction. Additionally, requirements are imposed on the amendments to the statutes.

What is the approved capital increase?

‍The approved capital increase is a tool created to enable the board of directors to act more quickly. It is regulated in Art. 651 of the Swiss Code of Obligations. The approved capital increase is particularly intended for the acquisition of interests or companies. Such projects regularly require rapid action and flexibility. If an ordinary capital increase had to be carried out during these negotiations, it would severely hamper the process. Therefore, with the approved capital increase, the possibility was created for the general meeting to provisionally authorize the board of directors through a change in the statutes to carry out a capital increase. As long as the board has not exercised this power, the general meeting can revoke this right.

The approved capital increase is subject to a time and a monetary restriction. The increase may amount to a maximum of half of the existing share capital. If more capital is needed, an ordinary capital increase must be carried out. Furthermore, the authorization can be pronounced for a maximum of two years. The period begins on the day the statute changes, which are necessary according to Art. 651 para.1 and Art. 651a of the Swiss Code of Obligations, are registered in the commercial register. However, to prevent uncertainties, it is advisable to specify the end date directly in the resolution of the general meeting.

‍What needs to be included in the statutes?

‍For the necessary content of the statutes, Art. 651 para. 3 of the Swiss Code of Obligations refers to the provisions concerning the ordinary capital increase, which are regulated in Art. 650 para. 2 of the Swiss Code of Obligations. Exceptions from this are data concerning the issue amount, the type of contributions, the acquisitions of assets, and the start of dividend entitlement. Thus, the following must be included in the statutes:

1. the nominal amount, which is understood as the maximum amount, as well as the amount of contributions to be made on it
2. the maximum number of shares, the nominal value, the type of shares, and the privileges of individual share categories (voting rights and/or preference shares)
3. special benefits, where the content, the value, and the names of the beneficiaries must be specified
4. a restriction on the transferability of new registered shares
5. information about the limitation or abolition of subscription rights, as well as the allocation of withdrawn or unexercised subscription rights
6. the conditions for exercising subscription rights acquired by contract

For the acquisition of interests or companies, the restriction or abolition of subscription rights can be of central importance, depending on how the takeover is structured. In such a case, however, the exclusion of subscription rights by a general meeting resolution in an abstract manner suffices, without needing to provide details.

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