The capital increase is the common means of raising new capital. Depending on the Company's objectives, however, the shareholders' mandatory subscription rights may conflict with the purpose of the capital increase. This requires the exclusion of existing shareholders from subscribing to new shares. However, the exclusion of subscription rights is subject to conditions that sometimes appear strict, so that possible errors have far-reaching consequences.

Increased capital requirements, whether to finance investments or to maintain liquidity in a tense economic situation, must increasingly be covered by equity capital. The reluctance of banks to grant loans is also prompting companies to consider alternatives for raising capital.

The capital increase represents the decisive capital measure if an investment acquisition is planned. This applies equally to the acquisition of a shareholding by the as well as to the acquisition of a shareholding in the company in question. If a capital increase takes place, shareholders of a stock corporation are entitled by law to a subscription right (Sec. 186 (1) AktG), which serves to protect the proportional maintenance of both their voting power and the assets embodied in the shares they hold. Such a subscription right is also recognized in the case of the GmbH.

Nevertheless, the interests of the Company may require the exclusion of the subscription right and thus override the interest of the shareholders in the protection of their shareholding granted by the subscription right. The possibility of excluding subscription rights serves to enforce the predominant interest of the Company.

Interest

The interest of the shareholders in the subscription right to which they are entitled by law, as described above, is often opposed by the overriding interest of the Company in excluding this subscription right.