What does share capital mean?
The share capital forms the share capital of a public limited company. The amount of the share capital corresponds to the amount contributed by the shareholders. Changes to the share capital are only possible in compliance with strict legal regulations.
Liberation of share capital
In addition to the subscription of shares, the payment of the share capital is one of the basic requirements for the formation of an AG. The payment of the share capital fulfills the capital contribution obligation arising from the share subscription by paying the issue amount. Payment is made in the form of cash or the contribution of tangible assets, e.g.real estate or machinery.
Amount of share capital
The amount of the share capital is determined in the articles of association when the public limited company is founded and divided into individual shares. The minimum capital of a public limited company in Switzerland is CHF 100,000 (Art. 621 of the Swiss Code of Obligations). At least 20 percent of this must be paid in (paid up), but the minimum amount is CHF 50,000 (Art. 632 CO).
Shareholder participation in the share capital
Any number of shareholders may participate in the share capital. A shareholder participates in the share capital in proportion to the nominal value of his shares. The nominal value must be at least one centime (Art. 622 CO).
Share capital increase
Capital increases may be necessary in order to remain competitive or to make important investments. Increases can also be made to reduce borrowed capital in order to reduce the overall financial burden on the AG.
When increasing share capital, a distinction is made between ordinary, authorized and conditional capital increases. Articles 650 to 653 of the Swiss Code of Obligations (CO) form the legal basis for the increase:
Ordinary capital increase
(Art. 650 OR)
Increase in share capital by resolution of the Annual General Meeting. The capital increase must then be implemented by the Board of Directors within three months.
Authorized capital increase
(Art. 651 CO )
The General Meeting of Shareholders decides on the possibility of increasing the share capital by a certain amount within a maximum period of two years – but no more than 50 percent of the existing share capital. The Board of Directors decides at its own discretion when to implement the increase.
Conditional capital increase
(Art. 653 OR )
In this case, the General Meeting may decide to increase the capital by granting conversion or option rightsor employees the right to subscribe to new shares. However, the decision to increase the share capital is not made by the Board of Directors. Rather, the increase depends on the shareholders deciding to subscribe to new shares.