Christoph Nauer, corporate and capital markets partner at bpv Hügel reports on capital issuances with exclusion of subscription rights at the seminar shareholders’ meetings of stock corporations on 20 February 2018 (Business Circle seminar series capital markets law 2018).
For listed companies capital issuance with exclusion of subscription rights are practically very relevant. It is a sensitive topic: The subscription right is one of the core shareholder rights. In contrast thereto it is in the interest of the company to have flexibility to address the capital markets and to issue with and under optimized conditions. Of course this is also in the interest of the shareholders. In order to justify an exclusion of subscription rights the interests of the company must outweigh the interests of the shareholders.
The lecture addresses capital issuances with exclusion of subscription rights:
- Authorized capital
- Share capital increase against contribution in cash and in kind
- Convertibles – authorization according to sec 174 Stock Corporation Act
- Conditional capital
- Sale of treasury shares
In detail: announcement and publication requirements, agenda of shareholder’ meetings, reporting obligations, shareholders’ authorizations to exclude subscription rights vs direct exclusion. Obligations under stock exchange law Shareholder rights (challenge of resolutions, measures against board decisions).
In particular for listed companies with widespread shareholder base (free-float) the voting policies of proxy advisors (Institutional Shareholder Services Inc. (ISS), Glass Lewis & Co, IVOX etc.) are of high importance. In particular for capital issuances with exclusion of subscription rights. A high number of institutional investors take the voting recommendations of proxy advisors into consideration.