Capital increase – a cost trap? Current BGH ruling gives reason to draft articles of association at an early stage

  • 11/22/2023
  • Reading time 4 Minutes

In its decision of September 12, 2023 - II ZB 6/23 (BeckRS 2023, 29212), the Second Civil Senate of the German Federal Court of Justice (“BGH”) decided a long-disputed cost issue: Accordingly, a premium (agio) agreed in close connection with the capital increase can also be taken into account in order to determine the (statutory) notary fee of a capital increase resolution.

The transaction value of the capital increase resolution can thus be increased considerably compared to the capital increase’s nominal amount thus considerably increasing the costs for the company concerned. However, this can be largely avoided by drafting the articles of association with foresight. It is therefore advisable to include appropriate provisions in the company's articles of association in good time, namely when a capital increase is not yet specifically planned but is expected as a possible scenario.

After a long period of controversy as to which value should be used as the capital increase’s transaction value, the BGH has now provided clarity (which is unpleasant from a company’s perspective): According to a recent BGH decision, the capital increase’s nominal amount is not the only relevant amount. Instead, the premium exceeding the issue price can also be taken into account when determining the notary fees with a value-increasing effect. This applies even if the corresponding regulation was made in a separate agreement between the shareholders. This is because the value of the resolution’s subject matter, which is decisive in determining the transaction value, is significantly determined by the value of the company share the transferee acquires upon entry in the commercial register. Contractual agreements between the shareholders provide at least a significant indication of this.

In the case underlying the BGH’s decision, the shareholders had decided to increase the share capital by a nominal amount of EUR 16,270. In the previously notarized investment agreement, an additional payment to the capital reserve pursuant to Art. 272 (2) No. 4 HGB (German Commercial Code) in the amount of almost seven million euros had been agreed for the newly issued shares. The certifying notary had therefore set the maximum value of five million euros as the transaction value in accordance with Art. 108 (5) GNotKG (German Court and Notary Costs Act). In contrast hereto, Art. 108 (2) S. 2 in conjunction with Art. 105 (1) S. 1 no. 3 GNotKG would have assumed a fee value of EUR 30,000. A 2.0 fee is charged for the notarization of a capital increase (KV 21100 GNotKG). When using the economic value as a basis in accordance with the BGH, the costs for the capital increase resolution amount to EUR 16,270 (plus VAT if applicable) instead of notary fees of EUR 250 (plus VAT if applicable) to be expected when applying the nominal amount.

Financing rounds can now lead to much higher costs – forward-looking planning can help

In future, the fee value of shareholder resolutions will have to be measured exclusively against the actual economic value of the capital increase and will therefore be based upon agreements on a contractually agreed premium. This is expected to lead to higher costs. However, in order to avoid having to use large parts of the newly raised capital for notary costs, it is important to think about possible financing rounds in advance: there is considerable potential to save notary fees, for example, if authorized capital (Art. 55a GmbHG (German Limited Liability Companies Act)) is created at an early stage. A provision can be included in the company’s articles of association at the time of formation, but also at a later date, according to which the management is authorized to increase the share capital up to a certain nominal amount for a period of up to five years. The authorized capital can be created up to an amount of half the share capital at the time of authorization. A GmbH with share capital of EUR 25,000 can therefore provide for authorized capital of up to EUR 12,500. In contrast to a stock corporation, the shareholders of a GmbH can also issue instructions to the management as to the authorized capital’s use.

The costs of a capital increase based on authorized capital are often reduced compared to an “ordinary” capital increase, especially for start-ups. In general, costs can be saved in particular if the authorized capital is already created upon the company’s formation.

Possible cost reduction – even if no authorized capital has been included in the articles of association

For example, companies could consider utilizing the degression effect pursuant to Art. 35 GNotKG by combining the participation agreement and the capital increase resolution in one deed. Finally, the BGH’s decision once again gives reason to also consider cost aspects when drafting articles of association.

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Authors of this article

Leonie Kröhnke

Senior Manager

Attorney-at-law (Rechtsanwältin), Specialist Lawyer for Commercial and Corporate Law

Daniel Laws


Attorney-at-Law (Rechtsanwalt), Specialist Lawyer for Commercial and Company Law

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