What is a capital increase?

A capital increase is the increase of capital of a society. It is a financial operation carried out with the aim of increasing theown fundsof the company and be able to make new investments.

To carry out capital increases, companies can issue new actions, increase the value of existing shares, or carry out a capital increase charged to reserves. In this last option, the capital increase is paid by the reservations, which are the profits of the company that have not been distributed among the shareholders.

Types of shares in the capital increase

Depending on the value of the new shares in a capital increase, the shares can be:

  • At par: the new shares that are issued have the same nominal value as the previous ones.
  • On par: these shares are issued in the capital increase with issue premium. Investors who decide to attend the capital increase must pay an additional price for each new share they buy. The objective is to protect the interests of the previous shareholders and avoid the loss of the value of their shares.
  • Released: shares released they are issued in the capital increase charged to reserves. The shares are made with the undistributed profits of the company and therefore do not have any for the shareholders.

In capital increases, current shareholders have a preferential subscription right. This means that they have priority when carrying out the subscription of the new shares issued by the company. On the one hand, the former shareholders have the possibility of buying the shares that the company allows and at the corresponding price. However, this right is optional, so you may not exercise the right to pre-emptive shares or sell it to another shareholder interested.



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