New share issue in a limited company – rights issue, private placement and step-by-step decision-making

Short answer: A new share issue means that a limited company issues new shares in exchange for payment, thereby increasing the share capital. The procedure is regulated in Chapter 13 of the Swedish Companies Act and requires a proper resolution to issue shares, subscription, payment, and registration.

What must the share issue resolution include?

The resolution must, among other things, address the increase amount, number of shares, subscription price, who is entitled to subscribe, subscription period, payment period, and how any share premium is to be treated.

Rights issue

The main rule is that existing shareholders have pre-emptive rights in proportion to their shareholdings. This form is often used when one wishes to give existing owners the opportunity to maintain their relative ownership stake.

Directed issue

In a directed issue, the pre-emptive right is waived. In such cases, the grounds for the deviation, the subscription price, and the principle of equal treatment become particularly important. The board and the general meeting should be able to explain why the issue is in the company's interest.

Subscription price and valuation

The subscription price should be justifiable. A low price can create significant transfers of value between existing and new owners and raise questions regarding minority protection and board liability.

Documents normally required

• board proposal or board resolution in case of authorization,
• minutes from the general meeting,
• subscription list or other permitted subscription method,
• supporting documentation for payment,
• any auditor's statements,
• registration documents.

FAQ

Can the board decide on a new share issue?

In certain cases, including with support from a general meeting authorization or with subsequent approval according to the rules of the Swedish Companies Act. The documentation must be adapted to the form of the resolution.

What is the difference between a rights issue and a directed issue?

In a rights issue, existing owners are allowed to subscribe proportionally. In a directed issue, the shares are instead offered to a specific group.

Is the subscription price the same as the quota value?

No. The subscription price is the price per new share. The quota value is the share capital divided by the number of shares.

This article provides general information and does not replace individual legal advice. Agreements, collective agreements, and the circumstances of each individual case may affect the assessment.