Capital increase of a stock corporation: Process, Forms & Requirements
Jul 8, 2025
Introduction
The capital increase of a stock corporation is an important step to strengthen the financial base of a company. It allows LLCs to raise additional equity and expand their ability to act. This strategic measure becomes particularly relevant with the revised Stock Corporation Law 2023. With the new instrument of the capital band, companies gain more leeway in shaping their capital. This guide is aimed at companies that wish to achieve their growth targets through a capital increase.
What is a Capital Increase?
A capital increase refers to the increase of the share capital of a stock corporation by issuing new shares or increasing the nominal value of existing shares.
The decision for a capital increase can have various economic motivations. Many companies aim to expand and need additional capital to enter new markets or expand their production capacities. Investments in new technologies also often require significant financial resources, which can be raised through a capital increase. Another important motivation can be strengthening the equity base, thereby improving the company's financial stability.
The decision between equity and debt capital depends on the business strategy, market conditions, and the financial situation of the stock corporation.
Types of Capital Increases in the LLC
Swiss stock corporation law recognizes three different types of capital increase, which differ in their procedures and application areas.
Ordinary Capital Increase
The ordinary capital increase is the traditional and most commonly used form of capital increase in Swiss stock corporation law. It can be achieved either by increasing the nominal value of existing shares or by issuing new shares. This form is characterized by a structured process that includes various legal and formal requirements. The resolution of the general meeting must meet the following requirements:
As a rule, the absolute majority of the nominal values of shares represented
Exception: A two-thirds majority of votes represented is required in the case of a capital increase through contribution in kind or set-off with a claim
The board of directors must apply for the registration of the capital increase with the commercial register within six months after the general meeting resolution. The new shares can only be issued after the commercial register entry.
Conditional Capital Increase
The conditional capital increase allows for a flexible adjustment of share capital based on specific conditions. The conditional capital increase is decided at the general meeting, and the share capital then increases automatically once certain prerequisites are met - without a renewed resolution of the general meeting.
Typical Applications:
Convertible bonds: Creditors can convert their claims into shares
Employee participation programs: Issuance of stock options to employees
The conditional capital increase must be anchored in the statutes and may not exceed 50% of the existing share capital. Shareholders waive their subscription rights in favor of the defined beneficiaries in this form.
Case Study
The Tech Innovations stock corporation plans a conditional capital increase to motivate its employees through company participation. In the general meeting, it is decided that the share capital can be increased by a maximum of 20% if employees exercise their options.
Once the employees decide to convert their options into shares, the capital increase takes place automatically without further resolution of the general meeting. The statutes of Tech Innovations stock corporation include this regulation and ensure that shareholders waive their subscription rights to enable employees to access the new shares.
With this measure, the Tech Innovations stock corporation not only strengthens the motivation of their employees but also enables a flexible adjustment of capital according to corporate goals.
Capital Band
The capital band is a flexible instrument that allows companies to increase or decrease their equity base within a set framework.
The capital band empowers the board of directors to adjust the share capital entered in the commercial register for a period of up to five years within a range previously set by the general meeting. Within this authorization, the board has the possibility to change the share capital flexibly and as needed.
Key Features:
Flexibility in capital adjustment
Increase or decrease of share capital within set limits
Statutory anchoring required
Maximum increase respectively: 50% of the currently registered share capital
It is important to note that the implementation of the capital band in the form of a reduction in capital is only possible if the stock corporation has been audited.
Practical Advantages:
Responsiveness to market changes
Possibility of quick capital raising without a general meeting resolution
The capital band offers companies an attractive way to dynamically shape their financing strategy and quickly adapt to changing market conditions.
Case Study
Tech & Consult Zürich stock corporation decides to introduce a capital band to the existing capital of CHF 1,000,000 with a lower limit of CHF 500,000 and an upper limit of CHF 1,500,000 - thus the maximum upwards and downwards. When a promising takeover opportunity of a competitor arises, the board of directors can increase the share capital to CHF 1,300,000 within a few days to finance the acquisition.
A few months later, after successful integration of the acquired company and increased liquidity, the board of directors decides on a reduction in capital to CHF 800,000 to return excess capital to shareholders. This flexibility allows Tech & Consult Zürich stock corporation an optimal adjustment of its capital structure to the respective business situation without having to convene time-consuming general meetings.
Legal Framework Conditions in the Revised Stock Corporation Law Since 2023
Minimum Deposit Per Share
The stock corporation law was extensively revised in 2023 and brings significant changes for capital increases. It is now allowed to issue shares with a nominal value of less than CHF 0.01 - provided the nominal value is greater than zero. Often used are nominal values of CHF 0.01 (1 cent) or CHF 1.
Share Capital in Foreign Currencies
Since the stock corporation law revision in 2023, LLCs are allowed to maintain their share capital in a functional foreign currency, provided it is essential for business activities. Currently, Euro, US Dollar, British Pound and Japanese Yen are permissible according to Annex 3 of the revised Commercial Register Ordinance. A change in the capital currency can be decided by the general meeting at the beginning of a financial year. This simplifies the capital structure, especially for companies that already keep their accounts in a foreign currency.
Types of Contributions - How Can Capital Be Contributed?
In a capital increase, the new share capital must be contributed. In Switzerland, three main types are common:
1. Cash Contribution
The most common form: New shares are subscribed by depositing money into a frozen account. It is particularly suitable for financing growth.
2. Contribution in Kind
Here, the contribution of assets such as real estate, vehicles, or patents takes place instead of money. This method requires an appraisal by an auditor and a disclosure in the commercial register.
3. Set-off with Claims
Existing claims against the LLC can be converted into shares. This method is often used to convert liabilities into equity capital and improve the equity structure.
Each method is subject to clear legal requirements (especially OR 652 ff.) and must be carefully planned and documented.
Conclusion
The capital increase of a stock corporation is an important tool for strategic corporate financing. The different types - ordinary, conditional, and approved capital increase - offer companies flexible options for raising capital:
Growth Financing: Targeted investments in new markets and business areas
Liquidity Assurance: Strengthening the financial base for operational business activity
Strategic Partnerships: Integration of new shareholders for corporate development
The legally compliant execution of a capital increase requires in-depth expertise in Swiss stock corporation law. Take advantage of our experience for an efficient and legally secure capital increase. Jurata is at your side as a competent partner.