All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

During a capital increase, new capital securities are issued either at their nominal value or at this amount increased by an issue premium . The issue value corresponds to the sum of the nominal value and the issue premium. The issue premium, considered as an additional contribution , aims to equalize the rights of existing and new shareholders when there are reserves or asset revaluations. It is  …

Issue premium

During a capital increase, new capital securities are issued either at their nominal value or at this amount increased by an issue premium . The issue value corresponds to the sum of the nominal value and the issue premium. The issue premium, considered as an additional contribution , aims to equalize the rights of existing and new shareholders when there are reserves or asset revaluations. It is the consideration for the rights that the new shareholder acquires over these reserves or revaluations .

In accordance with Article L. 225-129, the extraordinary general meeting is solely competent to decide, based on the report of the board of directors or the executive board, on an immediate or future capital increase. It may delegate this competence to the board of directors or the executive board under the conditions set forth in Article L. 225-129-2 of the Commercial Code . In this case, it is responsible for setting the duration, which cannot exceed twenty-six months, during which the delegation may be used and the overall ceiling of this increase. The delegation renders any previous delegation with the same purpose ineffective. Within the limits of the delegation given by the general meeting, the board of directors or the executive board has the necessary powers to set the issuance conditions, record the realization of the resulting capital increases, and make the corresponding amendments to the statutes.

A capital increase appears tainted by fraud when the issue price of the shares is 25 times the nominal amount of the old shares and is justified neither by reserves, which are nonexistent, nor by the company's prosperity . Similarly, an issue premium does not appear justified in principle when, at the time of the capital increase, the company was experiencing significant operating losses and substantial financial losses . Conversely, an issue premium that represents 59 times the value of the shares does not appear fraudulent when the amount of reserves, turnover, and stock value justifies its amount and the company's situation requires the contribution of equity capital .

Shares subscribed in cash must be paid up, at the time of subscription, to at least one-quarter of their nominal value and, if applicable, the entire issue premium . The payment of the surplus must occur, in one or more installments, within five years from the day the capital increase becomes final .

Commercial Code, Art. L. 225-128. See, for an application, CA Versailles, 30 November 2021, LawLex202300006083JBJ, specifying that when the valuation method for shares created during the conversion of OCA, set by the issuance contract, proves impracticable as it results in the issuance of shares whose value is below the nominal value or equal to zero, and the partners have neither set a method in case of null valuation of the company nor a minimum issuance value, it should be considered that the new capital securities must be issued either at their nominal amount or at this amount increased by an issuance premium.

See CA Paris, 28 November 2008, LawLex202300006669JBJ.

See CA Nîmes, 11 January 2023, LawLex202300006661JBJ.

Cass. com., 19 September 2006, LawLex202200011502JBJ, considering that the determination of the amount of the issue premium in the context of a capital increase decided by the extraordinary general meeting does not have to be carried out by the latter, but can be delegated to the board of directors.

Cass. com., 12 May 1975, LawLex202200011503JBJ.

Cass. com., 16 April 2013, LawLex202200005533JBJ.

Cass. com., 22 May 2001, LawLex202200011505JBJ.

Company Law (en cours)

93. Issue premium

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Les notions juridiques connexes

93. Issue premium

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise