So you have a so-called Delaware Corporation founded. Because (a) you want some presence in the American market, and (b) you’ve been told that Delaware Corporation “is the best around.” Because of flexibility and such.
And now you or your American corporation is slowly running out of money and you have to or want to carry out a capital increase. Or “expand”, as you say.
How does it work? How do you do such a capital increase?
a) Your German lawyer refuses. He wants nothing to do with US law. Too hot, i.e. subject to liability. That doesn’t cover his professional liability.
b) The American lawyer that you have already inquired about calls for an exorbitant hourly rate. So the capital increase goes straight back to the lawyer’s fees, think to yourself.
c) Do it yourself by simply googling it on the internet? Hm, maybe a bit too risky. In the end, as an external manager, you do something wrong and the whole thing blows up in your face. …
All right, I’ll take you by the hand and point you in the right direction.
So how do you do such a capital increase – or Stock Amendmentas the Americans say? The following steps are necessary:
1. Shareholders’ resolution
First you hold a shareholders’ meeting and let the company body responsible for this, e.g. the shareholders’ meeting, decide on the capital increase.
Take a look at the statutes to see who is responsible for what and which formalities must be observed when passing resolutions (e.g. notice periods, majority requirements, etc.).
You can change the number of shares (authorized shares) increase, another type of shares (class of shares) issue or the value of the shares (by value) raise.
If necessary, another corporate body must agree (approval). Check your articles of association.
2. Certificate of Amendment
What exactly you decided there, you keep in a so-called Certificate of Amendment Celebration. So, as I said, number of shares, Art (common/preferred shares), face value (by value) etc…
This Certificate must be signed by the relevant corporate body.
3. Filing (registration)
And last but not least, submit the Certificate of Amendment to Delaware Secretary of State a. Only with the registration or registration, the so-called filingthe capital increase will take effect.
Yes, that’s actually it. I wish you success!
dr Wolfgang Gottwald
Attorney at Law