Capital Enlargement of Companies that Quote on the Market

When a company decides to enlarge its social capital and issue shares, different possibilities are at hand:

issuance of bonus shares for the current shareholders. It consists in granting shares without the shareholders having to do any payment. In spite that in this operation the actual funds of the company do not vary because it only represents more shares the market usually accepts these type of measures. In fact the main advantage of this measure is that the shares usually gain more liquidity.

A public sales offer of shares to begin the quotation on the market. In this case, the current shareholders renounce to their rights of preferential subscription in order to put the shares on the market.

Issuance of shares of the company to acquire shares of other companies. This obligation is equally done when the shares of the company that does the purchase are well valued in the market. It is an operation that is done when you do an operation of doubles or when you want to make fusion between companies. For it, the current shareholders also have to renounce to their right of a preferential subscription.

Issuance of shares to distribute to those who exercise the rights of conversion of bonds or of convertible debentures or of warrants

Issuance of shares with rights of preferential subscription. In this case, the shareholders may buy the new shares in a proportion equal to the number of shares owned before the enlargement of capital, or well, to sell their rights on the market. In case they are not interested in acquiring more shares.

In this way, when the enlargement begins, the society quotes in two markets: that of old shares and that of rights for subscription. For those with rights a primary market starts working and from which you can exercise the rights until the subscription of the shares.