Required reading

1. EU: Second Company Law Directive, arts. 1(1), 2c, 3, 6–11

2. D: AktG, §§ 6–10, 23(2) nos. 2 and 3, (3) nos. 3–5, 26, 27, 29, 31–38, 46–54, 63–66(1), 150–152; GmbHG, §§ 3(1) nos. 3 and 4, §§ 5, 7(2) and (3), 8(1) and (2), 9–9c, 19(2) and (5); HGB, §§ 266(3)(A), 272

3. UK: CA 2006, secs. 542, 580–587, 593–598, 610–615

4. US: Scan for comparison: DGCL, §§ 102(a)(4), 152–154, 156, 162–164, and Model Act, § 6.21 (including nos. 1 and 2 of the Official Comment); DGCL, §§ 101–108, 124; Model Act § 2.04

The function of share capital and rules governing its constitution

Introduction

The “par” or “nominal” value of shares

It is an essential characteristic of a stock corporation that the company is owned by investors who receive transferable shares of stock certificating their rights as members and owners: this is exemplified by referring to such persons as “shareholders” (Aktionäre). If – as might be the case at the outset – the only assets of a stock corporation were the contributions of cash and assets made by its shareholders in exchange for their shares, the company's “capital” would equal the sum of such contributions for shares: it would be “share capital.” In Chapter 3, we saw that differences in capital requirements led to regulatory competition among charters for private companies in Europe in the late 1990s, and, in Chapter 4, we discussed how, in connection with the incorporation of a company, incorporators must specify the initial share capital.