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In late June the Government released draft legislation which would permit German stock corporations (Aktiengesellschaften) to issue stock without par value. Currently, par value of DM 5 or a multiple thereof is required.
If the draft legislation becomes law, stock corporations will have to decide whether to issue shares with or without par value starting in mid-1998. Mixing will not be allowed. Stock corporations with non-par value stock would be permitted to increase their stated capital from retained earnings without issuing new stock.
Behind the change is the impending introduction of the Euro as the single European Union currency. Uneven fractional par values would result if DM par value stock were converted into Euro. By switching to non-par-value stock, this problem can be avoided. Otherwise, cumbersome increases in capital will have to be conducted to arrive at even numbers at the latest when the transition phase is over and the national currencies cease to exist as subdivisions of the Euro (currently scheduled for 1 January 2002 - see article no. 62).
While the draft legislation would permit stock without par value, it will not do away with the concept of stated capital. Non-par-value stock will thus have a "fictional par value" arrived at by dividing stated capital by the number of shares of non-par-value stock outstanding.
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