KPMG Germany Webpage
Click on the above link to visit the KPMG Germany webpage on the Mondaq website
For disclaimer and copyright see end of this article.

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.

This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. We in particular insist that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While our articles are carefully reviewed, we can accept no responsibility in the event of any inaccuracy or omission. Please note the date of each article and that subsequent related developments are not necessarily reported on in later articles. Any claims nevertheless raised on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Deutsche Treuhand-Gesellschaft AG (KPMG Germany). Distribution to third persons is prohibited without our express written consent in advance.