Issue of participation certificates

Issue of participation certificates

The company can use non-voting, pre-IPO shares to implement capital increases without compromising its ability to act.

The participation certificates, most of which are issued by Swiss stock corporations, are essentially pre-IPO "non-voting shares" that are issued in different tranches at prices set by the company, usually at increasing prices. The holders of participation certificates are personally listed in the company's share register (participation book), but do not receive any voting rights.

Participants are primarily entitled to property rights and subscription rights: the right to participate in net profit or dividends and to the distribution of liquidation proceeds as well as the right to subscribe to new shares.

With the introduction of these effects, the need for equity without voting rights and for the issue of a tradable non-voting share with a low par value was taken into account.

The first participation certificate was listed on the Swiss stock exchange in 1963.

In principle, the German Stock Corporation Act applies to participation certificates, unless the law provides for deviations.

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Advantages for companies:

Participation certificates are a particularly suitable capitalization method for companies that can offer investors the prospect of a medium-term feasible plan for an exit scenario such as an IPO, tokenization or takeover by a large corporation.

Participation certificates result in a slight dilution of the dilution of the ownership structure, as the issue price of the participation certificates is usually significantly higher than the nominal value. As the proceeds from the sale of the participation certificates flow directly into the company, the company's liquidity is not used for interest or loan repayments.

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