MKB Juristen drafts custom legal documents
It is best not to cobble together or copy important contracts, terms and conditions, and other legal documents yourself. We help entrepreneurs on a budget with customized legal solutions, clear costs upfront, and practical explanations.
- Custom contracts, terms and conditions, and legal documents
- Budget-friendly and clear about the costs upfront
- Request a free consultation or a no-obligation quote
Share premium is the amount that a shareholder pays in addition to the nominal value upon the issuance of shares. This premium payment is placed in the share premium reserve (equity) and is a way to contribute capital without issuing new shares. You set out the terms of such a payment in a share premium contract.
What is premium?
Shares have a nominal value. If a shareholder pays in more than that nominal value, it is called the excess share premium. For example: shares with a nominal value of 1 euro are issued or fully paid up for 100 euros; the 99 euro difference is the share premium. The share premium strengthens the company's equity without adding any extra shares.
Why a share premium payment?
A share premium contribution is a way to bring money into the company, for example to invest or strengthen capital, without changing the share ratios. This can be advantageous for shareholders, partly because share premium can be repaid tax-free at a later date under certain conditions. (The tax implications are tailored to each specific situation; discuss these with your tax advisor.)
What is stated in a share premium contract?
In a share premium contract (or share premium payment agreement), you specify: who pays the share premium, the amount involved, which shares it relates to, and the conditions — for example, whether it concerns tied or freely distributable share premium and how and when repayment is possible. Clear agreements prevent disputes between shareholders.
Align it with the structure
A share premium contribution affects equity, shareholder relations, and taxation. Therefore, align the share premium contract with the articles of association and any shareholders' agreement, and have the tax implications assessed. This way, you utilize the benefit without surprises.
Frequently Asked Questions
What is the difference between nominal value and premium?
The nominal value is the value stated on the share; premium is the amount paid in addition to that.
Can share premium be repaid later?
Under certain conditions, yes, sometimes tax-free. The tax implications require a tailored approach; have this assessed.
Do I need a share premium contract?
Highly recommended: it sets out the amount, the shares, and the terms, and prevents disputes between shareholders.
Arranging a share premium payment properly?
Our legal experts draft a share premium contract and align it with your shareholders' agreement. View our corporate lawteam or schedule a free consultation.
