Share issue

A share issue (emisjon) is a process in which a company issues new shares in order to increase its equity. This may be done in order to raise capital to cover debt, finance growth or improve liquidity. By selling new shares to investors, the company can bring in money without having to take on a loan. A share issue can also be used to settle debt, by offering shares instead of cash.

Different types of share issue

There are several types of share issue, each with its own specific purposes and methods:

1. Directed share issue (rettet emisjon): The company approaches a specific group of investors, and the offer is not available to everyone. Because this sets aside the existing shareholders' pre-emption rights, this type of issue requires a specific justification and a resolution of the general meeting.
2. Rights issue (fortrinnsrettet emisjon): Existing shareholders are offered the opportunity to buy the new shares. This protects them against dilution of their holdings.
3. Public offering (børsemisjon): The offer to buy new shares is made available to all investors through the stock exchange.
4. New share issue (nyemisjon): A general term for issues in which the company is supplied with new capital or has its debt reduced. Directed issues, rights issues and public offerings are all variants of a new share issue.
5. Bonus issue (fondsemisjon): The company's retained earnings are converted into share capital, without any new money being supplied to the company. This is often done in order to lock up part of the profit, so that it cannot be taken out as a dividend.

Why are share issues carried out?

The most common reasons for a company to carry out a share issue include:

• Capital requirements: To cover debt or losses.
• Development and expansion: To finance growth projects or expansion.
• Liquidity: To improve the company's liquidity.
• Assets for shares: To transfer assets into the company in exchange for shares.
• Debt conversion: To convert debt into shares.

How does a share issue work?

A share issue must be resolved by the company's general meeting, often on a proposal from the board. The general meeting may also authorise the board to resolve the issue. Once the issue has been resolved, it must be reported to the Register of Business Enterprises (Foretaksregisteret, part of the Brønnøysund Register Centre) through the coordinated register notification (Samordnet registermelding) in order to take effect. Only then does the increase in share capital take place, and only then can it be recorded in the accounts.