Yes. A general meeting resolution increasing share capital may approve employees acquiring a specified number of shares below their issue price, provided the company covers the difference from its own resources (Section 204(4) of the Commercial Code). Existing shareholders' pre-emption rights are not an obstacle: by law, issuing shares to employees constitutes an important company interest justifying their exclusion.
How does preferential share pricing work?
When increasing share capital, the general meeting may resolve that employees will acquire a specified number of shares below their issue price, provided the company covers the difference from its own resources (Section 204(4) of the Commercial Code). The same resolution sets the terms for employees to subscribe and pay for the shares. The benefit is therefore a shareholder decision backed by the company’s finances, rather than a “discount from the board”.
Do shareholders’ pre-emption rights prevent this?
When capital is increased through cash contributions, existing shareholders have pre-emption rights to subscribe for new shares. These may be excluded only by a general meeting resolution in an important interest of the company. The law expressly states that where the increase aims to issue shares to employees, that important interest exists (Section 204a(5) and (7) of the Commercial Code). No elaborate justification is needed, but it must be properly reflected in the board’s report and the conduct of the general meeting.
Other tools available to a joint-stock company
Preferential subscription is not the only option. The articles of association may allow the company to acquire its own shares for transfer to employees without general meeting approval, but it must transfer them within 12 months (Section 161a(5)). The articles or general meeting may also provide for employees’ profit shares to be used to acquire shares (Section 178(4)). Transactions connected with employees’ acquisition of shares are also exempt from the strict financial assistance regime, provided equity does not fall below the statutory threshold (Section 161e(7)).
One restriction matters: all these simplified routes apply to the company’s employees, not external contractors. We can design a programme for the entire team, including contractors, through our ESOP and employee equity service.
This answer provides general information on the law as at 1 August 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
