The share subscription term is the period of time available to shareholders or new shareholders to subscribe for new shares of a company in a capital increase.
The pre-emptive subscription right allows the shareholder of a company to maintain the same percentage of participation in the capital stock as before a capital increase took place. In this way, the shareholder has the option of acquiring a certain number of shares at a reduced price before those who are not shareholders.
To exercise this right, a specific period of time is established. In said period, the shareholder, or new shareholder, can go to acquire shares of the capital increase. Once the established period has been exceeded, the pre-emptive right that we have mentioned above will not be able to be exercised.
If an investor, who is not yet a shareholder of the company, wishes to attend the capital increase, he can go to the market to buy said pre-emptive subscription right. These subscription rights can be bought or sold during this period. While it is true, they must also be executed within it.
In the case of Spain, companies that are listed on the stock market must establish a period of 15 days to exercise the pre-emptive subscription right. If the company is not listed on said market, it will be one month from the publication of the capital increase.
What happens if not all the issued shares are sold within the subscription period?
Sometimes, it is not possible to sell all the shares of the capital increase within the established period.
Under this circumstance, the General Shareholders' Meeting must decide whether to establish a new term, or, alternatively, to consider the capital increase as completed.
Subscription term example
Suppose we are the managers of a company that works within the artificial intelligence sector, with the development of algorithms.In order to carry out a new project, related to the implementation of artificial intelligence in the traffic lights of a city, we require funding or financing.
In the Board of Directors of the company we decided to obtain the necessary financing by carrying out a capital increase of 150 million dollars. Along with this, we decided that the subscription term for the new shares will be 15 days from the moment the capital increase is open.
In conclusion, the subscription period is the period of time available to a shareholder or investor to acquire new shares in a company, when it carries out a capital increase. Once this period has passed, no more shares may be subscribed.