Hlutafjáraukning

Hlutafjáraukning, often translated as share issue or capital increase, is a process by which a limited liability company increases its share capital. This is typically done to raise funds for various purposes, such as expanding operations, investing in new projects, acquiring other companies, or strengthening the company's financial position.

There are several methods by which a company can undertake a hlutafjáraukning. One common method is a rights issue, where existing shareholders are offered the right to purchase new shares, usually at a discount, in proportion to their current holdings. This allows existing shareholders to maintain their ownership percentage. Another method is a private placement, where new shares are offered to a select group of investors, such as institutional investors or venture capitalists, without offering them to the general public or existing shareholders. Companies can also issue shares to the public through an initial public offering (IPO) or a secondary offering, which involves selling shares on a stock exchange.

The decision to conduct a hlutafjáraukning is usually made by the company's board of directors and requires approval from the shareholders, often at a general meeting. The process involves legal procedures, including amending the company's articles of association and registering the new shares with the relevant authorities. The funds raised from a hlutafjáraukning can significantly impact a company's balance sheet, increasing its equity and potentially improving its debt-to-equity ratio. This can, in turn, enhance the company's borrowing capacity and overall financial flexibility.