Conditional capital

Conditional capital (capital conditionnel) is a form of authorised share capital increase pre-approved by the shareholders' general meeting of a Swiss company (CO art. 653), enabling the board to issue new shares without further shareholder resolution, within defined limits of amount and duration. It is primarily used to cover the exercise of conversion rights attached to convertible bonds, warrants or employee equity rights (BSPCEs, stock options). In fundraising, it provides flexibility for Swiss companies to issue dilutive instruments without convening a new general meeting at each exercise.

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Example: a Zurich startup creates conditional capital of CHF 500,000 (10% of current share capital) to cover future exercise of warrants granted to Series A investors. When investors exercise their rights 18 months later, new shares are issued directly by the board without general meeting formalities, providing a seamless and cost-efficient execution of the equity commitment.

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Hectelion documents conditional capital implications in cap table models during Swiss fundraising transactions.