October 18, 2022
What is an Agio?
An Agio is defined as a premium or extra charge that is brought into the company in excess of the nominal value of shares. In addition, the term also refers to the markup or premium by which the repayment amount of a loan exceeds the nominal amount. The Agio is often expressed as a percentage for the purchase and sale of securities. If securities are issued by companies with such a premium, the income generated by the premium must be transferred to the company as capital reserves. The buyer thus pays more than the actual nominal value through the premium.
In the context of capital investments, corresponding premiums or discounts (disagio) are customary, especially in the case of company investments, and represent the sales commission which is ultimately not available as invested capital.
What to distinguish the agio from?
A distinction must be made between the classic share premium under company law or membership fees pursuant to section 272 (2) No. 1 German Commercial Code (HGB) and a subsidy, i.e. another additional payment pursuant to section 272 (2) No. 4 HGB. The obligation to pay the premium is between the company and the obligor. However, an obligation to make an additional payment in accordance with section 272 (2) No. 4 HGB can be agreed between the shareholders.
What is the most common way to invest in start-ups?
In investment agreements between investors and start-up companies, additional payments in accordance with section 272 (2) No. 4 HGB have become generally asserted because they are easier to handle. From the point of view of the investors, in particular, a commitment to the company is not desired, as this would remain in place even in the event of a lack of liquidity. This can increase the investor's risk, especially in the case of milestone based financing.