What is a new share issue?
A new share issue (nyemission) is when a limited company issues new shares to raise capital. The total number of shares rises, so existing owners' stakes are diluted. New share issues are one of the most common ways unlisted growth companies finance themselves — every funding round is, in practice, a new share issue.
"Emission" is the broader term for issuing securities; a new share issue specifically means issuing new shares for payment. This guide covers how a new share issue works, the types that exist, and how you can take part as an investor.
Types of new share issue
The type of issue a company chooses affects who may subscribe and how existing owners are affected.
| Type | Who may subscribe? | Effect on existing owners |
|---|---|---|
| Rights issue | Existing owners, pro rata to holding | Can avoid dilution by subscribing |
| Directed issue | A selected group, e.g. a strategic investor | Diluted, with no chance to take part |
| Issue in kind | Whoever contributes assets, e.g. a company | Diluted; no cash capital comes in |
A rights issue protects existing owners from dilution, while a directed issue is faster but disadvantages those who cannot take part. In an issue in kind, the new shares are paid for with assets other than cash.
How is the price set?
The price per new share is called the subscription price. In an unlisted company there is no ongoing market price, so it is set from a valuation of the company — often based on the latest funding round, future prospects and negotiation with investors. The subscription price determines both how much capital the company raises and how much dilution existing owners face.
How to take part in a new share issue
If you are invited to subscribe in a new share issue, it usually works like this:
- You receive an information memorandum or prospectus with the terms — number of shares, subscription price and subscription period.
- You apply for how many shares you want to subscribe within the subscription period.
- In a rights issue you use your subscription rights; if you hold more rights than you want to use, they can often be sold.
- You pay for the shares allotted to you.
- Once the issue is registered with Bolagsverket, the new shares are valid and entered in the share register.
New share issues and secondary trading
It is important to distinguish between subscribing for new shares in an issue and buying existing shares on a marketplace. In a new share issue the money goes to the company and new shares are created. When you buy shares in secondary trading — for example on Accumeo — you buy existing shares from another owner, and no new shares are created. On Accumeo, trading is mainly in existing shares.
Summary
A new share issue is how a company raises new capital by issuing new shares. The type of issue determines who may take part and how existing owners are affected, and the subscription price drives both the capital and the dilution. As an investor, it helps to understand the difference between subscribing in an issue and buying existing shares in the secondary market.