The table below deals with the different forms of participation and their legal bases of raising capital at the German capital market. The effects and results are only described from the balance-related point of view of the entrepreneur (not of the investor):
Equity Capital | Equity Substitute | Outside Capital | |
Form of participation | -share holding -share of an Ltd. -share of partnerships in commerce -limited partner’s share |
atypical silent participation; participation right | loans; bearer bond; typical silent partnership |
Questions of ownership of property when borrowing | modification of questions of ownership of property after partial share | questions of ownership of property unchanged | questions of ownership of property unchanged |
Return on capital | profit-related | minimum distribution and profit-related | usually fixed rate of interest |
Advantages and disadvantages of the accounts | increase of the equity quota | increase of the equity quota, atypical silent partnership as loss adjustment instrument | increase of the outside capital quota, merely cash advantages |
Liability risk and risk of loss | loss sharing and risk of insolvency | risk of loss of earnings, risk of insolvency, especially in cases of inferior liability | exclusion from loss and liability, the financier is the insolvency creditor |
External liability | restricted to deposit liabilities | restricted to deposit liabilities | none |
Duration of capital lock-up | temporary unrestricted or rather long-term up to liquidation | temporary restricted, participation right, also unrestricted | temporary restricted |
Cash return of the deposit | excluded, ban of deposit refunding | yes, as far as it is not excluded by contract | yes, predestined redemption |
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