A new share issue is an event where a company issues (emits) new shares by bringing in new, external capital in the form of cash from existing and/or new shareholders. The new capital added to the company increases the company's share capital by the number of newly issued shares multiplied by the shares' quota value. If the price per share exceeds the quota value of existing shares, the excess amount is recorded as unrestricted equity.
The decision to carry out a new share issue is made at a shareholders' meeting by a simple majority, and existing shareholders have pre-emptive rights to subscribe for the new shares in proportion to the number of shares they already own. If a new share issue is to be directed, deviating from the current shareholders' pre-emptive rights, the meeting's resolution must be passed with at least a two-thirds majority.
The purpose of a new share issue can be to finance the expansion of operations, but it may also be necessary if the company needs to raise new capital to avoid bankruptcy. The need for new capital to finance operations can also be combined with complementary goals such as providing an opportunity for strategic investors to become shareholders or otherwise broadening the shareholder base.