24 Equity

The subscribed capital of Volkswagen AG is composed of no-par value bearer shares with a notional value of €2.56. As well as ordinary shares, there are preferred shares that entitle the bearer to a €0.06 higher dividend than ordinary shares, but do not carry voting rights.

The Annual General Meeting on May 14, 2019 resolved to create authorized capital of up to €179 million, expiring on May 13, 2024, to issue new preferred bearer shares.

The capital reserves comprise the share premium totaling €14,225 million (previous year: €14,225 million) from capital increases, the share premium of €219 million from the issuance of bonds with warrants and an amount of €107 million appropriated on the basis of the capital reduction implemented in 2006. No amounts were withdrawn from the capital reserves.

DIVIDEND PROPOSAL

In accordance with section 58(2) of the Aktiengesetz (AktG – German Stock Corporation Act), the dividend payment by Volkswagen AG is based on the net retained profits reported in the annual financial statements of Volkswagen AG prepared in accordance with the German Commercial Code. Based on these annual financial statements of Volkswagen AG, net retained profits of €4,028 million are eligible for distribution following the transfer of €3,165 million to the revenue reserves. The Board of Management and Supervisory Board will propose to the Annual General Meeting that a total dividend of €2,419 million, i.e. €4.80 per ordinary share and €4.86 per preferred share, be paid from the net retained profits. Shareholders are not entitled to a dividend payment until it has been resolved by the Annual General Meeting.

A dividend of €4.80 per ordinary share and €4.86 per preferred share was distributed in fiscal year 2020.

HYBRID CAPITAL

In June 2020, Volkswagen AG placed two unsecured subordinated hybrid notes with an aggregate principal amount of €3.0 billion via a subsidiary, Volkswagen International Finance N.V., Amsterdam, the Netherlands (VIF). The hybrid notes are perpetual, but may be called unilaterally by VIF. The first possible call date for the first note (€1.5 billion and a coupon of 3.500%) is after five years, and the first possible call date for the second note (€1.5 billion and a coupon of 3.875%) is after nine years. This resulted in an inflow of cash funds amounting to €2,984 million, less transaction costs of €16 million. Additionally, there were noncash effects from the deferral of taxes amounting to €5 million.

Interest may be accumulated depending on whether a dividend is paid to Volkswagen AG shareholders. Under IAS 32, these hybrid notes must be classified in their entirety as equity. The capital raised was recognized in equity, less a discount and transaction costs and net of deferred taxes. The interest payments payable to the noteholders will be recognized directly in equity. IAS 32 only allows these hybrid notes to be classified as debt once the respective hybrid note is called.

NONCONTROLLING INTERESTS

As of December 31, 2020, noncontrolling interests amounted to €1,734 million (previous year: €1,870 million). Most of the noncontrolling interests in equity arose as a result of the IPO of the TRATON GROUP in fiscal year 2019.

On February 28, 2020, Volkswagen AG announced that it was planning to increase its interest in AUDI AG from approximately 99.64% to 100%. On July 31, 2020, the Annual General Meeting of AUDI AG resolved to implement a squeeze-out under stock corporation law (see “Key events” section).

The table below shows summarized financial information of the TRATON GROUP, including amortized goodwill and fair value adjustments, which were determined at the acquisition date: