In principle, under the provisions of Regulation (EU) 2017/1129 and the German Stock Exchange Act (BörsG), a securities prospectus is required as part of a public offer or for the admission of securities to trading on an organised market. The legal exemptions from this obligation are specifically named and are an exception to the rule. The prospectus is an information and liability document. It has to include the legally standardised information required to enable investors to make an appropriate assessment of the issuer, the securities offered to them and, in particular, the associated risks.

The legal basis for the obligation to publish a prospectus for public offers is Article 3 for securities offered to the public in the European Union (Paragraph 1) or which are to be admitted to trading on an organised market in the EU (paragraph 3). Article 2(d) defines an offer to the public as a communication to the public in any form and by any means which contains sufficient information on the terms of the offer and the securities to be offered to enable an investor to decide whether to purchase or subscribe for those securities. The exemptions specified in Regulation (EU) 2017/1129 under which the obligation to publish a prospectus does not exist are of secondary importance in practice and for the classic IPO described here, but may become significant for future corporate actions.

Section 32 (3) of the German Stock Exchange Act (BörsG) refers to Regulation (EU) 2017/1129 for the admission of securities to trading on the Regulated Market and requires the submission of a prospectus approved or certified in accordance with the provisions of Regulation 2017 (EU) 2017/1129.

The competent authority for the approval of the prospectus is the Bundesanstalt für Finanzdienstleistungsaufsicht [BaFin, German Federal Agency for Financial Market Supervision].

Bundesanstalt für Finanzdienstleistungsaufsicht
Lurgiallee 12
D-60439 Frankfurt am Main
Telephone: +49 (0) 2 28-41 08-0
Fax: +49 (0) 2 28-41 08-15 50
Email: poststelle-ffm@bafin.de

The prospectus review process begins with the submission of an application for approval together with a draft of the prospectus to be approved and, if applicable, for notification to BaFin. The issuer has to submit the prospectus and accompanying documents to BaFin in accordance with Delegated Regulation (EU) 2019/980 in an electronic format via the MVP portal. It should be noted that registration on the MVP portal is required before a prospectus is submitted for the first time. The registration process takes time, so that the prospectus can usually only be submitted on the following working day. The same applies to supplements.

BaFin decides on the approval of the prospectus after completing a completeness check of the prospectus, including an examination of the coherence and comprehensibility of the information provided. Completeness is affirmed if the securities prospectus contains the minimum information required under Regulation (EU) 2017/1129 as well as other legally required components. BaFin does not carry out any further examination of the content, which means that an approved prospectus may still contain errors. This means that prospectus liability claims under Article 11 can be asserted even if the prospectus has been approved.

As required by law, BaFin must decide on the application for approval within ten working days of receipt of the prospectus, Article 20. The deadline is twenty working days if the public offer relates to securities of an issuer whose securities have not yet been admitted to trading on an organised market in a member state of the European Economic Area and the issuer has not previously offered securities to the public, i.e. in the case of an IPO. According to the wording of the provision, these periods begin after the draft prospectus has been submitted. The issuer then has the opportunity to make the necessary changes to the draft prospectus and resubmit the revised prospectus to BaFin for review via the MVP portal. As a rule, several hearings and revisions are required before the prospectus can be approved.

If there is any uncertainty as to what needs to be included in the prospectus, it is advisable to contact the approval authority at an early stage in the IPO process, even before the document is prepared.

After approval, Article 21 requires the issuer to publish the prospectus in good time before the public offer, and no later than at the beginning of the public offer. In the case of an initial public offering of a class of shares admitted to trading on a regulated market for the first time, the prospectus must be made available to the public at least six working days before the end of the offering.

The prospectus is deemed to have been published once the issuer has published it electronically on one of the following websites:

1. Website of the issuer, the offeror or the person applying for admission to trading on a regulated market;
2. Website of the financial intermediaries placing or selling the securities, including paying agents;
3. Website of the regulated market on which admission to trading has been applied for or, if admission to trading on a regulated market has not been applied for, on the website of the operator of the MTF.

The prospectus must be published on the website in an easily accessible separate section. The file must be downloadable and printable and have a search function, but it must not be editable. Documents containing information incorporated by reference in the prospectus, supplements and/or final terms related to the prospectus and a separate copy of the summary will be made available in the same section as the prospectus itself, if necessary in the form of a hyperlink.

The publication of the prospectus is a prerequisite for the admissibility of the public offer. In addition, the publication of the prospectus is a prerequisite for the admission of the securities to the Regulated Market.

In order to meet the requirements of different types of securities, issuers, offers and authorisations, Regulation (EU) 2017/1129 distinguishes between different prospectus formats: a standard prospectus, a wholesale prospectus for non-equity securities, a base prospectus, a simplified prospectus for secondary issuances and an EU Growth prospectus. Different minimum disclosures are required depending on the prospectus format. Further details are set out in Delegated Regulation (EU) 2019/980. All prospectus formats must be written in an easily analysable and comprehensible form and contain all the necessary information about the issuer and the securities to enable the public to make an accurate assessment of the issuer's assets and liabilities, financial position, profits and losses, future prospects and the rights attaching to the securities. The wording must be chosen in such a way that the information about the issuer and the securities can be easily understood and analysed.

The structure of the prospectus may comprise one or three documents (Article 10 of Regulation (EU) 2017/1129). Irrespective of whether the prospectus has one or three parts, the following components have been specified:

• Summary of the prospectus,
• Description of the issuer (registration document) and
• Description of the security (securities note)

The contents of the components listed above are briefly explained below. Please note that the following presentation is only a rough guide and is not suitable as the sole basis for drawing up a prospectus. Details should be discussed with the competent BaFin department in case of uncertainty:

1. Summary of the prospectus

The prospectus summary is governed by Article 7 of Regulation (EU) 2017/1129. It should be precise, easy for investors to understand and limited to a maximum of seven A4 pages. The structure and content of the prospectus summary are clearly defined in order to ensure comparability across the EU. The summary is divided into four sections in accordance with Article 7(4): Introduction with warnings, basic information on the issuer, basic information on the securities and basic information on the public offer of securities and/or admission to trading on a regulated market. Detailed information and content on the individual sections are provided and defined in Article 7(5) et seq. The key information about the issuer section includes, for example, the registered office, legal form of the issuer, its LEI, principal activities and shareholders of the issuer as well as specific financial information. In addition to the general information, risk factors must also be shown in subsections, which must not exceed a length of 15 A4 pages.

2. Description of the issuer (registration document)

The second part of the prospectus comprises the description of the issuer, which reflects the registration document if the prospectus has three parts. This paragraph describes the company's organisation, business activities, financial position, earnings and future prospects, management and shareholding structure. The requirement for specific content and the structure may vary depending on the circumstances. The Annexes to Delegated Regulation (EU) 2019/980 must therefore be taken into account in this context.

3. Description of the security (securities note)

The third component contains information on the securities that are to be offered to the public or admitted to trading on a regulated market. As with the description of the issuer (registration document), Delegated Regulation (EU) 2019/980 differentiates between various securities descriptions, which are specified in the annexes depending on the circumstances.

In principle, the publication of an approved securities prospectus is a prerequisite for the admission of securities to the Regulated Market. This means that approval and publication of the prospectus must always precede the admission decision. The prospectus must be attached to the application for admission of securities to the Regulated Market, stating the publication method and  BaFin's notice of approval.

The legal basis for this can be found in Section 32 (3) BörsG, which refers to Regulation (EU) 2017/1129 for the admission of securities to trading on a regulated market and requires the submission of an approved and published prospectus.

While Regulation (EU) 2017/1129 largely harmonises prospectus law across the EU, the liability regime continues to be regulated at national level. The principles of prospectus liability under German law are presented below. Prospectus liability in Germany is mainly governed by Sections 9 et seq. WpPG and is subject to the following requirements:

Grounds for a liability claim are the acquisition of securities admitted to trading on the stock exchange on the basis of an incorrect or incomplete prospectus.

Liability is always limited to those securities acquired on the basis of the prospectus that were, for example, authorised as part of the initial issue. Those who have assumed responsibility for the prospectus and those who have issued the prospectus are named as joint and several debtors.

The contractual acquisition transaction must have been concluded within six months of publication of the prospectus and after the initial introduction of the securities; it is irrelevant here whether this is the initial acquisition or a subsequent acquisition.

The purchaser is entitled to reimbursement of the purchase price plus the usual costs associated with the purchase in return for the retransfer of the securities, Section 9 (1) WpPG. If the purchaser is no longer the holder of the securities, he or she may demand the difference between the purchase price and the sale price, including the usual costs associated with the securities transactions. In both cases, the purchase price is limited by the first issue price of the securities, Section 9 (2) WpPG.

With regard to the attributes "incorrect" and "incomplete", it should be noted that the "incomplete" attribute is a subset of "incorrect", meaning that an incomplete prospectus is always incorrect. The prospectus is incomplete if material or required information is not included in the prospectus. The inclusion of all the information required by Regulation (EU) 2017/1129 does not mean that the prospectus is complete. Rather, these requirements come close to being met if the prospectus enables the public to make an accurate judgement about the issuer and the securities, among other things.

There is no prospectus liability under the German Stock Exchange Act, unless the prospectus is incorrect or incomplete due to intent or gross negligence and was therefore not known, or the lack of knowledge is due to a particularly serious breach of due diligence, Section 12 (1) WpPG. This is where the responsible listing partners play an important role, as they help to build a "legal defence" by preparing the prospectus, issuing legal and disclosure opinions from legal advisors and comfort letters from the auditors and in some cases contribute to the release from liability. 

It should be noted that the approval of the prospectus by BaFin does not indicate that the prospectus is correct and complete. In addition to the prospectus liability under the Stock Exchange Act outlined above, there is also a prospectus liability under the German Capital Investment Act, under investment law and under civil law; they will not be discussed here.

Where are securities prospectuses available?

The prospectus must be published in accordance with Article 21 of Regulation (EU) 2017/1129. It is usually made available electronically on the issuer's website. BaFin also maintains a database ("Filed securities prospectuses"), from which securities prospectuses can be downloaded.

How long is a securities prospectus valid?

In accordance with Article 12 of Regulation (EU) 2017/1129, a prospectus is valid for twelve months from approval for public offers or admissions to trading on a regulated market, provided that it is updated with any necessary supplements (Article 23 of Regulation (EU) 2017/1129). In summary, the supplement serves to update, but possibly also to correct the prospectus by presenting "any significant new factors" or correcting "any material inaccuracy". In light of the prospectus liability, the need to draft supplements should be carefully examined.

Essential information for issuers

Information on the legal basis, components, language and other points relating to the securities prospectus can also be found on the BaFin website.

BaFin Bundesanstalt für Finanzdienstleistungsaufsicht,Referat PRO1

Telephone: +49-(0) 228-41 08-0

• Börsengesetz [German Stock Exchange Act]
• Börsenzulassungs-Verordnung [German Stock Exchange Admission Regulation]
• Prospektverordnung EG Nr. 809/2004 [Prospectus Resolution (EC) No. 809/2004]
• Prospekt-Richtlinie [EU-Directive on Prospectuses]
• Bundesanstalt für Finanzdienstleistungsaufsicht [German Federal Agency for Financial Market Supervision]
• Wertpapierprospektgesetz [German Securities Prospectus Act]