International ECM Listings Rules, Requirements & Obligations in Germany

The Regulated Market of the Frankfurt Stock Exchange (FSE), which is operated by Deutsche Börse AG, is the biggest EU-regulated market in Germany.

Other regulated markets are operated by other stock exchanges such as the Munich Stock Exchange and the Stuttgart Stock Exchange.

Application for admission to trading on the FSE can be made either to the General Standard segment (applies automatically) or the Prime Standard segment (optional). The continuing obligations for issuers admitted to the Prime Standard segment are more onerous.

The Regulated Market of the FSE is regulated by the stock exchange supervisory authority of Wiesbaden and by the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistung-saufsicht - BaFin).

Stock corporations (Aktiengesellschaft, AG), European Companies (“société européenne – SE”) and partnerships limited by shares (Kommanditgesellschaft auf Aktien, KGaA).

In addition, interests in companies from certain foreign jurisdictions.

Prospectus in accordance with the European Prospectus Regulation No. 1129/2017 (Prospectus Regulation).  For public offers of securities in an amount between €100,000 and €8 million, the German Securities Prospectus Act (Wertpapierprospektgesetz, WpPG) imposes an obligation to prepare and publish a Securities Information Sheet (Wertpapierinformationblatt, WIB) to be approved by BaFin instead of a prospectus.

Shares or certificates representing shares (such as Global Depositary Receipts (GDRs)).

The minimum estimated market value of the shares to be admitted or, if such value cannot be determined, the equity of the issuer must be at least €1,250,000.

The minimum issue volume is either a total nominal amount of €250,000 or 10,000 shares in case of securities that are not denominated in a monetary amount.

For companies applying to the Regulated Market of the FSE, an initial minimum free float of 25% is required. Subject to certain requirements, the FSE may allow for exemptions.

The issuer must have existed as a company (not necessarily in its current legal form) for at least three years. Exemptions are possible if the management board of the FSE is satisfied that this is in the interests of the issuer and investors.

The issuer must have published annual financial statements for the last three financial years or, if less, for the period of time since the issuer was incorporated.

Listed securities must be freely transferable.

Transfer restrictions may be permitted by the executive board of the FSE if the securities are not fully paid, provided that: (i) the FSE is satisfied that stock exchange trading will not be affected; and (ii) the prospectus states that the securities are not fully paid and that the restrictions have been imposed for this reason, or, if there is no obligation to publish a  prospectus due to an exemption under the Prospectus Regulation, the investors are informed otherwise in an appropriate manner. Restrictions are also permitted if under the applicable law of the issuer’s domicile foreign nationals may only hold a certain percentage of the shares.

The FSE executive board may also admit shares the acquisition of which is subject to consent (registered shares with restricted transferability), provided such restrictions will not disrupt stock exchange trading.

There are no specific rules requiring an issuer to be independent of controlling shareholders.

There are no legally required lock-up requirements, but in practice (contractual) lock-up agreements of six to 12 months are market standard.

Application for admission must be filed jointly with a financial institution (a bank or a financial services company or a branch of a foreign bank or financial services company licensed in Germany or a foreign bank or financial services company of another Member State that is authorised to operate in Germany) which must be an admitted trading participant on a German stock exchange and must have a regulatory core Tier-1 capital of at least €730,000.

At least one paying agent and depository institution (Zahl- und Hinterlegungsstelle) for the shares must be appointed within Germany while the shares are admitted to trading.

The executive board of the FSE may determine that a designated sponsor is required for certain securities that are traded on the electronic trading platform of the FSE, which is known as Xetra, to enhance liquidity. As a general rule, no designated sponsor is required for listing in a particular market segment or inclusion in a certain index. But issuers of less liquid shares are required to engage at least one designated sponsor who performs a market making function.

Advertisements must be clearly recognisable as such and must indicate that a prospectus has been, or will be, published. Information included in an advertisement must be accurate and must not be misleading and it must be consistent with the prospectus.

Any information that is published concerning a public offering or an admission of securities to trading, even if not for advertising purposes, must be consistent with the content of the prospectus.

Depending on the size and complexity of the issuer and the IPO, the average process takes about five to six months from the beginning of the due diligence to the admission of the securities to trading, including nine weeks for the prospectus approval procedure with BaFin and the listing procedure with Deutsche Börse AG.

Minimum value of shares requirements (see Minimum assets, equity and/or working capital; Minimum public float (issue volume); Minimum free float above) do not apply to secondary offerings.

None.

1. German, except where English is permitted by the Prospectus Regulation (e.g., if a public offering is also made in a European country where English is accepted as a prospectus language); and
2. the summary must be translated into German.

www.exchange.de

www.bafin.de

Regulated market

Under German stock corporation law, shareholder approval in a general meeting is required for certain important decisions including, inter alia, on:

• appointment of the supervisory board members (Aufsichtsrat);
• allocation of net profits (payment of dividends) (Bilanzgewinn);
• appointment of the auditor;
• changes to the articles of association (Satzung);
• increases or reductions in share capital;
• liquidation of the company;
• transfer of the company’s entire assets;
• issue of debt instruments; and
• any other issues or decisions that the articles of association stipulate require shareholder approval.

According to the German Federal Court (Bundesgerichtshof), the management board (Vorstand) is obliged to ask the shareholders’ meeting (Hauptversammlung) for approval of fundamental decisions that are likely to have considerable impact on the company’s assets even if they are not mentioned as requiring shareholders’ approval in the articles of association or the Stock Corporation Act (Aktiengesetz). Such circumstances include proposals to spin off a major part of the business of a stock company into another, newly incorporated company.

The German Corporate Governance Code (Deutscher Corporate Governance Kodex) contains recommendations and suggestions for managing and supervising German stock corporations (Aktiengesellschaft), focusing on companies listed on a stock exchange.

The German Corporate Governance Code does not apply to foreign entities.

There is no obligation to comply with the recommendations and suggestions of the Code. However, German stock corporation law requires the management board to make an annual declaration that it follows and will follow the recommendations or which of the recommendations were or will not be followed and why (comply or explain).

All shareholders must be treated equally.

Shareholders holding an aggregate of 5% of the registered share capital are entitled to convene a general meeting. 

Any person whose shareholdings (direct shareholdings and attributable shareholdings of other persons) reach, exceed or fall below the threshold of 3%, 5%, 10%, 15%, 25%, 30%, 50%, or 75% of the voting rights in a stock company listed on a regulated market must, without undue delay but within four trading days at the latest, notify the company as well as BaFin of such fact as well as of the percentage of the total voting rights held. (This rule reflects the European Transparency Directive but is super-equivalent in requiring a notification at 3%.) The issuer must, without undue delay but within three trading days at the latest, publish such notice. If a threshold of 10% or more is reached, the acquirer must disclose the intentions behind the acquisition and the origin of the funds used.

An issuer must publish without delay after approval:

1. its annual financial statements in accordance with IFRS or US GAAP (Prime Standard: in English and German, but issuers with registered offices outside Germany may prepare their statements in English only; General Standard: in English or German);
2. its half-yearly financial results in accordance with IFRS or US GAAP (Prime Standard: in English and German, but issuers with registered offices outside Germany may prepare their statements in English only; General Standard: in English or German); and
3. Prime Standard only: quarterly financial information in English and German, but issuers with registered offices outside Germany may prepare their statements in English only.

All dealings in the issuer’s shares by persons discharging managerial responsibilities ("PDMR") and certain persons related with them (including dependent children and controlled companies) must be notified to the issuer and BaFin without undue delay (in accordance with the European Market Abuse Regulation). In turn, the issuer must publish such notification without undue delay (within three business days at the latest).

A PDMR shall not conduct any transactions on its own account or for the account of a third party, directly or indirectly, relating to the shares, debt instruments of the issuer or other financial instruments linked to them during a closed period of 30 calendar days before the announcement of year-end or a half-year financial information. The “announcement” means the date the issuer announces preliminary financial results for the relevant period.

Documents setting out the terms of any takeover offer are subject to prior approval by BaFin.

Prospectuses for secondary issues (offers of securities subsequent to the earlier admission to trading on the same regulated market) not exempt from the obligation to publish a prospectus have to be approved by BaFin prior to their publication.

If a Securities Information Sheet (Wertpapierinformationsblatt, WIB) must be published pursuant to the German Securities Prospectus Act (Wertpapierhandelsgesetz, WpHG), it has to be approved by BaFin prior to its publication.

Any party whose share of the voting rights, either by itself or when combined with voting rights of other persons with whom it is acting in concert or attributable to it for other reasons, reaches or exceeds 30% of the voting rights of a company after admission to trading is required to publish this fact, including the percentage of voting rights held, and subsequently, unless an exemption from this requirement is granted, has to submit a mandatory public takeover offer to all shareholders of the company pursuant to the Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz – WpÜG).

Under German law, neither the listing nor de-listing of shares requires approval by the shareholders’ in general meeting.

However, companies seeking to revoke the admission to trading of their shares on a regulated market may only pursue such de-listing, pursuant to section 39 of the German Stock Exchange Act (Börsengesetz – BörsG) if an unconditional compensation offer pursuant to the Securities Acquisition and Takeover Act is made, or, the securities can be continuously traded on another regulated market in Germany, the European Union or the European Economic Community provided that in these markets outside Germany corresponding requirements for a de-listing at the request of the issuer exist. The Compensation offer seeks to protect investors and is intended to compensate them for the termination of the possibility to sell the securities on the regulated market.  The compensation offer has to be approved by BaFin prior to its publication and must offer an amount in Euro (€) which in general does not fall below the weighted average price of the securities within the last six months in Germany.

The FSE requires the issuer to announce the de-listing six months ahead in order to give shareholders time to sell.

None.

For Prime Standard issuers, ad hoc announcements of developments that could affect the issuer’s share price must be made in English as well as German.