CMS Expert Guide to the private placement of equity securities

1. Prospectus requirement

  • Offer to the public.
  • Admission to trading of securities on a regulated market.
  • Offer to the public (i.e. an offer to an unlimited number of persons concerning the subscription for new securities or the purchase of securities in Switzerland).
  • Application for the admission to trading on a trading venue, i.e. a stock exchange or a multilateral trading facility, in Switzerland.

2. Prospectus exemptions

Key exemptions

Offer to the public

  • Qualified Investors.
  • Less than 150 persons per EEA state, other than Qualified Investors.
  • The aggregate consideration for which securities are publicly offered in the European Economic Area is less than EUR 8m during the preceding twelve months (however, in cases where the aggregate consideration is EUR 100,000 or more, the issuer must produce a 3 page securities information sheet which must be approved by the German Financial Supervisory Authority (BaFin) and published).

In cases where the aggregate consideration is EUR 1m or more, the exemption may only be used, if securities are only provided in conjunction with investment advice or investment brokerage by an investment firm that is obliged to verify that the aggregate value of securities that can be purchased by each non-qualified investor does not exceed the following amounts:

  • EUR 1,000, or
  • up to EUR 10,000, if the respective non-qualified investor holds at least EUR 100,000 in cash and/or financial instruments of which he can freely dispose;
  • twice the non-qualified investor’s average monthly net income, subject to a maximum amount of
    EUR 10,000;
  • offers made by credit institutions or issuers whose shares are already listed on a regulated market of a member state of the European Economic Area with an aggregate consideration for which securities are offered of less than EUR 8m.

Admission to trading on a regulated market – Listing

  • Admission to trading/Listing new shares of the same class as shares already admitted to trading on the same regulated market, representing less than 20% of the existing issued share capital in a rolling 12 month period.
Key exemptions

Offer to the public

  • Addressed solely at investors classified as professional clients.
  • Addressed at fewer than 500 investors.
  • Addressed at investors acquiring securities with a value of at least CHF 100,000;
  • Securities having a minimum denomination per unit of CHF 100,000; or
  • Aggregate value of not more than CHF 8m, calculated over a period of twelve months from the first public offer. 

Exemptions depending on the type of securities to be offered

In addition there is a number of exemptions available depending on the type of securities to be offered publicly (e.g. equity securities issued outside the scope of a capital increase in exchange for previously issued equity securities of the same class; or equity securities issued or delivered on the conversion or exchange of financial instruments of the same issuer or corporate group; etc.).

Admission to trading

Further exemptions exist in connection with the admission to trading.

3. Ability to offer shares to

3.1 Institutional/professional/authorised investors (for example investment funds, insurers, pension funds)

Only on the basis of an approved prospectus or if the potential investors are Qualified Investors pursuant to Article 2 (e) of the Prospectus Regulation or subject to complying with an exemption set out in paragraph 2 above or Article 1 para 4 of the Prospectus Regulation.

Yes, unless a professional client has declared it wishes to be treated as a retail client (opting-in) in which case a prospectus would be required (except there is an exemption available as set out in paragraph 2 above).

3.2 High net worth individuals 

Only on the basis of an approved prospectus or if the potential investors are Qualified Investors pursuant to Article 2 (e) of the Prospectus Regulation or subject to complying with an exemption set out in paragraph 2 above or Article 1 para 4 of the Prospectus Regulation.

Yes, provided such individual has declared they wish to be treated as a professional client (opting-out), otherwise a prospectus would be required (unless an exemption applies as set out in paragraph 2 above).

3.3 Retail/public/others

Only on the basis of an approved prospectus or subject to complying with an exemption set out in paragraph 2 above or Article 1 para 4 of the Prospectus Regulation.

Yes, subject to complying with applicable prospectus rules or the exemptions set out in paragraph 2 above.

4. Can the issuer approach potential investors on their own?

Yes. Note however that if the issuer is a financial institution it needs to hold a respective regulatory licence.

Yes, subject to complying with applicable prospectus rules or the exemptions set out in paragraph 2 above. In the absence of a duty to publish a prospectus, an issuer must treat investors alike when delivering information on a public offer.

5. Can the issuer's financial adviser/ placement agent approach potential investors on their own?

Yes. Note however that such financial adviser/ placement agent needs to have a licence to provide financial services in Germany.

Yes, subject to complying with applicable prospectus rules or the exemptions set out in paragraph 2 above (and no financial services provided in such context which would trigger additional regulatory obligations and license requirements).

6. Are there any other exemptions which may be relied on?

As long as a public offer is not made in Germany, a prospectus is not required. In cases where a foreign financial services provider is approached by a German customer on such customer’s own initiative, the financial services provider is not operating in Germany and therefore does not require a licence for Germany.

There are no other specific exemptions; however, reverse solicitation exemptions may apply under certain circumstances.