Capital Markets in Germany: Regulatory Overview

Main Equity and Debt Markets/Exchanges and Market Activity

1. What are the main public securities markets/exchanges in your jurisdiction? Outline the main market activity and deals (for both equity and debt) in the past year.

Main Securities Markets/Exchanges

Equity. The German security markets are divided into:

In total there are eight stock exchanges in Germany. The Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) is by far the largest and most frequented stock exchange, with a turnover share of approximately 90%, while the regional stock exchanges (Stuttgart, Hamburg, Hannover, Düsseldorf, Munich, and Berlin (Tradegate Exchange)) play a minor role. The Frankfurt Stock Exchange, as the main stock exchange, comprises a regulated market and a regulated unofficial market (Freiverkehr). The regulated market of the Frankfurt Stock Exchange is divided into the following segments:

The regulated unofficial market is divided into the following segments:

1. Regulated markets, largely regulated by EU law.
2. Regulated unofficial markets, governed by the stock exchanges' regulations.
3. Prime Standard. The Prime Standard imposes the highest demands on potential issuers. In return, it offers access to a broad international audience of investors.
4. General Standard. In principle, the General Standard offers a more cost-effective listing, as only the legal requirements are reflected in the admission requirements. Mainly national investors (medium-sized and larger companies) invest in the General Standard.
5. Scale. Although the inclusion requirements for Scale are less stringent than for the regulated market, the Scale segment is a segment with additional inclusion and post-listing requirements within the regulated unofficial market. Scale is particularly attractive for small and medium-sized companies (SMEs) and is a glistereded EU SME growth market.
6. REITs. All shares of Real Estate Investment Trusts (REITs) that are admitted to trading on the regulated market or that are included in the Quotation Board are eligible to participate in the REITs segment. REITs are:

• German stock corporations that meet the requirements of the Act on German Real Estate Stock Corporations with Listed Shares (https://www.gesetze-im-internet.de/reitg/index.html);
• foreign stock corporations that have a legal status comparable to a German REIT.

Only a small proportion of Prime Standard listings consists of foreign companies (26 out of about 273). On the General Standard and Scale, the proportion of foreign companies is also rather low (ten out of 101 and four out of 43, respectively, as at 1 January 2025).

Debt. A listing on a stock exchange is typical for larger offerings, to ensure a liquid secondary market. There are two options for the listing:

• An admission to a regulated market.
• A listing in an regulated unofficial market (Freiverkehr) regulated by the relevant stock exchange.

For admissions to the regulated market, the Luxembourg Euro Multilateral Trading Facility (Euro MTF) market is highly dominant. Admission to Euronext Dublin is also widespread, especially for high-yield bonds.

In Germany, the most prominent regulated unofficial markets for the listing of bonds are:

• The Frankfurt Stock Exchange.
• The Stuttgart Stock Exchange (Börse Stuttgart).

The Frankfurt Stock Exchange has also created a special Green Bonds segment. This segment bundles all bonds admitted to trading on the Frankfurt Stock Exchange that meet the rules for green bonds set out by the International Capital Market Association (ICMA). This segment is intended to simplify the search for investors interested in environmentally conscious investments.

Market Activity and Deals

Equity. While three IPOs were recorded on the Frankfurt Stock Exchange in 2023, four IPOs were recorded in 2024. The restraint in IPO and market activity during 2023 and 2024 was characterised by low market activity due to high inflation and high interest rates. The Russian-Ukrainian conflict caused rising energy prices which exerted inflationary pressure, material and labour costs increased, and general consumer reluctance created difficult market conditions. Due to unfavourable enterprise valuations caused by economical and geopolitical uncertainties and a highly competitive market with a large number of issuers seeking investor interest, few companies completed or planned an IPO. While companies listed on the German stock index Deutsche Aktienindex (DAX) benefited from an escape of capital into highly liquid titles and the DAX was at an all-time high by the end of 2024, the small-cap segment was particularly affected by the difficult conditions and underperformed.

Debt. Overall, 2024 was a challenging year for corporate bonds in terms of issuance volume, which experienced a decline. The debt market was also influenced by the effects of the Russian-Ukrainian conflict, interest rate hikes by the European Central Bank (ECB), and the economic recession.

The rise in energy prices increased costs for the German industrial sector. This worsened their EBITDA-to-interest coverage ratio and, with the higher interest rates, made the debt burden of some companies so severe that many became unable to debt-finance new projects. Despite the decline in the issuance volume of corporate bonds, other debt providers managed to successfully fill in the vacuum left by bond issuers, as loans that were offered by the direct lenders had a comparably lower cost burden.

Demand on the debt market was also materially affected by uncertainty on the real estate market. Previously funded by bonds and loans that had lower interest rates, the consolidation period ended due to increasing energy costs, and there were corrections on the valuation of real estate property. This increased the financial burden on the German real estate market actors and significantly lowered the frequency of transactions. These negative changes on the real estate market had the effect of lowering both the demand on the debt market and the supply of bonds.

Main Regulators and Legislation

2.What are the main regulators and legislation that apply to capital markets in your jurisdiction?

Regulatory Bodies

The competent authority in Germany is the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) (BaFin). Its main responsibilities include the approval of securities prospectuses and the supervision of the capital markets, in particular:

• Preventing insider dealing and market manipulation.
• Monitoring publications of ad-hoc disclosures, directors' dealings reports, and notifications of major holdings or voting rights.
• Supervising company takeovers.
• Enforcing financial reporting.

The prospectus approval is initially valid only in the country of the approving authority, but the prospectus can also be (on request and taking into account the European language regime) notified to regulatory authorities in other EEA countries. Afterwards, the securities described in the prospectus can be offered to the public in those countries (the European Passport).

In addition, the Frankfurt Stock Exchange is organised as an institution under public law with partial legal capacity, and is subject to public supervision. Within the statutory framework it sets the more detailed rules for admission to trading in a regulated market (https://www.deutsche-boerse-cash-market.com/resource/blob/312992/b077354e9344290dce0e41dbcfbd69d5/data/2024_12_04_fwb_boersenordnung.pdf). A private company (in the case of the Frankfurt Stock Exchange, Deutsche Börse AG) handles the applications for admission to trading on the regulated unofficial market.

Legislative Framework

Germany is part of the EU, and both German and EU legislation apply to the German equity and debt capital market, as well as the rules established by the stock exchanges, in particular the Frankfurt Stock Exchange.

The key pieces of EU legislation applicable to issuers with shares admitted for trading are:

• The EU Market Abuse Regulation (596/2014), as amended (MAR).
• The Prospectus Regulation (EU) 2017/1129, as amended (Prospectus Regulation), along with its:
  • Commission Delegated Regulation (EU) 2019/980, as amended, supplementing the Prospectus Regulation as regards the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing the Prospectus Directive Regulation (EU Prospectus Delegated Regulation); and
  • Commission Delegated Regulation (EU) 2019/979, as amended, supplementing the Prospectus Regulation with regard to regulatory technical standards on key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification portal, and repealing Commission Delegated Regulation (EU) No 382/2014 and Commission Delegated Regulation (EU) 2016/301.

the Prospectus Regulation has last been amended by Regulation (EU) 2024/2809 of 23 October 2024 (Listing Regulation) to simplify the access to the capital market, especially for SMEs. As a result, some changes have become effective in December 2024 whilst others will enter into force only in March 2026.

The key pieces of applicable German legislation and market rules are:

• The Securities Trading Act (Wertpapierhandelsgesetz, https://www.gesetze-im-internet.de/wphg/index.html), which establishes regulations on the marketing, distribution, and sale of securities.
• The Securities Prospectus Act (Wertpapierprospektgesetz, https://www.gesetze-im-internet.de/wppg/index.html), which primarily governs prospectus liability.
• The legislation governing, inter alia, admission of securities to stock exchange trading, which includes:
  • the Stock Exchange Act (Börsengesetz, https://www.gesetze-im-internet.de/b_rsg_2007/index.html);
  • the Stock Exchange Rules of the respective stock exchange, in particular the Frankfurt stock exchange (Börsenordnung FWB, https://www.deutsche-boerse-cash-market.com/resource/blob/312992/b077354e9344290dce0e41dbcfbd69d5/data/2024_12_04_fwb_boersenordnung.pdf); and
  • the Stock Exchange Admission Rules (Börsenzulassungsverordnung, https://www.gesetze-im-internet.de/b_rszulv/index.html).
• The Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, https://www.gesetze-im-internet.de/wp_g/index.html), which contains regulations relating to corporate takeovers.

Prospectus/Main Offering Document

3. When is a prospectus (or other main offering document) required? What are the main publication, regulatory filing or delivery requirements for an offering?

Prospectus (or Other Main Offering Document) Required

A prospectus must generally be prepared for every public offering of securities and their admission to trading on a regulated market. Securities include:

• Shares.
• Bonds.
• Securitised debt instruments, including, among other things, certificates and structured finance products.

The prospectus requirement extends to participatory loans, subordinated loans, or other comparable forms of investments that grant or provide the prospect of interest and repayment or an asset-based cash settlement in exchange for the temporary provision of liquidity. Once the securities prospectus has been prepared, it must be filed with, and approved by, the competent authority (BaFin).

However, there is no prospectus requirement if:

• Shares are sold for a total consideration of less than EUR 8 million (the Listing Regulation (see Question 2, Legislative Framework) amended the Prospectus Regulation to the effect that member states are able stipulate that no prospectus is needed if the shares are sold for a total consideration of less than EUR12 million and a corresponding initiative is ongoing in Germany (2. ZuFinG-E)).
• The offering is addressed solely to qualified investors.
• The offering is addressed to fewer than 150 natural or legal persons per member state other than qualified investors.
• The offering has a minimum denomination/minimum order size of EUR100,000.

In addition to the above, as a consequence of the Listing Regulation (see Question 2, Legislative Framework), additional exemptions have been added, namely that (i) the securities are admitted to trading on a regulated market or an SME growth market and are fungible with securities already admitted to trading on the same market, provided the securities represent, over a period of 12 months, less than 30% of the number of securities already admitted to trading on the same market, or, (ii) the securities are fungible with securities already admitted to trading on a regulated market or an SME growth market for the last 18 months. However, in these cases a short information document of 11 pages length is required.

Main Publication, Regulatory Filing or Delivery Requirements

Equity. The application for admission to the Frankfurt Stock Exchange must be filed together with other documents including, in particular:

• The securities prospectus and approval certificate.
• The resolutions of the management board and supervisory board.
• The subscription certificate and bank certificate.
• The global share certificate.
• The audited annual financial statements for the last three years.

With the implementation of the Listing Regulation (see Question 2, Legislative Framework), audited annual financial statements for only the last two years will be needed for the application for admission to the Frankfurt Stock Exchange.

Once the application is successful, the shares or bonds are admitted to trading and delivered to investors.

Debt. For government bonds only, a prospectus is not required if the issuance is of government bonds and the bonds comply with all the following requirements:

• They are issued continuously or repeatedly by a credit institution.
• They have an aggregate total equivalent value in the EU of less than EUR75 million per credit institution over a period of 12 months.
• They are not subordinated, convertible, or exchangeable.
• They do not entitle the holder to subscribe to, or acquire, other types of securities.
• They are not linked to a derivative.

However, even if a prospectus is not required, additional requirements under the Securities Prospectus Act (see Question 2, Legislative Framework) may need to be met when selling such a bond to retail investors.

4. Are there any circumstances in which reduced disclosure obligations apply in respect of the prospectus (or other main offering document)?

There are simplified prospectus requirements for secondary issues of securities (see Question 9, Main Requirements). In addition, reduced disclosure obligations apply to:

• An EU follow-on prospectus.
• An EU growth issuance prospectus.

EU Follow-On Prospectus

An EU follow-on prospectus can be used by issuers or offerors whose securities have been admitted to trading on a regulated market or an SME growth market continuously for the last 18 months preceding the offer to the public or the admission to trading on the regulated market. The simplified requirements include:

• The prospects and financial performance of the issuer.
• The essential information on the securities.
• The reasons for the issuance and its impact on the issuer.
• The minimum information set out in Annex IV or V of the Listing Regulation, depending on the type of securities.

The procedure takes less time and allows companies the possibility to raise equity quickly with little effort in terms of prospectus law. The prospectus is also substantially shorter than a regular IPO prospectus and cannot have more than 50 A4 pages. The new prospectus regime is intended to help EU companies raise capital to meet their financing needs, especially SMEs.

However, the regulations allowing for the EU follow-on prospectus will only be in effect on 4 March 2026. Some of the practicalities still remain to be fully determined.

EU Growth Issuance Prospectus

From 4 March 2026 onwards, issuers have the option of drawing up a growth prospectus if they have not previously issued securities that have been admitted to trading on a regulated market and they are one of the following:

• An SME.
• An issuer not exceeding a certain size.
• An offeror of SME securities (Article 15a(1), Prospectus Regulation)

SMEs are companies that meet at least two of the following three criteria, as measured by their annual or consolidated financial statements:

• An average number of employees in the last year of less than 250.
• A total balance sheet total of no more than EUR43 million.
• Annual net sales of no more than EUR50 million.

For already listed companies, the term SME as defined in the Prospectus Regulation also includes companies whose average market capitalisation, based on the year-end listing, was less than EUR200 million in the last three calendar years.

In addition, the preparation of an EU growth issuance prospectus is possible for companies whose public offering of securities corresponds to a total consideration in the EU of no more than EUR50 million over a 12-month period, provided that both:

• No securities of these issuers are traded on an MTF.
• Their average number of employees in the last financial year was fewer than 499 persons.

The EU growth issuance prospectus must include all the following information:

• The prospects and financial performance of the issuer.
• The essential information concerning the securities.
• The reasons for the issuance and its impact on the issuer.
• The information set out in Annex VII or Annex VIII of the Listing Regulation (depending on the type of securities).

In comparison to the regular IPO prospectus, these items are only required to be covered in a simpler and less detailed way. The prospectus cannot have more than 75 pages, must have a standardised format, and the information disclosed must be presented in a standardised sequence.

5. What are the main exemptions from the requirements for publication or delivery of a prospectus (or other main offering document) for an offering?

See Question 3, Prospectus (or Other Main Offering Document) Required and Question 4.

6. What are the main content or disclosure requirements for a prospectus (or other main offering document) for an offering? What main categories of information are included?

The prospectus contains the necessary information which is material for the investor to make an informed assessment of the securities being offered. The information can vary depending on the nature of the issuer, the types of securities, and the issuer's circumstances, but it will usually consist of the following parts:

Financial information must be prepared in accordance with the International Financial Reporting Standards (IFRS) in case of a listing on a regulated market or, in case of a listing on a regulated unofficial market, with the national accounting standards of an EEA member state in the case of issuers from the EEA or the equivalent accounting standards of a third country.

It is possible to prepare a base prospectus if a debt security is issued as part of a debt issuance programme (DIP). This form of prospectus makes it possible to initially include all necessary information (for example, on the issuer) in the base prospectus, but to determine individual terms and conditions of the offer only shortly before the public offering and to publish them in the final terms and conditions without further review by the BaFin. This allows for an accelerated approval of the "new" part of the prospectus before the issuance.

• A summary of the prospectus.
• The purpose of the prospectus, together with the persons responsible for it, together with third-party information, experts' reports, and the competent authority's approval.
• The issuer's strategy, performance, and business environment.
• The management report, and the sustainability report (equity securities only).
• The working capital statement (equity securities only).
• The risk factors.
• The terms and conditions of the securities.
• The details of the offer/admission to trading.
• Any material environmental, social, and governance (ESG) related information.
• The issuer's corporate governance.
• The issuer's financial information for the last two years.
• The issuer's shareholder/security holder information.
• The dividend policy (equity securities only).
• Information on the guarantor (debt securities only).
• Information on the underlying securities and the issuer of the underlying securities.
• Information on consent.

7. How is the prospectus (or other main offering document) prepared for an offering? Who is responsible or may be liable for its contents, and what is the nature of liability in respect of the prospectus (or other main offering document)?

Responsibility for the Content of the Prospectus/Key Information Document

Responsibility for the content of the prospectus must be expressly assumed by:

• The offeror.
• The issuer.
• Other joint applicants for admission (for example, in case of a Prime Standard IPO, the banks involved).
• The guarantor (if any).

If a key information document is required (as may be the case for some debt offerings), a retail investor can claim damages against the key information document's creator if the document or its translation:

• Is misleading or inaccurate.
• Does not comply with the relevant parts of the legally binding pre-contractual and contractual documents.
• Does not comply with the legal requirements.

In contrast to prospectus liability, liability for the key information document is directly regulated by EU law. The claim is directed against the creators, that is, any natural or legal person who issues a key information document or modifies it with regard to its risk or return profile or its costs. These can include, for example, fund managers, insurance companies, credit institutions, or investment firms. Compensation for damages includes losses incurred by retail investors.

Preparation of Prospectus

The prospectus is essentially prepared on the basis of extensive due diligence, usually by using a data room accessed by counsels to the issuer and to the underwriters. The financial information contained in the prospectus is reviewed by the auditor for the purposes of issuing a comfort letter to the underwriters and the issuer. This is followed by various submissions of the draft prospectus to the BaFin (the responsible approval authority), which usually involves three or four submissions. After the BaFin's approval, the prospectus is published at the beginning of the public offering.

Liability

The persons responsible for the prospectus are generally liable for incorrect/incomplete material information in the prospectus under the Securities Prospectus Act. The onus to prove that the prospectus was correct or complete lies with the issuer and other persons responsible for the prospectus, which makes prospectus liability a powerful weapon. Prospectus liability is not governed by European law but is subject to national regulation (the Securities Prospectus Act).

Equity Capital Markets

Main Requirements for a Primary Listing

8. What are the main requirements for a primary listing on the main public equity markets/exchanges?

Main Requirements

To be admitted to the stock exchange, the issuer must meet the admission requirements, which are mainly defined by the Stock Exchange Admission Rules (BörsZulV, https://www.gesetze-im-internet.de/b_rszulv/index.html). A German issuer must be structured as:

• A German stock company (Aktiengesellschaft) (AG).
• A German limited partnership on shares (Kommanditgesellschaft auf Aktien) (KGaA).
• A European stock company (Societas Europaea) (SE).

Other possible foreign legal forms include, for example, the Luxembourg SA and the Dutch NV.

To admit shares to trading on the Frankfurt Stock Exchange's regulated market, the issuer must demonstrate the following:

• It has existed for at least three years, together with proper disclosure of the annual financial statements for the last three years.
• An expected market capitalisation of at least EUR1 million.
• A total share capital of at least EUR250,000.
• A minimum denomination of 10,000 shares.
• A guaranteed minimum distribution of 10% to 25% of the shares among European investors, depending on the exchange's requirements in the individual case. Investors holding more than 3% of the shares are not counted towards the minimum distribution. The free float after the IPO must be expected to amount to at least 10%. The current draft of the German Future Financing Act II (Zukunftsfinanzierungsgesetz II, https://www.bundesfinanzministerium.de/Content/DE/Gesetzestexte/Gesetze_Gesetzesvorhaben/Abteilungen/Abteilung_VII/20_Legislaturperiode/2024-08-27-ZuFinG-II/2-Regierungsentwurf.pdf?__blob=publicationFile&v=3) is intended to bring the free float requirements for the admission of shares to the regulated market into line with European requirements. If shares of the same class have already been already admitted to trading, the minimum free float requirement of 10% applies to all shares issued.

The admissions procedure begins with a written admission application. The German Future Financing Act (Zukunftsfinanzierungsgesetz, https://www.recht.bund.de/bgbl/1/2023/354/VO.html) gave stock exchanges the option to waive the requirement of a joint applicant together with the syndicate bank for the admission of securities to the regulated market. The Frankfurt Stock Exchange made use of this option to reduce costs and expenses for issuers and to harmonise the admission procedure with the European standard. Nowadays, the application for admission of securities to trading on the regulated market can be made by the issuer alone, except for the first application for admission of shares to trading in the Prime Standard segment, which requires a bank to act as co-applicant. The admission requires publication of a securities prospectus.

The Prime Standard imposes additional obligations to the General Standard, including requiring the issuer to:

• Not only publish the annual and semi-annual reports, but also to submit them to Deutsche Börse AG.
• Prepare and submit quarterly reports.
• Continuously update the corporate calendar and hold annual analyst and investor events.

The regulated unofficial market at the Frankfurt stock exchange consists of Scale and REITs (see Question 1, Main Securities Markets/Exchanges).

Scale. The main requirements for inclusion on Scale are:

• An inclusion document, or in the case of a public offer, a securities prospectus.
• A company history of at least two years.
• An estimated minimum market capitalisation of EUR30 million.
• A nominal amount of at least EUR1.
• A minimum 20% free float.
• A confirmation concerning the financial analyses, which must be submitted to Deutsche Börse AG.

In addition, the issuer must fulfil at least three of the following criteria:

• A turnover of at least EUR10 million.
• Earnings for the previous year of at least EUR0.
• An equity capital of more than EUR0.
• At least 20 employees.
• An equity capital before an IPO of at least EUR5 million.

After inclusion on Scale, the issuer must (in addition to the Basic Board requirements):

• Publish ad hoc announcements and directors' dealings notifications.
• Keep and maintain insider lists.
• Continuously update the corporate calendar.
• Hold annual analyst and investor events.
• Publish the financial analysis, including the initial research and research updates.

REITs. All shares of REITs that are admitted to trading on the regulated market or that are included in the Quotation Board are eligible to participate in the REITs segment. The management board of the Frankfurt Stock Exchange decides on the application for participation. The application for participation must contain appropriate documents indicating the status of the REIT. The management of the Frankfurt Stock Exchange verifies the accuracy and consistency of the documents submitted.

Beyond the pure admission requirements, a listed company must also change its internal organisation as follows:

• The articles of association must be adapted to the capital market standards.
• A remuneration system for the management board and supervisory board must be implemented.
• The accounting standards must be adjusted to meet the IFRS.
• An audit committee must be formed.

The main divergence for foreign issuers, apart from their national legal requirements, is the regulator competent to approve its prospectus. First-time issuers must determine their home member state, which, in the case of share issuances, is the jurisdiction in which its registered seat is situated. For secondary issues, issuers from the EEA who have already had their prospectus approved by their state of origin can benefit from the European Passport (see Question 2, Regulatory Bodies) and have their prospectus, if still current, notified to the BaFin without the need for an additional prospectus in Germany. The draft of the German Future Financing Act II (Zukunftsfinanzierungsgesetz II) recognises English as a recognised language in the Securities Prospectus Act, so that the obligation to prepare a prospectus summary in German will no longer apply as soon as it will be adopted. International issuers who are not admitted to trading in Germany or the state of their principal distribution can only be admitted if it is credibly shown that these admissions were not prevented for reasons relating to the protection of the public.

Minimum Financial Requirements

See above, Main Requirements.

Trading Record and Accounts

See above, Main Requirements.

Minimum Shares in Public Hands (Free Float)

See above, Main Requirements.

Main Requirements for a Secondary Listing

9. What are the main requirements for a secondary listing on the main public equity markets/exchanges?

Main Requirements

The requirement to publish a prospectus does not apply (i) to the admission of securities that are fungible with securities already admitted to trading on the same regulated market, provided the shares represent less than 30% of the number of securities over a period of 12 months, or (ii) for an number of shares if the admission has been ongoing for at least 18 months and the issuer publishes a short information document of 11pages length.

Otherwise, the requirements for a primary listing and a secondary listing of shares on Frankfurt Stock Exchange are generally the same (see Question 8, Main Requirements), except that the issuer can use an EU Follow-on prospectus (see Question 4, EU Follow-on Prospectus).

If the securities of an issuer are already admitted to a regulated market, these can often be included in the over-the-counter market of another German stock exchange without meeting any additional requirements.

Minimum Financial Requirements

See above, Main Requirements.

Trading Record and Accounts

See above, Main Requirements.

Minimum Shares in Public Hands (Free Float)

See above, Main Requirements.

Main Steps for a Primary Listing

10. What are the main steps for a company applying for a primary listing of its shares? Is the procedure different for a foreign company and is a foreign company likely to seek a listing for shares or depository receipts?

Procedure for a Primary Listing

The IPO process typically begins with the selection of the advisers, in particular legal counsel to the issuer and a financial adviser. In a second step, an issuer typically selects joint global co-ordinators who, in turn, appoint their own legal advisers. These legal counsels conduct a thorough due diligence, for which the issuer prepares a (virtual) data room. The results of the due diligence form the basis for drafting the securities prospectus, reflecting the equity story prepared by the joint global co-ordinators with the issuer.

Often, additional joint bookrunners for the marketing of the shares are appointed by the issuer and form a syndicate of underwriters together with the joint global co-ordinators.

Analyst presentations and research reports prepare investors for the pre-marketing phase, in which early-look meetings, deep-dive sessions and pilot fishing meetings are conducted. At the same time, the securities prospectus is filed with the competent regulator and, after three to four rounds of comments, approved before the bookbuilding period starts.

The final offer price and volume are usually determined on the basis of the orders collected in the order book by the joint bookrunners and published after the expiration of the offer period by an ad-hoc release. Afterwards, the capital increase is registered in the local commercial register.

After the final admission of the company's shares to trading, the shares are delivered to investors against payment of the offer price. If needed, stabilisation measures may follow after the settlement and the closing of the transaction.

Procedure for a Foreign Company

There are no material differences with regard to the process followed for foreign issuers, other than in relation to the financial data to be submitted and the reporting standards, depending on the issuer's country of origin.

Main Steps for a Secondary Listing

11. What are the main steps for a company applying for a secondary listing of its shares? Is the procedure different for a foreign company and is a foreign company likely to seek a secondary listing for shares or depository receipts?

Procedure for a Secondary Listing

Secondary listings are commonly listings on a regulated unofficial market, so that, as long as no public offer is made, no prospectus is required. However, if the shares are to be admitted to another regulated market or shares are to be publicly offered in connection with the secondary listing, a prospectus must be prepared and approved by the BaFin or by the competent national authority, when applicable. In any case, the requirements under national corporate law must be met, and resolutions (such as those of the shareholders' meeting, management board, or supervisory board) must be passed.

Procedure for a Foreign Company

There are no differences concerning in the procedure for foreign issuers.

Structuring an IPO

12. What are the main ways of structuring an IPO?

The main ways to structure an IPO are:

• As a regular IPO.
• As a direct listing.
• As a reverse merger.

Regular IPO

A regular IPO typically involves the issuance of new and sale of existing shares to investors and their admission to a regulated market, usually the Frankfurt Stock Exchange. A public offer in Germany is often combined with a private placement in foreign jurisdictions, including the US market under Rule 144A. The shares offered usually derive from a capital increase of the issuer (new shares) and the holdings of existing shareholders (existing shares). The final number of shares sold is determined at the end of the bookbuilding. Sometimes, the offering also includes an "upsize option", meaning the possibility to increase the total amount of shares sold in the offering, usually by adding further existing shares to the offering. For stabilisation purposes, the existing shareholders usually grant a loan to the underwriters of the transaction, enabling them to over-allot shares in the offering and, for a period of 30 days thereafter, to either pay the IPO price for these shares to the existing shareholders or re-deliver shares bought back in the market to stabilise the market price (known as a Greenshoe option).

Direct Listing

In comparison to a regular IPO, a direct listing process is both faster and less expensive. However, in case of a Prime Standard IPO in Germany, an investment bank must apply for the admission to trading together with the issuer, which means that a bank must also be involved and paid in a direct listing. In this case, the bank must also take responsibility for the contents of the securities prospectus required for the purposes of the listing. Therefore, a direct listing not only requires the issuer to have access to a sufficient number of investors to generate the required free float, it will also either be an IPO in the General Standard segment or the issuer will need the assistance of an investment bank. In any case, a bank will be required for settlement purposes. Given the bank's potential liability for the security prospectus, it will often require a full due diligence, comfort letters, and legal opinions to reduce its liability risk, depending on its role. Therefore, the bulk of the costs incurred in preparation for an IPO cannot always be avoided by a direct listing.

Reverse Merger

In a reverse IPO deal, which is similar to a de-Special Purpose Acquisition Company (de-SPAC) transaction, the issuer merges with a target, usually by buying the target's shares against a contribution in kind. Again, this process is often considered to be less expensive and faster than a regular IPO, given that no further marketing measures are necessary, and the issuer is not dependent on positive market conditions as the price is subject to bilateral negotiations. However, typically, new capital is required, so new shares must be sold in connection with the reverse merger. If the new shares will be marketed in a public offer, for example in order to meet the free float requirements, the issuer must publish a prospectus, entailing a full due diligence and therefore similar costs as in a regular IPO.

Structuring a Follow On Equity Offering

13. What are the main ways of structuring a follow on equity offering? What are the advantages and disadvantages of rights issues/other types of follow on equity offerings?

Structure of a Follow On Equity Offering

There are two main ways to structure a subsequent equity offering:

• An offering with subscription rights. In a rights issue, the existing shareholders are offered the option to subscribe for new shares on a pro rata basis according to their existing shareholdings (to prevent dilution of their shareholdings) during a subscription period. Under the Stock Corporation Act (Aktiengesetz, https://www.gesetze-im-internet.de/aktg/index.html), shareholders have a subscription right, unless the general meeting of shareholders (or board of directors, if authorised by the general meeting in advance) decides to exclude these rights. A rights issue is considered to be a public offering in Germany and therefore requires publication of a prospectus for the listing of the new shares. However, the Listing Regulation has introduced far-reaching exemptions.
• An offering without subscription rights. A private placement of new shares from a capital increase excluding the subscription rights of shareholders is typically limited to:
  • up to 20% of the existing share capital in the case of German issuers (due to corporate law restrictions);
  • 30% in the case of foreign issuers.

This can be structured as a private placement and subsequent listing, without a need for a securities prospectus. The new shares are offered in an (accelerated) bookbuilding with qualified investors. Therefore, the process is very efficient, faster and less costly than a rights issue.

Advantages/Disadvantages

In a rights issue, existing shareholders are protected against dilution. However, unless a prospectus exemption is used, the process is fairly long and costly for the issuer, with a higher transaction risk and a larger discount to the market price than in a placement of new shares without subscription rights. Whether an international private placement will be conducted without a securities prospectus in accordance with international investor expectations remains to be seen.

In the case of capital increases with exclusion of subscription rights, the requirements for the exclusion of subscription rights are relatively high (in particular, requiring a close-to-market placement) and the maximum volume is limited. In addition, retail investors cannot participate, and existing shareholders are diluted. However, for the issuer it has the advantage of a fairly quick and efficient process with less transaction risk.

Advisers and Documents in a Public Equity Offering

14. Outline the role of advisers used and main documents produced in a public equity offering. Does it differ for an IPO?

Advisers

In an equity offering, underwriters' and issuer's counsel, in particular, are involved, as well as the issuer's auditor. In addition, investor relations and IPO (financial) advisers and financial communication consultants are typically engaged.

Main Documents

In an equity offering, whether an IPO or a subsequent rights offering, the following documents are typically required:

• The prospectus.
• The underwriting or placement agreement.
• The cornerstone investor agreements or firm commitment letters.
• The lock-up agreements.
• The comfort letters issued by the auditors.
• The legal opinions provided by the legal advisers.
• The disclosure letters provided by the legal advisers.
• Various company announcements regarding launch, pricing, and closing of the offering, as well as further technical announcements on any stabilisation, and major shareholders' or directors' dealings.
• The listing application to the Frankfurt Stock Exchange.
• The investor and analyst presentations.
• The corporate resolutions.
• The publicity guidelines.
• The research guidelines and research reports (these are less common in rights issues but typical in IPOs).
• The subscription certificates, bank certificates, and global certificates for the new shares.
• The subscription offers (in rights issues only).

In contrast, only very few documents are required in a capital increase with exclusion of subscription rights/private placement. These include the following:

• The underwriting or placement agreement.
• The legal opinions issued by the legal advisers.
• Various company announcements regarding launch, pricing, and closing of the offering, as well as further technical announcements on major shareholders' or directors' dealings.
• The listing application.
• The investor presentations (sometimes required).
• The corporate resolutions.
• The subscription certificates, bank certificates, and global certificates for the new shares.

Marketing: Public Equity Offerings

15. How are offered equity securities marketed? What are the main legal/regulatory restrictions on marketing activities?

Marketing Activities

Shares are marketed in various phases. Before approval and publication of the prospectus, pre-marketing takes place only to a limited group of potential, qualified investors through early look, deep-dive, and pilot fishing meetings, as well as through the financial analyses of the accompanying banks. After publication of the prospectus, the key marketing phase begins. The issuer's management board members then visit qualified investors and hold personal meetings to answer questions in the roadshow.

Regulatory Restrictions

Marketing materials must be recognisable as such. In any marketing advertisement or presentation, reference must be made to the published prospectus and the possibility of viewing it. In addition, the content of the advertising must not be incorrect or misleading and must be consistent with the information in the prospectus. Otherwise, there is a risk of liability.

16. Outline any potential liability for publishing research reports by participating brokers/dealers and ways used to avoid such liability.

To avoid the risk of liability, pre-deal research reports typically do not include a specific recommendation to buy or sell the shares, or a specific pricing.

Bookbuilding: Public Equity Offerings

17. Is the bookbuilding procedure used and in what circumstances? How is any related retail offer dealt with? How are orders confirmed?

The bookbuilding procedure for determination of the final price and volume is commonly used for equity offerings. The final price and volume are not included in the prospectus. A price range and description of the way to determine price and volume is sufficient, and a bookbuilding can therefore be conducted.

After publication of the prospectus, the joint global co-ordinators, together with the joint bookrunners, take the lead in co-ordinating the bookbuilding. During the offer period, both institutional and retail investors can submit their orders. The offers are collected in an order book. After the offering period, the pricing is agreed between the company and the selling shareholders (if any) in consultation with the joint global co-ordinators. Once the offer price has been set, the shares are allotted to investors on the basis of the purchase offers then available. The final price and volume are published by means of an ad hoc release.

Underwriting: Public Equity Offerings

18. How is the underwriting for an equity offering typically structured? What are the key terms of the underwriting agreement and what is a typical underwriting fee or commission?

The underwriting agreement is entered into between the issuer, the underwriters, and the selling shareholders, if any, shortly before the publication of the prospectus. It includes the obligation for the underwriters to find investors for the existing and newly issued shares on a best-efforts basis. The participating underwriters also undertake to subscribe to the new shares of a German issuer, since German issuers must issue new shares to a third party. The issuer (as well as the selling shareholders, in certain cases) provides certain representations and warranties, and indemnifies the underwriters from future claims of liability. In addition, the company undertakes not to initiate another share offering or similar measures, and the existing shareholders undertake not to sell their shares for a period of usually 12 to 24 months after the IPO (the lock-up period).

Timetable: Public Equity Offerings

19. What is the timetable for a typical equity offering? Does it differ for an IPO?

The IPO process is variable and depends on the issuer and the individual transaction details. It can generally be divided into the following phases:

• Preparation phase. The preparation phase consists of all aspects necessary to prepare the issuer internally for the IPO. It can take several months, depending on the necessary re-organisation, and implies strategic considerations as well as an initial assessment of the issuer's objectives. A detailed IPO-readiness assessment will also take place.
• Implementation phase. During the second phase, which takes two to four months, the issuer selects its IPO team and undertakes the required corporate governance structure adjustments. The first preparations of the upcoming due diligence process are initiated, as well as the production of a first draft of the prospectus.
• Placement phase. In the next phase, the equity story is prepared, accompanied by early look, pilot fishing, and deep-dive meetings, and the prospectus is finished, approved, and published. The offer period and the bookbuilding process then commence. After the expiry of the offer period, the final offer price and volume are announced publicly, and the new shares are issued.
• Listing and closing. In this final phase, the shares are admitted to trading. The issuer must comply with the post-listing obligations from then onwards.

Stabilisation: Public Equity Offerings

20. Are there rules on price stabilisation and market manipulation in connection with a public equity offering?

Despite the general prohibition on market manipulation, stabilisation measures are explicitly allowed for a limited period of time if certain requirements are met. The time limits depend on the specific type of transaction. In the case of a regular IPO, the period for permissible stabilisation measures is 30 calendar days, starting on the day on which trading in the securities commences.

Usually, existing shares provided by a share loan from the existing shareholders are allotted at the time of allotment of the offer shares (over-allotment option), if there is sufficient demand. If stabilisation is required, shares are bought in the market and re-delivered to the providers of the share loan. If no stabilisation is required, the Greenshoe option is exercised and the offer price, instead of shares, is re-delivered under the share loan. The Greenshoe option can only be exercised during the stabilisation period. Alternatively, the issuer may provide new shares from a further capital increase for purposes of the over-allotment option. The specific conditions and terms must be set out in the prospectus and a separate publication in any case, complemented by additional publications during and at the end of the stabilisation period, to establish a sufficient degree of transparency.

Continuing Obligations

21. What are the main areas of continuing obligations applicable to listed companies and the legislation that applies? What are the penalties for breaching the continuing obligations?

Continuing Obligations

Post admission to the regulated market, various post-listing obligations arise that affect the issuer, its management, and major shareholders. The obligations can differ depending on the market segment in which the shares are listed. The follow-up obligations of the Prime Standard include the following:

• Preparing and publishing the annual financial statements within certain time limits.
• Preparing and publishing the half-yearly financial statements within certain time limits.
• Preparing quarterly information for the first and third quarter of each financial year.
• Making ad hoc announcements.
• Holding an analyst meeting, at least once a year.
• Maintaining an updated financial calendar with the most important corporate action events for each financial year.
• Keeping and maintaining internal insider lists.
• Adhering to the specific accounting and reporting obligations.
• Making directors' dealings notifications.
• Publishing voting rights notifications of shareholders.

The lower the standard the shares are listed in, the less stringed the follow-up obligations. The follow-up obligations in the regulated unofficial market include the following:

• Preparing and publishing the annual financial statements within certain time limits.
• Preparing and publishing the half-yearly financial statements within certain time limits.
• Making ad hoc announcements.
• Keeping and maintaining internal insider lists.
• Making directors' dealings notifications.
• Publishing the corporate calendar.

The German post-listing obligations apply to foreign companies and to issuers of depositary receipts in the same way as to national issuers of shares.

Penalties for Breaching Continuing Obligations

Violations of the post-listing obligations and the market abuse/insider dealing provisions can result in the imposition of:

• Criminal sanctions.
• Administrative measures.
• Civil liabilities.
• Sanctions under competition law.

Fines of up to EUR2.5 million can be imposed on legal entities and up to EUR1 million on natural persons. The BaFin can also prohibit natural persons from trading securities on their own account for a period of up to two years.

Market Abuse and Insider Dealing

22. What are the restrictions on market abuse and insider dealing?

Restrictions on Market Abuse/Insider Dealing

Restrictions on market abuse and insider dealing are contained in the MAR, which is directly applicable in Germany. The MAR prohibits the following actions:

• Engaging or attempting to engage in insider dealing, as well as recommending or inducing another person to engage in insider dealing.
• Unlawfully disclosing insider information.
• Engaging or attempting to engage in market manipulation, which means entering into a transaction, placing an order to trade, or any other behaviour that gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of a security or securities, or is likely to secure the price of one or several securities at an abnormal or artificial level.

Penalties for Market Abuse/Insider Dealing

See Question 21, Penalties for Breaching Continuing Obligations.

De-Listing

23. When can a company be de-listed?

De-Listing

A stock exchange listing at the regulated market can be withdrawn in the following ways:

• A regular de-listing. The admission is withdrawn by the stock exchange at the issuer's request. A regular de-listing requires the issuer to make an offer to the shareholders to purchase their shares, unless a listing on another domestic stock exchange continues to exist. In the case of a mandatory offer, the offer price is determined on the basis of the average stock market price over the last six months.
• A forced de-listing. The admission can be revoked by the stock exchange when it is foreseeable that orderly exchange trading cannot be guaranteed in the long term and the management of the exchange has already discontinued the trading on the regulated market. A forced de-listing can also be pursued if post-admission obligations are not fulfilled even after the expiry of an appropriate grace period.
• A cold de-listing. This is where a company is restructured with the consequence that the requirements for a stock exchange listing no longer apply, so it is de-listed. This can happen, for example, in the event of a merger, a squeeze-out, or a change of legal form.

Suspensions

Trading on the stock exchange can be suspended for a short period of time if orderly trading is temporarily endangered or the suspension appears necessary for the protection of the public. Suspension temporarily terminates trading on the exchange and therefore the quotation. Suspension decisions are made by the management board of the relevant exchange.

Private Securities Offerings

24. What are the main exemptions from the requirements for registration of the offering or publication or delivery of a prospectus (or other main offering document) for private securities offerings (both listed and non-listed)?

The prospectus requirement does not apply in a private offering. If new shares are placed, they will need to be admitted to trading in case of a listed company and, generally, a prospectus is required for the listing. For the general exemptions from the prospectus requirement, see Question 3.

The exemptions from the prospectus requirement also apply to foreign issuers if their securities are admitted to a regular market in Germany (or the EU/EEA). The registered office of the issuer is not relevant in this context.

25. What is the process (if any) for a company completing a private securities offering?

The prospectus requirement does not apply in a private offering of existing shares or of new shares that have to be admitted to trading, of up to 30%. As a result, a shortened due diligence can be carried out and the marketing effort is considerably minimised, with lower transaction risk and faster receipt of the transaction proceeds. However, issuers must publish an ad hoc announcement, as the private offering may affect the price of the listed shares.

Debt Capital Markets

Restrictions on Offering/Selling Debt Securities

26. What are the main restrictions on offering and selling debt securities in your jurisdiction?

Main Restrictions on Offering and Selling Debt Securities

The main restriction on offering and selling debt securities in Germany is the need for a securities prospectus for a public offering or listing on a regulated market under the Prospectus Regulation, as amended (see Question 2, Legislative Framework).

In addition, certain types of debt securities, in particular structured finance products, also require a key information document containing the main features of the debt security under the EU Regulation on key information documents for packaged retail and insurance-based investment products (PRIIPs) (1286/2014) (PRIIPs Regulation).

Restrictions for Offers to the Public or Professional Investors

The manufacturer of the debt security (in most cases, the issuer) must establish a target market in compliance with the MiFID II Directive (2014/65/EU) (MiFID II), in particular as to whether the offering is directed only towards qualified investors or to the retail market.

27. What other legislation or guidelines do issuers and underwriters of debt securities need to be aware of in your jurisdiction?

Issuers and underwriters must comply with the following regulatory frameworks:

• The Securities Prospectus Act (Wertpapierprospektgesetz), which contains, among other things, liability provisions relating to securities prospectuses.
• The German Civil Code (Bürgerliches Gesetzbuch, https://www.gesetze-im-internet.de/bgb/index.html), containing regulations on contractual terms and conditions.
• The German Bond Act (Schuldverschreibungsgesetz, https://www.gesetze-im-internet.de/schvg/index.html), governing the structuring of bond issues.
• The MAR, which imposes a number of post-listing obligations.
• The MiFiD II.

Structuring a Debt Securities Issue

28. Are different structures used for debt securities issues to the public (retail issues) and issues to professional investors (wholesale issues)?

There are different structures for issuing debt securities to the public or to professional investors. If the debt security is to be sold to retail investors, there are some special features to be considered compared to marketing to professional investors. This applies especially with the issuance of bonds, where the following apply:

• The issuer must prepare and publish a securities prospectus.
• The terms and conditions are more strictly controlled, so that the issuer has less flexibility.
• Bonds sold to retail investors are usually also listed on the stock exchange to ensure a liquid secondary market.
• The bonds are denominated in a different way. Usually, a bond marketed to retail investors is denominated in EUR1,000 per bond, while those marketed to professional investors are denominated in EUR100,000 per bond.
• Additional product information must be distributed in addition to the securities prospectus for bonds marketed to retail investors.

29. Are trust structures used for issues of debt securities in your jurisdiction? If not, what are the main ways of structuring issues of debt securities in the debt capital markets/exchanges?

The concept of a trust is unknown in German law. Therefore, there are no German trust structures used in debt transactions.

In principle, there are two options for the issuance of debt securities under German law:

• Self-issuance directly from the issuer to the investor.
• Third-party issuance through one or more investment banks acting as intermediary.

The first only takes place in private placement structures. The latter is the standard.

If the issuer intends to raise debt capital over a longer period of time and in large volumes, it is possible and very common to set up an issuance programme such as:

• A Commercial Paper (CP) programme.
• A (Euro-)Medium Term Note (MTN) programme.
• A DIP (see Question 6).

In this case, a framework agreement is entered into between the issuer and a syndicate of banks, and the debt securities are issued in several tranches in accordance with the framework agreement. However, standalone bonds remain the most common form of issuance in Germany and are generally addressed to qualified investors.

Listing Debt Securities and Admission to Trading

30. What are the main listing requirements for bonds and notes issued?

Main Requirements

Corporate bonds can be admitted to the Prime Standard or included in the Scale segment of the Open Market at the Frankfurt Stock Exchange. The Scale segment generally sets less stringent eligibility requirements than the Prime Standard.

For the Prime Standard, the issuer must meet the following requirements for admission of the bond:

• Compliance with national accounting standards for issuers with an EU domicile, or the IFRS.
• Minimum bond volume of 100 million placed.
• Denomination of the bond in partial bonds of EUR1,000.

To be included in the Scale segment, the issuer must meet the following requirements:

• Compliance with national accounting standards for issuers with an EU domicile, or the IFRS.
• A corporate history of at least two years.
• A placed bond volume of at least EUR20 million.
• A denomination of a maximum of EUR1,000.
• Fulfilment of certain financial ratios (for example, EBIT interest coverage of at least 1.5 and EBITDA interest coverage of at least 2.5).

Exceptions are possible for issuers with shares listed in the Frankfurt Stock Exchange, DAX, or MDAX share indices.

The stock exchange determines the specific requirements for the admission or inclusion of securities in the various segments. The BaFin is then the primary authority responsible for supervising post-listing obligations.

For DIPs, there are some specifications due to the concrete features of this type of security. Individual draw-downs under a valid base prospectus are permissible if the final terms of the offering are published before the launch.

The Regulation (EU) 2023/2631 on European Green Bonds and optional disclosure for bonds marketed as environmentally sustainable and sustainability-linked bonds (Green Bond Regulation) sets out additional requirements if the issuer intends to issue bonds for financing investment related to environmentally sustainable technologies, energy, and resource efficiency as well as environmentally sustainable infrastructure and research infrastructure. It contains provisions that specifically concern:

• The use of proceeds.
• The transparency and external review requirements.
• The reporting requirements.

Minimum Size Requirements

See above, Main Requirements.

Trading Record and Accounts

See above, Main Requirements.

Minimum/Maximum Denominations

See above, Main Requirements.

31. Are there different/additional listing requirements for specific types of debt securities?

There are some additional requirements for the issuance of structured finance products (debt securities that are dependent on, typically, other securities that underlie them). The issuer must prepare an accompanying key information document in accordance with the PRIIPs Regulation containing the main features of the financial product. This is intended to enable investors to obtain sufficient information about the product in a clear form so that they are able to take an informed investment decision.

Continuing Obligations for Listed Debt Securities

32. What are the main areas of continuing obligations applicable to companies with listed debt securities and the legislation or rules that apply? Do they apply to overseas companies with listed debt securities? What are the penalties for breaching the continuing obligations?

Main Areas of Continuing Obligations

Post-listing, various obligations arise that affect the issuer and its major shareholders, as well as the issuer's directors and officers. The most important post-listing obligations applicable for debt securities listed on a regulated market are:

• Submission of an annual financial report within four months of the end of the reporting period.
• Submission of half-yearly financial reports within three months after the end of the reporting period.
• Submission of quarterly statements within two months after the end of the reporting period.
• Continuous updating, publication, and submission of a corporate calendar.
• Publication and communication of insider information, directors' dealings, and insider lists in German or English.

All reports and documents must be transmitted to Deutsche Börse AG through the Exchange Reporting System. The post-listing obligations must be fulfilled in German or English. The fulfilment of these obligations is supervised by the BaFin.

The post-listing obligations differ depending on whether the bond is listed in Prime Standard or the Scale segment of the Open Market.

Application to Overseas Companies with Listed Debt Securities

There is no differentiation between the continuing obligations of national and overseas companies if debt securities are listed in Germany. If the obligations relating to the prohibitions on market manipulation and insider dealing are fulfilled in another EEA state, they do not have to be additionally fulfilled in Germany.

Penalties for Breach of Continuing Obligations

Violations of the post-listing obligations can result in the imposition of:

• Criminal and misdemeanour sanctions.
• Administrative measures.
• Civil liabilities.
• Sanctions under competition law.

Fines of up to EUR2.5 million can be imposed on legal entities, and up to EUR1 million on natural persons. The BaFin can also prohibit natural persons from trading securities on their own account for a period of up to two years. A sanctions committee decides on the consequences of violations of duties under the rules of the Frankfurt Stock Exchange, which can include:

• Administrative fines.
• Public reprimands.
• Exclusion from trading for up to 30 days.

Advisers and Documents to Issue/List Debt Securities

33. Outline the role of advisers used and main documents produced when issuing and listing debt securities.

Advisers

The managers' counsel typically drafts the terms and conditions and the placement agreement, while the issuer's counsel looks after the required resolutions to be taken by the issuer's corporate bodies.

Main Documents

The following documents will be discussed and prepared together with the banks/legal advisers/auditors:

• The syndicate agreement.
• The signing/closing memorandum.
• The paying agency agreement.
• The trustee agreement under foreign law (if applicable).
• The comfort letter.
• The legal opinions.

There are only small differences in the documentation between wholesale and retail debt securities issues, as the documents above are internationally generally highly standardised to best market practice. The underwriting agreement for retail offerings may contain other representations and warranties. The legal opinions, disclosure letters, and comfort letters are drafted in accordance with general standards and do not differentiate between retail and wholesale debt securities issues.

Timetable: Debt Securities Issue

34. What is a typical timetable for issuing and listing debt securities?

A typical timetable for issuing and listing debt securities can cover several weeks, if not months, in particular in the case of a debt-issuance programme for which a new base prospectus must be drafted. If there is already a valid prospectus on which the issuance can be based, the process is much shorter. The timetable typically includes the following phases:

• Initial preparation.
• Preparation of transaction documents (terms and conditions, agreement, resolutions).
• Selection of advisers.
• Market sounding.
• Bookbuilding.
• Issuance, payment, and settlement.

After the settlement, the issuer must comply with the applicable post-listing obligations.

Clearing and Settlement of Debt Securities

35. How are debt securities cleared and settled and what currency are debt securities typically issued in? Are there special considerations for holding, clearing and settling debt securities issued in foreign currencies?

Debt securities are typically issued in Euro, although some are (dual)listed in the US and denominated in US dollars. In principle, there are no special features for debt securities denominated in foreign currencies, with the exception of special settlement requirements for the paying agent.

This Q&A guide was originally published by Practical Law Capital Markets and was prepared with the assistance of Mr Julius Könebruch.