As an alternative to a bank loan, companies can raise money from investors via the capital market. This can be done through a variety of financial instruments. The most common and best known in this context are stocks as equity instruments and bonds for raising debt or hybrid capital. The financial instruments can be represented classically in securities certificates or in electronic form. Irrespective of the form of the instrument used to raise capital, however, it should be noted that an information document must be published in the case of a public offer to a large number of retail investors. In the case of large-volume issues, this is generally a securities prospectus. The information that must be included in the prospectus is specified in the Prospectus Regulation and other accompanying regulations. For issues of up to EUR 8 million in Germany, there is the alternative option of using a securities information document (WIB) of up to four pages in length. The content requirements of the WIB are based on the German Securities Prospectus Act (WpPG). One important piece of information for investors is the financial situation of the issuer. Accordingly, it is regularly required that historical financial information be included in the documentation. Particularly in the case of young or small companies as issuers, it is therefore necessary to check in advance whether they can meet the requirements.

Securities Prospectus has the Strictest Requirements

The requirements for historical financial information are the strictest for a securities prospectus under the Prospectus Regulation. For equity securities such as stocks offered to retail investors, the audited historical financial information for the last three years must be included as well as an auditor’s report for each financial year. In the case of consolidated financial statements, these must at least be included. Where the issuer is required to prepare financial statements in accordance with international accounting standards, this financial information must be included. Should the issuer not be obliged to do so, the financial information may also be prepared in accordance with national accounting standards such as the German Commercial Code (HGB). In this case, it must contain at least the balance sheet, the income statement, an overview of all changes in equity, the cash flow statement, the accounting methods and explanatory notes. In these cases, smaller companies in particular must check whether their accounting meets the specified requirements or whether they may have to prepare additional financial information in accordance with the aforementioned requirements. The same applies, with a few simplifications, to the historical financial information for non-equity securities for small investors such as bonds. Here, the period to be reported is two years instead of three.

Simplifications for SMEs and Small Volume Issues

Under the Prospectus Regulation, small and medium-sized enterprises (SMEs) have the option of drawing up a so-called EU Growth Prospectus. In terms of content, this has fewer requirements than a regular securities prospectus. This also applies to the financial information. For example, only the last two financial years have to be included instead of three in the case of equity securities. If the balance sheet is prepared in accordance with national accounting standards, no cash flow statement and no statement of changes in equity must be presented. In the case of non-equity securities, only the last financial year must be included, and no cash flow statement must be included if the issuer prepares its financial statements in accordance with national accounting standards. A WIB can be used for issues of up to EUR 8 million in Germany. In the case of a WIB, the issuer’s debt-equity ratio calculated on the basis of the most recently prepared annual financial statements must be included. Furthermore, a reference to the most recent annual financial statements must be included and it must be stated where these can be obtained. These simplifications can make the preparation of the prospectus or WIB much easier, especially for smaller and young companies, as they can result in no new financial reports having to be prepared.

Attorney Dr. Konrad Uhink



The lawyer responsible for providing advice on the issuance of securities as well as the creation of securities prospectuses and WIB in our law firm is Attorney Dr. Konrad Uhink.