The Securities Prospectus for a Public Offer of Securities

Anyone wishing to offer a security to the public in Germany or within the European Union must prepare a securities prospectus in accordance with Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or when they are authorized for trading on a regulated market (Prospectus Regulation). Classically securitized debt instruments such as bonds, participation certificates, certificates and shares qualify as securities. Tokenized financial products can also qualify as sui generis securities. The decisive factor for qualification as a sui generis security is that the tokens are transferable and tradable on the financial markets and that the tokens embody rights similar to securities. A public offer of a security exists if a communication is made to the public that contains sufficient information about the terms of the offer and the securities to be offered to enable an investor to decide to purchase the securities. In this case, a securities prospectus must be prepared, which in Germany must be approved by BaFin. The Prospectus Regulation also provides for the possibility of notifying a prospectus to other EU member states (so-called passporting). This means that the prospectus can also be used for cross-border offers.

No Securities Prospectus Required in Specific Cases

Not every offer of a security requires the publication of a securities prospectus. The Prospectus Regulation provides for certain exceptions in this respect. For example, a prospectus does not have to be prepared if the offer is aimed exclusively at qualified investors, i.e. professional investors. Nor is a prospectus required if the offer of securities is aimed at fewer than 150 persons. If the security has a denomination of at least EUR 100,000 or the minimum subscription amount for the acquisition of securities is at least EUR 100,000, the issuer also does not need a securities prospectus for the public offer in accordance with the EU Prospectus Regulation. If the total issue volume of a securities offering in the European Economic Area does not exceed EUR 8 million, calculated over a period of twelve months, the issuer and offeror of the securities do not have to prepare and approve a securities prospectus either. In Germany, however, a securities information sheet (WIB) must be prepared instead of a securities prospectus. In addition, the securities must only be distributed on the basis of a WIB by a company that holds a BaFin license for investment advice or investment brokerage.

Content of the Securities Prospectus

The content of the prospectus must contain the information that is essential for the investor to be able to form an informed judgment about the assets and liabilities, profits and losses, financial position and prospects of the issuer of the security and any guarantor. The securities prospectus should also set out the rights attaching to the securities and the reasons for the issue and its effect on the issuer. Accordingly, the securities prospectus regularly contains securities and issuer-related risk factors, a description of the issuer and its activities, as well as a presentation of historical financial information. Small and medium-sized enterprises (SMEs) also have the option of drawing up a so-called EU growth prospectus. Its content requirements are lower than those of a regular securities prospectus.

The lawyer responsible for questions relating to securities prospectuses at our law firm is Dr. Konrad Uhink.