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 draw up a securities prospectus in accordance with Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to 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 may also qualify as securities sui generis. The decisive factor for qualification as a security sui generis 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 is given where a communication is made to the public containing sufficient information about the terms of the offer and the securities to be offered to enable an investor to decide to purchase or subscribe to those securities. In this case, a securities prospectus must be drawn up which in Germany must be approved by BaFin prior to the public offer. The Prospectus Regulation also provides for the possibility of notifying a prospectus to other EU Member States (so-called passporting). This allows the prospectus to also be used for cross-border offers.

Exemptions from the Prospectus Obligation

Not every offer of a security requires the publication of a securities prospectus. The Prospectus Regulation provides for certain exceptions. For example, a prospectus does not have to be drawn up if the offer is addressed exclusively to qualified investors, i.e. professional investors. If the securities shall be offered to less than 150 persons, the Prospectus Regulation also does not require the issuer to draw up a securities prospectus. Also, if the security has a denomination of at least EUR 100,000 or if the minimum investment amount for investors is at least at EUR 100,000 when acquiring the securities, no securities prospectus has to be drawn up and approved by BaFin as the competent authority neither. For securities issuances of which the total consideration in the European Economic Area does not exceed EUR 8 million, calculated over a period of twelve months, no securities prospectus has to be prepared either. In Germany, however, in such cases a securities information document (WIB) must be prepared. Furthermore, securities that are offered to the public on basis of a WIB may only be distributed via a company which holds a BaFin license for investment advisory or investment brokerage.

The Content of the Securities Prospectus

The content of the prospectus must contain the information that is essential for the investor to be able to make an informed judgement about the assets and liabilities, profits and losses, financial position and prospects of the issuer and any guarantor. The prospectus shall also set out the rights attached to the securities and the reasons for the issue and their effect on the issuer. Accordingly, the prospectus shall regularly include security and issuer-related risk factors, a description of the issuer and its activities and a presentation of its historical financial information. For small and medium-sized enterprises (SMEs), there is also the possibility of drawing up a so-called EU Growth Prospectus. The content required to be set out in an EU Growth Prospectus is lower than the minimum content to be disclosed in a regular securities prospectus.

The competent lawyer for questions concerning Security Prospectusses in our law firm is Attorney Dr. Konrad Uhink.