Deutsche Börse is the world's largest, leading, most international, and the only fully integrated exchange organization. This global exchange is located at the center of Europe in Frankfurt, Germany. Deutsche Börse helps companies to raise the capital they need and establish the profile they deserve.
Deutsche Borse operates one of the most efficient stock markets in the world. By holding an IPO at Deutsche Börse, companies can develop into true global players and bolster their equity base for long-term projects. Companies benefit by improving their competitive positioning and be able to pursue their growth strategies more efficiently through a full listing on one of Deutsche Börse's three market segments, which offer companies customized facilities for raising capital.
In coordination with local legal regulations, a listing at Deutsche Börse will help companies headquartered outside Germany to get the best out of Europe's capital markets. By listing on Deutsche Börse and coming under the regulatory regime of BaFin (Federal Financial Supervisory Authority), non-EU issuers gain access to all EU capital markets. A single, time ¬efficient, and low-cost listing allows companies to raise capital across borders in all 25 EU markets, with little additional administrative effort.
All required documents and communications with Deutsche Börse can be in English. An EU standard prospectus can be used for admission to full-listing on Deutsche Börse. The vetting approval of the English-language EU prospectus (under EU regulation) by BaFin and the subsequent listing on Deutsche Börse is completed within a maximum of 25 working days. The costs of the IPO and maintaining a listing on Deutsche Börse are substantially less than on other exchanges.
Process for going public
Choice of Market Segment
Issuers can choose from three market segments: Entry Standard, General Standard, and Prime Standard. The Entry Standard Deutsche Börse offers a simple, quick, and cost effective way of listing shares in exchange trading that is particularly suited for small and medium-sized companies. The General Standard and Prime Standard meet the highest European transparency requirements and gain all the advantages of a full listing.
Entry Standard: Quick and Easy Admission
This is a segment of the Open Market, its legal framework is defined by the "Allgemeine Geschäftsbedingungen for den Freiverkehr" (Rules for the Regulated Unofficial Market) of Deutsche Börse. It is open to companies that want to include their shares in trading quickly, easily, and cost-effectively with reduced formal requirements.
The Entry Standard provides a company with the following advantages:
• Quick access to the EU capital markets
• A low-cost IPO combined with the lowest listing fees
in Europe: €5,000
• Reduced formal requirements
• Deep liquidity pool
• Support from Deutsche Börse Listing Partner
Supervision of price quotations, orderly conduct of trading, and compliance with respective exchange rules and regulations are carried out by the Trading Surveillance Office (HüST) as defined by German securities law. This ensures high trading quality is always maintained. Research and analyst coverage by designated sponsors help provide higher stock liquidity by concentrating global pools of capital, which leads to a higher attainable share price.
The Entry Standard has the following transparency requirements:
• Audited annual financial statements, including
management report, in German or English;
compliance with national GAAP* (e.g. HGB) or
IFRSs within six months after the end of the
reporting period
• An interim report must be published no later than three
months after the end of the first six months of
every financial year
* IFRS or equivalent (such as U.S. GI1AP, Canadian GAAP or Japanese GAAP) for non-EU-Companies.
• Significant company news items must be published
• Publication of a brief company profile, which is updated annually
• Publication of a continuously updated corporate action timetable
The company must comply with applicable statutory provisions such including the following:
• Insider trading rules (WpHG)
• Market Abuse Directive
• Provisions governing public offerings (WpPG - the German Securities Prospectus Act)
General Standard: Minimum EU-Regulation
This segment is subject to the statutory requirements for the Amtlicher Markt (Official Market) or Geregelter Markt (Regulated Market). The General Standard is suitable for companies that primarily target German investors. The General Standard regulations apply to all companies seeking a listing in an EU-regulated market.
For a listing in the General Standard, a company must meet the statutory transparency regulations for EU-regulated markets including the following:
• Audited annual financial statements, including a management report and interim report in accordance with IFRS/International Accounting Standards (IAS)
• Ad hoc disclosures (WpHG)
• Publication of directors' dealings (WpHG)
• Announcement of reporting thresholds (WpHG)
• Compulsory offer with change of control (WpUG, the Securities Acquisition and Takeover Act)
• Corporate Publications in English allowed
Prime Standard: Highest Transparency in Europe
Above and beyond the requirements for the General Standard, the Prime Standard requires issuers to meet international transparency requirements, offering the highest transparency standards in Europe. This is because the Prime Standard is tailored to the needs of companies wishing to position themselves to attract international investors. Issuers in the Prime Standard have to meet additional transparency obligations compared with companies in the General Standard.
In addition to those required in the General Standard, companies in the Prime Standard must meet the following transparency requirements:
• Publication of quarterly reports
• Publication of a current corporate action timetable on the Internet
• At least one analyst conference per year
• Reporting in English (in addition to German for German companies)
Transparency Standards
The following table summarizes the transparency levels for the three market segments.
Entry Standard
The Rules for the Regulated Unofficial Market of the Frankfurt Stock Exchange, section III, apply; the following must therefore be published:
• Audited annual financial statements, including management report, in German or English in according with national GAAP* (e.g. HGB) or IFRS
• Interim report
• Significant company news items
• Brief company profile and corporate action timetable
Compliance with applicable statutory provisions such as:
• Insider trading rules (WpHG)
• Market Abuse Directive
• Provisions governing public offerings (WpPG)
General Standard
The statutory transparency regulations for EU-regulated markets apply such as:
• Audited annual financial statements, including management report and interim report in accordance with IFRS/IAS
• Ad hoc disclosures (WpHG)
• Publication of directors' dealings (WpHG)
• Announcement of reporting thresholds (WpHG)
• Compulsory offer with change of control (WpOG) *Corporate publications in English allowed
Prime Standard
In addition to the General Standard transparency regulations, the following apply:
• Publication of quarterly reports
• Publication of a current corporate action timetable on the Internet
• At least one analyst conference per year
• Reporting in English (in addition to German for German companies)
Admission Process
Admission Process for Entry Standard
The admission of shares for trading in the Entry Standard is one of the simplest and quickest ways of going public. The designation of a Deutsche Börse Listing Partner, also known as an "admission sponsor," who will serve as a capital market coach, is a requirement to enter the Entry Standard. The application for inclusion in exchange trading is filed by the designated trading participant registered at Deutsche Borse, who also monitors compliance with the transparency requirements and is the key contact partner and coordinator between the company and Deutsche Börse.
The main application documents are the following:
• For public offerings: a prospectus that is approved and vetted by the national regulator"
• For prospectus free private placements: a non-public offering document that is the sole responsibility of the company
• An undertaking from the admission sponsor to comply with the rules of the Entry Standard and to monitor the transparency requirements to be fulfilled by the company
• Proof that a Deutsche Borse Listing Partner has been appointed
• Application form
• Issuer's declaration of consent
• Annual financial statements
To admit shares to trading, the Frankfurt Stock Exchange requires a maximum of five trading days.
Companies, with their admission sponsors, can choose from two alternative application formats for admission based which best fits the planned transaction: a public offering with a prospectus or a private placement without a prospectus. Legal obligations both on European and national levels allow both forms of admission. However, all companies within the European Union markets are subject to the same regulatory conditions.
Admission process for General Standard and Prime Standard
The company is required to submit an application to the Board of Admissions of the Frankfurt Stock Exchange. If a company files an application to be listed in the General Standard for the first time, it is required to file together with a bank or financial services institution that is approved for trading on a German exchange. If a company has already been admitted to the General Standard and subsequently files for admission to the Prime Standard, it may file the application on its own.
In addition, the following admission documents must generally be submitted.
• Listing application (signed by the issuer and lead manager)
• A prospectus that has been approved by BaFin and published; a preliminary prospectus is initially sufficient for filing an application
• Current articles of association (certified)
• Current certified extract from the commercial register (or equivalent companies register)
• Report on the company's formation (if it has existed for less than two years)
• Evidence of the resolutions relating to the IPO, e.g. minutes of the Annual General Meeting, resolutions of the Executive Board and the Supervisory Board
• In the case of individual securitisation: specimens; for global securitisation: copy of the global certificate
• Annual financial statements and management reports for the past three financial years
The admission procedure can be initiated at the same time as the BaFin prospectus approval procedure, so that the admission resolution can be made on the same day as the approval and (Internet) publication of the prospectus.
Further information and forms can be found at: www.deutsche-boerse.com > Listing > Going Public > Application Forms
The road to an IPO usually involves the following four steps
Phase 1: Planning and preparation
• Select advisors and Deutsche Börse Listing Partner
• Select an investment bank
• Establish legal preconditions within the company
• Establish controlling and reporting preconditions within the company
• Provide regulatory permissions of government and administration
• Develop company strategy
• Determine business plan
Phase 3: Realisation and marketing
• Prepare investor relation activities
• Plan pre-marketing with investors and analysts
• Publish EU prospectus
• Publish research coverage
• Send admission of shares to trading
Prepare custody and settlement of shares
Phase 2: Structuring
• Determine an IPO timetable
• Plan the conception of the public offering
• Arrange financial, business, and legal due diligence
• Prepare the EU security prospectus
Phase 4: First day of trading and secondary trading
• Bookbuilding and pricing of IPO
• Initial price auction
• IPO event organised by Deutsche Börse and TV/ media coverage on the floor of the Frankfurt Stock Exchange
• Continuous trading on the Xetra electronic trading system
Deutsche Börse Listing Partners
Companies that have decided to go public can benefit from professional support and advice provided by Deutsche Börse Listing Partners with experience of numerous IPOs. They analyze fully the current market situation, examine the company's prospects, establish contacts, and then develop the IPO strategy that is right for the company's needs.
Further support and guidance is also required after an IPO. Only those companies that provide regular information about their products, results, and activities in a professional manner can expect long-term success on the financial markets. Deutsche Börse Listing Partners will help companies implement an active investor relations strategy and compile corporate information, such as quarterly or annual reports. They have expertise in both Asia and Europe. In addition, Listing Partners can act as an interface for a company to the capital markets and promote the liquidity and tradability of a company's shares acting as a designated sponsor or investment bank.
A Deutsche Börse Listing Partner with a strong local presence in both EU and Asia can help a company in a range of areas, including the following:
• IPO and corporate finance advice
• Investment banking
• Legal advice
• Tax advice and assurance services
• Investor and public relations
• Designated Sponsoring/Research Comprehensive details and contact information for all Deutsche Börse Listing Partners is available at www.deutsche-boerse.com/china
Board of Directors Requirements
No specific requirements.
Audit Committee Requirements
Entry Standard (Exchange regulated)
No specific requirements.
Prime Standard or General Standard (EU-regulated)
Requirements for German companies are specified in German Corporate Governance Kodex. Non-German companies have to follow the regulations of their country of registration.
Market Segment
Open Market (Freiverkehr)
Entry Standard
General Standard (Geregelter Markt Frankfurt)
General Standard (Amtlicher Markt Frankfurt)
Prime Standard (Geregelter Markt Frankfurt)
Prime Standard (Amtlicher Markt Frankfurt)
Trading participants International, more than 280 trading firms, more than 4,500 brokers
Legal framework Exchange-regulated market EU-regulated market
Issuer services - Direct access to sector key accounts
Large service portfolio (national/international investor road shows, capital market conferences, workshops, web-tools, etc.)
Capital market expertise -
More than 80 Deutsche Börse Listing Partners (including investment banks, brokers, accountants, law firms, IR-consultants, and others)
Minimum age of company - 1 year exception possible 3 years exception possible 3 years 3 years, exception possible 3 years
Minimum issuing volume - - Minimum market capitalization €1.25 M
Minimum issuing volume - - Minimum 10,000 shares
Equity capital - -
Minimum €1.25 M
Minimum profitability - - - - - -
Lock up shareholders - - - - - -
Free float
- - - - - -
Admission document Options:
1. EU-prospectus (public
offer)
2. Simplified admission
doc, (private placement) EU-prospectus (underwritten by company and bank/fse-member)
Responsibility for formal admission Deutsche Börse trading participant Company and bank (Deutsche Börse member)
Capital market coach - Deutsche Börse Listing Partner - - - -
Accounting standards National GAAP (for EU issuers)
IFRA (or adequate for non-EU issuers) IFRS (or adequate for non-EU issuers)
Market Segment
Open Market (Freiverkehr)
Entry Standard
General Standard (Geregelter Markt Frankfurt)
General Standard (Amtlicher Markt Frankfurt)
Prime Standard (Geregelter Markt Frankfurt)
Prime Standard (Amtlicher Markt Frankfurt)
Reporting history - - 3 years or since foundation 3 years 3 years or since foundation
Publication of annual report - No later than 6 months after end of reposting period on issuer website No later than 4 months after end of reporting period
Publication of interim (half year) report - No later than 3 months after end of reposting period on issuer website No later than 3 months after end of reporting period Quarterly reports
Quarterly reports - - - - No later than 2 months after end of reporting period; formal structure required
Publication language
German or English German or English (for international issuers)
Press conference financial statements - - Yes
Fast disclosure rule § 15a WpHG) - Immediate disclosure of important company news on issuer website Yes rule § 15a WpHG Yes rule § 15a WpHG English required
Insider lists (§ 14 WpHG)
- - Yes
Insider trading
Prohibited
Disclosure of Directors Dealings (§ 15a WpHG) - - Yes § 15a WpHG
Corporate Governance
- - Deutscher Corporate Governance Codex
Market Segment
Open Market (Freiverkehr)
Entry Standard
General Standard (Geregelter Markt Frankfurt)
General Standard (Amtlicher Markt Frankfurt)
Prime Standard (Geregelter Markt Frankfurt)
Prime Standard (Amtlicher Markt Frankfurt)
Publication of Voting rights (§ 21 WpHG) - - Yes, § 21 WpHG
Analyst conference - - - - Minimum of 1 analyst conference per year
Research - - - - Minimum of 1 research report for institutional investors per year
Corporate calendar - Published on issuer website - Published on issuer website
Designated Sponsor (market making) - - - - - -
Company profile - Published on issuer website - - - -
Admission fee Admission: €0 with prospectus
€750 without
prospectus
Introduction: €750 Admission: €3,000
Introduction: €2,500
Annual fee - Entry Standard: €5,000 General Standard €7,500 Prime Standard: €10,000
Audit requirements
Entry Standard (Exchange regulated)
A company is required to issue audited annual financial statements, including a management report, in German or English within six months after the end of the reporting period.
The company's financial statements must be in accordance with national GAAP for EU-companies (e. g. HGB), IFRS or equivalent (such as U.S. GAAP, Canadian GAAP, or Japanese GAAP) for non-EU-companies. Prime Standard or General Standard (EU-regulated)
A company listing under either the Prime Standard or the General Standard is required to issue audited annual financial statements, including a management report and interim report, in English within four months after the end of the reporting period. The financial statements must be in accordance with IFRS.
A company listing under the Prime Standard must also publish quarterly reports within two months after the end of the reporting period. An auditor's statement is not required.
Timetable
Costs of Going Public
Entry Standard (Exchange regulated)
In the Entry Standard, the annual listing fee is €5,000. The one-time fee for inclusion in exchange trading is €1,500 with a non-public offering document and €750 with a prospectus.
Prime Standard or General Standard (EU-regulated)
In the Prime Standard, the annual listing fee is €10,000; in the General Standard, the annual listing fee is €7.500. For both listings, the one-time admission fee is €5,500.
Total IPO Floatation Cost
Total IP0 floatation costs are substantially lower on Deutsche Gorse than on other exchanges, with costs of 6% to 9% of issuing volume on average.
Underwriting fees range on average range from 3% to 5% of issuing volume.
Non-underwriting fees range on average from 5% to 8% of issuing volume.
For example, pre-IPO due diligence and the preparation of prospectus costs on average €150,000 and €600,000.
Checklists for an IPO at Deutsche Börse
Checklist 1
Before you decide: Is the company ready to go public?
• Pre-IPO financing exhausted
• Requirement for additional equity identified
• Plans for growth made
• Internationalisation planned
• Staff retention important
• Succession problem must be solved
• Internal infrastructure prepared
Checklist 2
Before you go public: Is the team complete?
• Internal project team assembled
• IPO consultant appointed
• Lead manager selected
• Specialist lawyer engaged
• Auditor engaged
• Existing or new tax adviser engaged
• Investor relations/public relations agency selected Checklist 3
IPO/admission to trading: Key tasks
Cross-segment requirements:
• Powerful accounting system developed
• Experienced CFO in place
• Efficient corporate structure implemented
• Corporate governance standards established
• Business plan devised
• IPO concept prepared
• Equity story written
• Legal form=stock corporation
• Investor relations team complete
Specifically for a public offer and admission:
• Due diligence completed
• Prospectus compiled
• Approval received
• Application for listing or inclusion in trading filed
• Book-building started
• Road shows completed
• Issue price set
• Application for first quotation filed
For admission to trading in the Entry Standard:
• Expose or prospectus compiled
• Admission sponsor and Deutsche Börse Listing Partner engaged
For admission to trading in the General Standard or the Prime Standard:
• Financial reporting converted to IFRS, or an equivalent
standard such as U.S., Canadian, or Japanese GAAP
• Accounting system prepared
Checklist 4
After admission to trading: What, when, and how does company have to communicate? And whom does it communicate to?
• Ready to meet transparency requirements
• Insider trading guidelines implemented
• Reporting infrastructure ready
• Experienced investor relations expert(s) recruited
• Investor relations website built
• Investor relations service line open
• Analyst conference planned
contact www.mergerlawassociates.com
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