Companies wanting to procure funds from investors will in most cases sell their own stock or take a loan from the investor. In the case that the funds are supposed to be procured through publicly tradeable securities, a prospectus that meets the prerequisites of the Federal Securities Prospectus Act and, where applicable, of the EU Prospectus Directive has to be created by the issuer and approved by the Federal Banking Supervisory Authority (BaFin) prior to the initial public offering of the security. Publicly tradable securities are notably shares and comparable financial instruments as well as bonds, participation certificates and warrants on securities. The drafting of a securities prospectus is a complex and legally challenging task. Depending on the specific kind of the financial instrument in question, information about the issuer, its shareholders, the directors, the position of the issuer in the market as well as current trends in that market, the legal and fiscal design of the security and the risks that are associated with an investment into that specific security has to be included in the prospectus.
FIN LAW will conduct a fundamental and comprehensive consultation at the beginning of every capital market project to pinpoint the needs and goals of the client. This way, the client has a clear overview of the options that are available to him and can therefore make an informed decision on which financial instrument is best suited for his project and how a public offering of said instrument has to be conducted. If the framework of the project is developed in this way, the next step is the legal drafting of the financial instrument and the determination of the issuing procedure. Subsequently, the client has to compile and provide the information that is necessary for the security prospectus. FIN LAW assists the client on every step of the way until the prospectus is submitted to the BaFin and will represent the client vis-à-vis BaFin in the following approval process.
The EU Prospectus Directive is directly applicable within the European Union and therefore provides the basis of a harmonized capital market within the EU. In order to give issuers of securities requiring a prospectus an easier access to other capital markets within the EU, the European legislator created a relatively easy way to transport an approved prospectus that was drafted and permitted in one to another EU member state without the need of a completely new prospectus and another approval process in the target EU member state. The target EU member state may require a synopsis of the prospectus in the country’s native language or in a language that is commonly used for conducting business in that country. A translation of the entire prospectus is not required. Germany has opted for a synopsis in a common business language as long as the target investors seem to be an adequately informed group of people.
Attorney Lutz Auffenberg, LL.M.
T. +49 (0) 69 50 50 64 490
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