Entrepreneurs & Issuers

Structuring capital market offerings correctly – prospectus requirements and alternatives

A successful start on the capital market begins with the legally compliant and strategically sound structuring of the chosen financial instrument. Not only is the selection of the appropriate issuance vehicle crucial, but the right level of transparency and regulatory efficiency must also be carefully considered, as must the legal requirements for distribution.

Securities subject to prospectus requirements

Anyone wishing to offer securities to the public in Europe generally requires a securities prospectus approved by a European supervisory authority (e.g., Art. 3 (1) Prospectus Regulation, § 3 WpPG). Only instruments that are marketable – i.e., fungible and transferable under property law (e.g., bearer bonds or order bonds, shares) – are considered securities. In contrast, registered bonds or shares in a limited liability company (GmbH) are not considered securities within the meaning of the Regulation.

The approval process usually takes several weeks and incurs considerable costs. Advantage: An approved EU prospectus is notifiable and can be used throughout the EU. Certain prospectuses can also be recognized in Switzerland with little effort.

Tip

For small and mid-cap companies, a full securities prospectus may be disproportionately costly. In this case, it is worth looking at the prospectus-free alternatives or the EU Growth Prospectus.

The EU growth prospectus

It allows privileged issuers – especially SMEs – to raise capital with a reduced amount of information. Prerequisite: The company must not yet be listed on a regulated market. The EU growth prospectus is also notifiable (Art. 15 ff. Prospectus Regulation).

Practical benefit

Especially for issues up to approximately €20 million, the EU Growth Prospectus represents a balanced solution between regulatory acceptance and effort.

Prospectus-free securities

Securities information sheet (WIB):

For public offerings of up to €8 million within 12 months, a three-page information sheet may suffice in place of a prospectus (Section 4 WpPG). This must be approved by the competent supervisory authority – only the financial viability is excluded.

Issuer privilege:

If the issue volume is less than €1 million, the issuer may distribute its securities itself – without a distribution license and without a prospectus requirement.

Offers to qualified investors:

If the securities are distributed exclusively to professional clients or eligible counterparties, the prospectus requirement does not apply (Art. 1 (4) (a) of the Prospectus Regulation).

Denomination ≥ €100,000:

Securities that can only be subscribed for a minimum amount of €100,000 are exempt from the prospectus requirement (Art. 1 (4) (c) of the Prospectus Regulation).

Offers to fewer than 150 non-qualified investors per member state:

The so-called “149 exception” (Art. 1 (4) (b) Prospectus Regulation) is a proven means of avoiding prospectuses when targeting specific investors.

Conclusion

There are numerous options for placing securities in a legally compliant manner without a prospectus – provided that the structure, target group, and marketing are precisely coordinated.

Initial public offerings & capital increases

I advise issuers and institutions on IPOs, listings, and capital measures – from the initial draft of the offering structure to communication with the stock exchange. My consulting focus:

Preparation and legal structuring of the IPO
Preparation and approval support for the securities prospectus
Coordination with syndicate banks, designated sponsors, and stock exchange operators
Support for capital increases (rights issues, placements with or without a prospectus)
Contract drafting between issuers and banks

I provide support for stock exchange listings on regulated markets (e.g., Frankfurt Prime Standard) and for listings on over-the-counter markets (e.g., Frankfurt Quotation Board, Munich m:access).

An IPO is more than just an issue—it is a regulatory tour de force.

I ensure that your documentation is in order, your schedule is on track, and your capital market debut is a professional success.

Post-listing obligations

Listing on the capital market entails follow-up obligations – both nationally and at European level. I support issuers in complying with all capital market law obligations, including:

Ad hoc disclosure (Section 12 WpHG, Art. 17 MAR): Disclosure requirements for price-sensitive information
Directors' dealings / insider law (Art. 19 MAR): Reporting of managers' own transactions
Voting rights notifications (Sections 33 et seq. WpHG): Disclosure of shareholdings
Preparation of internal guidelines on insider prevention and communication
Training of board members on capital market law obligations

Violations of these obligations can quickly result in fines or criminal penalties.

I can help you to ensure that your disclosures are correct and timely – even in complex corporate and investment structures.

Investments – with and without a prospectus

Asset investments within the meaning of Section 1 of the German Investment Act (VermAnlG) (e.g., subordinated loans, participatory loans, profit participation rights, registered bonds) are also subject to the prospectus requirement (Section 6 VermAnlG).

A sales prospectus does not need to be notified in this case, but must be approved by BaFin. Here, too, the process can take several weeks.

Exemptions from the prospectus requirement:

Max. 20 shares of the same investment (Section 2 No. 3a VermAnlG)
Minimum investment amount of €200,000 (Section 2 No. 3c VermAnlG)
Total volume less than €100,000 per 12 months
Loans secured by land charges (with appropriately qualified collateral)

Crowdfunding exception (Section 2a VermAnlG):

Conclusion

For a successful start on the capital market, choosing the right financial instrument is just as important as the appropriate regulatory setup. Whether bonds, profit participation rights, or tokenized investments: only when the issuance vehicle, target group, and distribution concept are seamlessly integrated can financing become a viable capital market project.

Book a free initial consultation

I can support you in selecting and structuring your instrument—legally compliant, economically efficient, and tailored to your needs. Feel free to arrange a free initial consultation.