Prior to start of trading the securities have to be admitted to the Regulated Market. The admission procedure is governed by public law and may be conducted simultaneously to the procedure for approval of the securities prospectus at BaFin.
Briefly, you have to do the following:
Pursuant to Sect.32 Börsengesetz [BörsG, German Stock Exchange Act], securities to be traded at a stock exchange on a Regulated Market have to be admitted to listing or included by the management board of the respective stock exchange. The admission is an authorization under public law granting the right to use the stock trading systems. Therefore the admission procedure is governed by public law and the admission to trading on the Regulated Market is an administrative act.
Pursuant to Sect. 32 Paragraph 3 BörsG the company is entitled to the admission to its stock, if such stock meets the requirements set forth in Article 35 of the Regulation (EC) No. 1287/2006 and complies with the provisions serving the purposes of investors’ protection and safeguarding of orderly stock exchange trading pursuant to Sect. 34 BörsG; an additional requirement is the publication of a prospectus approved or certified pursuant to the rules of the Regulation (EU) 2017/1129. Article 35 of the Regulation (EC) No. 1287/2006 provides for the free tradability of stock and defines whether a security is considered tradable in a fair, orderly and efficient manner. This is the case if, among other facts, the securities are sufficiently wide-spread and if information for their evaluation is available. These aforementioned and additional requirements are reviewed pursuant to the Börsenzulassungs-Verordnung [BörsZulV, German Stock Exchange Admission Regulation]. Employing the legal authorization contained in Sect. 34 BörsG, the regulator determined in detail the requirements for admission to the Regulated Market in the Stock Exchange Admission Regulation. The following aspects, above all, are checked according to the BörsZulV in the course of the admission procedure:
It seems advisable to contact the department Listing & Regulatory Issuer Services and Obligations of Deutsche Börse AG at an early stage in advance of the IPO in order to coordinate the details of the admission procedure, also in view of the time schedule intended.
The admission procedure is initiated by an electronic application for admission. The admission of securities to the General Standard is to be provided by the issuer of the securities. It is possible to represent the issuer by authorizing a third party (e.g. group company, service provider, bank, consultant, law firm). A so-called “IPO-underwriter” as co-applicant (Sect. 32 BörsG) is not provided for by the Exchange Rules for the FWB.
The application for admission must be signed by the applicant and submitted via the electronic eListing platform, with proxy permissive, and supplemented by adequate documents/records to furnish necessary evidence. Sect. 48 Paragraph 1 BörsZulV explains the General Standard application’s necessary contents. It has to state name and registered offices of the company as well as class and amount of the securities to be admitted to trading. In view of the securities class, besides the admission of company shares in form of stock, in rare cases there is the option of admitting certificates representing stock. Certificates representing stock are securities which were issued instead of stock and entitle the holder to execute the rights connected to the stock represented by them.
The documents to be submitted are listed in Sect.48 Paragraph 2 BörsZulV. Therefore, the application for admission of stock to the Regulated Market has to be accompanied by an approved prospectus or, in case approval proceedings at the Bundesanstalt für Finanzdienstleistungsaufsicht [BaFin, German Federal Agency for Financial Market Supervision] have not been concluded yet, by a draft version of such prospectus; in addition, those documents allowing for the review of admission requirements also have to be attached. These are specifically:
If necessary for assessing that the admission requirements are met, further documents must be submitted to the Management Board of the Frankfurt Stock Exchange as requested.
The electronic eListing platform has been developed by the stock exchange to assist applicants. The eListing platform offers users valuable assistance and procedural transparency. Users are guided through the application process by displaying the information and documents required for the procedure, providing input options using drop-down menus, error messages in the event of incorrect entries, additional explanations and the provision of templates and information sheets. The platform will also enable direct communication with FWB's process officers, and applicants will be able to call up the processing status at any time.
In the General Standard, there is an admission of definitive securities. Therefore, issuers of admitted shares and certificates representing shares are obliged to admit all shares of the same class issued later (Sect. 40 Börsengesetz [BörsG, German Stock Exchange Act], Sect. 69 Börsenzulassungs-Verordnung [BörsZulV, German Stock Exchange Admission Regulation]). For capital increases (subsequent admissions) two files must therefore be submitted: an application for admission of the new shares to the General Standard (filing by issuers) and for a notification of the introduction to the General Standard (filing by issuers).
Pursuant to section 32 (3) BörsG, the publication of a prospectus approved or certified in accordance with the provisions of Regulation (EU) 2017/1129 is always a prerequisite for the admission of securities, unless the publication of a prospectus can be waived in accordance with Article 1(5) of Regulation (EU) 2017/1129. The application for authorisation must therefore be accompanied by the draft prospectus or a prospectus approved by BaFin or by a competent authority of another EEA state as well as proof of its publication.
The securities prospectus is a key authorisation document that is subject to precise legal requirements with regard to its content. Interested investors can use the information contained in this document to find out about the company and the securities. Further information on the securities prospectus can be found under "Prospectus".
In order to safeguard the formation of a liquid market in the stock to be admitted and, thus, to guarantee orderly trading, Sect. 2 Paragraph 1 BörsZulV sets forth a minimum amount for stock to be admitted. Pursuant to this provision, the expected market value of the stock to be admitted has to amount to €1,000,000 at least. This market value could be identified by multiplying the stock to be admitted with the amount at the lower end of the price spread which applies to the stock offering. If an assessment of the market value is not possible, the applicable criterion is a corresponding amount of equity capital of the company in the meaning of Sect. 266 Paragraph 3 letter A of the Handelsgesetzbuch [HGB, German Commercial Code].
Pursuant to Sect. 4 BörsZulV the securities to be admitted have to be issued in compliance with the legal regulations the issuer is subject to and have to correspond to the legal provisions applying to the securities. This provision clarifies the fact that the securities to be admitted have to be issued in legally valid manner and have to be legally existent. Evidence may be provided in form of the respective resolutions by the company’s general shareholders meeting, executive board and supervisory board as well as a current certified excerpt from the commercial register.
Pursuant to Sect. 5 BörsZulV the stock to be admitted has to be freely tradable. This requirement shall secure transferability and, thus, a well-functioning settlement of stock exchange transactions. In the course of reviewing the existence of free tradability of securities merely statutory restrictions, but no contractual restrictions are decisive. Therefore restraints on alienation contractually agreed upon, so-called lock-up agreements, generally do not impede the admission to trading.
In addition, Sect. 5 Paragraph 2 BörsZulV specifically defines the conditions which are necessary so not fully paid-up stock or registered stock limited in transferability shall be considered freely tradable. According to this provision, stock may be admitted even if the corresponding capital contribution has not been fully provided yet under the conditions that, for one, measures have been taken to secure that there will be no limitations to tradability of these securities. For another, the facts relevant in this context, which means the wanting full capital contribution and the measures for ensuring free tradability, have to be announced to the investing public in adequate manner. Usually, this will be achieved by including this information in the prospectus which is submitted as evidence document to the stock exchange in the course of the admission procedure.
In practice, an application for admission of registered stock limited in transferability to stock exchange trading may be answered to the positive only subject to a written declaration of the issuer to the stock exchange, stating whether during the past three business years the consent to stock transfer had been denied. This statement could be worded as follows:
“During the last three business years, the company did not deny to give its consent to any transfer of stock.”
Additionally the issuer, while observing the corresponding provision in its articles of association, if need be, has to give a statement with the following contents:
“The consent to stock transfer and to stock purchase in execution of subscription rights will be denied exclusively for extraordinary reasons in the company’s interest with the respective reasons being communicated to the applicant.“
Pursuant to Sect. 7 BörsZulV an application for admission of stock has to encompass all stock of the same category so that price distortions as a result of shortage of the admitted stock can be prevented. Therefore this provision contains a ban on partial admission or rather the obligation for complete admission. Decisive for the definition of the term “category” is the legal definition in Sect. 11 Clause 2 Aktiengesetz [AktG, German Stock Companies Act] stating that a category is formed by stock bearing the same rights. In converse argument this means that e.g. the admission of an issuer’s ordinary stock does not need to include preferred stock of the same issuer.
However, the application to admission may be limited insofar as the stock not to be admitted belongs to a shareholding which serves the purpose of maintaining a controlling influence on the issuer or if the stock may not be traded for a certain time period, see Sect. 7 Paragraph 1 Clause 2 BörsZulV. In this case a partial admission of stock can be granted on the condition that purchasers are not expected to suffer any disadvantages resulting from such merely partial admission.
The existence of a controlling influence and the fact that the danger of price distortions due to a shortage of admitted stock or stock available to the market can be excluded, alone do not justify a limitation of the application for admission. Rather it is necessary that this controlling influence shall be maintained for a longer period of time. This may be possible, for instance, in case a “family company“ is going public while the parties wish for the controlling influence to continue. On the other hand, a short-term purchase of a large share block merely for investment purposes gives no reason for a partial admission.
Generally, the application for admission of stock may also be limited due to a lock-up agreement under private law, on the condition that purchasers are not expected to suffer any disadvantages resulting from such merely partial admission. Above all, existing investors and major investors undertake to conclude such lock-up agreements to demonstrate, for example, their solidarity with the issuer and their trust in the issuer’s business model. Moreover, this measures strives to achieve the greatest possible price stability as for a determined period of time no additional stock will be entered into the market.
Prior to the listing order, the issuer has to publish the partial admission to listing of a securities category by including this information in the prospectus, see Sect. 7 Paragraph 1 Clause 3 BörsZulV.
The print layout of the securities in printed individual certificates (so-called physical securities) has to offer adequate protection against counterfeiting and allow for a safe and simple settlement of securities transactions, Sect. 8 BörsZulV. This provision applies to those exceptional cases where individual certificates as physical securities are printed instead of global certificates. Details can be found in the “Gemeinsamen Grundsätzen der deutschen Wertpapierbörsen für den Druck von Wertpapieren“ [Mutual Principles of German Stock Exchanges for the Print of Securities] issued by the stock exchanges in Germany, which apply to any securities admitted to trading on a German stock exchange.
Pursuant to the regulation in Sect. 9 BörsZulV the stock to be admitted has to be adequately wide-spread within the market participants. This regulation shall ensure that the market is provided with a sufficient number of circulating stock as this is necessary for representative trading as a requirement for orderly price determination.
The spread is considered adequate if the free floating rate amounts to at least 10 % of the total nominal amount or in the case of shares with no par value, the number of shares to be admitted. The decisive moment for assessing the necessary spread is the issue of the listing order, so that a corresponding confirmation regarding the adequate spread has to be provided by the company prior to the listing order. Stock to be issued at a later point in time (e. g. from a “greenshoe”- option) will not be taken into account when calculating the free floating stock.
Deviating from the 10%-principle, a smaller percentage may be sufficient given certain circumstances, if orderly stock exchange trading is guaranteed. This shall take into account whether a sufficient number of shares are held by the public, whether the shares are held by a sufficient number of shareholders or whether the market value of the shares held by the public represents a sufficient proportion of the subscribed capital of the class of shares concerned.
Like the regulations on the spread of stock, the provision regarding an adequate denomination of stock shall mainly serve the purpose of a better and simpler stock distribution and the furthering of a well-functioning and vivid stock trading. Pursuant to Sect. 6 BörsZulV the denomination of stock as well as the number of stock issued in this denomination has to correspond to the demands of stock trading and the investing public without violating the requirements resulting from corporate law. Since introduction of the non par value share by the so-called “Stückaktiengesetz” [German Law on No-Par Value Shares] in 1998 and the decrease of the minimum par value for stock to 1.00 Euro, see Sect. 8 Paragraph 2 Clause 1 Aktiengesetz (AktG) [German Stock Companies Act], many companies have made use of these options provided for by stock-related legal regulations. Section 8 Paragraph 7 AktG offers the opprtunity, that the issuer’s articles of association can include that par value shares have a lower par value (at least 0.01 EUR). For non par value shares, the articles of association may provide that the pro rata amount of the share capital attributable to each individual share is EUR 0.01.
How can I apply for the admission of securities to the Regulated Market on the Frankfurt Stock Exchange?
The application for admission and the notification of the introduction must be submitted via the electronic platform ("eListing platform"), which is provided by FWB for this purpose. The electronic eListing platform offers users assistance and transparency. Users are guided through the filing process by displaying the information and documents required for the file, providing input options using drop-down menus, error messages in the event of incorrect entries, additional explanations and the provision of templates and information sheets.
How long will the Admission Procedure normally take?
In case of an IPO, the application’s processing, depending on its volume, may take up to ten business days, if all the required documents have been filed with the application and all admission prerequisites are met.
Is another Application required for Listing the Securities for Trading?
The stock does not only need to be admitted to trading but also requires as a further step to be listed at the stock exchange. The issuer must inform the Frankfurt Stock Exchange via the eListing platform about the timeline and further details of the introduction, meaning the start of listing of admitted securities on the Regulated Market,. The notification of the listing of admitted securities, depending on the time schedule for the IPO, may be filed also in the course of the admission procedure already.
What Documents have to be filed with the Application?
The documents which the application to admission to the General Standard has to be accompanied by are listed in exemplary manner in Sect. 48 Paragraph 2 BörsZulV and may also be learned from the admission application form. The most important of these documents are the following:
In addition, immediately after the prospectus has been approved of by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) [German Federal Agency for Financial Market Supervision], the approval certificate as well as evidence on the prospectus’ publication has to be forwarded. The admission of securities issued by issuers from abroad, as a rule, will require a legal opinion regarding, for example, the legal base of the securities issuance or the securities’ tradability.
This list above is not necessarily final. Depending on the review of the particular case, submission of further documents may be required.
Who may submit the Application for Admission?
The application for admission of securities to the Regulated Market (General Standard) has to be submitted by the securities’ issuer. Upon submission of an authorization by the issuer, a third party may sign the application for admission on the issuer’s behalf.
Does the Admission to the Prime Standard require the Filing of a Separate Application?
The application for admission to the sub segment of the Regulated Market bearing follow-up obligations resulting from admission (Prime Standard) may be filed alongside with the application for admission to the Regulated Market (General Standard), Sect. 48 of the Börsenordnung für die Frankfurter Wertpapierbörse (BörsO FWB) [Exchange Rules of Frankfurt Stock Exchange]. This can be indicated on the eListing platform in the corresponding section.
What are the Significant Points to be observed when Applying for the Admission of Certificates Representing Stock?
Certificates representing stock become especially relevant for the secondary securitisation of mostly foreign stock, if the original stock can not be admitted to listing in Germany and, therefore, a securitisation form representing the original stock is required. The reason why this stock can not be admitted to listing will often result from the fact that the original stock lacks free tradability, because it is, for example, deposited with a central custodian abroad and for want of technical connection a settlement of stock trades through the German central securities depositary Clearstream Banking AG is not possible. Pursuant to their offering terms, the certificates contractually convey to their holders any right vested in the original foreign stock. In case of American Depository Receipts (ADR) the certificates will usually be issued by US-American depositary banks.
Even if the application for admission refers to the certificates representing shares, the admission procedure is pursued still by the original stock’s issuer. Pursuant to Sect. 12 BörsZulV, three prerequisites need to be met for the admission to listing of certificates representing stock:
The application for admission has to be submitted by the issuer of the represented stock as well as the issuer of the certificates and the underwriting institute. Moreover, the issuer of the represented stock has to be established in an orderly manner and the minimum amount of securities to be admitted has to comply with the requirements set forth in Sect. 2 BörsZulV. Additionally, the issuer of the represented stock has to declare to the stock exchange in writing that they will meet the follow-up obligations resulting from admission pursuant to Sects. 40, 41 BörsG. This concerns the obligation to file an application for admission of stock of the same category, which might be issued at a later point in time, within one year after the respective issue and to render information to the stock exchange Management Board on matters connected to admission and listing of certificates representing stock.
Secondly, the certificates to be admitted have to meet the prerequisites set forth in Sects. 4 to 10 BörsZulV and, thirdly, the issuer has guarantee the performance of their obligations towards the certificate holders. The latter prerequisite means that the certificate issuer has to provide the certificate holders with conditions that allow the certificate holders to execute their rights from the original stock (e. g. dividend entitlement, voting rights and subscription rights) which are vested in the certificates to be admitted for listing.
Due to the special complexity in case of the intended admission of certificates representing stock we would recommend to contact the Deutsche Börse AG, Department Regulatory Issuer Services and Obligations at an early stage.
Who is the Contact for Questions concerning Stock Securitisation ?
In case of questions regarding securitisation and deliverability of stock, please contact the Clearstream Banking AG, Frankfurt am Main, under telephone number +49 (0)69 – 211 1 1177.
Listing Hotline
E-Mail: listing@deutsche-boerse.com
Telephone: +49-(0) 69-2 11-1 39 90
Fax: +49-(0) 69-2 11-1 39 91
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