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Stand:updated on 07.03.2024 | Topic Prospectuses, Consumer protection Drawing up the prospectus, approval process

A prospectus that is carefully drawn up in accordance with the applicable statutory requirements can be processed swiftly within the statutory time limits for examination and can often be approved within the intended timetable.

I. Drawing up the prospectus

1. Prior consultations

Issuers are encouraged to contact BaFin for a prior consultation before drawing up a prospectus for an individual new issue. Often, questions issuers may have relating to prospectus requirements can be clarified upfront (e.g. regarding historical financial information that must be included, expert valuations that may be required or the question of whether the reduced prospectus requirements are applicable). If approval is desired on or by a certain date, it is advisable to agree the timetable for the approval process with BaFin at an early stage.

2. Structure of the prospectus

Prospectuses can be drawn up as a single document or as three documents (Article 10 of the Regulation (EU) 2017/1129 (“Prospectus Regulation”)). The latter option comprises three separate documents – the issuer description (the “registration document”), the description of the security (the “securities note”) and the summary of the prospectus. If an approved registration document is available that is still valid and up-to-date or that has been updated by a supplement, only the securities note and the summary have to be drawn up and approved by BaFin for each subsequent issue. Whether a prospectus is drawn up as a single document or a tripartite prospectus is at the issuer’s discretion.

3. Prospectus or base prospectus

The prospectus may be drawn up in the form of a stand-alone prospectus or a base prospectus (Article 8 of the Prospectus Regulation), depending on the structure of the issue.

A stand-alone prospectus is drawn up if the details of the issue have already been established when the prospectus is drawn up. In the case of non-equity securities (including warrants), Article 8 of the Prospectus Regulation allows for the option to draw up a base prospectus if several issues are intended.

A base prospectus does not need to include the final terms of the offer. Instead, information that can only be determined at the time of the issue concerned may, as a general rule, be presented as one of several options. Therefore, the base prospectus can be used for multiple issues of non-equity securities with similar structures. With each issue, the final terms of the offer are then published and filed with BaFin. The final terms do not need to be approved by BaFin.

4. Information incorporated by reference

Under certain circumstances, information contained in published documents can be incorporated into the prospectus by reference, in accordance with Article 19 of the Prospectus Regulation. Information incorporated in this manner becomes part of the prospectus.

In particular, this makes it possible for information from a prospectus that has already been approved and filed, or information from parts of it, to be incorporated by reference into a new prospectus. This even applies if the old prospectus is no longer valid; however, the information incorporated by reference must still be up-to-date.

The prospectus must contain hyperlinks to all documents containing information which is incorporated by reference (Article 19(2) sentence 2 of the Prospectus Regulation). The documents containing information which is incorporated by reference must be provided to BaFin, together with the application for approval, if they have not already been approved by or filed with BaFin.

5. Content of the prospectus

The prospectus comprises a summary, a registration document and a securities note.

The format and content of the summary are set out in Article 7 of the Prospectus Regulation. For prospectus the criteria pursuant to Article 37 of the Delegated Regulation (EU) 2019/980 must be observed. Information in summaries and prospectuses must be understandable for the reader with regard to the typeface and font size. Characters have to be of readable size. In administrative practice, a font size of at least 10pt has proven useful, depending on the font. For information in tables or footnotes, a smaller font size can be used if necessary, taking into account the principle of comprehensibility. It is subject to a case-by-case review. The summary is subject to strict formal requirements that aim to ensure comparability throughout Europe. A prospectus summary can be omitted if the prospectus relates to non-equity securities with a minimum denomination per unit of €100,000 that are to be admitted to trading on a regulated market.

The issuer description and the securities note must also include the risk factors specific to the issuer and the security. These must be described in a separate section entitled “Risk factors”. In accordance with Article 16(1) of the EU Prospectus Regulation, the prospectus must include the risk factors that are specific to the issuer and/or to the securities and which are material for taking an informed investment decision. The information provided on the risk factors must be corroborated by the content of the registration document and the securities note.

The risk factors are particularly important in this context. They must first be divided into categories in accordance with subparagraph 4 of Article 16(1) of the EU Prospectus Regulation. This categorisation of risk factors is based on the ESMA Guidelines on Risk Factors under the Prospectus Regulation of 29 March 2019 (ESMA31-62-1217) Guideline VI.4. Within each category, issuers must list the most material risks first as determined by their own assessment. This should include at least the two most material risks for each category. The remaining risks in a given category do not necessarily have to be listed in the order of their materiality. Issuers should note in this context that simply ordering the risks within a category does not suffice as a description of the materiality – the materiality of each risk factor must be made clear in accordance with the statutory provisions and the ESMA Guidelines.

For example, issuers can provide an assessment of materiality using qualitative descriptions. In particular, classification as low, medium or high can be used to describe the materiality in the risk factor. If an issuer decides to use an alternative method to describe risk materiality (quantitative approach), they must phrase the risk factors in such a way that investors can clearly recognise the materiality of each risk factor (see the ESMA Guidelines on Risk Factors under the Prospectus Regulation of 29 March 2019 (ESMA31-62-1217) Guideline 4, No. 29). Issuers must disclose the measure by which risk materiality is assessed (meaning the probability of corresponding losses occurring and the magnitude of their negative impact) in the prospectus. A qualitative description alone does not fulfil this requirement. One option is to disclose the measure of materiality and explain it in greater detail at the beginning of the risk chapter.

In particular, BaFin recommends that issuers consult the ESMA Guidelines on Risk Factors under the Prospectus Regulation vom 29.03.2019 (ESMA31-62-1217 when drafting the risk factors. As part of its administrative practice for the approval of securities prospectuses, BaFin apples the ESMA Guidelines on risk factors under the Prospectus Regulation (see link).

BaFin particularly recommends that issuers consult the ESMA Guidelines on Risk Factors under the Prospectus Regulation of 29 March 2019 (ESMA31-62-1217) when drafting the risk factors.
The required content of the securities note and the issuer description in the main part of the prospectus is governed by the EU Prospectus Regulation in conjunction with the corresponding Delegated Acts. Depending on the type of security and issuer, different annexes to the Prospectus Regulation and the Delegated Acts are applicable, which means that the scope of the information required also varies. BaFin also uses the ESMA Guidelines on disclosure requirements under the Prospectus Regulation in this context and applies these guidelines in their entirety in its supervisory practice (see link).

On its website, ESMA provides information about guidelines, recommendations and technical standards and also publishes questions and answers. From 1 January 2024 onwards, new Q&As can only be found by using the "Search a question" page on the ESMA website, which offers a range of search functions.

II. Approval process

1. BaFin as the competent authority

As a general rule, where the issuer is domiciled in the EEA, the authority in the country in which the issuer is formally domiciled is the competent authority for approving the prospectus.

For certain securities, however, the issuer has the option to choose whether the country in which the issuer is domiciled or another EEA signatory state in which the security is to be admitted to trading or offered to the public is responsible. This is usually the case for the issue of:

  • non-equity securities with a minimum denomination per unit of €1,000 or
  • non-equity securities giving the right to acquire any transferable securities or to receive a cash settlement, provided that neither the issuer nor an entity belonging to the issuer’s group is the issuer of the underlying securities.

Issuers domiciled in a third country have a one-time option to choose between the EEA signatory state where the securities are intended to be offered to the public for the first time and the EEA signatory state where the first application for admission to trading on an organised market is filed.

2. Prospectus approval process

Individual questions, in particular those relating to the intended timetable, the historical financial information to be included in the prospectus, etc., can be resolved in advance before the actual prospectus approval process begins. The prospectus approval process itself begins when the application for approval including a draft prospectus to be approved and, if applicable, the notification are filed with BaFin.

The procedure can be conducted in both German and English (see Section 4j FinDAG). For issuers of English-language securities prospectuses, BaFin permits the use of English in the approval procedure. Oral and written communication in the run-up to and during an approval procedure for an English-language securities prospectus may be conducted by the issuers in English. The issuer should notify BaFin in advance if it chooses to conduct the prospectus approval procedure in English.

Article 42 of Commission Delegated Regulation (EU) 2019/980 of 14 March 2019 (applicable since 21 July 2019) supplementing the EU Prospectus Regulation as regards the format, content, scrutiny and approval of the prospectus (“Delegated Regulation”) contains detailed provisions on the supporting documents which the issuer must submit to BaFin via the MVP Portal in a searchable electronic format. As a rule, the supporting documents must be submitted together with the first draft prospectus. Likewise, if the issuer files a universal registration document, it is generally necessary for the supporting documents to be submitted at the time of filing. The supporting documents are to include a cross-reference list, provided that the prospectus is not structured in the order of the annexes or the prospectus does not have any cross-references indicated in the margin (see Article 24(6) of the Delegated Regulation).

Depending on the submission type and prospectus type, various reporting data and metadata must be submitted in full via the MVP Portal at the latest by the time the prospectus is approved. Otherwise, approval cannot be granted. The metadata requirements are based on RTS 2019/979 (Annex VII – Machine-readable data to be provided to ESMA).

To submit prospectuses and documents to BaFin, applicants must use the MVP Portal, in particular the specialised procedure “Prospectuses (EU-VO/WpPG/VermAnlG), ii) Submission of prospectuses/supplements under the EU Prospectus Regulation”.
Please note that electronic submissions are possible only after an applicant has registered on the MVP Portal. The registration process takes some time, which means that the submission of a prospectus is typically only possible on the day following the registration. The same applies to supplements.

The securities prospectus should already be essentially complete when submitted for the first time. Particularly if the issuer is aiming for a specific timetable and date of approval, all information about the offer, the issuer and the securities must be included the first time the prospectus is submitted, except for a few items of information that can only be determined just prior to approval (e.g. final issue price, final issue volume). In particular, it is not possible for annual and interim financial statements, pro-forma financial information or expert opinions (if required), discussions and clarifications of financial information, the translation of the summary (if required) and information on board members to be submitted only at a later stage of the approval process. Exceptions are only permitted if and to the extent this was explicitly agreed upon in a preliminary enquiry.
BaFin generally provides feedback on the prospectus within a period of ten working days by way of a written hearing. The period is 20 working days from the first submission of the draft prospectus if it relates to a public offer of securities and if securities from this issuer have neither yet been admitted to trading on a regulated market in an EEA signatory state nor previously been offered to the public.
The issuer concerned then has the opportunity to make the necessary changes to the draft prospectus and resubmit the revised version via the MVP Portal to BaFin for examination.
Several hearings and revisions are usually necessary before the prospectus can be approved.

3. Completion of the prospectus approval process

a) Approval and publication of the prospectus

The prospectus can be approved as soon as it contains all of the required information and any unclear and/or contradictory information has been removed.
Once the prospectus has been approved, it must be made available at a reasonable time in advance of, and at the latest at the beginning of, the offer to the public or the admission to trading of the securities concerned (Article 21(1) of the Prospectus Regulation). The prospectus must be published online: either on the website of the issuer, the offeror, the person applying for admission to trading, the financial intermediaries (including paying agents) or the regulated market where the admission to trading is sought or – in cases where no admission to trading on a regulated market is sought – on the website of the operator of the MTF. The issuer, the offeror, the applicant for admission or the financial intermediaries placing or selling the securities must, on request, provide each potential investor with a copy of the prospectus on a durable medium, free of charge. If a potential investor specifically requests a paper copy of the prospectus, the respective body is to provide a printed version of the prospectus. The provision of the prospectus is limited to the jurisdictions in which the offer of securities to the public is carried out under the Prospectus Regulation or where the admission to trading on a regulated market is granted.
The prospectus must be available to the public at least up to the final date of the public offer or up to the date of admission to trading on a regulated market, if this occurs at a later date.

b) Approval refused

If, even after (repeated) hearings, a prospectus still has deficiencies that preclude its approval and the party that drew up the prospectus cannot or does not want to remedy these deficiencies within a reasonable period of time, approval must ultimately be refused.

c) Prospectuses withdrawn

The prospectus approval process can also be terminated if the applicant withdraws their application for approval.

4. Fee notice

The approval of a prospectus carries a fee in the amount of €16,915 in accordance with sections 1 no. 4 and 2 (1) of the Fees Regulation in respect of Financial Services Supervision (Finanzdienstleistungsaufsichtsgebührenverordnung – FinDAGebV) in conjunction with Annex no. 3.1 to section 2 (1) of the FinDAGebV. If approval is refused, a fee is charged, the maximum amount of which may be the amount chargeable for the individually attributable official act applied for, i.e. up to €16,915. If the application for approval is withdrawn, the fee is generally reduced by one quarter.

5. Next steps

a) Notification

On the applicant’s request, BaFin provides other European supervisory authorities with a certificate of approval in accordance with Article 25 of the Prospectus Regulation. The prospectus is then deemed to be approved in these European countries as well. This means that a securities prospectus that has been approved in one EEA signatory state can also be used for an offer to the public or to admit securities in other EEA signatory states, without the applicant having to submit a new securities prospectus for the approval of the local supervisory authority in the host member state.

b) Supplements

The information in the prospectus must be updated if significant new factors arise after the approval of the prospectus and before the final date of the offer to the public or – whichever is later – the time when the quotation of the securities on an organised market commences, or if material mistakes or material inaccuracies are found that may affect the valuation of the securities. The applicant can update or correct such information by drawing up a supplement, which, like the prospectus itself, must be submitted to BaFin for approval before it is published.

A supplement must specify the material mistake or inaccuracy or the significant new factor.

Supplements must also be submitted to BaFin via the MVP Portal.

c) Filing of final terms

In the case of base prospectuses, final terms must be filed with BaFin for every issue that is to be based on the base prospectus (Article 8(5) of the Prospectus Regulation). The final terms are not approved by BaFin but must be submitted via BaFin’s Reporting and Publishing Platform (MVP Portal).

d) Automatic forwarding to the ESMA Register

Once the prospectus has been approved, it is automatically forwarded to the ESMA Register along with the associated metadata.

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