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Obligations of Issuers of Financial Instruments in Germany

Companies raising money on the capital market by issuing shares or debt securities usually have to publish an information prospectus for investors. However, it is not enough for issuers to publish this so-called securities prospectus. There are a number of other statutory obligations to follow, which also serve to protect investors.

Obligations of Issuers of Financial Instruments in Germany

Violations of the obligations can be punished with fines of up to EUR 50,000.

Investors have to be able to obtain comprehensive information quickly

Investor protection in Germany includes both individual protection and the protection of the entire investing public. Investor protection standards include

  • the accounting rules,
  • the ad hoc disclosure obligations and
  • the ban on insider trading.

These regulations enable capital market participants to obtain comprehensive and fast information about capital market products and their issuers and to ensure that nobody benefits from insider information.

Ad hoc disclosure: insider information must be published

Issuers of financial instruments are required to disclose any insider information, which directly affects them, publicly and as soon as possible. Delayed publication of insider information by the issuer is only permissible to protect legitimate interests and only if the confidentiality of the information is ensured and the supervisory authority is subsequently informed.

Director’s Dealings: Executives must disclose investment

In addition, issuers are subject to disclosure requirements for “directors’ dealings”. This stipulates that persons who perform management duties at the issuing company and closely related persons are obligated to disclose any transactions involving

  • shares of the issuer,
  • Debt securities,
  • related derivatives, and
  • other related financial instruments

to the Federal Financial Supervisory Authority (BaFin) and the issuer. Violations of this disclosure obligation is punishable with fines of up to EUR 50,000.

We are happy to support your company when it comes to issuing securities and in fulfilling the resulting follow-up obligations.

Continue reading:
Standardization of Prospectus Requirements Under European Prospectus Regulation
Legal Requirements for the Issuance of Securities on the German Market

Dr. Annette Wagemann

Dr. Annette Wagemann comprehensively advises companies and their managers on questions regarding business law and banking regulations. She is specialized in the legal structuring of business models, corporate governance and compliance, and especially in business models that require a BaFin license.

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