I. Capital investments

Section 1 (2) of the VermAnlG exhaustively defines capital investments as

• shares which confer the right to participate in the earnings of a company,
• shares in trust funds,
• profit participation loans,
• subordinated loans,
• participation rights,
• registered bonds,
• other investments which grant or offer the prospect of interest payments and principal repayments or assets in the form of a cash settlement in return for the temporary provision of money, and
• investments which, in return for the temporary provision of money or industry-standard precious metals, grant or offer the prospect of a claim to interest payments and repayments, a claim to interest payments and the return of industry-standard precious metals, an entitlement to assets based on cash settlement or an entitlement to assets based on the return of industry-standard precious metals,

provided they are not securities within the meaning of the WpPG and are not structured as shares of an investment fund within the meaning of section 1 (1) of the KAGB and the acceptance of funds does not qualify as deposit business within the meaning of section 1 (1) sentence 2 no. 1 of the KWG.

II. Capital investments offered to the public

Any offeror offering capital investments to the public in Germany must publish a prospectus in accordance with the VermAnlG in the event that a prospectus requirement does not already apply due to other provisions. An offer is also considered public if it is directed at a certain segment of the public.

III. Exemptions

The VermAnlG sets out exemptions from this prospectus requirement:

1. Exemptions in accordance with section 2 of the VermAnlG

Exemptions from the requirement to publish a prospectus are listed in section 2 of the VermAnlG, among others. In line with the de minimis thresholds, for instance, the prospectus requirement does not apply to offers where the number of shares offered in the same capital investment does not exceed 20 (section 2 (1) no. 3 (a) of the VermAnlG), the selling price for all shares in a capital investment offered within a period of twelve months does not exceed 100,000 euros (section 2 (1) no. 3 (b) of the VermAnlG) or the price for each share in a capital investment amounts to at least 200,000 euros per investor (section 2 (1) no. 3 (c) of the VermAnlG). It must be noted, however, that these exemptions are interpreted and applied restrictively for the sake of investor protection. In case of doubt, it should be assumed that the prospectus requirement applies.

2. Exemptions in accordance with section 2a et seq. of the VermAnlG

In addition, there are also exemptions for crowdfunding and crowdinvesting (section 2a of the VermAnlG) as well as for social projects (section 2b of the VermAnlG). In these cases, a capital investment information sheet must be filed with BaFin for approval and subsequently published. The prospectus requirement exemption set out in section 2a of the VermAnlG only applies to profit participation loans, subordinated loans, participation rights and other investments if the selling price for all shares in capital investments offered by the same issuer within a period of 12 months does not exceed 6 million euros. The exemption only applies if the capital investments are offered by way of investment advice or brokered over an online service platform which is required by law or regulation to check whether investors exceed certain investment limits in relation to the same issuer. Furthermore, there is a ban on linking investments which are offered to the public with no prospectus via crowdfunding as long as one capital investment from the issuer is publicly offered in accordance with section 2 (1) no. 3 of the VermAnlG or a capital investment of the issuer offered in this way has not been repaid in full.

Offering capital investments to the public for which BaFin has not approved a capital investment information sheet and for which the issuer has not filed or published a capital investment information sheet represents an unauthorised public offer. BaFin must prohibit this offer. If an issuer fails to publish a capital investment information sheet, or publishes it incorrectly, incompletely, or not within the prescribed period, this constitutes an administrative offence that is punishable by a fine of up to 500,000 euros.

You can find practical tips regarding the approval process for capital investment information sheets here.