One of the key objectives of the EU Prospectus Regulation is to facilitate small and medium-sized enterprises’ (hereafter: “SMEs”) access to financing via capital markets within the European Union. Due to their size and because they often exist for shorter durations, a special investment risk exists in relation to SMEs. There are therefore simplified requirements for issuers in this segment relating to the mandatory disclosures set out in the annexes for drawing up prospectuses in accordance with Commission Delegated Regulation (EU) 2019/980 of 14 March 2019 (applicable since 21 July 2019) supplementing EU Prospectus Regulation as regards the format, content, scrutiny and approval of the prospectus (hereafter: “Delegated Regulation”). SMEs and comparable undertakings can draw up an EU Growth prospectus (see Article 15(1)(a) to (d) of the EU Prospectus Regulation).

a) Overview

Regardless of whether the issuer can draw up an EU Growth prospectus, it can always offer its securities publicly using other formats, such as a securities information sheet (Wertpapier-Informationsblatt – WIB), a stand-alone prospectus or a base prospectus.

* Information on drawing up a securities information sheet
** Information on drawing up a stand-alone prospectus
*** Information on drawing up a base prospectus
**** Information on follow-up requirements/information and transparency requirements for issuers on the regulated market / issuer guidelines

b) Eligibility requirements for drawing up an EU Growth prospectus

In order to draw up an EU Growth prospectus, the issuer must have certain characteristics and meet certain requirements:

Example of eligibility for classification as an SME:

In accordance with Article 15(1)(a) in conjunction with Article (2)(f) of the EU Prospectus Regulation, companies that, according to their most recent annual financial statements/consolidated financial statements, fulfil at least two of the following criteria:

• Average number of employees of less than 250 in the last financial year

• Total net assets of at most €43,000,000 and

• Net revenues for the year of at most €50,000,000

or

• Small and medium-sized enterprises within the meaning of point (13) of Article 4(1) of Directive 2014/65/EU

may claim eligibility as an SME.

If the requirements are met, it is possible to draw up an EU Growth prospectus in accordance with Article 15 of the EU Prospectus Regulation.

The issuer must provide evidence of eligibility as an SME with the initial submission of the letter for the prospectus examination procedure. Otherwise, eligibility as an SME will not be taken into account, meaning that the simplified requirements will not apply and the prospectus as well as the cross-checklists will have to be adjusted and submitted in accordance with the relevant annexes of Delegated Regulation 2019/980.

c) Structure and content of the EU Growth prospectus

The structure and content of the EU Growth prospectus are governed by the Delegated Regulation as well as the relevant annexes. Here, it is necessary to consider whether it is planned to offer equity securities or non-equity securities by means of the EU Growth prospectus. The EU Growth prospectus consists of a summary, issuer description and a securities description.

The requirements of Annex 23 of the Delegated Regulation apply to the preparation of the summary. The structure and length of the summary are governed by Article 33 of the Delegated Regulation. It should be noted that the summary must not exceed seven pages. The requirements for the information relating to the issuer are governed by Annex 24 or 25 of the Delegated Regulation and the requirements for the information relating to securities are governed by Annex 26 or 27 of the Delegated Regulation.

The sequence and structure of an EU Growth prospectus are governed by the requirements of Article 32 of the Delegated Regulation, which are compulsory and must be observed. Supplementary details are provided in Commission Delegated Regulation (EU) 2020/1273 amending and correcting Delegated Regulation (EU) 2019/980 supplementing Regulation (EU) 2017/1129.

d) Particular requirements in the area of historical financial information (HFI):

This prospect format is subject to particular requirements with regard to historical financial information. Here, it is only necessary to provide reduced information (see disclosures in accordance with Section 5 of Annex 24 or Section 5 of Annex 25). Due to its shorter form, the information should be presented in such a way that the focus is on those disclosures that are of relevance and material significance for investment in the securities being offered. In particular, it is necessary to ensure that the size of the company and its financing needs are presented appropriately and transparently for investors.

Period:
In contrast to Annex 1 (HFI for the last three years), Annex 24 only requires HFI for the last two years. Annex 25 requires only one year.

Components:
In the case of EU Growth prospectuses (Annex 24 or 25):

• Balance sheet
• Income statement and, if the IFRS are used, additional consolidated statement of comprehensive income (including other comprehensive income)
• Accounting policies and explanatory comments (i.e. notes to the financial statements)
• Auditor’s report
• No statement of changes in equity required
• No statement of cash flows required

Maximum age of most recently audited HFI:

Annex 1 item 18.1.7 of the Delegated Regulation:

• Prospectuses with audited interim financial information

  Most recently audited HFI no older than 18 months as of the date of the prospectus

• Prospectuses with unaudited interim financial information

  Most recently audited HFI no older than 16 months as of the date of the prospectus

Annex 24 item 5.1.7 of the Delegated Regulation:

• The only difference from Annex 1 is that if the prospectus does not contain any interim financial information, the reporting date of the most recently audited annual financial statements may not be any more than 16 months earlier than the date of the prospectus.

Annex 25 item 5.1.7 of the Delegated Regulation:

• the balance sheet for the last year that forms part of the audited financial information may not be any older than 18 months (calculated from the date of the prospectus).

Interim financial information:

EU Growth prospectuses in accordance with Annex 24 and Annex 25 are not subject to the requirement that the prospectus must contain (unaudited) interim financial information if it is more than nine months after the reporting date of the most recently audited annual financial statements.

Operating and financial review (MD&A)

In accordance with Annex 24 item 2.5 of the Delegated Regulation, disclosures regarding the business and financial situation have to be provided by equity issuers with market capitalisation above €200,000,000 only when the management report presented and prepared in accordance with Articles 19 and 29 of Directive 2013/34/EU is not included in the EU Growth prospectus.

Statement on working capital and statement on capitalisation and indebtedness

In accordance with Annex 26 item 2.1 and 2.2 of the Delegated Regulation, disclosures also only have to be provided in this regard if the issuer has a market capitalisation of more than €200,000,000.

In accordance with Annex 27, no disclosures are required in this regard.

e) Contact

If you have legal questions with regard to your specific submission, you can send a preliminary enquiry to BaFin’s Division WA 33. However, you will need to include your own legal opinion, as BaFin acts in the public interest and therefore does not provide legal advice. For this purpose use the SME prospectus contact form.