This is a central element of the new law exercising the options of the EU Prospectus Regulation and adapting other financial market legislation, with which German legislators have taken advantage of the liberalisation option provided for in the Regulation. Most provisions of the law entered into force on 21 July 2018.

Numerous amendments to the legislation

As the name suggests, the omnibus act changes many fundamental laws for the German financial market. The new legislation is largely due to requirements under European Union law.
Particularly affected are: the German Securities Prospectus Act (Wertpapierprospektgesetz – WpPG - only available in German), the German Regulation on the Imposition of Fees under the Securities Prospectus Act (Wertpapierprospektgebührenverordnung – WpPGebV - only available in German), the German Commercial Code (Handelsgesetzbuch – HGB - only available in German), the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG - only available in German), the German Capital Investment Act (Vermögensanlagengesetz – VermAnlG - only available in German), the German Act on the Establishment of a Financial-Market Stabilisation Fund (Finanzmarktstabilisierungsfondsgesetz – FMStFG - only available in German), the German Banking Act (Kreditwesengesetz – KWG - only available in German), the German Investment Code (Kapitalanlagegesetzbuch – KAGB - only available in German), the German Money Laundering Act (Geldwäschegesetz – GwG - only available in German) and the German Law on the Transformation of Deutsche Siedlungs- und Landesrentenbank into a Stock Corporation (DSL- Bank-Umwandlungsgesetz - DSLBUmwG - only available in German).

Prospectus Regulation

The EU Prospectus Regulation sets the threshold for the obligation to draw up a prospectus for offers of securities to the public at a total consideration of EUR 1 million. It offers Member States two options: below that threshold, they can lay down other proportionate disclosure requirements at national level and not require a prospectus. It also gives Member States the option of fully exempting offers of securities to the public not exceeding EUR 8 million from the obligation to publish a prospectus. Notification is of course not possible in either case.

Use of the options in Germany

In Germany, in particular an amendment to the WpPG takes advantage of both options to the extent that issuers offering securities to the public with a total consideration of between EUR 100,000 and less than EUR 8 million must draw up, file and publish a WIB instead of a prospectus (see the “New requirements for issuers” table). Offers of securities up to a total consideration of less than EUR 100,000 are prospectus and WIB-exempt. Thresholds are to be calculated over a period of 12 months in both cases.

By raising the prospectus obligation threshold to EUR 8 million, legislators have ensured considerable liberalisation in order to promote Germany's capital market.

Approval procedure and WIB content

The WIB is intended to serve investors as a source of information for their investment decisions. It may not be published until BaFin has granted approval. The approval procedure largely corresponds to that of the capital investments information sheet stipulated in the VermAnlG.

The WIB may comprise no more than three pages and must clearly state the key information on securities, offerors, issuers and any guarantors in an easily comprehensible manner; the details and sequence are prescribed. Section 3a (3) sentence 2 of the WpPG (WpPG-E - only available in German) (see info box “Legal Background”) contains a longer, albeit non-exhaustive, list of requirements. The WIB must also contain a warning to the effect that acquisition of the security involves considerable risks and can result in the total loss of the capital invested. It must also include a note stating that no prospectus approved by BaFin has been filed, as well as other information.

The WIB is to be kept up to date and/or corrected, if necessary, for the duration of the public offer. The updated version is also to be filed with BaFin and published, although no new BaFin approval is required. Offerors should not be burdened with recurring approval costs.

Protection for non-qualified investors

In order to provide additional protection to non-qualified investors¹, securities for offers between EUR 1 million and less than EUR 8 million – to the extent they are offered to non-qualified investors – may only be offered through investment advice or broking by investment services enterprises.

Such enterprises must check that the total amount of the securities that can be acquired by a non-qualified investor does not exceed certain maximum investment amounts. A provision has been added to the WpHG prescribing that the enterprises must obtain declarations from non-qualified investors themselves, if necessary.

Adaptation of the WpPG

Introduction of the WIB requires adapting a number of WpPG provisions to this new form of documentation. These include provisions on advertising as well as civil liability. Regarding the latter, new grounds for claims were created, which were, however, based on existing WpPG and VermAnlG provisions.

In addition, the provisions on BaFin's authority (e.g. to prohibit public offers) must be adapted. The provisions on administrative fines are also amended at various points to reflect the new WIB form of documentation. Irrespective of this, the amount of an administrative fine for contravention of the provision on the obligation to publish supplements to a prospectus (section 35 (1) no. 9 of the WpPG) is increased in accordance with the gravity of the infringement.

Exception for offers with a total consideration of less than EUR 5 million

CRR credit institutions² and issuers whose shares have already been admitted for trading on an organised market will continue to be exempted from the obligation to publish a prospectus or a WIB if the total consideration is less than EUR 5 million.

This simplification will, however, be converted from an exception to the scope of application of the WpPG to an exception from the prospectus obligation and is thus now located in a different place in the law. Consequently, it only concerns public offers of securities and cannot be applied to listing prospectuses.

Moreover, letters (a) to (c) of subparagraph 1 as well as subparagraph 2 of Article 1(5) of the Prospectus Regulation also provide for further exceptions to the prospectus obligation that have been incorporated into the WpPG. In addition, the new version of the WpPG corrects editorial errors.

Fees and other amendments

New fees will be introduced into the WpPGebV. For example, a fee of EUR 500 is stipulated for the approval to publish and file a WIB. A fee of EUR 55 is stipulated for filing an updated WIB.

Submitting the WIB

The law also affects the technical infrastructure, particularly BaFin's Reporting and Publishing Platform (MVP Portal – see info box “MVP-Portal”), via which offerors must submit their prospectuses or security information sheets.

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