Market maker

Bank or securities trading house that quotes binding buy and sell prices for a security.

Market makers guarantee that a security can be traded on an ongoing basis, thereby ensuring the liquidity and viability of the market. Through their readiness to step in as a counterparty at any time, market makers compensate for the inconsistent order flows of investors and stabilize the market when temporary imbalances occur. They are usually assigned to support trading in inactive stocks.

At FWB® Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange), market makers are known as Designated Sponsors.

Prospectus

Brochure published by the issuer of a security. It contains general information on the company and the placement of the security.

An issuing prospectus contains all key information about the security: the issuer, corporate structure, financial situation, business activities, as well as all executive bodies and companies involved in the floatation. The issuer and the issuing syndicate are responsible and liable for the accuracy of the contents of the prospectus (prospectus liability).

Since 1991, each issuer of securities which are being offered publicly for the first time in Germany is obliged to publish an issuing prospectus. The prospectus obligation becomes obsolete if the securities are only offered to a limited number of persons – e.g. if they are only offered to persons who purchase or sell securities professionally or commercially for own account or for third party account, such as banks – or are offered to employees either by their own employer or by a company affiliated to their employer.

The issuing prospectus may not be published until publication has been permitted by the German Financial Supervisory Authority (BAFin) or until 10 working days have elapsed after the BAFin has received the prospectus without the BAFin having forbidden its publication.

The minimum content required for an issuing prospectus is regulated in the Ordinance on Securities Sales Prospectuses (VerkProspG). Issuers who apply for admission to the Official Market must draw up an issuing prospectus which fulfills the requirements of an exchange admission prospectus. The content is determined by the Stock Exchange Act (BörsenG) and the Exchange Admission Ordinance (BörsenZulVO). The accuracy of all information required is examined by the Admission Board of FWB Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange), which decides whether to admit the company.

In addition, a prospectus with which a company applies to be admitted to the Official Market, Regulated Market or Neuer Markt segments of the Frankfurt Stock Exchange should adhere to the requirements of the Going Public Principles which were published on 15 July 2002 and which will come into effect as per 1 September 2002. Since July 2002 (Fourth Financial Market Promotion Act), the prospectus must also be made available in electronic form for publication on the Internet.

Since July 2005 the prospectus are being made available by the Financial Supervisory Authority (BAFin) in a internat database at bafin.de.

Synonyms: Offering Circular

IF YOU NEED A PROSPECTUS FOR THE FRANKFURT STOCK EXCHANGE AND PLAN ON LISTING ON FRANKFURT CONTACT INFO@FSELISTINGS.COM

Stock exchange

Organized market for securities trading. (Auch: Börsengebäude)

Exchange trading takes place at established times, with the exchange itself performing the following main functions:

· Bringing together supply and demand (market function)

· Creating an environment in which companies can raise capital by issuing securities (mobilization function)

· Guaranteeing that securities can be sold and transferred at any time (substitution function)

· Determining the current market price for an individual stock, and thus the market value of the company in question (valuation function).

The key indicators for the size of stock exchange are the stock exchange turnover and market capitalization.

As stipulated in the German Stock Exchange Act, the supervision of the regional stock exchanges is handled by the government of the respective states (Länder). Higher-level tasks which affect exchanges throughout Germany, such as the ordinance of stock exchange rules and regulations and the terms and conditions of business, are assigned to the bodies of the stock exchange, which include in particular the Exchange Council (Börsenrat) and Business Management. The decision to establish or close down an exchange is made by the State Exchange Supervisory Office, which is the highest authority at the state level.

Depending on the focus of their activities, stock exchanges are classified according to the following criteria:

1) Goods traded (securities exchange, precious metals, currency and commodities exchange)

2) Type of transaction (cash market, derivatives market)

3) Organization (floor trading, computer-based trading).

CONTACT INFO@FSELISTINGS.COM OR www.fselistings.com for more information on going public on the Frankfurt Stock Exchange

Securities exchange

In the broader sense of the word, an exchange on which securities or derivatives are traded under the provisions of the Securities Trading Act.

In practice, only securities (i. e. stocks, government bonds, mortgage bonds, public-sector bonds, corporate bonds, etc.) are traded on a securities exchange; derivatives trading takes place on a futures and options exchange.

In Germany, there are currently eight securities exchanges, all of which use the floor trading system. Of these, FWB Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange) is by far the largest.

Initial Public Offering (IPO)

Process by which a company becomes listed on an exchange

A company usually prepares and executes an IPO with the support of an issuing bank, or, in the case of large-scale issues, in conjunction with a syndicate.

Companies go public primarily as a means of raising additional equity capital and as an exit channel for the original capital providers (e.g., venture capital companies). Additional benefits of an IPO include a higher profile for the issuing company and a broader investor base. It is more advantageous for a company to go public during a bull market because this increases the likelihood that all new shares will be purchased, thereby lowering the cost of capital for the issuer.

Admission to the exchange

Prerequisite for a listing on the stock exchange

At FWB® Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) the Admissions Office is responsible for deciding whether to admit securities to the Official Market; the admission of securities to the Regulated Market is determined by the Admissions Committee. Each market segment has its own admissions requirements. However, all issuers must publish an offering prospectus containing the fundamental data required for an evaluation of the security.

Admission to General Standard does not require any further action on the issuers’ part. However, issuers have to apply for admission to Prime Standard; a listing in this segment is subject to the fulfillment of high international transparency requirements.

Issuing price

The initial price of a newly issued security determined off the exchange by the issuing company

In recent years, the bookbuilding method has become a widely used procedure for determining issuing prices.

Second Quotation Board

The First Quotation Board and Second Quotation Board structure the Open Market.

All companies whose shares are already listed or included at another international or domestic trading venue and apply for admission to the Open Market are included in the Second Quotation Board.

GO PUBLIC ON THE FRANKFURT STOCK EXCHANGE CONTACT INFO@FSELISTINGS.COM WWW.FSELISTINGS.COM

First Quotation Board

The First Quotation Board and Second Quotation Board structure the Open Market.

All companies with an initial listing in Open Market are included in the First Quotation Board. It is directed at domestic and international companies for a cost efficient and fast admission of their shares to trading.

GO PUBLIC ON THE FRANKFURT STOCK EXCHANGE, CONTACT INFO@FSELISTINGS.COM

Filing

The submission of admission materials (issuing prospectus) and follow-up mandatory reports (e.g., quarterly reports) to an exchange

GO PUBLIC ON THE FRANKFURT STOCK EXCHANGE, CONTACT INFO@FSELISTINGS.COM

Fee schedule of the stock exchange

Body of regulations governing fees and the reimbursement of outlays for stock exchange services

The stock exchange charges fees for various services, such as the admission of participants or securities to exchange trading, or the listing of securities on the exchange. The fee schedule of the stock exchange is issued by the Exchange Council and approved by the Exchange Supervisory Office.

Regulations on the fee schedule of an exchange are contained in the German Stock Exchange Act, section 5.

IF YOU ARE LOOKING TO GO PUBLIC, CONTACT INFO@FSELISTINGS.COM

Holding period

Period of time during which capital gains from securities transactions are taxable (or subjected to the highest tax rate)

The holding period in Germany is twelve months – i.e., capital gains resulting from the purchase or sale of securities held for less than a year are subject to income tax. In Germany, all capital gains realized after the holding period has elapsed are tax-free. Investors can offset capital gains and capital losses recorded during a given year on their tax return. If an investor’s net gains in a given calendar year amount to less than €512, they will be tax-exempt irrespective of how long the securities were held. If this tax exemption limit is exceeded, the entire amount of capital gains is subject to tax.