Disclosure requirement (Ad-hoc disclosure)

Obligation of issuers of securities to immediately report and publish any information that might have a bearing on the price of their securities.

The regulations pertaining to the disclosure requirement are contained in section 15 of the German Securities Trading Act, which states that issuers of securities admitted to the Regulated Market on a German stock exchange are obliged to report all corporate developments that have a sufficiently strong impact on the issuer’s financial situation or its business activities to influence the market price of the security. Securities listed in the Unofficial Regulated Market are exempt from this requirement.

The obligation to release such information without delay is intended to mitigate the abuse of inside information and enhance market transparency. A violation of the disclosure requirement is punishable with a fine.

While the Federal Supervisory Office for Securities Trading (BAFin) is responsible for investigating whether issuers are meeting the disclosure requirement as stipulated in section 15 of the Securities Trading Act, it is the task of the Exchange Operating Board to decide whether the information published requires a temporary suspension of a quotation.

According to section 15, paragraph 1, no. 1 of the Securities Trading Act, the information must be published in the German language in at least one national “Börsenpflichtblatt” (the journal for statutory stock market publications), or via an electronic information dissemination system. Furthermore, companies in Prime Standard are obliged to publish ad-hoc messages in English.

Prior to publication, the information must be communicated directly to BAFin and the Exchange Operating Board of the German exchange where the securities or their derivatives are listed.

Directors’ Dealings and Insider Trading on the Frankfurt Stock Exchange

Private purchases and sales by management of shares they own in the company they manage

Directors’ dealings cover securities transactions by people with management duties at publicly traded companies. Since 1 July 2002, such transactions are subject to new notification rules. Per section 15a of the German Securities Trading Act (WpHG), people at publicly traded companies who have leadership duties, or people who have close relationships with these managers, must declare any securities transactions made with their own contingent of company shares.

Through the Fourth Financial Markets Promotion Act (FiMaFöG), the reporting requirement for so-called directors’ dealings was expanded to apply to all companies admitted for trading on the Regulated Market. This requirement used to apply only to companies on the Frankfurt Stock Exchange’s technology segment, Neuer Markt.

The goals of the new regulation covering directors’ dealings is to provide better investor protection, make the financial markets more transparent and to create more trust. In conjunction with the new rules for ad-hoc announcements, private investors are now offered a basis for damages claims in the case of missing or late publication of facts influencing the price development of a share.

Investors can review directors’ dealings online:

Database of the German Federal Financial Supervisory Agency (BaFin)
BaFin operates an Internet platform that publishes directors’ dealings.

www.insiderdaten.de
A privately run Web site that presents stock transactions in a very clear manner. The latest transactions are sorted by company, insider name, date and order volume.

Synonym: insider trading

Direct offering

Type of issue in which the issuer places its securities directly with investors, without the support of an underwriting syndicate

Direct offerings are typically undertaken by banks and insurance companies – i. e., companies that have already developed business relations with the investing public and established an extensive sales system which they can use to place the securities.

A direct offering is less costly than an issue supported by an underwriting syndicate. However, there are potential difficulties associated with a direct offering, for example, if the securities are to be placed with international investors. Moreover, if the issuing volume is particularly large, it can overload the issuer’s sales system. For this reason, issuers are increasingly handling direct offerings via the Internet.

Frequently, a company will opt for a direct offering if it has been able to agree upon the terms of the issue with a large-scale investor (private placement).

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Dealer

Persons or companies that function as intermediaries in the purchase and sale of securities. Dealers are also authorized to trade securities for their own account.

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Business plan

Plan that documents the viability of a company

In its business plan, a company outlines its business model and its medium-term goals. The main reason for writing up a business plan is to give providers of outside capital – and in particular venture capital companies – a means of evaluating the company’s approach and development potential. Important components of a business plan are thus the investment plan, financing plan, liquidity plan and profitability forecast. The planning period usually spans three to five years.

Business angel

Private investor who supports a start-up company by providing capital and what is usually many years’ management experience

Business angels are typically former entrepreneurs. They support new companies in their early stages by providing risk capital. In addition, they advise the management team or assume management tasks themselves. In return for their support, they acquire stock in the company.

Deutsche Börse AG and KfW Bankengruppe have joined forces with BAND (Business Angels Netzwerk Deutschland) to create a forum for establishing contacts between business angels and innovative companies.

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Brokerage commission

Fee paid by investors to cover the intermediation function performed by brokers

When a security is bought or sold on the floor, the investor is required to pay a brokerage commission that is determined on the basis of the order size. In the case of shares, it is calculated as a percentage of the price of the stock; in the case of bonds, it is specified as a percentage of the par value of the bond. The fee is charged by the institution responsible for executing and settling the order.

Brokerage fees are standardized and stipulated in the fee schedule of the stock exchange. In the Official Market, the brokerage fee for exchange brokers comes to 0.08 percent of the price of a stock, warrant or subscription right, but in all cases at least 0.75 euro. For stocks in the DAX index, the brokerage fee is 0.04 percent. For bonds, the fees are between 0.0015 and 0.075 percent, depending on the transaction.

Broker

Brokers determine prices on the stock exchange.

They also provide assistance in making investment decisions and execute their clients’ buy and sell orders. Their role thus corresponds to that of a “Freimakler” in the German system.

Synonym: exchange trader

If you are looking to go public on the Frankfurt Stock Exchange you should contact info@fselistings.com

Bridge capital

In venture capital language, capital used to finance an IPO

Investment banks and underwriting houses will help a company go public by providing bridge capital, which serves to “bridge” the period until the equity capital generated by the IPO flows into the company.

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Börsenordnung (Stock Exchange Rules and Regulations)

Statutes of the stock exchange

The Stock Exchange Rules and Regulations (Börsenordnung) are issued by the Exchange Council in agreement with the operating body of the stock exchange. It ensures that the respective exchange can perform the tasks expected of it, and guarantees the interests of the public and trading. More specifically, the Stock Exchange Rules and Regulations regulate the organization of the stock exchange and the publication of all information regarding prices and volumes. In the case of securities exchanges, the Rules and Regulations also govern the composition of the Admissions Office and the appointment of its members.

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