5.2 Legal obligation to publish a prospectus

The obligation to publish a prospectus before securities can be admitted to listing on a regulated market in Germany is laid down in section 32(3) of the Stock Exchange Act. With respect to the content requirements for the prospectus, this section refers to the Securities Prospectus Act (Wertpapierprospektgesetz). The obligation to publish a prospectus before offering securities to the public is laid down in section 3(1) of the Securities Prospectus Act. The Securities Prospectus Act provides for the exceptions1 and exemptions2 to the obligation to publish a prospectus as required by the Prospectus Directive 2003.

Section 5(1) of the Securities Prospectus Act prescribes that the prospectus must contain in an easily analysable and comprehensible form all the information with respect to the issuer and the securities on offer to the public or admitted to listing on a regulated market that is necessary for the public to make an accurate assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and any guarantor, and the rights attaching to such securities. The prospectus must be written in a form that facilitates its understanding and evaluation. In regard to the specific requirements on content, format and publication of the prospectus, section 7 of the Securities Prospectus Act refers to the Prospectus Regulation 2004.

The abovementioned acts and EU regulation regarding a prospectus have a public law nature. Therefore, these rules primarily determine the legai relationship between the issuer and the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdiestleistungsaufsicht, BaFin) as competent authority in this regard. A prospectus cannot be published in Germany until the Authority approves it.3 Even though this chapter focuses on private law compensation claims against the issuer and/or the lead manager based on a false and misleading prospectus, these public law norms codetermine the private law norms with respect to the publication and distribution of a prospectus. If the issuer publishes a prospectus as a marketing instrument, even though an exception or exemption applies to this particular issue of securities, the Authority's approval of the prospectus contents is not required and cannot be obtained. In that case, the public enforcement mechanism is not available.