The Going Public Principles contain specifications for form and content that should be observed in preparing a prospectus. Moreover, according to the principles, as of four weeks prior to the offering, an issuer should refrain from making available any further information that is important for evaluating the shares but is not included in the prospectus. The banks of the consortium involved in the IPO should also not release any studies accompanying the IPO within two weeks of the offering. Both restrictions are to apply until the end of the stabilization period, but no longer than 30 days after the shares start being quoted on the exchange. Finally, prospectuses are to be available on the Internet pages of the issuers for three years.
Deutsche Börse had already announced the principles in August last year. The draft version that has now been presented reflects the opinion of Deutsche Börse and the PMAC on this subject. Within the framework of a four-week public hearing by Internet, all market participants will have an opportunity to comment. Plans call for the Principles to come into force as far as applicable in all market segments on June 1 through the administrative practice after approval by the securities admission board (Zulassungsstelle). For IPOs in the Neuer Markt the principles shall be compulsory.
The formal criteria that have to be met by a prospectus as defined by the Principles are that the language has to be generally understandable and the description may not have the character of advertising. Risk factors have to have a specific reference to the issuer's business operation and have to be enumerated in order of relevance. Statements oriented to the future should be formulated in such a way that they are clearly recognizable as such, with clearly recognizable assumptions on which they are based.
Moreover, an issuer has to disclose business transactions and legal relationships with natural persons closely affiliated with the company, such as members of executive management and supervisory bodies of the issuer, and with juristic persons closely affiliated with the company. The latter include companies, for example, in which the issuer holds at least five percent of the capital, either directly or indirectly. This specification is oriented to the German Securities Trading Act (Wertpapierhandelsgesetz).
Moreover, the Going Public Principles restrict the use of pro-forma information in the statements of account. Finally, they require the members of the executive management to give an account of their professional background and disclose any sanctions (e.g. convictions, penalties, fines) for violating domestic and foreign provisions of criminal and capital-market law during the last 10 years.
