Germany is the largest economy by GDP in Europe and is the third largest globally by nominal GDP (and, according to OECD Economic Outlook, is forecast to hold this position due to strengthening economic growth in 2026 and 2027). As a result, capital markets lawyers from outside of Germany may have many reasons to find themselves involved in capital markets deals in Germany. This may include advising:

• On initial public offerings (IPO) and other equity transactions of German companies where part of the offering will also be sold outside of Germany, or the shares will be listed on a foreign stock exchange. For example, a public offer in Germany is often combined with a private placement in foreign jurisdictions, including the US market under Rule 144A.
• On the IPO of non-German companies that wish to list on a German stock exchange.
• On debt offerings of German companies where part of the offering will also be sold outside of Germany.
• Issuers of securities publicly offered in Germany that often have part of their business in other jurisdictions. If these business operations are substantial, their legal framework is typically disclosed in the securities prospectus prepared for the offering. Foreign counsel will be involved in the transaction, in particular in due diligence and to support drafting of the relevant disclosure.
• On European de-SPAC transactions of German targets, which often involve merging entities or businesses into a Luxembourg or Dutch public company. Foreign lawyers may be involved if the de-SPAC involves a non-German special purpose acquisition company (SPAC). 
• On Nordic bonds where a German issuer is raising funds on the Nordic markets.

What is considered the best advice to give foreign lawyers can vary by the type of transaction or the industry sector of the deal. This Note outlines top tips that may apply to general equity and debt transactions in Germany. In addition to general top tips, it covers other points for a foreign lawyer to be aware of in relation to regulatory review and approvals, transaction communications and disclosure requirements, and the legal and regulatory issues that may impact capital markets deals in Germany. 

Germany has a range of different stock exchanges. The Frankfurt Stock Exchange (FSE) is the country's main market and has both a regulated and an unregulated market. The FSE's regulated market is divided into the Prime Standard and the General Standard, while the unregulated market consists of the Scale segment, Basic Board, Quotation Board, CEINEX D-Shares market and REIT segment. Alongside the FSE, there are six regional stock exchanges in major cities across Germany. 

Supervision of the German capital markets comes from the Federal Financial Supervisory Authority (BaFin). The legislative framework for the German capital market is made up of German and EU legislation (including the Market Abuse Regulation ((EU) 596/2014 as amended) and EU Prospectus Regulation ((EU) 2017/1129 as amended) and the rules of the different stock exchanges.

Although Germany is the third largest economy globally, the FSE is only the 13th largest stock exchange worldwide by market capitalisation of listed companies and it has the 11th highest share of global equity markets. This substantial disparity may be due to, among other things, the hesitancy of German retail investors to invest in stocks and the economic challenges facing the country. 

German capital markets lawyers are typically lead counsel, given the nature of the German capital markets, with German companies or foreign companies wanting to list their securities on the German stock exchanges. However, regardless of whether German counsel will be leading or have a more supporting role, given some of the particularities of doing deals in Germany discussed in this Note, it is advisable to instruct German counsel early on in a transaction. For example, experienced German counsel will know to consider the practical guidance of BaFin and the European supervisory authority, European Securities and Markets Authority (ESMA).

Shares with multiple voting rights have been permitted since 1 January 2024 due to Germany's Financing for the Future Act (Zukunftsfinanzierungsgesetz) (ZuFinG). This act reformed some of Germany's stock corporation and capital markets laws and strengthen and improve the conditions for start-ups, growth companies, and small and medium-sized enterprises (SME) in Germany. These reforms include the insertion of section 135a into the Stock Corporation Act (Aktiengesetz) (AktG), which permits multiple voting rights being attached to one share. A resolution by the annual general meeting to grant or issue shares with multiple voting rights requires the approval of all shareholders concerned. 

To comply with the Multiple-Vote Share Structures Directive ((EU) 2024/2810), the permitted voting rights of a share, however, are limited to ten to one. There are further restrictions on the exercise of multiple voting rights in specific situations, such as the appointment of a special auditor (Sonderprüfer). Further, multiple-voting rights cease to exist once shares are transferred after a listing or, at the latest, ten years post-listing, if not prolonged for a maximum of another ten years at least one year prior to expiration.

Since entering into force on 10 February 2026, the Location Promotion Act (Standortfördergesetz) (StoFöG) allows issuers to offer shares at a nominal value of as low as one Eurocent. The German lawmaker – who passed this act in the tradition to simplify access to and increase the attractiveness of German capital markets as commenced by the ZuFinG regulation – aims to particularly offer SME issuers a strengthened opportunity to access capital markets with this change in law. To limit the risks of market manipulation by so-called penny stocks, the issuance of shares with a nominal value below EUR 1 remains subject to a respective provision in the issuer's articles of association and thus is subject to the approval of the general meeting of the issuer.

Most issuers convert their accounting standard from local generally accepted accounting principles to International Financial Reporting Standards (IFRS) before an IPO. The time required for this process should not be underestimated, as this conversion can take months. The IPO timings may be delayed if the company has not allowed enough time for the conversion process.

The issuer's counsel should approach BaFin early on to discuss the transaction and propose a transaction timeline. At the same time, the issuer will also propose the set of financials to be included in the prospectus. Since certain parts of the EU Listing Act Regulation ((EU) 2024/2809) came into force, the relevant financial information only relates to the last two years instead of the last three years.

The issuer should also examine whether any interim financial statements are required, in particular considering the 135 days rule for the provision of the accountant's comfort letter (notably, after 135 days, these comfort letters are unlikely to be delivered as the underlying financials will have gone stale). A typical timeline usually involves three to four submissions of the prospectus and comment periods from BaFin. BaFin typically responds within one to two weeks as to whether they agree with the timeline proposal. Once agreed, BaFin is committed to keeping the timeline. 

The prospectus review process can be accelerated if the issuer holds a preliminary meeting with BaFin at an early stage and adheres to an agreed timetable. A voluntary checklist helps to identify potential problems at an early stage and to submit the prospectus as completely as possible. The initial submission must be comprehensive, including all relevant annexes and historical financial information, considering prior agreements with BaFin.

BaFin also expects the issuer to keep to the agreed timeline, subject to extraordinary circumstances. For example, if the issuer engages in an M&A transaction and needs to provide pro forma financial statements, it will discuss the implications on the timeline with BaFin. Another example would be if market conditions are not conducive to marketing the securities, the issuer could propose a delay to BaFin. It usually takes a couple of days to change the timeline and BaFin would typically agree to a revised timeline in these circumstances.

A typical IPO transaction usually involves three filings of the draft prospectus with BaFin and the second filing must include all the financial statements. This requirement may cause a problem for IPOs scheduled for later in the year (after mid-May for a company whose financial year ends on 31 December), because interim financial statements are usually required to be included in the filing, which may not be ready in time. If the statements are not ready and therefore change after the second filing, BaFin may restart the review, which will delay the IPO timetable.

If an issuer preparing for an IPO has a current profit forecast outstanding, it must include it in the prospectus. The banks and auditors will want to review the forecast, which will take time and could lead to delay.

If an envisaged M&A transaction means that pro forma financial statements are required, the IPO may need to be postponed so that the pro formas can be prepared. The issuer may need to weigh up the advantages and disadvantages of proceeding with the acquisition or postponing the IPO.

Potential investors may approach an issuer and ask to see its business plan (which will often contain a forecast). As the business plan is not included in the prospectus, investors who learn about the business plan will have non-public information and the prospectus may be considered incomplete if the forecast is still valid. As a result, the issuer may need to postpone the IPO (for example, for a couple of months) until the disclosed business plan becomes stale. This can be a particular problem in dual track IPO or M&A transactions where potential M&A investors may have received information that cannot, for liability risk reasons, be included in the IPO prospectus.

Often there is only a small core team at the issuer of the CEO, CFO, and others working on the IPO transaction. Counsel should ensure this core team does not underestimate the amount of work that will be required of them at the end of the transaction.

Lawyers from outside Germany may not be aware that various transactions require notarial formalities. These formalities should not affect the transaction timeline if they have been factored in appropriately into the process (see below: Execution of Documents).

International counsel may want to be aware of the following issues in relation to regulatory review and approval in a capital markets transaction in Germany.

The regulatory approval requirements are dependent on the type of transaction and the issuer. For example, for an IPO with a concurrent admission to the regulated market of a stock exchange, the issuer must meet the admission requirements of the stock exchange, which are defined in particular by the listing rules. These regulatory requirements include:

• A German issuer must first be structured as a German stock company (Aktiengesellschaft) (AG), a German limited partnership on shares (Kommanditgesellschaft auf Aktien) (KGaA), or a European stock company (Societas Europaea) (SE). Other possible foreign legal forms include the Luxembourg limited liability company (société anonyme) (SA) and the Dutch public company (Naamloze Vennootschap) (NV).
• Under the ZuFinG and the new StoFöG regime, it is also possible for start-ups and growth companies to use a so-called reverse takeover company (Börsenmantelaktiengesellschaft) (BMAG) to get an easier access to the regulated capital market in Germany. The BMAG follows the model of the American special purpose acquisition company (SPAC). This new legal form of organisation is now regulated in sections 44 to 47b of the German Stock Exchange Act (Börsengesetz) (BörsG). 
• The expected market value of the shares must be at least EUR1 million, although market expectation would typically be much higher. The equity capital must be at least EUR730,000 and the issuer must have a minimum of 10,000 issued shares and a minimum distribution of 10% of the shares among retail investors (free float) must be guaranteed. Investors holding more than 5% of the shares are not counted towards the minimum distribution. While issuers previously had to be in existence for at least three years, the StoFöG regulation lifted this requirement.
• The annual financial statements of the last two years must have been properly disclosed.

Beyond the pure admission requirements, a listed company may need to change its internal organisation to implement compliance systems. The company must adapt its articles of association to meet capital market standards, implement a remuneration system for the management board and supervisory board, change its accounting standards to IFRS, and form an audit committee.

Depending on the structure of the issuer, it may be considered a fund and the specific regulations on funds and the offering of funds apply.

The public offering of shares on a regulated market in Germany typically requires the publication of a securities prospectus approved by the competent authority. For foreign issuers, depending on the home member state, foreign supervisory authorities or BaFin may be the competent authority. This must be checked carefully and the relevant competent authority ascertained early in the process. 

Additionally, the application for admission to the FSE may require the approval of the stock exchange management board. The application for approval (to be submitted for this purpose) must be filed together with other documents, including:

• The securities prospectus and approval certificate.
• The resolutions of the management board and supervisory board.
• The subscription certificate and bank certificate.
• The global share certificate.
• The audited annual financial statements for the last two years.

There are several other transactions, such as bond issuance programmes or public takeovers in the case of share for share transactions, where the EU prospectus regime is also applicable.

Further disclosure requirements may arise from the PRIIPs Regulation ((EU) 1286/2014) and Assets Investment Act (Vermögensanlagegesetz) (VermAnlG) and, in the case of funds, the Capital Investment Act (Kapitalanlagegesetzbuch) (KAGB).

There are different exemptions from the prospectus requirements that, depending on the circumstances, may be relevant to an issuer.

There is no obligation to prepare a prospectus if the offering meets any of the following requirements:

• With effect from 5 June 2026, if it has a total aggregated consideration of less than EUR12 million per issuer or offeror over a period of 12 months (member states can elect to adopt a lower level of EUR5 million, but there is no current indication that Germany will choose to adopt a lower level). (Article 3(2)(b), EU Prospectus Regulation and Article 1(3)(2), EU Listing Act Regulation).
• It is addressed solely to qualified investors (Article 1(4)(a), EU Prospectus Regulation).
• It is addressed to fewer than 150 natural or legal persons per member state other than qualified investors (Article 1(4)(b), EU Prospectus Regulation).
• It has a minimum denomination or minimum order size of at least EUR100,000 (Article 1(4)(c)-(d), EU Prospectus Regulation).

In addition, there is no obligation to prepare a prospectus for secondary issues if the newly admitted securities, over a 12-month period, represent less than 30% of the number of securities already admitted to trading on the same regulated market and: 

• The issuer of the securities is not subject to restructuring or insolvency proceedings. 
• A document containing key information is electronically filed with the competent authority of the home member state and available to the public. 

(Article 1 (4da), EU Prospectus Regulation.)

There is also no obligation to prepare a prospectus for an offer of new securities which are fungible with securities that have been admitted to trading on a regulated market or an SME growth market continuously for at least the 18 months prior if: 

• The securities to be admitted are not issued in connection with a takeover by means of an exchange offer, a merger or a division. 
• The issuer of the securities is not subject to restructuring or insolvency proceedings. 
• A document containing key information is electronically filed with the competent authority of the home Member State and available to the public. 

(Article 1 (4db), EU Prospectus Regulation.)

Under the EU Listing Act Regulation, with effect from 5 March 2026, a new EU follow-on prospectus in Article 14a of the EU Prospectus Regulation replaced the simplified prospectus for secondary issues. The new regime follows a standardised format and sequence, is limited to a maximum of 50 pages, and must only contain all the information to make an informed investment decision in an easily analysable and comprehensible form. 

The EU Follow-on prospectus regime's requirements for information regarding corporate governance and financial data are considerably lower than a standard prospectus, considering the shortened scope. The EU follow-on prospectus applies for issuers whose securities have been admitted to trading on a regulated market or an SME growth market for a continuous period of at least 18 months. For listings without admission to a regulated market, the period for approval for the follow-on prospectus is shortened to seven working days (Article 20(6a) EU Prospectus Regulation).

To make it easier for SMEs to gain access to capital markets, with effect from 5 March 2026, the EU Listing Act Regulation introduced the EU growth issuance prospectus. It follows a standardised format and sequence and is subject to a 75-page limit. Given investor expectation, this format may not always be sufficient and issuers will have to consider whether it is suitable for their purpose or whether a standard prospectus would be preferable. 

Since the new EU growth issuance prospectus regime is in force, issuers that meet the following requirements, among others, have the option of drawing up an EU growth prospectus if they have not previously issued securities that have been admitted to trading on a regulated market: 

• SMEs.
• Issuers, other than SMEs, whose securities are, or will be, traded on an SME growth market.
• Issuers with an average number of employees during the previous financial year of up to 499, whose total aggregated consideration in the EU for the securities offered the public is less than EUR50 million calculated over a 12-month period.
• Offerors of securities that have been issued by SMEs or issuers, other than SMEs, whose securities are traded on an SME growth market. 

(Article 15a, EU Prospectus Regulation, as inserted by the EU Listing Act Regulation.)

European and German regulation of deals varies significantly depending on the structure of the deal and the issuer.

According to European law, a prospectus, as the disclosure document, must contain all information that is material for the investor; that is, it must be complete and correct. So, regulation aims to provide sufficient information to make rational decisions, but also to prevent information overload by only presenting material information. That is why, for example, all substantial information must be summarised in the first section of the prospectus.

Typically, the following are the key aspects in securities prospectuses that investors will focus on:

• Identification of risk factors that are material and specific to the issuer and the securities.
• Financial information for the last two business years.
• Pro-forma information.
• Management discussion and analysis (which is no longer mandatory but often expected by (international) investors).

Generally, an IPO is the capital markets transaction with the most requirements and requires the largest amount of drafting by legal counsel. In particular, an IPO prospectus is much more detailed than in a debt offering. The respective requirements for a prospectus are governed from the perspective of a potential investor. Where, for example, in bond issues, the offering itself and the terms and conditions are in the spotlight, in equity security offerings the issuer must provide more comprehensive financial disclosures as well as information on the competitive situation, dilution, and the business in general.

Legal counsel to the issuer is in close communication with the BaFin during the drafting of the prospectus as the offer and disclosure document. A detailed timetable is agreed with BaFin in advance of the transaction. During the typical three submission rounds of the prospectus, the issuer receives individual feedback on the status of the prospectus. There is usually no direct contact with ESMA. However, ESMA publishes its legal opinion on certain transaction issues in (non-binding) guidelines and Q&As to help establish a level playing field. These are treated as binding law.

In most cases, the same contact person at BaFin is available as a central point of contact throughout the prospectus review process. The communication and review process with BaFin may seem more bureaucratic by comparison with some other jurisdictions.

In preparing a private company to go public by an IPO, the company usually undergoes significant changes under German company law, such as changes in its form and articles of association. These changes must be submitted to the commercial register and published.

Subsequent disclosure obligations (such as voting rights and director's dealings) following a listing must be reported to and published in the Federal Gazette (Bundesanzeiger), among others. 

International counsel should be aware of the following issues in relation to communications, disclosure, and transaction documents.

To be admitted to the stock exchange, the issuer must disclose its audited annual financial statements for the last two business years. The statements must be in accordance with IFRS or similar foreign standards for non-EU issuers. The StoFöG regulation removed this requirement and replaced it with a new requirement to use the European Single Access point (ESAP), which, when established, will allow access to the relevant financial information. The ESAP will be established by 10 July 2027, followed by a phased implementation (Article 1(I). Regulation ((EU) 2023/2859)). 

Responsibility for the content of the prospectus must be expressly assumed by the issuer, applicant for admission (that is, the one or more banks involved), and guarantor, if any. The persons responsible for the prospectus are generally liable for incorrect or incomplete material information in the prospectus under the WpPG. The onus to show that the prospectus was correct or complete lies with the issuer and other persons responsible for the prospectus, which makes prospectus liability a powerful weapon. A due diligence defence may be raised by the banks and they invariably receive an indemnity from the issuer in the underwriting agreement.

The persons responsible for the prospectus are additionally liable under both criminal and civil law for an incorrect prospectus. In addition, the management board members of the issuer may be held personally liable for damages to the issuer. This liability is not governed by EU law but by national laws.

There are several communication restrictions concerning the marketing of publicly offered equity or debt security transactions. The marketing must be recognisable as such and any marketing advertisement or presentation must reference the published prospectus and possibility of viewing it. The content of the advertising must not be incorrect or misleading and must be consistent with the information in the prospectus. Otherwise, there is a risk of liability. To avoid the risk of liability, pre-deal research reports typically do not include a specific recommendation to buy or sell the shares or specific pricing.

Whether for a public offering or a private placement, pre-deal marketing is also subject to special rules regarding the handling of insider information. There are special rules for exploratory market talks with qualified investors (market sounding) depending on the stage of the transaction and the size of the group of investors addressed.

Post-IPO, the company must publish any newly arising price-sensitive information (so-called insider information) by way of an ad hoc announcement or, under certain conditions, it can decide to exempt itself from immediate publication.

Generally, an issuer must no longer immediately publish inside information that relates to intermediate steps of a protracted process. Even if such information  has been selectively disclosed to a limited number of people. For example, in an acquisition or capital increase, the issuer would not want to disclose early, in which instances, the issuer can decide that it has a material interest in delaying disclosure and publish and file the information with the regulator afterwards. However, if the confidentiality of inside information can no longer be guaranteed or the public in any way could be misled by continuing to withhold disclosure, the issuer must immediately publish inside information.

The prospectus is essentially prepared based on extensive due diligence, usually by using a data room accessed by counsel to the issuer and to the underwriters. The auditor reviews the financial information in the prospectus so that it can issue a comfort letter to the underwriters and issuer. The legal advisors issue legal opinions on certain aspects of the transaction (for example, the underwriting agreement and the pricing and volume agreement).

In private placements, where no prospectus is required, a shortened due diligence process, mainly by way of management calls, is typical.

In principle, all transactions involving changes to the articles of association, capital measures, or changes of legal form, among other actions, require a notary public in various forms. For example, to register the amendments to the articles of association, the management board must attach a notary's certificate to the application to the commercial register. The certificate testifies that the amended provisions of the articles of association correspond to the resolution on the amendment of the articles of association and that the unamended provisions correspond to the last complete wording of the articles of association submitted to the commercial register.

The resolution to convert the legal form of the issuer and the previous capital increase that typically occurs requires notarial certification. After the successful conversion, typically further capital measures and authorisations of the management board are required, which must be approved by the annual general meeting. These shareholders' resolutions must be certified by a notary public.

International counsel should be aware that the following legal or regulatory issues could impact capital markets transactions in Germany.

Under the EU General Data Protection Regulation ((EU) 2016/679), the disclosure of certain private data (such as names, addresses and telephone numbers) is prohibited without the consent of the data subject. This may imply that the issuer must verify that it has the appropriate consents before disclosing the information required in the due diligence process and, if necessary, redact information before making a document available in the data room.

Foreign investments are generally possible in all areas within the framework of the applicable law. However, to avoid security threats, the Federal Ministry for Economic Affairs and Energy may review the acquisition of domestic companies by foreign buyers on a case-by-case basis.

To examine whether the specific acquisition is likely to impair public order or security or essential security interests of Germany, so-called cross-sectoral or, in the acquisition of certain defence or information technology security companies, sector-specific investment reviews are carried out. Foreign trade, that is, trade in goods, services, and capital with foreign countries and trade in foreign assets and gold, is therefore subject to certain restrictions resulting from EU law, the Foreign Trade and Payments Act (Außenwirtschaftsgesetz) (AWG), and the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung) (AWV).

Certain corporate measures that must be taken to get IPO-ready require a resolution of the annual general meeting, such as: 

• A capital increase out of retained earnings ahead of the IPO. 
• Amendments to the articles of association. 
• A change of legal form. 

Under German law, the decision of the company's management to go public does not require a resolution of the annual general meeting. However, a typical IPO does not only involve the admission of existing shares but also the creation of new shares through a capital increase. Capital measures, in turn, require the approval of the general meeting. This also applies to the issuance of options and convertible bonds.

Before the company goes public, it typically converts from a limited liability company (GmbH) to an AG, KGaA, or SE. This step requires shareholder approval.

In general, the issuer is not required to be incorporated in Germany to be admitted to a German stock exchange or engage in other equity or debt transactions. EU incorporated issuers are treated the same as a German company. If the issuer is incorporated in a country outside the EU (a so-called third country), certain disadvantages may arise. For example, it may be difficult to provide evidence of the equivalence of the financial statements required for the preparation of the prospectus.

The speed of capital markets deals largely depends on the type of transaction. In general, the amount of time needed for the same type of transaction is likely to be similar to other EU jurisdictions.

Post-deal litigation is much less likely in Germany than, for example, the US. However, there remains a risk of litigation or liability, particularly:

• If the issuer must publish a prospectus, as there is generally a risk of liability for the inaccuracy or incompleteness of the prospectus.
• In transactions requiring the approval of the annual general meeting, as there is the threat that the resolution may be challenged.
• In issues of subscription rights, which are subject to specific risks, especially regarding the calculation and allocation or exclusion of subscription rights.

Following an IPO, the company must comply with certain follow-up obligations, such as the duty to publish price-sensitive information, the restrictions on market abuse and insider dealings, and, among others, the obligation to regularly publish financial statements. Failure to comply with these obligations can lead to heavy fines, criminal sanctions and civil liabilities.

This article was originally published by Practical Law Capital Markets.

Authored by Prof. Dr. Michael Schlitt, Dr. Susanne Ries, LL.M., and Michael Berkenkopf.