Synergy Capital Markets

The Frankfurt Stock Exchange (“FSE”) is one of the world’s leading international stock exchanges by revenue, profitability and market capitalization, offering excellent services and systems for listed companies and investors. It is owned and operated by Deutsche Börse AG.

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Market Segments

FSE comprises two basic market segments – the Open Market (Freiverkehr) and the Regulated Market (Regulierter Markt).

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Quotation Board

 

The Quotation Board is only for dual listings of companies already listed on a qualified stock exchange. On 3 February 2012, the Deutsche Boerse Group made the decission to close The First Quotation Board (FQB) segment of the Frankfurt Stock Exchange. It will not be reopened again for new admissions. The Entry Standard segment will now be the first level of three total segments on the Frankfurt Stock Exchange.

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Open Market – Entry Standard

The Entry Standard provides for a minimal set of requirements. There are few restrictions as to the jurisdictions of incorporation an issuer may derive from. Although not required, a prospectus is strongly advised for a successful Entry Standard placement. In case of a private placement (no public offerering), the minimum requirement is an issuer data form (very basic data as to the issuer). Contrary to the prospectus, an issuer data form does not have to be approved by the BaFin. 

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General Open Market - Entry Standard Listing Requirements:

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• Minimum 2 years age of company

• Approved Prospectus

• 10% minimum free float shares (at least 30 initial shareholders)

• Audited financials (National GAAP or IAS/IFRS US-GAAP, et. al.) for the year prior to the listing

• Minimum nominal share capital of €750,000 (or its equivalent in another currency). The post-listing obligations are substantially lower compared to the General and Prime Standard such as:

  • Facts which may materially affect the market price of the issuer’s securities

  • Audited consolidated financial statements not later than six

  • Months after the end of the reporting period (annual report)

  • Interim reports within 3 months of the end of the first half of the financial year

  • An annually updated profile of the issuer

  • An up-to-date corporate calendar

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Regulated Market – General Standard Segment

The General and Prime Standard provide for a greater level of transparency and set forth higher listing requirements for the issuer, in particular:

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• Minimum 3 years age of company

• Minimal prospective market value of the securities to be admitted, no less than €1,250,000 paid in cash at some time (at least 10,000 underlying shares)

• Requirement of a minimum “free-float” of 25% of the outstanding securities.

• Minimum 3 years of reporting history (i. e. publication of audited financial statements)

• EU Prospectus (underwritten)

 

The post-listing requirements of the General Standard are much broader compared to the Entry Standard and relate in particular to the issuer’s compliance with several obligations and reporting requirements, such as:

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• Publication of its annual accounts (not later than 4 months after the financial year end) 

• Publication of half-yearly financial reports 

• Disclosure of directors' dealings 

• Ad-hoc disclosure 

• Notification of shareholdings

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In connection with Depositary Receipt Programs for third country issuers, certain exemptions from the 4 months (annual reports) and 2 months (half-yearly financial reports) are available.

The listing on the Prime Standard implies additional post-listing requirements, which are aimed at a greater transparency of the issuers, including:

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• Publication of quarterly reports

• Annual publication of a calendar regarding major corporate events

• Holding at least one analyst presentation per year

 

Main steps for the listing

The procedure for listing on the FSE comprises the following main steps:

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• Completion of a Due Diligence investigation (legal, financial, business)

• Drafting of the Prospectus – issuer data form

• Receipt of the BaFin approval regarding the Prospectus (if any).

• Set-up of a DR (Depositary Receipts) program (if any)

• Underwriting and offering (if any)

• Admission to listing/inclusion to trading from FSE

• Commencement of trading 

A listing on a European exchange provides access to millions of international investors that shy away from the higher American broker fees. The European markets are appealing for going public, the Frankfurt Exchange ranks third in terms of volume, behind New York and NASDAQ.

 

Europe has a most attractive investor pool. In 2011 Deutsche Börse bought 60% of the NYSE. The European regulations are more relaxed, and there are no monthly or annual filing fees. Because there are tax advantages in Europe for holding on to a stock for a particular period of time, European investors hold on to their stocks for a longer term than American. This results in more stable stock prices. for instance, German investors get a tax break for stocks held over one year, to encourage retention of stocks, and causing less day trading. Frankfurt has a higher turnover velocity than the London exchange, and is third in terms of sheer volume, just behind New York and NASDAQ.

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Time for an FSE Listing (IPO)

Estimated Time to Listing: Approximately 8 to 24 weeks.

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