Capital Markets: IPOs, Bonds and Listed Companies

Capital markets in Germany: what issuers need to know

Capital markets in Germany give companies access to equity and debt from a broad investor base, most prominently through the Frankfurt Stock Exchange. The legal framework is largely European: the Prospectus Regulation governs offering documents, the Market Abuse Regulation (MAR) governs inside information and insider dealing, and the Transparency Directive is implemented in the Securities Trading Act (Wertpapierhandelsgesetz, WpHG). German law adds the Stock Exchange Act (BörsG), the Securities Prospectus Act (WpPG) with its liability rules, the Bond Act (SchVG), the Electronic Securities Act (eWpG) and the corporate law of the stock corporation. BaFin approves prospectuses, supervises market conduct and enforces disclosure duties.

This page covers initial public offerings, capital increases of listed companies, bond issues and the ongoing obligations of issuers: ad hoc disclosure of inside information, managers' transactions, insider lists, periodic reporting and voting-rights notifications. It is written for management and supervisory board members, CFOs, investor relations teams and in-house lawyers of issuers, and for investors who hold significant positions in German listed companies.

The EU Listing Act, adopted in 2024, amends the Prospectus Regulation, MAR and related rules to make listing in the EU simpler and cheaper, with changes applying in stages. Among other things, it streamlines prospectus formats and adjusts some disclosure obligations. Issuers should check, for each transaction, which version of the rules applies at the relevant date. Where this page refers to the EU rules, it describes their general structure rather than every recent amendment.

IPOs on the Frankfurt Stock Exchange

An IPO in Germany usually involves a company in the legal form of an AG, SE or KGaA, a syndicate of underwriting banks, a prospectus approved by BaFin, an application for admission to trading, and a public offering combined with an international private placement. The Frankfurt Stock Exchange offers the regulated market, where admission brings the full set of EU transparency and German corporate obligations (with the Prime Standard imposing additional requirements), and the open market, including an SME growth market segment with lighter rules. The choice depends on the company's size, investor targets and index ambitions.

Preparation typically takes several months. The company is converted into an AG or SE if necessary, its governance is adapted to the expectations of public investors (supervisory board composition, rules of procedure, remuneration system, compliance and insider management), its financial statements are prepared to the required standards, and the banks carry out legal and financial due diligence. Existing shareholders agree lock-up undertakings. Founder control can be preserved through multiple-voting shares with up to ten votes per share (§ 135a AktG), subject to sunset rules for listed companies.

Prospectus liability

The prospectus must contain the information an investor needs to make an informed assessment of the issuer and the securities. If material information is incorrect or incomplete, investors who acquired the securities on the basis of the prospectus within a defined period can claim the return of the purchase price against the persons responsible for the prospectus and those from whom it originates (§ 9 WpPG). Responsibility rests with the issuer and, typically, the underwriting banks, which is why banks require extensive due diligence, comfort letters from the auditors and legal opinions. Directors' personal exposure arises mainly through internal liability to the company.

Choosing between IPO, direct listing and private capital

Not every company that needs growth capital should list. Private equity and late-stage venture investors, pre-IPO rounds and dual-track sale processes compete with an IPO, and the decision depends on valuation, market conditions, the shareholders' liquidity needs and the company's readiness for public scrutiny. A listing in Germany brings visibility, access to a broad investor base and a currency for acquisitions, but also permanent disclosure obligations, quarterly market expectations and the costs of a listed company's governance. Companies weighing access to capital markets in Germany against other options should assess these factors early and keep the alternatives open as long as possible.

Capital increases and equity capital markets

Listed companies raise further equity through rights issues, accelerated bookbuilt offerings and placements of new shares from authorised capital. Shareholders have statutory subscription rights, which the management board can exclude only on the basis of a general meeting authorisation and for an objective reason. For cash capital increases of listed companies, a simplified exclusion of subscription rights is available where the issue price does not significantly fall below the stock market price and the volume stays within the statutory limit of 20% of the share capital set in § 186(3) sentence 4 AktG. Such "accelerated" placements can be completed within hours after market close.

A prospectus may be required for the admission of new shares to trading unless an exemption applies. Placements to qualified investors are generally exempt from the prospectus requirement for the offer, and admission exemptions apply up to defined thresholds. Convertible and exchangeable bonds are common instruments for listed issuers and require a general meeting authorisation and conditional capital. Throughout, the issuer must manage inside information carefully, because a planned capital measure is often inside information that must be disclosed or whose disclosure must be properly delayed.

Bonds and the SchVG

Debt capital markets in Germany range from investment-grade bonds of large corporates and Schuldschein loans to high-yield bonds of sponsor-backed companies and SME bonds placed with retail investors. German-law bonds are governed by the BGB rules on bearer bonds and, for collective issues, the Bond Act (Schuldverschreibungsgesetz, SchVG). The SchVG allows the terms and conditions to provide that bondholders can amend them by majority resolution and appoint a joint representative. Material amendments, such as extending maturity, reducing interest or principal, or converting bonds into shares, require a qualified majority of at least 75% of the participating voting rights (§ 5(4) SchVG), while other resolutions need a simple majority.

This collective action mechanism is a central tool in bond restructurings, often combined with a restructuring plan under the StaRUG. Votes can be held without a physical meeting, and a second meeting with lower quorum requirements is available if the first vote is not quorate. Bondholders who object can challenge resolutions in court, but challenges do not automatically block implementation. See our page on StaRUG restructuring.

Green, social and sustainability-linked bonds are now an established part of the market. Issuers can follow voluntary market principles or use the EU Green Bond Standard, which requires allocation of proceeds to taxonomy-aligned activities and external review. Sustainability-linked bonds tie the coupon to the achievement of sustainability performance targets. In each case, the issuer's statements about use of proceeds and targets are disclosure, and inaccurate claims create the same liability risks as any other misstatement, in addition to the green claims rules that apply to marketing.

Since the Electronic Securities Act (Gesetz über elektronische Wertpapiere, eWpG) came into force, bearer bonds can be issued as electronic securities registered in a central register or a crypto securities register instead of a physical global certificate, and the Future Financing Act extended the regime to shares (§ 1 eWpG). Tokenised bonds have been issued by banks, corporates and public issuers; see our page on fintech and crypto assets.

Ongoing obligations of listed issuers

Once listed, issuers in the capital markets are subject to continuous disclosure obligations. The most important is the duty under Article 17 MAR to disclose inside information that directly concerns the issuer as soon as possible. Inside information is precise information, not public, that would be likely to have a significant effect on the price if it were made public. Intermediate steps in a protracted process, such as merger negotiations, can themselves be inside information. An issuer may delay disclosure on its own responsibility if immediate disclosure would prejudice its legitimate interests, delay is not likely to mislead the public and confidentiality can be ensured; BaFin must be notified when the information is eventually disclosed.

Issuers must keep insider lists, persons discharging managerial responsibilities and closely associated persons must report their transactions in the issuer's shares, and issuers must publish annual financial reports within four months of the end of the financial year (§ 114 WpHG) and half-yearly reports within three months of the end of the reporting period (§ 115 WpHG). Failure to publish inside information in time, or publication of false inside information, can make the issuer liable to investors for damages (§§ 97, 98 WpHG), in addition to BaFin fines.

Insider lists, managers' transactions and market soundings

Issuers must draw up and update lists of all persons who have access to inside information and work for them under an employment contract or otherwise perform tasks through which they have access, such as advisers and auditors. Persons discharging managerial responsibilities, typically members of the management and supervisory boards, and persons closely associated with them must notify the issuer and BaFin of transactions in the issuer's shares or debt instruments once a de minimis threshold is exceeded, and the issuer must publish these notifications. During closed periods before the announcement of interim or year-end reports, such persons may in principle not trade.

Before a placement or a takeover offer, banks and issuers often sound out potential investors. MAR provides a market sounding regime that protects the disclosing party if it follows prescribed procedures, including recording which information was disclosed to whom and informing recipients when information ceases to be inside information. Investor relations teams should be trained to recognise when a conversation with an analyst or investor risks the selective disclosure of inside information.

Voting-rights notifications

Shareholders must notify the issuer and BaFin without undue delay, and at the latest within four trading days, when their voting rights reach, exceed or fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75% (§ 33(1) WpHG). Holders of financial instruments that give the right or the ability to acquire shares, and of instruments with similar economic effect, are subject to parallel notification duties (§ 38 WpHG), and the holdings are aggregated (§ 39 WpHG).

The issuer must publish the notification within three trading days (§ 40 WpHG). Breaches can lead to the loss of rights attached to the shares for the duration of the breach, in addition to fines. Holders reaching 10% must, on request, disclose their objectives and the source of funds unless the articles exclude this (§ 43 WpHG).

Delisting and leaving the capital markets

A company may wish to leave the regulated market after a takeover or because the costs of listing exceed its benefits. A delisting on application by the issuer generally requires that a public offer to acquire all shares has been published under the takeover rules (§ 39(2) BörsG). The offer must be unconditional and in cash, and the consideration must at least equal the weighted average domestic stock exchange price during the six months before the offer was announced, as well as any higher price paid by the bidder in the prior six months. Exceptions apply where the shares remain admitted to another regulated market or to certain SME growth markets with equivalent protection.

Alternatives include a downgrade from the regulated market to the open market (subject to the same offer requirement where the conditions of § 39 BörsG apply), a squeeze-out after a takeover, or a merger into an unlisted entity. Our page on public takeovers explains the combination of takeover and delisting offers. For governance issues of listed companies, see corporate governance.

Leaving the regulated market does not end all obligations at once. Shares that remain included in an open-market segment continue to be subject to MAR, so the ad hoc disclosure and insider dealing rules still apply, while periodic reporting and voting-rights notifications under the WpHG fall away.

• Plan IPO governance early: board composition, remuneration system and compliance take time.
• Prepare the ad hoc process before listing, not after the first incident.
• Monitor shareholder notifications and instruments that may trigger notification duties.
• Check SchVG majority provisions when drafting bond terms, as they determine restructuring options.

How TRW & Co helps

We advise issuers, shareholders and investors on capital markets in Germany. We prepare companies for IPOs, including changes of legal form and governance, and support prospectus work and admission. We advise listed companies on capital increases, convertible bonds and the exclusion of subscription rights, and issuers on bond documentation, SchVG resolutions and restructurings. We set up and review ad hoc disclosure, insider and managers' transactions processes, advise on voting-rights notifications and support companies in BaFin investigations. For delisting and going-private transactions we work with our takeover team. To discuss a capital markets transaction or a disclosure question, please contact us.