[Last updated: 1 January 2024, unless otherwise noted]
Three segments of the FSE (operated by Deutsche Börse AG) must be distinguished:
- On the one hand, the General Standard and the Prime Standard (EU-Regulated market segments with highest transparency requirements).
- On the other hand, Scale (segment of the exchange-regulated Open Market with a lower level of transparency).
The "Quotation Board" of the Open Market is not available for primary listings of equity securities, but available for secondary broker listings of issuers listed elsewhere and who are subject to some degree of transparency obligations at their primary listing venue. For these secondary listings, no consent by the issuer is required and the issuer is not subject to any obligations in connection with the trading of its shares on the Open Market.
Companies applying for admission to the General or Prime Standard must have a minimum of 10,000 issued shares (applies only to no-par shares). The minimum market capitalization of the shares to be listed must be €1.25 million (approximately US$1.38 million). However, these criteria do not play any role in practice, since market conditions demand much higher numbers.
For Scale, the expected market capitalization must amount to at least €30 million (approximately US$33.15 million) and the (notional) nominal value of one share (or Depositary Receipt) must not be lower than €1 (approximately US$1.11). For a secondary listing on the Open Market, there are no financial criteria whatsoever.
With respect to the Prime and General Standard segments, there are no particular financial requirements in terms of profits, revenues or cash flows to be met in order to obtain a primary listing. However, an issuer applying for a listing on the Scale segment must meet three out of the following five key performance indicators: (i) revenues of at least €10 million (approx. US$11.05 million); (ii) annual profits of at least zero (no losses); (iii) positive equity; (iv) at least 20 employees, and (v) cumulated pre-IPO equity of at least €5 million (approx. US$5.53 million). Also, the issuer must confirm it has an operative business and that it meets certain compliance standards and the accredited "Capital Market Partner" which co-signs the listing application must confirm this certification.
[Last updated: 1 January 2024, unless otherwise noted]
Prospectus. A listing on the General or Prime Standard requires a BaFin-approved prospectus. An inclusion on the Scale segment also requires a prospectus in case of a concurrent public offering. However, because Scale has the status of an SME growth market, small and medium size issuers can follow a simplified prospectus standard. In the event of private offering or a pure listing, the issuer must provide an inclusion document, which is a kind of mini prospectus.
Free float; distribution. A listing on the General or Prime Standard generally requires a free float of 25%, but the threshold can be lowered in the case of very large issues. A company whose shares will be included on the Scale segment must have a free float of at least 20% or 1 million shares and a minimum of 30 shareholders.
Application; third party involvement. An application for listing on the General Standard, the Prime Standard must be made by a bank or financial services provider with a minimum capital of €730,000 (approximately US$806,650). An application for listing on the Scale segment must be co-signed by a "Capital Market Partner" accredited with Deutsche Börse AG. In addition, for an index membership a Prime Standard listing and a designated sponsor is required. In the case of the Scale segment, a compliance advisor also must be contracted.
Accounting standards. In the case of General Standard and Prime Standard listings, IFRS or a national GAAP that was deemed equivalent by the European Commission must be complied with. In the case of the Scale segment, IFRS or equivalent, national GAAP (only EEA issuers) or German GAAP must be complied with.
Financial statements. In the case of the General Standard and Prime Standard, the applicant must submit audited annual financial statements, including the company report for the last three business years and the auditor certificates. In the case of the Scale segment, those documents must only be provided for the last completed fiscal year.
Corporate history. A company applying for admission to the General or Prime Standard must have a history as an enterprise of at least three years and must have duly published its financial statements during that period. For the Scale segment, a two-year corporate existence requirement applies.
[Last updated: 1 January 2024, unless otherwise noted]
The listing process is much quicker than the prospectus approval process, and may take less than two weeks. However, listing cannot occur until the shares to be listed have been validly issued and the prospectus has been approved. The following is a typical process and timetable for a listing of a foreign company on the FSE in the Prime Standard or General Standard.
[Last updated: 1 January 2024, unless otherwise noted]
There are no corporate governance requirements for a foreign company in order to qualify to list its securities on the FSE. However, if the foreign enterprise is listed via a special listing vehicle in the form of a German AG or SE, the German Corporate Governance Code applies.
While compliance with the recommendations of the Code is voluntary, companies must give a declaration of adherence in which they must disclose which recommendations of the Code have not been (or will not be) observed, including the reasons therefor. German investors will certainly feel more comfortable if the German Corporate Governance Code is observed.
Since the provisions of the Code tie into specific provisions of German corporate law to enhance best practice, it would be rather complicated for a company organized under a foreign law to try to follow the Code and report compliance on a voluntary basis. In this case, it would be preferable if the company followed any corporate governance code or best practice established in its home jurisdiction.
A company listed on the General Standard or Prime Standard or included in Scale must observe transparency obligations. No transparency obligations apply to an issuer included in the Quotation Board as a secondary trading venue.
[Last updated: 1 January 2024, unless otherwise noted]
A company seeking to list must pay initial fees and annual fees. Generally speaking, the FSE is one of the least expensive listing venues in the world. For Scale, the initial fee is at least €20,000 (approx. US$22,100), which will increase on a complicated digressive scale for market capitalization above €30 million (approx. US$33.15 million) and there is a quarterly fee of €3,250 (approx. US$3,591). For the General Standard and the Prime Standard, the initial fee amounts to at least €41,499 (approx. US$45,856), which will increase on a complicated digressive scale for market capitalizations above €250 million (approx. US$276.25 million), but the total listing fee is capped at €118,488 (approx. US$130,929) plus an introduction fee of €2,721 (approx. US$3,007). The annual fee is at least €14,397 (approx. US$15,909) for the General Standard and at least €15,220 (approx. US$16,818) for the Prime Standard, plus (in each case) an additional €0.10 for each additional amount of €1 million of market capitalization. Additional fees apply to a prospectus review by the BaFin (€16,915 or approx. US$18,691) and to third party services (such as lawyers, accountants, banks and trading members).