Legal interpretation aids

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The most important elements of the legal basis of prospectus law are the Prospectus Regulation (Regulation (EU) 2017/1129 as well the Capital Market Act 2019 (KMG 2019; Kapitalmarktgesetz 2019), which clarifies the Regulation in greater detail and extends it to also cover investments. In addition, various publications by the European Securities and Markets Authority (ESMA) represent important aids in legal interpretation.


ESMA Publications

ESMA regularly publishes and updates documents that cover complex provisions under prospectus law requiring interpretation. The main sources for prospectus approval procedures are the ”Questions and Answers – Prospectuses” as well as the ”Recommendations”.

Margin notes 128-130 of the ESMA recommendations apply for property companies. Valuation reports containing the content listed in margin note 130 must be included in the prospectus, where and provided that equity securities and non-equity securities as defined in margin note no. 128 are issued, which are guaranteed by properties.
On 01.10.2019 ESMA published the Guidelines on Risk Factors under the Prospectus Regulation. The Guidelines are applied with the entry into force of Regulation (EU) 2017/1129 on 21.07.2019.

Note on the AIFMG/AIFM Directive

Explicit reference is made to the existence of the Prospectus Regulation in addition to Directive 2011/61/EU on Alternative Investment Fund Managers, implying that under certain circumstances not only the Prospectus Regulation, but also the KMG 2019 as well as the Alternative Investment Fund Managers Act (AIFMG; Alternatives Investmentfonds Manager-Gesetz) could apply. Any review to determine whether the particular issue or business model might represent an Alternative Investment Fund (AIF) is, however, carried out independently of prospectus approval. The onus is on the issuer to determine whether the issue falls under the AIFMG and to take any appropriate measures.

Differentiating cases

Information on cases to be differentiated from the term “public offering” pursuant to Article 1 para. 1 no. 1 KMG 2019:

  • Where a customer contacts a credit institution and expresses the wish to purchase a specific security, the conditions constituting a case of public offering pursuant to Article 1 para. 1 no. 1 KMG are not met.
  •  Where, upon a customer’s request for advice on securities, a credit institution uses lists of information on securities, such a case represents individual securities advice and not a public offering within the meaning of Article 1 para. 1 no. 1 KMG.
  •  Where lists of information about securities are published on the credit institution’s website solely for the purpose of providing information to existing investors, this does not represent a public offering within the meaning of Article 1 para. 1 no. 1 KMG, provided that:
    • only data on the ISIN, the title of the securities and the prices are disclosed; and
    • the information is for secondary market investors; and
    • a disclaimer is published (i.e. indicating that it is not a public offering); and
    • no advertising activities as specified in Article 4 KMG take place, which could qualify it as a public offering within the meaning of Article 1 para. 1 no. 1 KMG.

Further information: