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Is a prospectus needed?

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In order to ensure a contractual relationship on equal terms, the law relating to prospectuses has always included detailed and strict information for providers of securities and investments. For many FinTechs this has proven a financial barrier, although this barrier has been drastically reduced as a result of the new rules introduced in some areas in the Alternative Financing Act (AltFG; Alternativfinanzierungsgesetz). Specific information about the obligation to produce a prospectus in accordance with the AltFG can be found in the section on “Crowd financing”. Two general points regarding the obligation to produce a prospectus crop up time and again in discussions with the FMA.

You will always require a prospectus, if securities or investments are being publicly offered, and where there is no applicable exemption as defined in Article 1 of Regulation (EU) 2017/1129 for seecurities or Article 3 of the Capital Market Act 2019 (KMG 2019; Kapitalmarktgesetz 2019) for investments. Put simply, the obligation to produce a prospectus should be checked in any case, provided that you collect funds from a broad circle of investors. Depending on the design it may constitute a security or an investment. Examples of types of securities are shares, bonds or certificates; examples of investments may include limited partner participations, silent participations or subordinated loans – however this always depends on the design on a case-by-case basis. The Austrian Financial Market Authority (FMA) is generally responsible for the approval of a securities prospectus in Austria, while investment prospectuses are checked by an eligible prospectus controller and submitted to the Oesterreichische Kontrollbank (OeKB).

The costs for approval of the prospectus by the Austrian Financial Market Authority (FMA) are EUR 7,000 for a one-off prospectus (for a specific issuance) as well as for a base prospectus as a single document or EUR 3,500 respectively for the approval of a registration document or a securities note in the case of multi-part prospectuses as well as fees of EUR 36.10. The duration of a prospectus approval procedure may usually take about 6-8 weeks from initial submission; the duration, however, depends strongly on the quality of the submission and the complexity of the material contained therein. We request that the timescale should be coordinated by telephone. These statements refers only to securities prospectuses; the FMA is not able to advise about the estimated costs for investment prospectuses as well as the legal advice that may be necessary in certain circumstances.

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