Prospectus requirement may lead to more security for investors in SMEs

A critical article on FAZ.NET (Frankfurter Allgemeinen Zeitung) deals with the pros and cons facing investors in shares of small and medium-sized companies listed on the Entry Standard market segment of the Frankfurt stock exchange.

On the one hand, according to the Deutsche Börse, this market segment has seen a real surge of 33 initial public offering (IPOs), on the other hand only 5 of these are said to have been genuine IPOs. All the other “IPOs” turned out to be private placements. The article also draws the attention to the fact that there is still a legal discussion going on concerning the obligation to report of companies listed in the Entry Standard. It furthermore cautions against the assessment risks facing investors, if the newly listed company does not present a stock exchange prospectus. However, consortium banks are increasingly convinced that also in this market segment a stock exchange prospectus will soon become the rule. The companies quoted in the Entry Standard Level are called upon to be aware of the fact that this segment was only to be considered as a first step and an opportunity for practising. In fact, the final objective should be a listing on the Regulated Market or the Official Trading segment. GERMAN