Follow-up obligations Open Market

Follow-up obligations Open Market

Annual Financial Statements and Management Report

With the audited Annual Financial Statements and the Management Report the issuer informs the capital market about the company’s situation and business activities.

Obliged are issuers

  • in Scale for equities  
  • in Scale for corporate bonds
  • in Basic Board

Briefly, this needs to be done:

  • The audited Annual Financial Statements and Management Report
  • in German or English
  • needs to be transmitted to Deutsche Börse AG via the Exchange Reporting System (ERS)
  • within six months after the financial year has expired.

Legal basis

  • Sect. 21 Paragraph 1 Let. a) GTC DBAG for issuers of shares and certificates representing shares in scale
  • Sect. 22 and Sect. 21 Paragraph 1 Let. a) GTC DBAG for issuers of bonds in scale
  • Sect. 28 and Sect. 21 Paragraph 1 Let. a) GTC DBAG for issuers of shares and certificates representing shares in Basic Board
  • Sect. 28, Sect. 22 Paragraph 1 and Sect. 21 Paragraph 1 Let. a) GTC DBAG for issuers of bonds in Basic Board

Scope and contents of the Reports

Issuers in Scale and Basic Board have to transmit their audited Annual Financial Statements and their Management Report to Deutsche Börse AG.

Consolidated or individual Financial Statements

Issuers under the legal obligation of group accounting have to transmit their consolidated Financial Statements and their group Management Report in order to comply with the requirements set forth in the GTC DBAG. In these cases, publication of the individual Financial Statements alone is neither required nor sufficient.

In the absence of an obligation of group accounting, the transmission of the individual Financial Statements and the individual Management Report will be sufficient. However, issuers who in these cases voluntarily transmit their consolidated Reports do not have to publish their individual Reports additionally, of course.

Each issuer decides based upon the applicable law whether they are under the obligation of preparing consolidated Financial Statements. Therefore, in case of an issuer with registered offices in Germany, Sect. 290 et seq. of the German Commercial Code (HGB) refer to a possible group accounting obligation.

Accounting

In order to comply with their obligations set forth in the GTC DBAG, issuers in Scale and Basic Board may in any case transmit their reports, which were prepared according to internationally accepted accounting standards.

Reports prepared according to national law will meet the requirements of the GTC DBAG only, if

a. the issuer is based in an EU member state and prepares its balance sheet pursuant to that state’s law or

b. the issuer is based in a non-EU country and prepares its balance sheet pursuant to national law which has been accepted as equal to internationally accepted accounting standards pursuant to Art. 3 of Regulation (EC) No. 1606/2002 of the European Parliament and the Council dated of 19 July 2002.

Further, the Annual Financial Statements (individual Financial Statements) and Management Report of third country issuers who are not required to prepare consolidated accounts, can also be prepared and audited in accordance with HGB.

 

Components of the Annual Financial Statements

The necessary components of Annual Financial Statements result from the accounting standard applied. As an example, please find the components for Annual Financial Statements prepared pursuant to HGB or IFRS compiled here.

Complete Annual Financial Statements pursuant to HGB will encompass a balance sheet, a statement of profit and loss as well as an annex. Annual Financial Statements pursuant to IFRS, on the other hand, will encompass a balance sheet, a statement of income and accumulated earn, a statement of changes in equity capital, a statement of cash flow and an annex.

 

Requirement of audited Annual Financial Statements

The GTC DBAG always require the transmission of audited Annual Financial Statements. This shall apply even in case the applicable law provides for exemption options.

 

Example:

Pursuant to Sect. 316 Paragraph 1 HGB, small joint stock companies are exempted from the auditing obligation as regards their Annual Financial Statements. In spite of this existing statutory exemption option, the GTC DBAG demand of each issuer in Scale and Basic Board audited Annual Financial Statements, that means also of a “small“ joint stock company exempted from this obligation under German law.

The requirement of “audited Annual Financial Statements” also implies that both, the Annual Financial Statements and the complete audit certificate or the certificate on its rejection have to be transmitted.

Requirement of a Management Report

Pursuant to the GTC DBAG a Management Report has to be transmitted at all times. In case the issuer is not obliged to draw-up a Management Report pursuant to applicable national law, the GTC DBAG do not establish an own obligation to draw-up a Management Report exceeding the requirements of such national law. An explicit permission pursuant to Sect. 21 Paragraph 2 of the GTC DBAG is therefore not necessary.

The issuer rules whether the legal requirements of a dispensation are in place. In case questions arise concerning the requirement of a dispensation during the observation of the follow-up obligations, Deutsche Börse AG shall contact the issuer and ask for evidencing documents and declarations accordingly.

 

Example:

Pursuant to German law (HGB) the obligation to draw-up a (single) Management Report results from Sect. 264 HGB. Exempted from such duty are pursuant to German law – precisely Sect. 264 Paragraph 1 Sentence 4 HGB – the so called small corporations. Small corporations are defined in Sect. 267 Paragraph 1 HGB. Pursuant to Sect. 264 let. d) HGB every market-orientated company is always a large corporation irrespective of its classification and therefore does not apply to issuers of securities in Scale and Basic Board as they are not organized markets pursuant to the German Securities Trading Act (WpHG). As a result and contrary to the wording of the GTC DBAG a small corporation with securities listed in Scale and Basic Board does not have to draw-up and transmit a Management Report, thus.

Language requirements

The Reports and the auditor’s certificate have to be transmitted either in German or in English.

Requirements regarding the submission

The reports have to be transmitted via the Exchange Reporting System-interface (ERS).

Origin of follow-up obligations

The obligation becomes effective for the first time in the reporting or preparation period during which the Deutsche Börse AG decides on the inclusion.

Time limits provided for follow-up transmissions

The Annual Financial Statements as well as the Management Report have to be transmitted within six months following expiration of each financial year.

Frequently asked questions

How does Deutsche Börse AG sanction violations of this follow-up obligation?

Deutsche Börse AG can impose a contractual penalty on the negligent issuer. The precise amount of the penalty imposed by Deutsche Börse AG depends in particular on the duration and extent of the violation and the significance of the violation for the capital market.

Deutsche Börse AG may also publish the penalty imposed, naming the issuer and the specific violation, on its internet site.

As a last resort, Deutsche Börse AG can terminate without notice the inclusion in Scale subsequent to the elapsing to no effect of a further deadline set by DBAG. The reason for termination is independent of culpability on the part of the issuer.  

Contact

Rule Enforcement

Phone +49 (0) 69 - 211 – 1 38 88
E-Mail: rule-enforcement@deutsche-boerse.com

Related links