Follow-up obligations Regulated Market

Follow-up obligations Regulated Market

Annual Financial Report

With the Annual Financial Report, comprising in particular the actual Financial Statements prepared in accordance with international standards, the Management Report and the balance sheet oath, you inform the capital market in full in German and English about the company’s situation and business activities. You must send the report to the Stock Exchange via a data interface.

Briefly, you have to do the following:

  • Prepare the Annual Financial Report according to the requirements of the WpHG
  • in both German and English
  • for the end of each business year and
  • no later than four months after the end of the respective business year
  • via the Exchange Reporting System-interface
  • transmit such report to the Stock Exchange Management Board.

Legal basis

Pursuant to Sect. 48 of the Exchange Rules for the Frankfurter Wertpapierbörse (BörsO FWB), all issuers in Prime Standard are under the obligation to prepare and transmit via electronic means their Annual Financial Report in German and English.

Sect. 48 BörsO FWB refers to Sect. 37 v Paragraphs 2 and 3 of the German Securities Trading Act (WpHG), and in case of group reporting requirements to Sect. 37 y No. 1 WpHG. Generally, Sects. 37 v and 37 y WpHG require all domestic issuers, whose securities are admitted to the Regulated Market, to prepare and publish their Annual Financial Report within certain time limits. Requirements regarding the language and publication modalities for the Annual Financial Report pursuant to WpHG can be found in the German Securities Trading Reporting and Insider List Regulation (WpAIV). The competent authority for interpreting and supervising the provisions of the WpHG and the WpAIV is the German Federal Financial Supervisory Authority (BaFin). You can find helpful information on financial reporting requirements in the Issuer Guideline of the BaFin.

Particular for Sect. 48 BörsO FWB, as compared to the obligations resulting from the WpHG is the fact, that as a rule, preparation and electronic transmission of the Annual Financial Report has to be performed in both German and English. In the scope of the explanations at hand, primarily the questions arising from Sect. 48 BörsO FWB will be discussed.

Components of the Annual Financial Report

Issuers in Prime Standard have to prepare an Annual Financial Report pursuant to the requirements of Sect. 37 v Paragraphs 2 and 3 WpHG or in case group accounting requirements exist, pursuant to Sect. 37 y No. 1 WpHG. Pursuant to these provisions, the minimum contents of the report are these:

  • the audited Annual Financial Report (for more details please see below)
  • the audited Management Report,
  • the so-called “balance sheet oath” and,
  • if need be, a certification issued by the Professional Association of Certified Accountants furnishing evidence of the registration of the respective certified public accountant or a confirmation of the Professional Association of Certified Accountants on the exemption of the accountant in question from registration requirements.

Therefore, the Annual Financial Report can not be equalized with a so-called business report. Generally business reports will contain, in addition to the complete Annual Financial Report, further components, like e. g. the supervisory board’s report, a letter to the shareholders and the like. However, decisive for complying with the report requirements set forth in Sect. 48 BörsO FWB are only the components of the Annual Financial Report.

In order to fulfil the obligation "transmission of the audited Annual Financial Report" both, the Annual Financial Report and the complete audit certificate has to be transmitted. This applies to the Financial Reports in German and English.

Language of the Annual Financial Report

As a rule, issuers in Prime Standard have to prepare their Annual Financial Report in both German and English language and to transmit it in electronic form.

Issuers having their registered office outside of Germany may prepare and transmit their Annual Financial Report exclusively in English without the need of specific permission procedure. The registered office in terms of this provision is the place determined by the articles of association.

Way of electronic transmission

The Annual Financial Report has to be transmitted electronically to the Stock Exchange Management Board. For electronic transmission the Exchange Reporting System-interface (ERS) has to be applied. The issuers may either get themselves connected to this interface or may employ a service provider with connection to the ERS in order to transmit their reports.

The Annual Financial Report transmitted via the interface will be published subsequently on the company websites of Deutsche Börse AG, www.boerse-frankfurt.de (under the respective issuer’s name / Company Details / Recent Report / Company Reports), and thus provided to the interested investing public in a timely and easily accessible manner.

The Annual Financial Report may be transmitted either in one unique document or, separated into its different parts, in up to four documents at maximum.

The electronic transmission does not have to be performed on the same day as other publications take place, like the report’s publication on the company websites, for example. The only important fact is that transmission is performed prior to expiration of the time limits determined in the BörsO FWB.

For the electronic transmission please observe that the data size of the pdf-document must not exceed a maximum of 10 MB. If larger files are transmitted acceptance of the complete data supply will be denied. In the past, problems used to arise especially in cases, when numerous high-definition pictures were included in the business report. The Annual Financial Report itself has usually only a small-sized file.

Time limits

Start and end of reporting requirements

From the moment of admission to the sub segment of the Regulated Market with additional obligations arising from admission (Prime Standard), the issuer has to comply with all follow-up obligations of the Prime Standard pursuant to the regulations of BörsO FWB.

Regarding the obligations pursuant to Sects. 48, 49 and 50 BörsO FWB (briefly: reporting requirements) this exactly means the following: Already those Financial Reports and Quarterly Statements covering the reporting period (called “period covered by the Statement” in the context of Sect. 50 BörsO FWB) and/or preparation period in the course of which the admission is granted, have to be transmitted to the Stock Exchange Management Board via ERS.

Example:

The admission of stock of the X-AG to the Regulated Market with additional obligations arising from admission (Prime Standard) is granted on 03 February. The financial year of the X-AG corresponds to the calendar year.

Therefore, the admission takes place within the preparation period (01 January to 30 April) of the Annual Financial Report (covering the previous financial year), within the period covered by the Statement (01 January to 31 March) of the first Quarterly Statement and within the reporting period (01 January to 30 June) of the Half-yearly Financial Report.

Thus the reporting requirements have occurred in regard to both Financial Reports as well as the Quarterly Statement. The first transmission obligation after the admission concerns the aforementioned Annual Financial Report. The time limit for transmission of this report expires on 30 April at the end of day.

Already in the course of submitting the application for admission to the sub segment of the Regulated Market with additional obligations arising from admission (Prime Standard) the start of the reporting requirements has to be identified diligently in order to secure that the first Financial Report or the first Quarterly Statement will be transmitted in due time.

In case the issuer withdraws from the Prime Standard due to a revocation of the admission, the reporting requirements will end no sooner than the revocation of admission to the Regulated Market (Prime Standard) becomes legally valid.

Example:

The revocation order concerning the admission of the stock of X-AG to the Regulated Market with additional obligations arising from admission (Prime Standard) becomes legally valid on 03 July at the end of day. The financial year of X-AG corresponds to the calendar year.

Therefore, the revocation becomes legally valid only after the end of the preparation period (01 January to 30 April) of the Annual Financial Report (covering the previous financial year) and the preparation period of the first Quarterly Statement (01 April to 31 May). As a result, both the Annual Financial Report as well as the first Quarterly Statement have to be transmitted.

As the revocation order becomes legally valid during the preparation period for the Half-yearly Financial Report (01 July to 30 September), the reporting requirements for this report initially occur on 01 July; however, upon the revocation order’s legal validity at the end of day on 03 July, the reporting requirements do not apply any longer. Thus, the Half-yearly Financial Report does not have to be transmitted anymore.

Regarding the end of the report requirements, it makes no difference whether the revocation was initiated upon application by the issuer or performed ex officio.

Duration of transmission time limit

Four months after expiration of the respective business year, at the latest, the Annual Financial Report has to be transmitted to the Stock Exchange Management Board in electronic form. Prolongation of this time limit may not be requested.

The expiration of time limit is calculated pursuant to the provisions of Sect. 31 Paragraph 1 of the Administrative Procedures Act of Hessia (HVwVfG), in conjunction with Sect. 187 Paragraph 1, Sect. 188 Paragraph 2 and Sect. 193 of the German Civil Code (BGB). If the day the time limit ends is a Saturday, Sunday or a public holiday, the time limit will end on the next working day instead.

Obligated party according to Sect. 48 BörsO FWB

If certificates representing stock are admitted, the obligations arising from Sect. 48 BörsO FWB are borne by the issuer of the represented stock. The Annual Financial Report of the issuer of the certificates representing such stock, however, does not have to be published according to the requirements of Sect. 50 BörsO FWB.

Frequently asked questions

Do issuers in the Prime Standard have to transmit their individual or the consolidated Financial Statements in order to meet their obligations according to Sect. 48 BörsO FWB?

If the issuer has to prepare consolidated Financial Statements, the requirement set forth in the BörsO FWB is adequately met by exclusively transmitting these consolidated Statements accompanied by the other components of the Annual Financial Report. In these cases, the “individual Annual Financial Report” does not need to be transmitted for meeting the obligations of the BörsO FWB. This interpretation shall apply, even if the wording of the BörsO FWB, by referring to Sect. 37 y No. 1 WpHG, might suggest a different interpretation here.

Only the issuer is in the position to assess whether they are under the obligation to prepare consolidated Financial Statements; by no means, this assessment can be made by FWB. The same applies to the question if and, if so, from what date on there has been a modification in view of the kind of Statements to be prepared.

The decision whether they are under the obligation to prepare consolidated Financial Statements, is taken by the issuer according to the legal regulations applicable. Therefore, in case of an issuer with registered office in Germany, the question regarding the possible requirement group accounting is answered pursuant to Sect. 290 et seq. of the German Commercial Code (HGB).

Which accounting principles have to be observed in preparing such Statements? Which Statements have to be transmitted electronically?

If the issuer is merely under the obligation to prepare individual Financial Statements, pursuant to the wording of the BörsO FWB in conjunction with Sect. 37 v Paragraph 2 WpHG these individual Financial Statements prepared and audited in compliance with

  • the national legal requirements of the state where the company is registered, in case of issuers who have their registered office in a member state of the European Union or of the Treaty on the European Economic Area,
  • the legal requirements pursuant to HGB (subject to the “exemption options” mentioned below), in case of issuers who have their registered office in a third country,

have to be transmitted.

However, FWB will also accept, in deviation from the narrow wording, the transmission of individual Financial Statements prepared in compliance with IFRS principles. In the opinion of the Stock Exchange issuers in Prime Standard should be free to decide which individual Financial Statements will best assist them in presenting their company to their investors. If the objective is the company’s positioning towards international investors, the publication of IFRS-individual Financial Statements might make more sense than the publication of statements “merely” prepared in compliance with national laws. The Stock Exchange does not oppose the issuer's decision by clinging to the, in this aspect rather narrow, wording of the BörsO FWB.

However, if issuers choose to transmit IFRS-individual Financial Statements the reports transmitted by them throughout the year will also have to be prepared pursuant to IFRS-principles.

If the issuer is obliged to prepare consolidated Financial Statements, the issuer always has to transmit to the Stock Exchange Management Board the Statements prepared in compliance with the Regulation (EC) No.1606/2002 of the European Parliament and of the Council of 19 July 2002 on the Application of International Accounting Standards (Official Journal of the EC No. L 243 Clause 1). Therefore, the consolidated Annual Financial Statements as well as the group Management Report prepared in compliance with the IAS/IFRS adopted by the EU and the interpretations related to these principles have to be transmitted.

In addition, also acceptable are consolidated Financial Statements and group Management Reports prepared in compliance with accounting standards, which have been acknowledged as equal to IFRS by the EU-Commission in its decision of 12 December 2008 (2008/961/EC), amended by the Commission Implementing Decision of 11 April 2012 (2012/194/EU), and by the Commission Regulation (EC) No. 1289/2008 of 12 December 2008 (these are: US-GAAP, Japanese GAAP as well as Chinese GAAP, Canadian GAAP and South Korean GAAP; for business years beginning prior to 01 January 2015, third country issuers may also prepare their reports in compliance with Indian GAAP).

Does the BörsO FWB provide exemption options from the Annual Financial Report preparation requirements?

Pursuant to Sect. 48 Paragraph 3 Clause 5 BörsO FWB, the Management Board may exempt issuers having their registered office in a state outside the European Union or outside of another member state to the Treaty on the European Economic Area from the obligation to prepare an Annual Financial Report in compliance with the requirements of Sect. 37 v Paragraphs 2 and 3 or Sect. 37 y No. 1 WpHG. In doing so, the Management Board may either grant a complete exemption from the obligation to prepare an Annual Financial Report according to the aforementioned requirements (e.g. exemption from the obligation to prepare an IAS/IFRS-statement) or may grant an exemption merely for a component of such report. In any case, an exemption will be granted exclusively if and to the extent that the issuer is subject to or submits to equal regulations of a third country. For the report prepared in compliance with the third country regulations, the explanations regarding language, time limit and kind of transmission apply accordingly.

While an exemption from the obligations pursuant to the BörsO FWB granted by the Stock Exchange Management Board (naturally) will leave unaffected the obligations set forth in the WpHG, something else does apply for exemptions granted by the BaFin: Insofar as the BaFin has granted an exemption pursuant to Sect. 37 z Paragraph 4 WpHG, this exemption will also apply directly to the scope covered by the BörsO FWB. There is no need to apply for further exemption in these cases. However, the Management Board has to be informed of the exemption granted by the BaFin.

Does the Frankfurter Wertpapierbörse assist Prime Standard issuers with meeting their time limits relating to the Annual Financial Report?

Prior to the expiration of respective time limits, FWB will remind Prime Standard issuers of reports still waiting to be transmitted by means of so-called “reminder mails”. The first reminder mail will be sent about two weeks, a second one about three days prior to the time limit’s expiration. While the first mail is not yet directed to the individual case, the second reminder mail is tailored to the issuer in question and specifically to the financial reports still missing.

What are the sanctions resulting from a violation of Sect. 48 BörsO FWB?

A violation of the obligations from Sect. 48 BörsO FWB may be punished by a reprimand or an administrative fine (Sect. 22 Paragraph 2 Clause 2 of the German Exchange Act (BörsG)).

Basic information for issuers in Prime Standard

Please find information on the legal basis, the components, language as well as other aspects of the “Annual Financial Report” compiled under 'Detailed information'.

Attachments

Contact person

Rule Enforcement
E-Mail: rule-enforcement@deutsche-boerse.com

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