GERMANY Law and Practice Contributed by: Gregor von Bonin, Natascha Doll, Andreas Ruthemeyer, Stefan Schröder and Mirko Masek, Freshfields
trading and allowing shareholders to make informed decisions. After this initial announcement, the bidder is obliged to prepare and submit a tender offer (see 4.2 Manda- tory Offer ). 8.2 Prospectus Requirements In Germany, consideration in a public tender offer may only be satisfied with shares instead of cash if these shares are listed on a regulated stock exchange in the EU or EEA (like the Frankfurt Stock Exchange) no later than upon settlement of the offer (ie, issuance of such offer shares to the tendering shareholders of the target company). Should this situation arise, the offer document must typically incorporate a full prospectus. This prospec- tus must contain all the information generally required for public offerings that involve the issuance of shares, ensuring prospective investors receive comprehensive and accurate details. This legal requirement stems from the EU Prospectus Regulation and the German Securities Prospectus Act (WpPG). The prospectus portion of the offer document must include, in particular, detailed disclosure on the issuer, the securities offered, and other relevant information to enable the target’s shareholder to make an informed decision. 8.3 Producing Financial Statements In a public bid offer in Germany, bidders are required to produce financial information in their disclosure documents, whether the transaction is structured as a cash or share-for-share deal. This information is cru- cial for shareholders to assess the financial capacity of the bidder and the implications of the offer. Specifically, the offer document has to include com- prehensive details on the financing of the offer itself, in particular to demonstrate that the bidder has secured the necessary “certain funds” (see 4.9 Requirement to Have Certain Funds/Financing to Launch a Takeover Offer ). Beyond that, the bidder must disclose information regarding its own assets, financial position, and
income situation, both before and after the offer, to provide context on the bidder’s financial health. Addi- tionally, information on the bidder’s participation in the target company (if any) and its intentions regarding the future business activities of the target company and its employees must be included. While the specific requirement for financial statements to be prepared in a particular form (eg, GAAP or IFRS) is implicitly linked to the bidder’s existing financial reporting standards, the WpÜG primarily focuses on the content and com- pleteness of financial information relevant to the offer and its funding. In case of a share-for-share transaction, it is notewor- thy that the disclosure requirements are much more extensive given the requirement for a prospectus-like annex to the offer document (see 8.2 Prospectus Requirements ). Such prospectus must comply with the requirements of the EU Prospectus Regulation which, inter alia, requires the publication of audited financial statements of the bidder, including poten- tially pro forma financial information with regard to the planned business combination. 8.4 Disclosure of Transaction Documents The extent to which transaction documents must be filed or disclosed depends on the type of transaction and the relevant regulatory context. For public bids, the most critical document, the offer document itself, is published following BaFin approv- al. This document must include all material terms of the offer, but the underlying transaction agreements themselves are not required to be filed or published in full. The German commercial register is a publicly avail- able database where various corporate documents are filed. For instance, merger documents (such as merger agreements and shareholder resolutions for mergers) and a GmbH’s articles of association are publicly accessible. Due to this public accessibility, parties commonly opt to detail sensitive commercial terms in confidential, private agreements (eg, share- holders’ agreements, joint venture agreements) and only include the legal minimum requirements in the documents to be filed with the commercial register.
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