Germany: Update Of BaFin´s Issuers´ Guidelines

Last Updated: 6 August 2009
Article by Mathias Schulze Steinen and Daniela Bohn

On May 20, 2009, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - the "BaFin") issued an update of its Issuers' Guidelines. Without constituting a legal commentary, it is designed to provide hands-on guidance for domestic and international issuers whose securities have been admitted to trading at a domestic exchange on the interpretation and execution of the various laws applicable to financial market participants, in particular under the German Securities Trading Act (Wertpapierhandelsgesetz, the "WpHG"), and to outline BaFin's administrative practice in monitoring the financial market. Almost four years after the release of the previous version, the newly issued Issuers' Guidelines cover some substantive changes and amendments in order to take into account changes in the European and German legal environment as a result of the European Transparency Directive (2004/109/EC), the European Market Abuse Directive (2003/6/EC), the European Insider Directive (1989/592/EC) and the German Risk Limitation Act.

The following aspects of the updated Issuers' Guidelines are considered to be of particular relevance:

  • revisions were made in the areas of ad hoc publicity, insider registers and director's dealings;
  • newly implemented were sections on significant proportions of voting rights, information for the exercise of securities rights, supervision of financial statements of companies and financial reporting;
  • no amendments were made for the administrative practice regarding reporting obligations under sec. 25 of the WpHG for the entitlement to reassignment of shares of the lender under a securities lending agreement and the repurchase obligation under a repurchase agreement.

This alert focuses on the amendments relevant for listed companies, i.e. ad hoc publicity, insider registers, director's dealing, supervision of financial statements of corporations and financial reporting. An alert on the amendments to the Issuers' Guidelines with respect to significant proportions of voting rights and information for the exercise of securities rights will follow shortly.

Ad hoc notifications

The WpHG imposes a statutory requirement on listed companies to notify the market of insider information. If companies fail to disclose the insider information or if they provide the information too late, false or incomplete, BaFin is entitled to intervene and to impose sanctions. The purpose of the ad hoc disclosure is to prevent other market participants are put at a disadvantage compared to company insiders and to equalize the information level and transparency in the market. Ad hoc publicity is also an important tool against the abuse of insider information.

Information qualifies as insider information, and must be disclosed by the issuer immediately, i.e., ad hoc, (i) if it contains specific facts about the issuer (ii) it is not public knowledge, (iii) if such information has the potential to influence the market price of the securities, and (iv) if it relates directly to the issuer. However, the question whether a certain fact qualifies as insider information and whether, and when, it must be included in an ad hoc disclosure can only be determined on the basis of experience and comparison with other cases. Therefore, companies are well advised to adhere to the cases and explanations provided by BaFin in the Issuers' Guidelines.

In addition to the examples provided, BaFin clarifies in the new Issuers' Guidelines that:

  • circumstances which will highly likely occur in the future can qualify as insider information;
  • insider information must be specific with a potential influence on the trend of the market price;
  • information has a potential influence on the market price if a judicious investor would take this information into account when making an investment decision;
  • as a matter of principle, there is no direct relation to the issuer in the case of general market data, purchase and sales agreements as well as decisions of supervisory authorities;
  • exemptions and particularities must be considered in relation to financial instruments such as bonds, participating certificates and certified derivatives.

The latest amendments to the paragraph on ad hoc publicity relate to the exemption defined in sec. 15 (3) of the WpHG. An exemption requires that (i) non-disclosure is necessary to protect the legitimate interests of the issuer, (ii) there is no misleading of the public, and (iii) confidentiality of the information can be secured. The Issuers' Guidelines explain that legitimate interests exist, in particular, if ongoing negotiations may be affected or the approval of another corporate body of the company is outstanding. According to BaFin, making use of an exemption requires an express decision of the managing directors or a disclosure committee formed by the management board. The argumentum e contrario here is that if insider information has not been published immediately and representatives have not made a resolution on the exemption from the ad hoc disclosure, this will be an infringement of sec. 15 of the WpHG, even if there was a theoretical possibility of an exemption.

If information qualifies as insider information and no exemption applies, the ad hoc disclosure must be published Europe-wide via electronic information platforms, posted on the website of the issuer and submitted to the German Company Register. In addition, BaFin must be notified of the disclosure by submitting the document together with the publication certificate.

Director's Dealing

If capital markets are to be transparent, market participants must have an idea of when members of the managing and supervisory board of listed companies are dealing in their company's own shares (director's dealing). Therefore, sec. 15a of the WpHG requires members of the management and supervisory board of the issuer, as well as other persons with regular access to insider information who are entitled to make important managerial decisions (the "Director"), to notify both the issuer and BaFin of any dealings in the company's own shares within five working days. This also applies to associated persons, i.e., spouses, registered civil partners, dependent children and other relatives living in the same household for at least one year. In order to prevent circumvention of sec. 15a of the WpHG, legal entities, such as establishments acting in a fiduciary capacity and partnerships that are dealing in the company's shares, may also be subject to the disclosure requirement. Circumstances that will trigger the disclosure requirement for legal entities are: (i) the Director is a member of the management or supervisory board of the legal entity, (ii) the Director has a share of a minimum of 50 percent in the legal entity, (iii) the Director holds a minimum of 50 percent of the voting rights, or (iv) a minimum of 50 percent of the entity's profits are allocated to the Director, provided that the Director directly or indirectly controls the legal entity or performs managerial tasks in the legal entity.

Pursuant to the statutory law, the Director must disclose all transactions in relation to the stocks of the issuer, or any other financial instruments, to the issuer and BaFin. BaFin provides the following specific examples of transactions that trigger/do not trigger the disclosure requirements according to its administrative practice:

  • Acquisition of financial instruments on the basis of an employee's contract, a gift or an inheritance will not trigger the notification obligation. The acquisition of stocks in connection with participation in an employees program, however, is subject to disclosure;
  • Granting of options that are issued to shareholders in connection with a capital increase do not require disclosure. Trading of options, on the other hand, must be disclosed;
  • Transactions in connection with trust agreements trigger a disclosure obligation of the trustor, not the trustee.

As a matter of principle, there is, however, no reporting requirement if the total sum of all transactions done by the Director is below Euro 5,000 by the end of a calendar year.

The issuer must send details of the reportable transactions immediately to the media for Europe-wide dissemination, i.e., press agencies, news providers, print media, websites for the financial market or electronic information websites. The company may decide in each individual case which media it will use as long as the Europe-wide dissemination can be secured. In addition, the issuer must forward the information immediately to the Company Register and provide BaFin with the publication document.

Financial Reporting Enforcement

Since early 2005, when accounting control was implemented by the German Act on Accounting Control (Bilanzkontrollgesetz), the accounting practices of listed companies have been subject to external monitoring, supplementing the internal audit function. The external monitoring process, known as financial reporting enforcement, applies to the companies' financial statements from December 31st, 2004 onwards. Reacting to international accounting scandals, it is intended to strengthen investors' confidence in the accuracy of financial statements. Consequently, the new accounting control procedure is supposed to secure that financial reporting of issuers will be controlled at least once every five years. BaFin added a new chapter to its Issuers' Guidelines that provides some explanations to the enforcement procedure and gives some guidance on the interpretation of the new regulations.

Subject to the examination procedure are the latest approved accounts. They will be examined as to whether they comply with the statutory financial reporting requirements. As regards German companies, financial reporting requirements of the German Commercial Act, the German Stock Corporation Act, International Financial Reporting Standards (IFRS) for consolidated accounts as well as European Directives apply. As regards foreign companies, IFRS , US -GAAP as well as all applicable national reporting requirements must be taken into account.

In order to strengthen the enforcement of accounting rules, the German Act on Accounting Control introduced a two-tier procedure:

(1) The German Financial Reporting Enforcement Panel (FREP) (Deutsche Prüfstelle für Rechnungslegung DPR e.V.) examines individual and consolidated financial statements (i) on a random sampling basis, (ii) with cause if there are concrete indications of an infringement of financial reporting requirements, or (iii) at the request of BaFin. Abbreviated financial statements and interim management reports are subject to examination only with cause.

(2) BaFin comes in at the second level if (i) a company does not participate willingly in the examination or does not agree with the findings of the examination, or (ii) if there are substantial doubts about whether the findings of the examination are correct or the examination was conducted properly.

It should be noted that proceedings will only end on the first level if a company agrees with all the findings of the examination. If a company does not agree with the examination in parts, BaFin will conduct its own examinations to the fullest extent, which can result in a high administrative fee for examinations and also deviation in the examination results to the disadvantage of the company.

Infringements of financial reporting requirements require publication of the major findings of the examination and the corrected accounts, which may only be avoided if there is no public interest in the publication or if the company can prove a legitimate interest, i.e., possibly in existence threatening or clear bagatelle cases, whereas negative impact on the market price is not sufficient. In the Issuers' Guidelines, BaFin takes the view of the German legislator that bagatelle cases will qualify as an infringement of the accounting rules but will not require correction of the accounts. However, due to a recent precedent of the Higher Court of Frankfurt, which decided that bagatelle cases will not qualify as an infringement, there remains some uncertainty about dealing with bagatelle cases in the future.

The Issuers' Guidelines also provide a detailed explanation of the cooperation between BaFin and other national or international authorities with respect to the enforcement procedure, i.e., circulation of information and data, as well as legal protection against measures of BaFin.

Financial Reporting

Provisions on financial reporting, which are laid down in sec. 37v et seq. of the WpHG, require publicly traded companies to prepare annual financial statements and half-yearly financial reports as well as interim management statements, or, alternatively, quarterly financial reports. The regulations have been introduced by the Transparency Directive Implementation Act (Transparenzrichtlinie-Umsetzungsgesetz) which implemented the guidelines set by the European Transparency Directive (2004/109/EG). A new chapter in the Issuers' Guidelines provides a useful checklist regarding timing and scope of financial reporting.

As a matter of principle, issuers must meet the following financial reporting requirements:

  • Publish an announcement on the internet stating the date and the exact address of the webpage on which the accounting documents are being made publicly available. According to BaFin, the documents must be posted directly on the indicated webpage or, at least, must be accessible by just one link,
  • Notify BaFin of the publication of the announcement and pass the announcement to the Company Register (Unternehmensregister), and
  • Publish the complete accounting documents on the webpage and submit the documents to the Company Register in order to be stored there.

Particularities in relation to financial reporting requirements apply to short fiscal years where the end of the fiscal year does not correspond with the relevant publication period. Annual financial statements must include, in any event, (i) audited accounts, (ii) an annual report, and (iii) a compliance statement (Bilanzeid) pursuant to the German Commercial Act. The compliance statement has to be issued by the company's legal representatives who declare that, to their best knowledge, the financial statements and the report include a fair view on the development and performance of the company and the position of the group as well as a description of important events that have occurred during the reporting period and the impact of such events as well as a forecast in this respect.

Publication of annual financial statements on the website must be made publicly available at the latest four months upon the end of the financial year, whereas half-yearly financial statements must be published within two months upon the end of the half year. BaFin recommends publishing the announcement about one week prior to the publication of the statements.

The WpHG also requires that companies publish an interim management report that sets out the development of the business activities during the reporting period. An exemption applies where companies issue quarterly financial statements in accordance with the requirements of the WpHG. Different from the other financial reporting, this report only relates to the past.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions