Issue (legal)

Issue is the issue of securities and their placement in an organized money market or capital market ( stock market or private placement). The issue of money as legal tender by the central bank is called emission.

• 3.1 Listing
• 3.2 Reporting obligations
• 3.3 underwriters
• 3.4 Other

Purpose and object

For the issuing company ( issuer) the issue of procurement or increase in the equity or debt and the increase in market capitalization serves. In the procurement of equity shares will be issued (see also IPO, capital increase); Borrowing is received through the issuance of bonds. Shares and bonds are traded on the capital market, participation certificates and convertible bonds as an intermediate form between equity and debt are also trading object of the capital market. Commercial paper or medium-term notes are trading object of the money market as a short-to medium-term loan obligations.

Type of Issue

Securities issues can be distinguished according to their frequency and the interest, which pursues an issuer. In addition, there are public and non- public issue.

After the frequency

If an issuer for the first time placed its securities, it is a new issue, issuers with a permanent presence on the money and capital markets are called according to duration issuer. New issues - even if an issuer after many years first appears again on the capital market - subject to special attention of all market participants, especially with banks, investors and media. The IPO belongs in this context to the new issues. Among the long-term issuers include in particular credit institutions, the permanent need debt to finance its lending business.

After the emission interest

When the self- emission of the issuer places its own securities in its own name and for its own account. He is the direct counterparty to the investing public and must consequently take itself the marketing risk, which also contains the complete technical processing is to be arranged by him. Therefore self emissions come mostly before with banks. Other companies can only occur as a self- issuer, if the emission takes place outside the stock exchange for legal reasons.

When the stranger mission, the issuer of one or more banks to act as underwriters and thereby carry out the securities issue for the issuer operates. Consortium members have the necessary expertise for securities underwriting and sales organization. In addition, the technical processing is performed by the consortium, which - in the case of a takeover consortium - also bears the market risk.

Public and non- public issue

The issuer need the IPO support from at least one credit institution, because in § 32 para 2 of the Exchange Act will require the participation of banks in the securities registration. This hurdle can be avoided only with self emissions by way of private placements. When securities issues in the context of private placements the offer is directed only to a few investors and is not - published - possibly through an offering circular. This form of OTC marketing is mostly done without any public participation.

Legal Issues

The issue of securities is regulated by law in some areas. As already shown the need for participation of banks in the stock exchange securities registration, the legislature has a legitimate interest in protecting creditors and shareholders largely and to provide for an orderly exchange trading.

Listing

Main article: Stock Exchange Admission Regulation

Prerequisite for exchange trading is the admission of the securities by the admission office, the approval by the issuer to request along with a credit institution (§ 32 para 2 of the Exchange Act ), unless the applicant is itself a financial institution. In both cases, the bank on a domestic exchange must be approved with the right to participate in trading. Is the primary basis for approval a prospectus on the basis of the Securities Prospectus Act. The prospectus shall also be signed by the attending institution.

Reporting requirements

The admitted to trading issuer must satisfy pursuant to § § 44, 44a, 44b, 44c of the Exchange Act certain obligations, in particular

• A Paying Agent and to appoint a depository on the stock exchange,
• To publish new facts immediately, which could result in shares to a change of course and in debt to impairments in debt service,
• To provide regular progress reports during the current financial year.

Underwriters

The underwriting syndicate leads within the agency (§ § 675 ff BGB) for an issuer issuing securities (including shares or bonds; IPO ) through by these placed on the capital market or holds in its own portfolio. The consortium will advise and assist the issuer in the different phases of the issue. First phase is the identification of needs, followed by the prospectus. After the approval process for the securities to be issued in cooperation with the relevant stock exchanges, regulatory and management agencies is operated. These are in particular Germany, the German stock market, the BaFin and the Clearstream. If the consortium together with the issuer the authorization application for the stock market, it takes full prospectus liability; an exemption from the liability claim is the internal relationship with the issuer regularly then agreed as a prospectus inducer. After approval finally follows the placement for which the underwriters as distribution channels in particular the stock market, the private placement are ( direct sales via the branches of the Underwriters ) or the assumption in its own stock available.

In underwriters (securities) is a Begebungskonsortium according to § 1 para 1 sentence 2 of the Banking Act No. 4, when only one broking services is adopted. Then the placement risk remains with the issuer ( "best effort" ). When underwriting the other hand, the lead manager (hence: underwriting syndicate ) a binding commitment to take on the entire issue amount, the Lead Manager and / or the consortium to take the risk, put in the worst case, the entire issue alone or need to take. In stock offerings exclusively offers the underwriting syndicate, so that the planned capital increase comes about and may be entered in the commercial register. The underwriting applies for regulatory purposes as underwriting fees in accordance with § 1 para 1 sentence 2 of the Banking Act No. 10.

Others

The issue of bearer and order bonds subject for a long time a legal approval of title by the Federal Minister of Economics (§ § 795, 808a BGB). These provisions have been repealed in December 1990 for the purpose of capital market liberalization. Since then, the issue of bonds is not subject to public law restrictions, in particular there is no public approval by more that can serve as a legal basis for subsequent interventions and changes in the terms of issue of issued bonds.

Pricing

Depending on the way of pricing, there are basically three different methods by which carried the pricing and subscription of securities to be issued: The book-building process, the fixed price method and the auction process.

While the fixed-price method in its original meaning today in the equities business has almost no meaning, find the most emissions now rather than through a bookbuilding. Here, it should be noted that in the context of risk-taking by the banks under the Konsortialgeschäfts usually a two-step transaction structure is formed, in which the securities are initially sold as an auction procedure to a bank, that bank securities occurs very often in a very short time, resold by a (accelerated ) bookbuilding to third-party investors. Even when the fixed price method similar to the rights issue, in which the subscription rights are offered to existing shareholders at a fixed subscription price, the unsubscribed shares are often placed through an accelerated book-building process in a second step after the subscription period.

If during the book-building process, the demand for the securities is higher than the supply, there is an over-subscription. An additional offer ( reserve) of securities that can be allocated in cases of particularly high demand, ie allotment. If the issue price of a security over face value, it is called an over - Pari- emission, it is lower, by a sub-par emission. This is called the difference between the issue price and the nominal value premium or discount.

U.S. Placement / Rule 144A

Emissions must be registered in the United States with the Securities and Exchange Commission (SEC). However, the U.S. Securities Act of 1933 (Public Law ) allows exceptions. In particular Rules 505 and 506 allow the sale of unregistered securities to accredited investors, which include under Rule 501 Regulation D in particular credit institutions, insurance companies or registered investment companies. This is a non-public private placement.

Rule 144A allows privately organized U.S. and international issuers to place also not registered with the SEC securities through a broker -dealer if the purchaser for the qualified institutional investors = QIB 's are ( so-called "Rule 144A Securities"). This QIB 's is allowed based in the United States of America the resale of such unregistered securities in the QIB 's. Here, the NASDAQ Portal Market is the trading platform for "Rule 144A Securities".

Situation in Switzerland

In Switzerland, the stamp duty as a tax on new issues of equity securities of domestic companies. In bonds, the stamp duty has not been levied since 2012.