PLC Company Formation – Frankfurt Stock Exchange

The Frankfurt Stock Exchange is one of the world’s largest trading centres of securities. We can assist privately held companies looking to go public, on the Frankfurt Stock Exchange.

An Initial Public Offering (IPO) and the listing of shares on to exchange trading provides a broader equity base for your company. The key benefit is your company can grow faster and thrive in a competitive international environment.

Raising equity on the stock market can help your company to develop a financing structure that offers sustained flexibility.

An IPO usually has a positive effect on the corporate development of your company, financing growth strategies and strengthening the equity base.

Going Public

In Europe, there are two legally defined ways to access the capital market: EU-regulated markets and markets regulated by the stock exchanges themselves. At Duetsche Börse, the operator of the Frankfurt Stock Exchange, an IPO in the EU-regulated market leads to the General Standard or the Prime Standard, whereas in the Regulated Open Market in the Entry Standard segment.

With the Entry Standard, there is a fast and cost-efficient way of including shares in exchange trading, which is suited for small and medium-sized companies.

Listing on the Frankfurt Stock Exchange – Entry Standard

Entry Standard is a segment within the Frankfurt Stock Exchange where you can list your company.

The Entry Standard segment is open to all companies seeking to include their shares in trading with reduced formal requirements. It is a particularly attractive option for young and established small to medium-sized companies.

Advantages of listing on the Entry Standard

• Fast and cost-efficient capital market access
• Reduced formal requirements
• Continuously low transparency requirements
• Use of the stock market as a trading platform
• Preparation for meeting the transparency standard of the EU-regulated markets
• One-stop access to all capital market functions at the only fully integrated exchange organisation worldwide

Transparency Requirements

The Entry Standard lowers entry barriers to the capital market, as the high transparency requirements and stringent investor protection regulations that have been harmonized for organized markets across Europe do not all apply.

Requirements include:

• Publication of audited consolidated financial statements and management report, no later than six months after the end of the reporting period
• Publication of the interim report no later than three months after the end of the first half of the fiscal year
• Publication of a brief, up-to-date company profile and a calendar of company events
• Immediate publication of important corporate news or facts that could have a significant impact on the price of your listed shares

Shell Corporation

A shell corporation, or public shell, is a company that has a class of securities but has only nominal operations and no nominal assets other than cash and cash equivalents.

A public shell company exists because it was either a former operating company that went public and then ceased operations and liquidated its assets or it never had any operations but was formed for the purpose of creating a public shell.

Shells may or may not have stock that trades publicly. A shell with a listing is known as a listed shell corporation.

A shell formed from scratch by a shell promoter typically does not have publicly traded stock.

In the case of a former operating company, shell promoters gain control of defunct operating companies by buying up a majority of their shares.

Shell promoters create a new shells by incorporating a company, voluntarily register its shares and then file timely required reports with the appropriate government agency.

The promoter charges the operating company a fee and retains an ownership interest in the shell for completing the reverse merger process.

Process of a Reverse Merger

• A private operating company works with a shell promoter to locate a suitable non-operating or shell public company
• The private operating company then merges with the shell company
• In the merger, the operating company in exchange for their operating company shares
• Upon completion of the merger, the shell company contains the assets and liabilities of the operating company and is controlled by the former operating company shareholders
• The shell name is changed to the name of the operating company, its directors and officers are replaced by the directors and officers of the operating company
• The shares continue to trade on the market or exchange they were trading prior to the merger
• The operating company has come into to the shell company’s public status and has become public

Getting listed on the Frankfurt Stock Exchange or London

Step by Step Guide

Planning and preparation

Listing Partner

Formacompany will provide you with a trusted Listing Partner for your admission on to the exchange

• Companies planning a listing need the know-how of and support of a competent advisor
• Our Listing Partner evaluate the capital market situation, analyse the issuer’s perspective, make contacts and develop a tailor made issuing strategy

Meet all legal requirements for the IPO

• Based on the legal form and size, the company creates organisational and structural conditions for its floatation, such as changing its legal form into a joint stock corporation, implementing and regulating responsibilities for directors

Complete a discussion of strategy

• The company must define its strategy for the IPO in conjunction with its advisors

Structuring

Prepare the business plan and IPO strategy

Complete Due Diligence for IPO

• We can complete the due diligence for your public company

Prepare your prospectus

• The prospectus must contain all information necessary for investors to determine if they will subscribe to the IPO listing: products, competition, markets, ownership breakdown, possible risks

Realisation and Marketing

Complete the various filings and applications  

• Brief analysis
• Guarantee and publish research coverage
• Publish prospectus
• File application for admission
• Contact investors

Price Determination and Secondary Market

Determine price and delivery process

• Fixed price or book building process
• Preferred subscription for private investors

Complete the first price determination

• Electronic price determination
• Price determination using market makers

Have first trading day