Private placings

Specific regulation

Are there specific rules for the private placing of securities? What procedures must be implemented to effect a valid private placing?

Private placements may be exempt from the obligation to publish a prospectus. Pursuant to section 3, paragraph 1, No. 14 of the KMG, an offer addressed to fewer than 150 natural or legal persons per EEA member state that are not qualified investors is considered as a prospectus-exempt ‘private placement’.

In addition, there are several other prospectus exemptions excluding certain types of offers from the obligation to publish a prospectus. Pursuant to section 3, paragraph 1, No. 11 of the KMG, the publication of a prospectus is not required if the securities are offered exclusively to qualified investors, which includes credit institutions, investment firms, insurance companies, investment funds, pension funds, the government, certain SMEs and also certain natural persons applying for a classification as qualified investors. Other relevant prospectus exemptions include security offerings addressed to investors subject to a minimum investment amount of €100,000 per investor as well as offerings of securities with a minimum denomination of €100,000, offerings of a total amount of less than €2 million during a period of 12 months (see question 2), and certain offerings by preferred issuers or security offerings to employees.

To rely upon one or more prospectus exemptions, no specific formalities must be followed. However, anyone that has the intention of offering securities for the first time is obliged to notify the New Issue Calendar, which provides an insight into the extent and manner of the expected capital market utilisation. The New Issue Calendar is maintained by the OeKB for statistical purposes (see question 2). The issuer must refer to a specific exemption from the obligation to publish a prospectus and expressly indicate the facts pertaining to this exemption.

Private placement memoranda or promotional material on the offering that are circulated to potential investors usually include appropriate disclaimers stating that investors are exclusively targeted on a private placement basis and that the document is not a securities prospectus approved according to the PD or Austrian law. Nevertheless, information provided shall not be inaccurate or misleading and shall not deviate from other information provided to potential investors in order to avoid civil law liability.

Investor information

What information must be made available to potential investors in connection with a private placing of securities?

Austrian law does not impose any mandatory requirements for information to be made available to potential investors in a private placement as long as no listing of securities on a regulated market in Austria takes place (ie, on the Official Market of the VSE). In the absence of a mandatory requirement, potential investors will, nevertheless, require certain information about the issuer and the offered securities to decide on an investment in the securities. Such information is commonly provided in a voluntarily supplied information memorandum or offering circular providing information and certain standard disclaimers. If the offeror provides potential investors with such information, the information should in any case be understandable, accurate, true and not misleading in order to avoid any claims by potential investors resulting from culpa in contrahendo. Further, care should be taken that no material information is missing in the information memorandum and that potential investors are treated equally.

Transfer of placed securities

Do restrictions apply to the transferability of securities acquired in a private placing? And are any mechanisms used to enhance the liquidity of securities sold in a private placing?

There are no statutory restrictions on the transferability of debt or equity securities acquired in a private placement. Such securities can be transferred pursuant to the rules on transferability of the relevant security.

If the securities shall be listed on a regulated market in Austria, a prospectus exemption provided for in the BörseG 2018 has to be relied upon. As soon as the securities are admitted to the regulated market they can be traded in accordance with applicable laws and regulations. If no listing is sought, any transfer restrictions provided for in the issuer’s articles of association (registered shares) have to be assessed.

As a resale of securities acquired under the private placement exemption by way of a public offering may trigger a prospectus obligation pursuant to the KMG, unless a prospectus exemption can be relied upon, respective selling and transfer restrictions, and the corresponding investor representations for resales of such securities, are typically included in the information or private placement memorandum.