On October 25, 2018, the National Council passed a long-awaited amendment to the German Stock Corporation Act (AktG) aimed at facilitating access to capital markets for Austrian companies, especially SMEs, growth companies and start-ups. From 2019, unlisted companies will also be able to issue bearer shares and list their shares on the Third Market of the Vienna Stock Exchange, the trading platform with the lowest admission requirements.

To date, this failed due to the fact that the issuance of bearer shares so far only open to companies that are listed on an EU-regulated market (in Austria: the Official Trade of the Viennese evil). The third market is not such an EU regulated market.  The new regulations are scheduled to enter into force on 1 January 2019. On this occasion, the Vienna Stock Exchange will offer two attractive, cost-effective new market segments, "direct market plus" and "direct market" , which will replace the existing "mid-market" segment from 21 January 2019 onwards . As a result, shares of SMEs, growth companies and start-ups on the Vienna Stock Exchange can be traded via the Xetra® T7 trading system, making it easy for investors to buy and sell them. 

The easements from 2019 at a glance

  • Issue of bearer shares also for companies whose shares are traded with their knowledge of a multilateral trading system (MTF) within the meaning of WAG 2018; This allows for admission to the Third Market of the Vienna Stock Exchange
  • Two new market segments of the Vienna Stock Exchange promise quicker, cheaper and easier capital market entry

Essential requirements for a listing on the Vienna Stock Exchange segment "direct market"

  • Legal form: Company must be a public limited company (in particular start-ups, which are typically founded as a limited liability company, will therefore have to convert a limited liability company into a stock corporation before listing)
  • Cap Table: a "sufficient number of different shareholders" is required, ie the shareholder structure must be in the low double-digit range
  • There is no minimum duration of the company necessary (also newly founded startups is a listing open)
  • There is none 
    • Minimum size (turnover, balance sheet total)
    • Minimum requirement for market capitalization
    • Minimum requirement on placement volume 
    • Obligation to publish financial statements, interim financial statements and company calendars 
    • Obligation to appoint a Capital Market Coach in the first year to provide legal support for post-admission obligations
  • Attractive fee structure for inclusion: One-time EUR 5,000, then EUR 1,000 per year
  • Application by issuer, stock exchange member, bank, investment firm or lawyer possible

Essential requirements for a listing on the Vienna Stock Exchange segment "direct market plus"

Increased transparency requirements in this segment are offset by "plus" marketing by the Vienna Stock Exchange. The following additional requirements apply to the same requirements as for a listing in the "direct market" segment:

  • Minimum company life of one year needed
  • Publication requirement for annual financial statements, interim financial statements and company calendars necessary
  • Mandatory appointment of a Capital Market Coach to provide support for at least one year from the beginning of the listing, especially when fulfilling the post-admission requirements

Attention

Interested issuers should note that, due to European requirements, ad hoc disclosure obligations, management of insider lists and publication of manager transactions under the EU Market Abuse Regulation (MAR) are also applicable to listing on the Third Market. A careful preparation from a legal point of view is urgently recommended, especially in view of the sensitive sanctions in case of a breach. In addition, interested issuers must comply with applicable capital market regulations: if a public offer to purchase shares is made (eg for the purpose of financing the startup) on the basis of a listing on the third market (eg for the purpose of financing the startup), it must be examined, for example, a capital market prospectus or a simplified prospectus is necessary. The listing on the Third Market therefore does not exempt you from these regulations. If, from a legal point of view, no prospectus is required, an information memorandum will suffice for a listing on the Third Market. 

outlook

The simplified access to the capital market through the opening up of the Third Market, also for Austrian companies from 2019, is a positive signal for the economy and in the sense of the European Capital Markets Union to open the capital market for SMEs. At the same time, issuers must also be aware that a listing also involves ongoing obligations. Interested issuers should therefore weigh pros and cons; we are happy to assist you.