Listing process Open Market

Going Public Open Market


The issuer certificates certificates the securities and deposits them at a securities clearing and deposit bank in order to allow settlement of securities transactions and custody and administration of rights connected to the securities, like e.g. dividend payments, corporate actions and general shareholders meetings.

Briefly, you have to do the following

  • Prepare a legally valid securities certificate
  • Cause the certificate’s depositing at the securities clearing and deposit bank
  • Name a principal paying agent


The inclusion of a company’s stock to trading at the Open Market, Scale is subject to the free tradability of such stock, cd. Sect. 7 Nr 4. GTC Open Market. Pursuant to EU-law (Art. 35 Verordnung 1287/2006) [Commission Regulation (EC) No. 1287/2006] free tradability requires that securities may be traded and afterwards transferred between the parties of a transaction and that all securities are fungible within the same class. In order to provide for the required transferability, the stock has to be certificated and deposited in form of a document at a central depository, a securities clearing and deposit bank. A securities clearing and deposit bank is a credit institution which assumes the central depositing of securities and which was recognized for this task by the competent official body, see Sect. 1 Depotgesetz [DepotG, German Securities Deposit Act]. Currently, there is only one officially recognized securities clearing and deposit bank in Germany which is the Clearstream Banking AG, Frankfurt am Main (henceforth “Clearstream“, “CBF”).

There are various options for the certification of securities as well as for their depositing. In the scope of an IPO, the issuing house will usually submit the stock in form of a permanent global certificate for the issuer at CBF for collective custody.

Please learn below what exactly this procedure means and how it works.

Certification of Securities

Securities can be securitised as individual or collective certificates. According to the historical concept of a security, the purchaser receives a certificate which embodies the issuer's promise of payment or right of membership and which the holder of the certificate can hold in safe custody himself. This is a so-called individual certificate for a certain value, the sole owner of which is the purchaser of the certificate.

The separate securities certificates (= physical securities) consist of a corpus, which is the master document embodying the ownership right in the company, of a coupon sheet with up to 20 coupons and a renewal coupon. The coupon sheet is the so-called ancillary document and the individual coupons have to be submitted to the competent paying agents in order to claim rights deriving from the document, e.g. subscription rights for newly issued stock. This requires presentation of the coupon sheet as evidence for ownership; the corpus, however, does not need to be presented. After all coupons have been used up, the renewal coupon may be turned in at a paying agent to request a new coupon sheet. This procedure also does not require the presentation of the master document. The renewal coupon in itself is the title-evidencing instrument for the shareholder.

The (principal) paying agent of the company is a bank or credit institution responsible and specifically authorized by the issuer for the settlement of any corporate actions connected to the securities (like e.g. dividend payments). Often the issuing house or one of the underwriting syndicate banks will assume this function. The investor may learn the institution assuming the function as payment agent from the securities prospectus, for instance.

For separate certificates of stock to be admitted for stock exchange trading, there are precise requirements regarding their format, composition, layout and print mode. These are determined in the “Gemeinsame Grundsätze der deutschen Wertpapierbörsen für den Druck von Wertpapieren” [Mutual Principles of Stock Exchanges in Germany for the Printing of Securities]. According to regulations of stock corporation law, the certificate has to be signed by the issuer, see Sect. 13 Aktiengesetz [AktG, German Companies Act].

As the certification of securities rights as separate certificates nowadays, in view of the circulation of securities, would result in enormous costs for material and transfer and cause major delays in the assignment of documents, the issuance of securities in form of a global certificate has become the normal case.

Pursuant to sect. 9a DepotG a global certificate is an individual security in central custody certificating a complete issue or parts of it. There are three different kinds of global certificates: the global bond certificate, the temporary or interim global certificate and the permanent global certificate.
Normally, only part of an issue will be issued as global bond certificates. In addition, separate certificates exist in order to fulfil possible shareholders’ claims to delivery. This form of certification saves the issuer costs because there is no need to have separate certificates printed for each company share; it also saves space and effort for the depositing credit institutions in custody and management of these securities. The form of a temporary global certificate often is selected at the beginning of a stock offering. The global certificate is deposited at a securities clearing and deposit bank in order to bridge the time to the existence of a permanent global certificate and, thus, to obtain the admission to stock exchange trading as soon as possible. After closing the IPO (“Initial Public Offering“) this interim certificate will be exchanged for a permanent global certificate. The characteristic of these two global certificates is the fact that the right to claim a separate certificate stays with the shareholder; as a consequence, companies have to provide separate certificates upon request, see Sect. 9a Paragraph 3 Clause 1 DepotG. Pursuant to sect. 10 Paragraph 5 AktG the claim of the shareholder for separate certificates may be excluded in the company’s articles of association. In this case, the securities will be issued as permanent global certificates. This kind of global certificate certifies a complete issue or even any and all stock issued by a company, potentially for the whole duration of the securities. The shareholder’s right to demand physical separate certificates is excluded.

Securities Custody

In practice, stock certificates usually are left at banks conducting securities accounts or at a securities clearing and deposit bank to be held in custody, which allows for a non-physical transfer of securities. The German Securities Deposit Act (Depotgesetz) contains specific details regarding the persons authorized to keep securities in safe custody for others, the various custody options and the detailed organization of custody. Securities certificates may be held in different forms of safe custody.

German law on safe custody knows three different kinds of custody:

  • the segregated or jacket custody,
  • the collective custody and
  • the credit for safekeeping of securities abroad.

Securities listed at a stock exchange are usually kept in collective custody at a securities clearing and deposit bank.

In segregated custody the separate certificates are deposited at a bank or an institution conducting securities accounts in such a manner that pursuant to sect. 5 DepotG a separation from the custodian’s own holdings and third-party holdings is externally visible, e. g. by means of so-called jacket custody. This kind of custody safeguards that the securities account holder (= depositor), at the time the certificates are taken from safe custody, will be returned exactly the same physical certificates that had been deposited by them. Due to the separation, the depositor’s sole ownership in the respective physical securities certificate remains unaffected. The jacket custody owes its name to the individually marked paper ties which serve the purpose of distinguishing the individual certificates and separating them from the holdings of other shareholders in safe custody. In earlier times, the jacket contained the holder’s name and account number, the securities class, securities amount and securities number as particulars for individualizing the certificates. Today the certificate numbers of the securities deposited for jacket custody are registered and the certificates are kept separated from other certificates of the same class. A variation of the segregated custody is the third-party custody ship; in this case the institution conducting securities accounts functions as intermediate custodian and transfers the holdings in its own name to a third-party custodian, e. g. the CBF, to be kept there in safe custody, see sect. 3 DepotG.

There is also the option of collective custody. The securities deposited are no longer kept separate for each depositor, but are combined to a uniform holding insofar as they belong to the same class. Instead of sole ownership of a separate certificate, the shareholders own in co-ownership an imaginary fraction of the total holdings which is credited to a securities account, see Sects. 5 et seq. DepotG. This allows for a quick and efficient non-physical securities transfer (= giro collective custody), for the transfer of rights in or from the securities is performed solely by means of entering money to accounts (so-called securities clearing transactions).

In these collective holdings, the shareholders (= depositors) hold co-ownership at a fraction corresponding to the number of securities deposited by them. The ownership is legally valid towards anybody and for the assignment of securities in collective custody the general civil law principles apply, i. e. seller and recipient have to agree on the transfer of right and a transfer action (= securities account entry) is required. If the depositor may claim for the delivery of separate certificates and makes use of such claim they will be provided with stock corresponding in kind and nature to the stock handed in by the depositor to the collective holding. If the company decides to issue its stock as a permanent global certificate, such certificate has to be kept for custody pursuant to sect. 9a para. 1 DepotG at a securities clearing and deposit bank, unless the issuer demands separate custody. As central custodian in Germany, CBF assumes part of the custodian banks’ functions. The benefit lies in the fact that securities transactions involving various custodian banks may be settled centrally through the securities clearing and deposit bank and do not require numerous technical connections among the various custodian banks. Thus, the central collective custody serves the purpose of facilitating custodial services and saving costs in the course of securities custody and management. Therefore it is the kind of custody which is generally selected by publicly quoted companies.

The custodian banks as clients of CBF and as intermediate custodians and CBF as securities clearing and deposit bank function as bailors for the depositor, thus by means of constructive possession of chattels based on agreement [Besitzmitteilungsverhältnis] legally arranging for the depositor’s possession of the securities in custody. As custodians they do not own the stock. Within the assignment of securities co-ownership shares, the constructive possession of chattels based on agreement is shifted with each securities purchase or sale on every custody level from the selling to the acquiring depositor or their respective custodian banks. For securities deposited at CBF by a custodian bank in its function as intermediate custodian the non-property presumption pursuant to sect. 4 paragraph 1 DepotG, applies, i. e. the custodian bank, as a rule, is not deemed the owner of the securities it deposited.

The custody and settlement in securities rights (WR), the so-called fiduciary book entry transfers, has been provided for only rudimental in the German Securities Deposit Act. It is a special kind of securities custody which is employed, for instance, when foreign securities are purchased. If the client instructs the bank to acquire foreign securities, the bank will procure these securities as commission agent abroad. In doing so the bank, according to their dutiful discretion with adequate regard to the client’s interests, will obtain the securities’ ownership or co-ownership or another, similar legally valid position commonly accepted in the state the stock is kept safe and will hold this legal position in fiduciary manner for the client. The investor will receive a credit for safekeeping of securities abroad (= WR-credit) stating the foreign state where the securities are kept safe. Towards the custodian bank acting as fiduciary for them, the client merely possesses a contractual claim to restitution regarding this legal position as well as authority to give directives resulting from the fiduciary relationship. The domestic transfer of this legal position is performed according to law of obligations principles by debiting and crediting of accounts.

Admission for Collective Custody

Certificates to be kept in custody by CBF have to undergo a special admission procedure in view of their ability to be kept in collective custody.

An underwriting bank who maintains an account at Clearstream will submit at CBF the securities certificate, which has been signed in legally valid manner by the issuer, alongside with an application for admission to collective custody and additional documents. The signatures of the persons signing the admission application have to be deposited at CBF to allow a review of the authorization of the persons acting for the issuing house. Pursuant to A) Chapter II Paragraph 1 of the Allgemeinen Geschäftsbedingungen der Clearstream [General Terms and Conditions of CBF] any legal entity that CBF enters into a business relationship with may be a client.

Generally these will be:

  • credit institutions operating custody activities,
  • brokerage houses either operating third-party or their own stock exchange transactions,
  • securities clearing and deposit banks from abroad,
  • foreign institutions settling securities transactions, e. g. Clearstream Banking S.A., Luxemburg and
  • securities trading houses from abroad.

The application letter has to be directed to

Clearstream Banking AG
Neue Börsenstraße 8
D-60487 Frankfurt am Main/Hausen

and has to contain the ISIN, dividend entitlement as well as the competent paying agent. If the function of paying agent is not assumed by the applicant themselves, another bank exercising this function has to be named. A paying agent who is not the applicant also has to maintain an account at CBF and has to confirm in writing that they assumed the paying agent function. Moreover, the application has to contain the confirmation of the legal validity of the signatures borne by the submitted global certificates, i. e. the submitting issuing house has to declare in legally binding manner that the certificate has been signed by members of the issuer authorized to give such signature. The securities certificate and the application for admission to collective custody have to be accompanied by the company’s legally valid, current articles of association as well as a certified, up-to-date excerpt from the commercial register to give evidence of the actually paid-in stock capital.

CBF reviews the submitted securities with regard to their authenticity, completeness, deliverability and their further ability for being kept safe in collective custody. Above all, at the submission of physical securities, CBF will check the following:

  • conformity of corpus, coupon sheet and custody receipt or electronic custody data record in every aspect e. g. securities class, securities identification number, nominal value, certificate numbers,
  • transferability of certificates, i.e. review of authenticity, damages, forbidden lettering or stamps,
  • complete existence of all the coupons on the coupon sheet.
  • In addition, CBF will check upon deposit of securities with the help of the announcements contained in the Bundesanzeiger [German Federal Gazette] if there are any notices of loss, payment stops or public notification procedures (procedure for invalidation of certificates) with regard to these shares (sect. 72 AktG.

When securities are admitted for collective custody. CBF will publish the admission via the WSS Wertpapier Service System [WSS Securities Service System] (WSS online) which can be accessed by the underwriting banks as registered members. WSS is an electronic information system of Deutsche Börse AG providing its registered members with all information relevant for securities settlement. The data provided include within a single online-application master data as well as maturity data and quotation data generated, among others, from trading data at Frankfurt Stock Exchange and the WM-data. Subsequently, the stock is entered by CBF according to its value into the account of the applying issuing house through the stock exchange-owned settlement system CASCADE (Central Application for Settlement, Clearing and Depository Expansion). The issuing house, on the other hand, distributes the book entry securities of the stock to the shareholders through their custodian banks. The securities certificate itself is deposited and kept inside the about 6000sqm large vault of CBF until the certificate will be replaced or the stock certificated in it is no longer existent.

The legal framework for the admission of securities for collective custody have been set forth in the Allgemeinen Geschäftsbedingungen der Clearstream Banking AG, [General Terms and Conditions of Clearstream Banking AG] Frankfurt am Main.

Contact Person

General Customer Support
Telephone: +49-(0) 69-2 11-1 11 77
Fax: +49-(0) 69-2 11-61 11 77

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