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Gleiss Lutz Hootz Hirsch Stuttgart

Pursuant to Section 1 of the Securities Sales Prospectus Act, any person not admitted to trading on a German stock exchange, who offers securities to the public for the first time in Germany, must publish a prospectus unless the securities being offered or the offeror itself are exempted pursuant to other provisions of the Securities Sales Prospectus Act.

The Federal Supervisory Authority for Securities has recently issued a revised circular to clarify uncertainties that have arisen in relation to the aforementioned duty to publish a prospectus and which were not dealt with in the first circular published by the Supervisory Authority in 1996.

It is important to note that the revised Circular now also deals with offers of securities made over the internet. The revised Circular confirms that an offer to the public is every form of advertising in the press or through the post, addressed to an indefinite class of persons, whereby the addressee is solicited to make an offer to purchase securities. As far as internet offers are concerned, the revised Circular states that if German investors are targeted, it is irrelevant where the data was uploaded. An offer is considered to target investors in Germany if the German language is used on the website or German contact persons are named. The Circular, however, makes it clear that if there is a disclaimer in German in a pre-eminent position on the website, stating that it is not possible for investors in Germany to subscribe to the shares, then this will not be regarded by the Supervisory Authority as an offer in Germany. In addition, appropriate provision has to be made to ensure that investors in Germany cannot purchase the shares.

The Circular also clarifies the required content of an offer. The Circular confirms that the prospective purchaser must be able to make a concrete offer which the offeror can accept unilaterally. However, it now makes clear that general advertising measures, publications and information which advise of the possibility of acquiring securities but do not include sufficient information to make an actual offer to subscribe to such securities will not be regarded as an offer to purchase. General advertising measures include information which informs in general terms about the issuer/company and any planned flotations. However, the revised Circular communicates that if the publication contains material characteristics about the securities (eg the price, class, etc.), then reference to a prospectus must be made. The revised Circular of course contains other clarifications, including, among other things, to the meaning of "securities" and when the exemptions from the duty to publish a prospectus can be invoked.

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