Does the Stock Exchange Facilitate Downlisting into Scale? Yes, but …

Update Capital Markets No. 64

Since spring 2026, the Location Promotion Act (Standortfördergesetz – StoFöG) has enabled issuers whose shares were previously traded on the regulated market to transfer the listing to the Scale segment of the Open Market (Freiverkehr) at the Frankfurt Stock Exchange without a delisting purchase offer to shareholders. Such a segment change appears attractive due to the leaner reporting obligations being applicable in Scale. However, the procedure for such a downlisting has so far also proven burdensome even without a public purchase offer, as the general requirements applicable to a new inclusion in the Scale segment had to be met as in the case of an IPO of a company not yet listed on a stock exchange.

The Frankfurt Stock Exchange has now amended its General Terms and Conditions for the Open Market (“GTC”) with effect from 12 June 2026. In doing so, certain facilitations for issuers already listed on the regulated market have been introduced for inclusion in the “Scale” segment. However, some of the previous requirements remain in place.

Inclusion Requirements

Capital Market Partner

An issuer’s application for inclusion in Scale continues to require the involvement of a Capital Market Partner. This “Applying Capital Market Partner” must, as before, be a credit institution, financial services institution, or an enterprise operating pursuant to Section 53 or Section 53b of the German Banking Act (KWG). Even in the case of a downlisting, this partner must confirm the suitability of the issuer for the Scale segment in a formal declaration based on an “adequate legal and financial due diligence” on the basis of certain legal, business-related, financial, organisational, and personnel criteria set out in the GTC.

The issuer’s ongoing support by a Capital Market Partner also continues to be required. The role of the so-called “Supporting Capital Market Partner” may, however – unlike in the case of the application – also be assumed by a lawyer or auditor recognised by Deutsche Börse AG. This role consists of conducting an annual information meeting with the issuer regarding the issuer’s ongoing inclusion obligations under the GTC and the relevant statutory provisions such as those under MAR and the German Securities Trading Act (WpHG). Furthermore, the Capital Market Partner is expected to advise the issuer with regard to its investor relations activities and a possible admission of the securities to the regulated market. In future, however, this will only be required during the first two years following inclusion, as will the publication of financial analyses (so-called research reports), which may need to be commissioned by the issuer.

Market Capitalisation and Free Float

The previous minimum market capitalisation of EUR 30 million has been abolished without replacement. The minimum free float requirement, which continues to apply, will in future – as in the regulated market – generally only amount to 10 %. The stock exchange may accept a lower free float if it considers the number of shares held by the public, the number of shareholders, or the market value of the shares held by the public to be sufficient to ensure orderly exchange trading.

Inclusion Documentation

The requirement for a securities prospectus or inclusion document is maintained. The latter remains a document sui generis with specific disclosures set out in the GTC. In the case of a downlisting, reduced requirements will in future apply compared to the “standard” introduction.

For this purpose, the issuer’s shares must have been admitted to trading on a regulated market without interruption for more than 18 months, and a prospectus approved in accordance with the requirements applicable to that market must have been published in connection with the admission. There are no specific requirements regarding the age of this prospectus. The issuer must also have complied with its ongoing obligations arising from the admission of its shares. To this end, the Applying Capital Market Partner must provide a confirmation that neither circumstances to the contrary are known to it nor could it reasonably obtain knowledge thereof from generally accessible sources of information. This raises questions similar to those concerning the compliance confirmation for the so-called Annex IX document under the EU Prospectus Regulation. In individual cases, a qualified confirmation was included there that discloses known deviations. BaFin has apparently not objected to this approach. Whether the FWB will proceed in a similar manner remains to be seen in light of the different objective in the present context. In any event, early coordination with the FWB appears advisable.

In the simplified inclusion document, the disclosures on “business activities and prospects” are replaced by a new section containing material information on the business and financial situation. This essentially consists of the incorporation by reference of the issuer’s annual or consolidated financial statements, together with information on significant changes in its financial position and a separate declaration by the issuer regarding compliance with the obligations arising from stock exchange admission (compliance declaration). In addition, the issuer must confirm that its working capital is sufficient for its current requirements (Working Capital Statement) or explain how it intends to procure any additional working capital that may be needed. Apparently with a view to the ongoing regular and ad hoc disclosure obligations of an issuer already listed on the regulated market, the inclusion of issuer-specific risk factors has been eliminated, while the risk factors material to the securities still have to be included. Otherwise, the minimum disclosures remain largely unchanged. In particular, the person responsible for the inclusion document must declare that, to their knowledge, the information in the document is correct and complete. In addition, the Applying Capital Market Partner must confirm that, to its knowledge, the information in the inclusion document is complete, coherent, and comprehensible.

Summary and Assessment

By amending the GTC for the Open Market, the Frankfurt Stock Exchange has facilitated the transfer of issuers from the regulated market to the Open Market segment Scale. In particular, the elimination of the minimum market capitalisation and the reduced free float requirements represent significant simplifications. The same cannot be said to the same extent for the inclusion documentation. Here, the European legislator had created a lean format for a prospectus-replacing document with the so-called Annex IX document, which considerably reduces the effort for secondary issuances – the offering and admission of additional shares of issuers already listed on the stock exchange – by assuming that the information already available in the market due to the stock exchange listing from previous prospectus, regular financial and ad hoc disclosure is known and does not need to be repeated. This would also avoid inconsistencies in risk disclosure. In the inclusion document, this is now incomprehensibly limited to risks specific to the securities. By implication, issuer-related risks are apparently excluded, possibly in reliance on the risk reporting in the management report. By contrast, in an Annex IX document, the issuer’s specific risk factors are a material component.

It would therefore have been consistent to use an Annex IX document also for the purposes of a segment change, instead of continuing to require an inclusion document with its own requirements. It is particularly noteworthy that, to this extent and with regard to previous compliance with ongoing admission obligations, separate declarations by an Applying Capital Market Partner are required. This may make good sense for issuers not yet listed on a stock exchange. For companies experienced in capital markets, it appears dispensable. The potentially liability-inducing declaration is likely to increase the cost of engaging an Applying Capital Market Partner to a not insignificant extent. This appears all the less comprehensible given that the Frankfurt Stock Exchange made use in 2025 of the simplification of admission to the regulated market in the General Standard segment introduced by the Future Financing Act (Zukunftsfinanzierungsgesetz). There, the admission application is now filed solely by the issuer; the involvement of a bank is no longer required. That such involvement is required for the transfer of an issuer already listed on a stock exchange to Scale as a – less strictly regulated – Open Market segment does not appear consistent. Nor is such a declaration by an external adviser such as a Capital Market Partner required in an Annex IX document for a public offering or the admission of additional shares to the regulated market.

The mandatory engagement of a supporting Capital Market Partner during the first two years of listing in Scale is surprising for issuers whose shares have already been listed on the regulated market for a considerable period. For such issuers, sufficient experience in dealing with the ongoing obligations arising from the listing should be expected due to the previous listing in a more strictly regulated exchange segment.

It therefore appears desirable to critically review the separate format of the inclusion document and the remaining procedural requirements for inclusion in Scale in the case of a downlisting. Some of the remaining requirements for this case are also tailored to growth companies that are not experienced in being listed on the capital market. For companies that have been admitted to the regulated market for a longer period and are merely undertaking a segment change, they appear to be a burdensome and potentially costly, but ultimately unnecessary formality. By further simplifying the downlisting process, the Frankfurt Stock Exchange could therefore make a genuine contribution to the current deregulation discussion.

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