Roadshow

Definition and Significance of Roadshow

A roadshow refers in a legal context to a series of events during which companies—especially in connection with capital market transactions—present information about the company, a financial product, or a planned transaction to potential investors or the public. The roadshow concept is particularly common in advance of an initial public offering (IPO) or bond issues. The objective is to promote transparency, build trust, and attract as well as acquire investors. In addition to the capital market environment, roadshows may also serve as a marketing tool for launching new products or services.

The following section provides a structured overview of the various legal aspects and regulatory frameworks surrounding the organization and execution of a roadshow.

Legal Framework and Compliance Requirements

Capital Markets Law Requirements

In the field of capital markets law, roadshows are particularly sensitive due to the dissemination of information to selected groups of persons. The boundaries between permissible investor relations and illegal market manipulation are clearly defined here.

Disclosure Obligations and Prospectus Law

In connection with public offers of securities, communications conducted as part of a roadshow are subject to the rules of prospectus law, in particular under the EU Prospectus Regulation (Regulation (EU) 2017/1129) as well as supplementary national provisions such as the German Securities Prospectus Act (WpPG).

• Prospectus Liability: All information provided during the roadshow must be consistent with the details in the securities prospectus and must not contain any contradictory or misleading statements.
• Disclosure Obligation: Materials used during the roadshow (e.g., presentations, information documents) may trigger a disclosure obligation if they contain additional or new information compared to the securities prospectus.
• Ad-hoc Disclosure: For listed companies, there is also an obligation to immediately publish inside information under Article 17 of the Market Abuse Regulation (EU) No. 596/2014 (MAR).

Market Abuse Law and Insider Law

A key concern of regulatory authorities is the protection of the capital market from insider trading and market manipulation.

• Disclosure of Information: Companies must ensure that no unpublished inside information is passed on to selected investors during the roadshow (Art. 14 and 17 MAR).
• Principle of Equal Treatment: All investors must, in principle, be treated equally; selective disclosure of information is prohibited, insofar as it concerns inside information.
• Documentation Obligations: It is recommended to document all contents of the roadshow to be able to provide accountability for equal treatment and compliance with disclosure obligations.

Aspects of Antitrust and Competition Law

In addition to capital markets requirements, companies must also observe antitrust and competition law provisions.

Antitrust Considerations

• Arrangements: Roadshows must not be used to make antitrust-infringing arrangements with investors or competitors.
• Exchange of Information: Information relating to pricing or strategic business decisions may not be communicated in violation of antitrust laws during roadshows.

Requirements under Fair Trade Law

Promotional statements made during a roadshow are subject to the provisions of the Act Against Unfair Competition (UWG).

• Protection Against Misleading Statements: No misleading statements may be made about the company itself, the financial product, or the transaction.
• Transparency Requirement: All presentation content must be transparent, comprehensible, and truthful.

Data Protection and Data Protection Law Requirements

When planning and conducting roadshows, the personal data of participants is regularly processed. This requires compliance with the General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG).

• Consent: Processing personal data such as contact details or investor preferences in the context of the roadshow generally requires effective consent or another legal basis.
• Information Obligations: Before and during the roadshow, the individuals concerned must be thoroughly informed about data processing and its purposes.
• Data Security: Appropriate technical and organizational measures must be implemented to protect the data.

Tax Law Implications

In connection with roadshows, tax law questions may arise regarding the entertainment of guests, travel expenses, or possible gifts to participants. Under German tax law, for example, entertainment expenses are only tax-deductible under certain conditions and up to a certain amount (§ 4 para. 5 no. 2 Income Tax Act, EStG).

Contractual Structuring and Liability Issues

Contractual Relationships in the Context of Roadshows

• Engagement of Service Providers: Companies often engage agencies, event managers, or communications consultants. Contractual arrangements should clearly specify rights and obligations, especially with regard to confidentiality, liability, and data protection.
• Exclusion of Liability: The information provided as part of the roadshow may give rise to liability risks if it is inaccurate or misleading. Appropriate liability exclusions should be included in contractual arrangements, although they may not exclude liability for material breaches of duty or intent.

Execution and Practical Structuring of the Roadshow

Disclosure and Transparency

In particular, listed companies should ensure that the information conveyed during the roadshow is consistent with information already published or to be published in the prospectus or in ad-hoc disclosures.

Documentation and Evidence

To fulfill regulatory requirements and evidentiary duties, a complete documentation of the substantive and organizational procedures of a roadshow is recommended.

Summary and Final Assessment

The term roadshow, in the legal sense, is closely linked to capital market, competition, and data protection law regulations. Companies conducting a roadshow must pay particular attention to requirements on equal treatment, information obligations, the prohibition of insider information, and other regulatory provisions. Careful planning, documentation, and comprehensive legal review are essential to avoid regulatory and liability risks and to ensure compliance with all relevant regulations.

Frequently Asked Questions

What legal permits are required for conducting a roadshow?

Conducting a roadshow requires various permits, the extent and nature of which depend on local, state, and national legal requirements. For the use of public spaces—such as squares, streets, or parks—a special use permit must first be applied for at the local regulatory authority. This permit particularly reviews questions of traffic law, public safety and order, and, if necessary, required diversions or barriers. Furthermore, if the roadshow involves musical performances or sound systems, additional noise regulations and, if applicable, a request for an exemption from noise protection laws must be considered. If temporary structures such as stages, booths, or advertising displays are erected, these may require building permits and must comply with the Assembly Places Ordinance and state building codes. Additionally, a catering license (pouring license) may be required for food and drink services. Finally, when using drones, pyrotechnic effects, or special technical equipment, professional permits or additional notifications to the relevant authorities are often mandatory. All parties involved must observe the respective deadlines and processing times for the issuance of permits and ensure coordination with police, fire, and emergency services.

What data protection requirements must be observed at a roadshow?

When holding a roadshow, personal data is regularly collected and processed, for example during guest registration, contests, photos, or video recordings of the audience. Those responsible must strictly comply with the requirements of the General Data Protection Regulation (GDPR). This includes, among other things, informing the data subjects pursuant to Art. 13 GDPR, usually by clearly visible notices or posters. If photo, audio, or video recordings are planned, the consent of the persons shown or recorded (the right to their own image under the Copyright Act) must be obtained unless this takes place as part of events of public interest. The data collected may only be used for the specified purpose, must be protected by technical and organizational measures, and must be deleted after the relevant retention periods expire. Furthermore, there is an obligation to appoint a data protection officer once the relevant legal thresholds are exceeded, and to create a record of processing activities. If the data is transferred to third parties (e.g., service providers, caterers, technical partners), data processing agreements must be concluded pursuant to Art. 28 GDPR.

What liability risks exist for organizers of a roadshow?

Organizers of a roadshow bear extensive civil and criminal liability toward participants, staff, and third parties. In the event of damage, such as accidents, injuries, or property damage, the German Civil Code (BGB) applies, especially with regard to road safety obligations (§§ 823 ff. BGB). Organizers are obliged to ensure that all equipment, stages, devices, or pathways are designed safely and undergo regular inspections. If this duty is breached and damage occurs, the organizer must pay compensation. Additional organizational liability risks exist, for example, in case of violations of the Working Hours Act, the Youth Protection Act, or the Act on Events on Public Spaces. For damage to property caused intentionally or by gross negligence, the organizer is liable without limitation. To minimize risk, the conclusion of specific event liability insurances is recommended.

Must special employment law requirements be observed during a roadshow?

During a roadshow, the provisions of the Working Hours Act (ArbZG), the Youth Employment Protection Act (JArbSchG), the Maternity Protection Act (MuSchG), as well as rules on breaks, rest periods, and night work must be observed. Managing directors and roadshow managers must take into account the maximum permissible daily and weekly working hours, as well as necessary rest breaks between work assignments. When employing young people or pregnant employees, additional protective provisions and restrictions apply. Work times must be documented and, if necessary, presented to the supervisory authority. If external companies or service providers are engaged, contractual assurance must be obtained that they fulfill their obligations. Finally, business registration, for example for short-term temporary staff, and proper registration with social security institutions must be ensured.

What tax obligations arise from conducting a roadshow?

Organizers of a roadshow are subject to various tax obligations, particularly regarding value added tax, corporate tax, and, where applicable, event taxes at the municipal level. Revenue from ticket sales, booth rentals, or sponsorship is subject to VAT unless an exemption applies (for example, for charitable events). Services by domestic and foreign artists are subject to the special withholding tax under § 50a Income Tax Act (EStG). When goods or food are sold, the record-keeping obligations set out in the German Cash Register Ordinance must be observed. Each transaction (e.g., sponsorship services, advertising measures) must be examined for VAT implications, especially so-called barter-like transactions. Often, it is necessary to register for tax purposes at several event locations and submit tax returns, provided that revenue exceeds respective exemption amounts. Ongoing tax advice is essential to ensure compliance with all legal requirements.

What requirements apply to advertising and prize draws in the context of a roadshow?

For advertising measures during a roadshow, the Act against Unfair Competition (UWG), the Price Indication Regulation (PAngV), and specific rules for prize draws must be observed. Advertising campaigns may not contain misleading statements and must fulfill information obligations about the organizer, prices, and participation conditions in a transparent and easily understandable manner. Prize draws are subject to specific statutory requirements: the conditions of participation must be clearly and fully set out, especially regarding duration, procedure, prizes, payout of winnings, and the type of data processing. In addition, the notice and information obligations under the GDPR must be met. If minors participate, the consent of their guardians must be obtained. If lotteries or games of chance are organized, a special official permit (e.g., under the State Treaty on Gambling) is required, as these are not considered non-binding prize competitions. Where companies use opt-in procedures for advertising (e.g., newsletter subscriptions), the corresponding consents must also be documented.

What country-specific particularities must be considered for nationwide roadshows?

Roadshows conducted across states within Germany are subject to both federal and state-specific requirements. While the fundamental structure regarding permits, safety, and tax obligations is uniformly regulated nationwide, numerous details vary by federal state, for example, due to divergent provisions of state building codes or state emission control laws regarding noise protection and regulations for public events. The level and requirements for municipal special use fees, event charges, or possible ecological requirements such as waste reduction or environmental zones also vary significantly regionally. Therefore, it is absolutely recommended to conduct a legal review for each event location and to involve the relevant authorities at an early stage. Coordination and communication with local authorities, police, and emergency services must be organized on site to fully comply with all requirements.