Fixed price procedure

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In banking, the fixed price procedure is a procedure for determining the price of the issue of securities , which, in contrast to the bookbuilding procedure, specifies a fixed price for the placement of the shares .

The fixed price procedure still dominated the German share issue business until 1995 . Due to a lack of flexibility and increased complexity, it was almost completely displaced by the bookbuilding process within a few years.

As a rule, the placement price was determined on the basis of evaluations by the issuer , comparisons with the stock exchange prices of comparable companies and an assessment of the expected demand for securities. The procedure, however, entailed the risk of a misjudgment, which could result in a placement price that was not in line with the market.

Today, the fixed price procedure is only used in the context of rights issues, as Section 186 (2 ) AktG requires a precisely quantified price ( issue price ).