Further restrictions on investment controls
Additional requirements to be observed in the context of M&A transactions
The amendments to German foreign trade law will lead to further restrictions of the investment control regulations. They relate to (i) the expansion of the sectors subject to reporting requirements, (ii) the introduction of new thresholds, (iii) the implementation of a review option by the BMWi in the case of atypical acquisitions, (iv) the applicability of investment control to intra-group restructurings, and (v) restrictions imposed on clearance certificates.
May 10, 2021
As of 01 May 2021, the German government has again further tightened investment control regulations, particularly in the area of the cross-sectoral examination.
1. Expansion of the sectors subject to reporting requirements
The catalog of sectors that are subject to reporting requirements under the cross-sectoral examination has been expanded from 11 to 27 listed sectors. Because of this expansion of the scope, more acquisitions of domestic companies that are operating in sensitive industrial and technology sectors can be subject to a cross-sectoral examination in the future. This includes, in particular, artificial intelligence, autonomous driving and flying, robotics, semiconductors, aerospace, additive manufacturing, network and quantum technology.
2. Introduction of thresholds
The expansion of the listed sectors is also accompanied by an amendment of the thresholds of acquired voting rights that trigger reporting obligations.
Depending on the listed sector, reporting obligations will apply in the context of the cross-sectoral examination for acquisitions of 10 % or 20 % of the voting rights. The threshold of 25 %, which applies to non-listed sectors, remains unchanged.
There is a reporting obligation in the case of additional acquisitions if these exceed the above-mentioned thresholds. In addition, a reporting must be filed if the following thresholds are exceeded due to subsequent acquisitions: If the first reporting threshold is 10%, additional reporting thresholds exist at 20%, 25%, 40%, 50% and 75%. If, in contrast, the acquisition of 20 % of the voting rights is subject to a first reporting requirement, the aforementioned thresholds apply, starting with 25 %.
3. Review option for atypical acquisitions and parallel acquisitions
Although there is no reporting obligation for atypical acquisitions, these can be reviewed ex officio by the BMWi in the future. Atypical acquisitions of control can occur, when a non-EU citizen acquires an effective interest in the control of the domestic company in another way, e.g. by granting veto or information rights.
The same applies to coordinated acquisitions that do not exceed the thresholds individually but together.
4. Intragroup restructuring
In principle, the investment control regulations apply to intra-group restructurings. However, an exception may apply, if the acquisition of a German company is concluded exclusively between companies with shares that are held entirely by the same controlling company and all parties of the contract have their place of management within the same third country.
5. Restrictions on certificates of non-objection
Finally, it is no longer possible to apply for a certificate of non-objection if an acquisition is subject to reporting requirements.
Amendments cause increasing transactional uncertainty