Monthly Dose of Germany: October 2024

What to expect from a Legal Matter Management System

Legal Matter Management Systems (LMMS) are in many ways the nexus of a legal department’s activity. Designed specifically for legal professionals, such systems streamline and organize all facets of an in-house lawyer’s day-to-day work through a host of features. This article looks into what functionalities can be expected from a modern LMMS and also highlights other considerations that are worth keeping in mind when choosing a new LMMS.

Discover how the new Bureaucracy Relief Act reduces bureaucratic hurdles for employers and paves the way for the digitization of employment contracts.

Digital employment contracts: opportunities and challenges arising from the Bureaucracy Relief Act IV

The world of employment is undergoing a profound change, driven by advancing digitalization. On September 26, 2024, the German Bundestag passed the Fourth Bureaucracy Relief Act (BEG IV), which is intended to relieve companies of unnecessary bureaucracy. When this law comes into force, there will be significant changes that will particularly relieve employers in the administrative area. In this article, we highlight the most important employment law changes brought about by BEG IV, the effects on employment contract design, and the challenges that remain despite this progress.

Learn more about Legal Matter Management, discover the key features of a Legal Matter Management system and the benefits of a Legal Matter Management system.

Company pension law – Case Law update 2/2024

Our Autumn 2024 Client Alert on current case law at company pension schemes covers the judgments

(1) of the German Federal Labour Court (Bundesarbeitsgericht, BAG) of 12 March 2024 (3 AZR 150/23) on the scope of an employment contract’s reference clause to the Collective agreement for public service (Tarifverträge des öffentlichen Dienstes, TVöD),

(2) of the Higher Labour Court (Landesarbeitsgericht, LAG) of Dusseldorf of 24 April 2024 (12 Sa 683/23) on the elimination of the obligation to assess pensions (adjustments) under the condition that the pension fund and the employer are identical,

(3) of the LAG Hamm of 10 January 2024 on the employer's contribution to salary conversion in accordance with Sec. 1a (1a) of the German Company Pension Act (Betriebsrentengesetz, BetrAVG) in context of Section 19 (1) BetrAVG despite a collective agreement that came into force before BRSG and

(4) of the LAG Baden-Württemberg of 20 February 2024 (11 Sa 45/22) on the question of whether a promise subject to the suspensive condition of the death of the promisor constitutes an occupational pension plan according to the BetrAVG.

The 2024 Chief Legal Officer (CLO) Strategy Survey

The chief legal officer’s roles and responsibilities have expanded beyond determining legal department strategy and providing legal services to the business. See how CLOs are now collaborating with their C-suite colleagues to help solve more complex business challenges.

In our 2024 CLO Strategy Survey, we asked 460 legal executives about various enterprise-wide and legal function-specific topics including transformation, trust, Generative AI, understanding the work and priorities of the legal function, and how that work is accomplished. Respondents were grouped into four geographical clusters: Australia, Canada, the United States, and Europe (Belgium, France, Germany, Italy Netherlands, Spain, and the United Kingdom) to better understand where legal functions around the world are aligned—and where they are not.

Bank Acquisitions – The Regulatory Perspective

The acquisition of Commerzbank shares by the Italian Unicredit has, to put it mildly, surprised the German federal government. The situation is prompting a review of the structure and procedure of the bank regulatory ownership control process required for acquisitions of Qualifying Holdings in credit institutions.

This process was established in Europe as early as 1989 through the Second Banking Directive, and was implemented nationally in Germany in 1992, with some delay, as part of the Fourth Amendment to the Banking Act (KWG) under the former Section 2b KWG. At the time, this provision was often referred to as the "Mafia Paragraph." This term didn’t arise haphazardly; under the former Soviet Union, large sums of money from unclear sources were being transferred to Europe, and their owners were occasionally attempting to acquire stakes in European credit institutions. Since then, the provision has moved further down in the KWG: it is now found in Section 2c KWG and was recently revised through legislation at Christmas time in 2022 by the Ownership Control Regulation, which governs the procedural details. Initially, the Ministry of Finance (BMF) was responsible for issuing the provision, but since 2022 this role has been assumed by the Federal Financial Supervisory Authority (BaFin).

Risk minimization in tax audits

Reducing the risk of the initiation of penalty and criminal tax proceedings in connection with a tax field audit

Already with the receipt of the audit order, a risk of the initiation of administrative fine and criminal tax proceedings may be revealed. An audit order may cover audit periods for which the “normal” assessment period has already expired and which can only be changed if there is a case of reckless understatement of tax or tax evasion. In addition, it may, for example, emerge from an audit order that the tax authorities, contrary to the opinion of the company's legal representatives, consider a non-German company to be based in Germany and assume unlimited tax liability instead of limited tax liability.

Resolution of the Federal Government on the Second Act to Strengthen Company Pensions

On 18 September 2024, the Federal Government (Bundeskabinett) adopted the draft of the Second Act to Strengthen Company Pensions and to Amend Other Laws (Second Act to Strengthen Company Pensions)1. Compared to the draft bill proposed by the Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales - BMAS) and published on 24 June 20242 (Referentenentwurf), this government draft (Regierungsentwurf - the “Government Draft Bill”) contains important specifications regarding the planned changes to the Investment Regulation (Anlageverordnung – AnlV)3. This article examines the implications of these changes.

We have already analysed the previously published draft proposed by the BMAS with regard to these planned changes (Link). The AnlV regulates the investment of the guarantee assets (Sicherungsvermögen) of Pensionskassen (pension funds), small insurance undertakings and funeral expense funds (hereinafter referred to as "AnlV Investors"). It is therefore a very important set of rules for AnlV Investors and for the asset management industry, which offers corresponding products for these regulated investors as an important client group.

Best Law Firms in Germany 2024

On 30 September, the law firm ranking of the US publisher 'Best Lawyers' was published for the first time in Germany in cooperation with the Handelsblatt. Deloitte Legal was listed in a total of 23 national and regional rankings:

• Germany-wide: Four Tier 2 rankings and three Tier 3 rankings
• Regionally: Seven Tier 1 rankings, six Tier 2 rankings and three Tier 3 rankings

The rankings are based on feedback from more than 3,100 clients, more than 2,700 lawyer evaluations, 116 interviews with practice group and firm leaders, and extensive data collected through the Law Firm Survey.

People News

We are delighted to welcome one new partner in our Hanover office!

Deloitte Legal expands its financial regulatory practice - Felix Brandes joins the Hanover office as a partner 

With Felix Brandes, Deloitte Legal has gained another specialist for financial regulatory law at its Hanover office. After working as an in-house lawyer at a major German bank and a lawyer at a US law firm, Felix Brandes most recently worked for the legal advisory arm of another Big 4 firm.

Read more here!

Transaction News

We at Deloitte Legal Germany are constantly advising on numerous complex transactions and challenging projects.

We would be delighted to explain our services portfolio to you and discuss with you how we at Deloitte Legal Germany can assist you with your projects, whether in the field of Corporate Reorganizations, M&A transactions, including carve-outs, general commercial, employment law, IT/IP or LMC/LMS. Just reach out to us!

In order for you to better understand how we have helped other clients, we would like to hereinafter showcase information on two projects that our teams have recently advised on.

Deloitte Legal advises Federal Ministry for Digital and Transport on the sale of Schenker AG by Deutsche Bahn AG 
A multi-office Deloitte Legal team led by Hamburg partner Dr. Volker Schulenburg (Corporate/M&A) has advised the Federal Ministry of Digital and Transport – as the ministry managing the investment – on the sale of Schenker AG by Deutsche Bahn AG. 

Read more

Deloitte Legal advises Springboard Network on the acquisition of German system.de 
A Deloitte Legal team led by Felix Felleisen (Partner, Corporate/M&A, Düsseldorf) has advised Springboard Network, a group of leading European companies in the field of secure network solutions and managed services, on the acquisition of system.de - system & Project GmbH, an established German IT consultancy and Cisco partner. Peter Schulte, system.de’s CEO, will remain on board and reinvest in the purchaser group. The acquisition was supported by Quadrum Capital, an independent Dutch investment firm. 

Read more

Deloitte Legal Webcast Series

In our German language Deloitte Legal Update webcast series, we address current legal issues and developments that are important for corporate practice.

In our upcoming "Legal Update" webcast we will discuss:

Deloitte Legal Webcast "Legal Update #19/2024" - The use of AI in HR: Navigating the jungle of AI regulation 

Wednesday, 06 November 2024 | 11:00 - 11:45 a.m.
Register here (Webcast in German language)

More and more companies are turning to Artificial Intelligence (AI) to handle individual tasks or even entire areas of responsibility. Such use of AI-based solutions offers enormous potential for relieving burdens on employers and employees. In HR in particular, many companies expect not only a competitive advantage from the use of AI, but also significant efficiency gains when it comes to topics such as automated personnel decisions, shift planning or employee retention.

To enable you to benefit optimally from the new technology in this area of tension, in our Deloitte Legal Update #19/2024 Webcast on November 6, 2024, Anna Mafalda Bock and Roland Schiller will explain the legal requirements for the use of AI in HR and show you steps towards the successful implementation and secure use of AI-based systems.

You can download the presentations of our recent webcasts here:

• In our special webcast "Fast-Track Your CLM: The Power of a Pre-packaged Contractify Implementation", Klaus Gresbrand and Mai Anh Ma showed the pre-packaged implementation approach of Contractify togehter with Contractify CEO Steven Debrauwere and Deloitte Legal colleagues from Belgium. Learn more about the implementation, change management, and configuration techniques, real-life use cases and experience a live demonstration of Contractify’s essential features. You can view the recording of this webcast here: Recording "Fast track your CLM"
  
• Legal Update Webcast #17/2024  - Distressed M&A - The Fine Art of the Bespoke Deal: Session 3 Assets at a bargain price? - The right company valuation and purchase price determination: After the first two successful events, which focused on the legal frameworks and employment law structuring options in distressed M&A deals, the third session addressed the accurate valuation of companies and the determination of purchase prices for assets during a crisis. The central question is how companies can be properly valued in economically challenging times and which methods should be used to determine an appropriate purchase price. Our experts Marcus Spangenberger from Deloitte Legal, along with Merlin Smeenk and Werner Warthorst from Deloitte Financial Advisory, Turnaround & Restructuring, provided valuable insights into the challenges and opportunities of company valuation in distressed M&A transactions.

• Legal Update Webcast #16/2024 - Electricity storage – legal and regulatory framework in Germany: In our Deloitte Legal Update Webcast on October 9, 2024, Torsten Wielsch and Rebecca Gulden presented the state of the discussion according to the BMWK paper and explain the options relevant to the use of electricity storage. They then outlined the current legal framework for the use of electricity storage. How extensively is the use of electricity storage regulated? What relevant standards are there? What are the legal difficulties and obstacles? And what are the possible applications and business opportunities? These are the questions we aim to answer in our webcast.

In our Webcast Archive, you can find a list of previous webcasts and also download the corresponding presentations.

Should you be interested in topics discussed during one of our German language webcasts, do not hesitate to contact the respective presenters – they will be delighted to provide you with additional information in the English language.