Tuesday July 25 2017

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: Germany




On 12 July 2017, an amendment to the German Foreign Trade and Payments Ordinance (the Ordinance) was adopted. The amendment aims to tighten control by the German government over acquisitions of domestic companies by foreign investors.

In Germany, the acquisition of a shareholding of at least 25 percent in a German company by investors from outside the EU and EFTA-European Free Trade Association can be scrutinised by the Economic Affairs Ministry. The review considers whether the acquisition poses a threat to public policy or public security in the Federal Republic of Germany. In particularly sensitive security-related areas like military equipment and cryptotechnology, all foreign investments are scrutinised to see whether essential security interests of the Federal Republic of Germany are affected.

The amendment to the Foreign Trade and Payments Ordinance which was adopted today adapts the modalities of the review process to the increased number and complexity of corporate acquisitions. Most of the review periods are extended from two to four months so that more information can be obtained. It is made unambiguously clear that “indirect” acquisitions are also subject to scrutiny. These are cases in which foreign investors establish a company in the EU to purchase a German firm.

Also, the scrutiny is being widened in particularly security-sensitive areas to include further companies which develop or manufacture certain key enabling technologies in the defence sector. The content of the review, which derives from EU law (danger to public order or security and essential security interests), is not changed by the new rules. Similarly, the possibility – which however is restricted by high barriers – to prohibit an acquisition is not changed or widened.

Additionally, the Federal Ministry of Economic Affairs and Energy have launched an initiative at EU level together with Italy and France to bring about changes to EU law.

Please click on the above link for more information.