GERMANY: Changes to Germany takeover rules under consultation

Friday February 27 2015

The German Ministry of Finance has proposed a draft law on the implementation of the amendments to the Securities Acquisition and Takeover Act (WpUG).

The amendments concern exemptions to the aggregation requirements for groups of companies when calculating whether the mandatory bid threshold has been reached.

Under the proposed revisions, for the attribution of voting rights, capital management companies are in accordance with § 17 paragraph 1 of the Investment Code and EU management companies in accordance with § 1 paragraph 17 of the Investment Code concerning the shareholdings of funds managed by them in accordance with § 29 and § 30, are not to be considered as a subsidiary within the meaning of § 2 paragraph 6 if the following conditions are met:

1. The Management Company exercises its voting rights independently from the parent company,
2. The holdings of the investment funds are managed in accordance with Directive 2009/65/EC,
3. The parent company shall notify BaFin of the name of the management company and the agency responsible for their supervision or lack thereof and
4. The parent company declares to BaFin that the requirements of paragraph 1 are satisfied.

The Management Company shall be considered as a subsidiary however, if

1. The parent company or another company controlled by the parent company within the meaning of § 2 paragraph 6 in turn has an interest in funds managed by this management company according to § 29 and § 30 and
2. The Management Company may exercise the voting rights associated with such participation, not at their absolute discretion, but only on the basis of direct or indirect instructions by the parent company or another company controlled by the parent company within the meaning of § 2 paragraph 6.

The above provisions will extend to management companies domiciled in a third country accordingly if it can be shown that there are equivalent independence measures which apply.

In relation to cases where voting rights will be deemed attributed, Article 30 is proposed to be amended to add two additional situations where voting rights attaching to shares of an issuer must be aggregated for the purposes of calculating a position:

• Voting rights held by a third party under an agreement with the reporting party, providing for the temporary transfer of voting rights without the associated shares for consideration, insofar as it is legally possible, and
• Voting rights which are held by the reporting party as collateral, provided that they control the voting rights and declare their intention of exercising them.

Comments on the draft law are due by 14 March 2015.

Click on the above link for the document (only in German).