Further Tightening Of Germany's Rules For Foreign Investments

Author:Mr Daniel Wiedmann and Xin Zhang
Profession:P+P Pollath + Partners

The German Federal Ministry of Economics and Technology ("BMWi") has presented plans to further tighten foreign investment review rules last week.

A Ministerial Draft is aimed at amending the German Foreign Trade Act. Further, a strategy paper published simultaneously announces changes to the Foreign Trade Ordinance. The amendments shall be enacted later this year.

Key Facts

- Extension of notification requirements to investments in the areas of artificial intelligence, robotics, semiconductors, biotechnology and quantum technology

- Prohibition on implementing notifiable acquisition before clearance by the BMWi

- Lowering of the requirements for a prohibition

We have summarized the most important changes in more detail below.

Extension of notification requirements Direct or indirect acquisitions by investors from outside of the EU and EFTA of 10% or more of the voting rights in German companies active in the following areas shall be subject to notification requirements:

artificial intelligence; robotics; semiconductors; biotechnology; and quantum technology. Until now, notification requirements have only applied to investments in German companies that

operate critical infrastructures; develop or update certain industry-specific software used to operate critical infrastructures; are tasked with activities in the telecommunications surveillance field or produce or have produced technology for the implementation of the same; provide cloud computing services and in so doing have access to certain crucial security infrastructures; hold authorizations relating to components or services in the telematics infrastructure; or contribute to shaping public opinion in the media industry through radio, telemedia or printed matter and are characterized by particular topicality and wide-ranging impact. In addition, there are notification requirements in the context of the so-called sector specific investment review for non-German acquirors for investments in companies that produce or develop certain weapons, ammunition and armaments, components of military vehicles and products with IT security functions used to process classified state secrets or components of such products.

Prohibition on implementing transactions before clearance for all notifiable transactions All notifiable investments shall be subject to an implementation prohibition. A notifiable investment in a German company shall be provisionally invalid. The underlying legal...

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