The German Government has further strengthened its FIR regime on 30 April 2021. This amendment is – for now – the last part of a series of three significant amendments, each further strengthening the German FIR regime and adapting it to the EU Framework Screening Regulation.
Three modifications are especially notable as they will be highly relevant in practice:
- Firstly, the amendment drastically extends the scope of transactions that are subject to mandatory notification requirements. Now, the acquisition of companies active in sectors the German Government regards as key technologies must be notified. These technologies are listed in the amendment and include inter alia artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, quantum and nuclear technology, autonomous driving and flying, optoelectronics and additive manufacturing (3D printing) to name a few examples. The acquisition of at least 20 % (a newly introduced threshold) of the voting rights of a target company active in one of these newly defined sectors is subject to a mandatory notification requirement
- Secondly, the German FIR regime now also covers so-called “atypical” transactions that allow for the control of a German company. While previously the German FIR regime only covered the acquisition of voting rights above a certain threshold (10 % or 25 % depending on the type of business) the amendment takes a more holistic approach. The acquisition of an amount of voting rights below the thresholds (now 10 %, 20 % or 25 % depending on the type of business) but combined with e. g. veto rights for strategic business decisions or a majority in supervisory bodies can now fall within the scope of the German FIR regime. Since the question of control needs to be decided on a case-by-case basis, this aspect of the amendment will pose a particular challenge in practice. However, although these transactions fall within the scope of the FIR regime, they are exempt from the mandatory notification requirement.
- Finally, the amendment confirms the current practice of the German Government concerning the additional acquisition of voting rights. According to this, even acquisitions that do not meet the thresholds mentioned above can still be covered by the German FIR regime if an acquirer already holds voting rights in the target company. This is the case if the combined amount of the newly acquired voting rights and the voting rights already held is above the threshold.
This recent amendment of the German FIR-regime will certainly not be the last. The German Government has already announced that an evaluation of this recent amendment will take place in 2022.
The German FIR regime is continually changing. For successful transactions, it is important not only to assess the current legal situation but also to monitor ongoing developments since amendments to the FIR regime can quickly enter into force and affect proposed transactions.