Germany is set to rewrite its foreign investment screening rulebook. For the first time, the rules would be set out in a dedicated statute, with a substantially broader catalog of sensitive sectors, new review triggers for influence without voting rights, and a faster but more demanding review procedure.
On 15 October 2026, the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie, BMWE) launched its consultation on drafts of a standalone Investment Screening Act (Investitionsprüfungsgesetz, IPG) and an accompanying Investment Screening Ordinance (Investitionsprüfungsverordnung, IPV). The IPG would consolidate and restructure the rules currently spread across the Foreign Trade and Payments Act (Außenwirtschaftsgesetz, AWG) and the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, AWV), while the IPV would define the sensitive sectors in which an acquisition triggers a mandatory filing and standstill obligation. The package also implements key requirements of the revised EU Screening Regulation (Regulation (EU) 2026/1386), which will apply from 17 January 2028.
The core mechanisms of the current German FDI review regime are carried over: the BMWE remains the competent authority, the 10 % and 25 % voting rights thresholds continue to apply, and most case groups triggering mandatory FDI filing obligations are retained.
At the same time, many of the proposed changes reflect what our foreign investment team has seen first-hand in recent years, including minority investments with far-reaching governance and information rights and close BMWE scrutiny of targets in technology and dual-use sectors.
Key Changes
- Three distinct review procedures: The IPG differentiates between three clearly separated procedures: (i) the sector-specific procedure for defense-related and certain IT-security targets, with a 10% threshold and a mandatory filing; (ii) a new case-group-specific procedure for the sensitive activities listed in the IPV, essentially the current mandatory-filing cases under Section 55a AWV supplemented by the new EU-mandated categories, with a 10% or 25% threshold and a mandatory filing; and (iii) the cross-sector procedure as a catch-all for all other targets, with a 25% threshold, no filing obligation, but the possibility of an ex officio review. The standstill obligation would continue to apply only where a filing is mandatory. At the same time, the procedures would be aligned: the BMWE would issue an “approval” in every case, replacing the current distinction between clearance and a certificate of non-objection. Prohibitions would no longer require a Federal Cabinet decision. Instead, across all three procedures, they would require only the consent of the Federal Chancellery and the Foreign, Interior, Defense and Finance Ministries, as is already the case in sector-specific reviews.
- Expanded catalog of sensitive activities: The IPV would retain the 10% threshold for defense, critical infrastructure and certain closely related activities, while applying a 25% threshold to a significantly broader catalog. Newly framed or expanded categories include certain general-purpose AI models suitable for space or defense applications and general-purpose AI models with systemic risk, automated or autonomous vehicles and drones and related key components and software, an extensive semiconductor value chain, quantum technologies, strategic and critical raw materials, election systems and all Annex I dual-use items developed, manufactured or distributed by the German target.
- Atypical influence: Supervisory or management board seats or majorities, veto rights over strategic business or personnel decisions, and rights of access to sensitive information could trigger review even without any acquisition of voting rights, provided they confer influence comparable to the applicable voting-rights threshold. This materially increases the relevance of governance and information rights in minority investments.
- New investor definitions: EFTA investors would be treated as third-country investors for cross-sector and case-group-specific review. A natural person would only qualify as German if that person has exclusively German citizenship and is habitually resident in Germany. A natural person would qualify as an EU resident only if that person has exclusively one or more EU citizenships and is habitually resident in the EU.
- Revised review periods: Phase 1 would be shortened from two months to 45 calendar days and could no longer be extended by agreement. Crucially, however, the period would begin only on the day after the BMWE receives the complete prescribed Phase 1 information. As before, Phase 2 would run for 120 calendar days from receipt of the complete Phase 2 information, subject to a BMWE extension of up to 90 days, consensual extension and statutory suspension events. The ex officio review period would be reduced from five to three years after signing.
- Closing gaps: asset deals, circumvention and interim measures: First, asset deals would be reviewable where the acquired assets form all or a material part of the German company’s assets. For the first time, the acquisition of assets located in Germany but owned by a foreign company, such as a German production site of a non-German group, could also be covered. Second, the anti-circumvention rule would capture not only structures designed to avoid review, but also structures that have this effect in practice, regardless of intent. Third, the BMWE could order interim measures to safeguard the proper conduct of a review and prevent a fait accompli, for example by prohibiting or restricting the exercise of voting rights or the disclosure of sensitive company information, ordering the transfer of voting rights to an independent third party or, including in the cross-sector procedure, imposing a temporary standstill obligation.
- More explicit remedies: The draft lists potential remedies ranging from governance and technology-access restrictions to supply commitments, cybersecurity requirements, EU data localization and independent monitoring. It also creates new information-gathering powers vis-à-vis third parties, provides for first-instance jurisdiction of the Higher Administrative Court, requires publication of prohibitions and permits publication of remedies. The draft further introduces fines of up to EUR 1 million for negligent standstill breaches and up to EUR 100,000 for certain filing and information failures.
Limits to the Scope of Review
- Greenfield investments: Under the current draft, genuine greenfield investments would remain outside the screening regime.
- Licensing arrangements: Licenses would not form a separate acquisition category. However, the explanatory memorandum expressly states that granting a license may qualify as a reviewable asset deal where the licensed rights concern a material part of a German company’s assets. The assessment will therefore turn on the economic substance and importance of the foreign company’s licensed assets, not the transaction label.
- Intra-group restructurings: The exemption would be extended to all three procedures. Previously, it only applied to the cross-sector procedure. It would apply where the transaction is exclusively between entities wholly owned by the same controlling company and no direct or indirect acquirer is added that has its registered office or place of management in a country different from those of the existing transaction parties. The exemption may also apply where the common parent company itself transfers the target to, or acquires it from, one of its wholly owned subsidiaries.
- Bank and insurance resolution transactions: Acquisitions ordered by the competent authorities as part of the statutory resolution of a failing bank, central counterparty or insurer would fall outside the screening regime. These transactions often need to be completed within days to protect financial stability and are already subject to oversight by the relevant resolution authorities.
Outlook
The draft is now in the federal states and industry-association consultation launched on 15 October 2026. Comments are due by 12 November 2026. The package is more developed than the initial reports suggested and already resolves several previously open points, including the broad Annex I dual-use trigger, the new procedure structure and the detailed threshold architecture. Important elements remain open, however: the draft still contains placeholders for the 2027 application date and several drafting notes and broken cross-references.
The German reform also forms part of an ongoing EU-wide process, as Member States adapt their national regimes to the revised EU Screening Regulation. Transactions involving several EU jurisdictions will therefore need to account for parallel regulatory changes across the EU. Businesses contemplating transactions involving German target companies should begin mapping targets against the proposed IPV categories, particularly the semiconductor, AI, quantum, raw-materials, and dual-use definitions, and assess governance and licensing arrangements that may fall within the expanded acquisition concept.
Drawing on many complex reviews, including cases that have shaped the BMWE’s practice, and on our integrated export-control and security expertise, we are uniquely positioned to advise not only on whether a filing is required but also on filing strategy and on what it may take to secure timely, coordinated approval. Our deep integration with Baker McKenzie’s transaction teams enables us to provide strategic corporate FDI advice, from classifying potential targets and assessing underlying FDI risks to designing M&A processes that ensure gun-jumping compliance and factor FDI considerations into broader business operations.
