Key Considerations ^ Germany remains an investor-friendly jurisdiction, but the German Ministry for Economic Affairs and Energy (BMWE, formerly known as the Ministry for Economic Affairs and Climate Protection, or BMWK) is now heavily scrutinizing deals involving companies active in the communications and IT sectors and/or investors from the People’s Republic of China, investors from the Middle East (in particular state-owned entities), and, increasingly, U.S. investors in defense-related transactions. ^ Investors must notify the BMWE before acquiring interests of at least 10% or 20% of voting rights in German entities that are active in certain business sectors (the relevant threshold depends on the business sector in question). ^ The BMWE may initiate a review on its own initiative in the case of an acquisition by a non-EU/non-EFTA (European Free Trade Association including Switzerland, Norway, Iceland and Liechtenstein) investor of 25% or more of the voting rights in any German company if the transaction poses a threat to public order or security in Germany. Under the anticipated Investment Screening Act and the revised EU FDI Screening Regulation, EFTA investors are expected to be brought within the scope of the German FDI regime, amending the current exemption. ^ The timing of an investment review can be unpredictable, with some complex reviews significantly exceeding the deadlines set out in the applicable laws.
FDI Regime Overview The German rules on FDI are set out in the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz or AWG) and the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung or AWV). A new standalone Investment Screening Act (Investitionsprüfungsgesetz) is actively being prepared by the German government and is expected to consolidate these rules into a single statute and implement the revised EU FDI Screening Regulation; a first draft for public consultation is expected in summer 2026. The BMWE carries out its reviews in consultation with the Foreign Office, the Ministry of Defense and the Ministry of the Interior. Non-German investors need to notify the BMWE before directly or indirectly acquiring voting interests of 10% or more in, or essential assets
of, a German entity that is active in a “sensitive security area” (called “sector specific screening” which includes defense or cryptography sectors). Additionally, investors from outside the EU and the EFTA must notify the BMWE before acquiring directly or indirectly at least 10% or 20% (depending on the relevant business sector) of the voting rights in, or essential assets of, a German entity that is active in certain other sensitive sectors, including critical infrastructure (energy, water and food supply, information technology and telecommunications, health (including certain healthcare services, medical products, pharmaceuticals and labor diagnostic products and services), finance and insurance, transport and traffic, as well as municipal waste) and software for such infrastructure, certain IT services (in particular cloud computing services), IT security products, healthcare and key
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