Federal Minister for Economic Affairs Katherina Reiche (CDU) is driving forward a new legal framework designed to shield the German economy, specifically against external influences such as China. This initiative stems from the draft “Investment Review Act,” which was reported on by “Handelsblatt”.
The proposed law mandates stricter investment screening processes that the Ministry of Economic Affairs must conduct when a foreign investor seeks to enter a German company. According to the draft, the necessity for these changes is driven by the fact that the “geopolitical security situation and the risks to national and economic security in Germany have significantly worsened.” However, the document has not yet been coordinated among the various departments of the federal government.
The detailed 86-page document outlines several specific requirements. It is planned that ownership stakes in publicly listed companies will now be subject to review starting at a 15 percent threshold. Furthermore, the legislation proposes requiring a repeat review of foreign investors should they attempt to take over a German company entirely.
Another key element of the proposed act restricts the investment check solely to those providing capital from outside the European Union. While countries such as Switzerland, Iceland, Liechtenstein, and Norway were previously exempt from these rules, the new legislation would bring them under the same regulatory requirements.
