GERMANY Law and Practice Contributed by: Gregor von Bonin, Natascha Doll, Andreas Ruthemeyer, Stefan Schröder and Mirko Masek, Freshfields
7. Due Diligence/Data Privacy 7.1 Energy and Infrastructure Company Due Diligence In Germany, the due diligence process for listed energy and infrastructure companies is governed by a combination of securities law, stock exchange regu- lations and corporate governance principles. Public companies are allowed to provide financials, business plans, intellectual property, legal documents, and operational data to bidders, but this must be done with careful consideration of its interest in protect- ing sensitive, potentially price-sensitive information, unless the information is already generally available. The information disclosure may already constitute inside information, requiring the public company to implement pertinent compliance procedures such as establishing restricted teams, ensuring strict confi- dentiality, managing self-release of information, and continuous monitoring. As a general rule, the public company may only disclose price-sensitive “inside” information if there is a “need to know”. This assess- ment primarily rests with the management board of the public company. The management board of a public company plays a critical role in balancing the interest of confiden- tiality with the aim of a successful deal. While there is no strict requirement to do so under German law, the management board of a public company will be expected to give the same information to all bidders during a competitive process, thereby preventing any bidder from gaining an advantage based on better access to information as selective information-sharing might conflict with the fiduciary duties of the manage- ment board to act in the best interest of the company and its shareholders. 7.2 Restrictions Several legal and regulatory restrictions impact the due diligence process for energy and infrastructure companies in Germany, primarily concerning data privacy.
One key area of restrictions arises from confidential- ity obligations under regulatory permits, concession agreements and contracts. Also, the General Data Protection Regulation (GDPR) is paramount, requiring that any personal data dis- closed during due diligence must be handled in full compliance with its principles. Special data protection obligations can arise in exceptional cases, such as in the scope of the Metering Point Operation Act (MsbG), which governs smart meters and energy consump- tion data, requiring careful consideration for targets in these niches. The disclosure of a takeover bid in Germany is gov- erned by the WpÜG and EU Market Abuse Regulation (MAR). The WpÜG applies to voluntary offers for public companies that have their registered seat in Germany and whose shares are listed on a European Economic Area or German stock exchange. The bidder needs to make a public announcement under WpÜG if it has decided to launch an offer (which typically coincides with the signing of a business combination agree- ment with the target and execution of any irrevoca- ble undertakings). The target may also be required to make an ad hoc disclosure if the information about the potential deal has become inside information under MAR, but is permitted to delay such disclosure if this is in the best interest of the company, the public is not misled and confidentiality is maintained. This also means that a target may be forced to announce that it is in talks if a leak occurs. If a bidder reaches or exceeds 30% ownership in a publicly listed target company or decides to launch a tender offer to acquire shares in a publicly listed target company, the bidder must disclose this immediately, meaning a formal notification to BaFin and the rel- evant stock markets must occur within seven working days after the 30% threshold is reached and other- wise immediately after the bidder decides to launch a public tender offer. This early disclosure ensures transparency and fair information access for all mar- ket participants and is aimed at preventing insider 8. Disclosure 8.1 Making a Bid Public
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