GERMANY Law and Practice Contributed by: Leif Gösta Gerling, Matthias Krämer, Anna Reuber and Jiabao Gerling-Li, LPA
has successfully positioned itself on the market – an option that would not have been possible (or at least not in this form) if it had remained as a sub-division within the respective undertakings of the JV parties. 3. JV Regulation 3.1 Legal Framework and Regulatory Bodies Regulatory Bodies Key regulatory oversight comes from several authori - ties, as follows: • the Federal Cartel Office ( Bundeskartellamt ) enforces merger control and antitrust rules under the German Act against Restraints of Competi - tion (GWB), requiring notification for JVs meeting certain turnover thresholds; • the Federal Ministry for Economic Affairs and Climate Action (BMWK) screens investments under the German Foreign Trade and Payments Act/ Regulation (AWG/AWV) for JVs involving non-EU investors in sensitive sectors such as defence or critical infrastructure; • Data Protection Authorities (DPAs), led by the Fed - eral Commissioner for Data Protection and Free - dom of Information (BfDI), enforce strict compli - ance with the GDPR and the German Federal Data Protection Act (BDSG), and oversee virtually all JVs that process personal data; and • sector-specific bodies are also relevant, such as the Federal Financial Supervisory Authority (BaFin) for finance, the Federal Institute for Drugs and Medical Devices (BfArM) for pharma and medi - cal devices, the Federal Office for Motor Vehicles (KBA) for automotive and the Federal Network Agency (BNetzA) for energy and telecommunica - tions. Legal Framework Germany’s legal framework for JVs is not contained in a single law, but rather is a combination of cor - porate, competition and regulatory statutes. Beyond those enforced by specific regulators, core statutory foundations include general corporate and commer - cial law. The German Limited Liability Companies Act (GmbHG) provides the flexible structural basis for most incorporated JV vehicles, governing their for -
mation and governance. For partnership-style JVs, the German Commercial Code (HGB) may serve as the statutory basis. Furthermore, the German Works Constitution Act (BetrVG) mandates employee co- determination through works councils, directly influ - encing JV governance and operations where employ - ees are present in Germany, even though it lacks a single national enforcement regulator. 3.2 Anti-Money Laundering Compliance Germany’s anti-money laundering (AML) framework is built mainly on the German Money Laundering Act (GwG) and several sector-specific regulations. General compliance obligations include verifying the identity of customers and their beneficial owners; this includes, for example, checks on whether politically exposed persons are involved. JVs must assess the purpose and intended nature of the business relation - ship. This information must be continuously monitored and updated, and all available information must be incorporated into a consolidated risk analysis. If the risk of money laundering is increased according to the risk analysis, JVs must observe special due diligence obligations where necessary, such as special justifica - tion for maintaining business relationships and closer monitoring. JVs must establish clear internal responsibility for AML compliance (due to shared ownership in a typical JV), including appointing an AML officer and defining internal reporting lines. 3.3 Sanctions, National Security and Foreign Investment Controls Restrictions on Co-Operation With Joint Venture Partners in Germany The German FDI regime only applies to transactions involving the acquisition of shares or assets of a Ger - man company. Therefore, only the incorporation of a JV involving the contribution of assets forming the essential operating resources of a German company or a separable part of a German company may fall within the scope of German FDI control. Germany is considering broadening the scope of investment con - trol to cover greenfield investments, including JVs that do not involve the contribution of assets.
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