GERMANY LAW AND PRACTICE Contributed by: Daniel Möritz, Jan Bonhage, Hendrik Bockenheimer, Carl-Philipp Eberlein, Markus Ernst, Matthias Rothkopf, Christoph Wilken and Alexander Rang, Hengeler Mueller
holdings of voting rights, financial instruments that allow the holder to access voting rights or combina - tions of such holdings are taken into consideration. Failure to comply with these notification requirements may result in the loss of rights attached to the (under - lying) shares – in particular, voting and dividend rights – for the period during which the requirements are not met and, under certain circumstances, even for an additional period of six months. In addition, issuers may request information from intermediaries to determine the ultimate holders of shares pursuant to the German Stock Corporation Act. Takeover regulation As mentioned in 3.2 Regulation of Domestic M&A Transactions , the German Securities Acquisition and Takeover Act regulates acquisitions or takeovers that reach or exceed the 30% threshold in the target’s vot - ing rights. 5.3 Investment Funds The German FDI screening regime applies to foreign investors structured as investment funds and to lim - ited partners investing in investment funds – see 1.2 Regulatory Framework for FDI . Indirect shareholding is typically attributed to the fund’s foreign top hold - ing company and, in some cases, even to the fund’s limited partners (investors). Limited partners who indi - rectly hold an investment in a German company can generally avoid FDI screening if their voting rights fall below the FDI screening thresholds – 10% or 20% for critical targets and 25% otherwise (see 7.1 Applicable Regulator and Process Overview ). 6. Antitrust/Competition 6.1 Applicable Regulator and Process Overview The German merger control regime is contained in Sections 35–43 of the Gesetz gegen Wettbewerbsbe- schränkungen (Act against Restraints of Competition, or ARC). FDI – like any other investment – must be notified to the Bundeskartellamt (Federal Cartel Office,
or FCO) prior to being implemented if the following jurisdictional requirements are met. Firstly, the transaction must amount to a “concentra - tion”, which may be triggered by various events: • acquisition of – sole or joint – control over another undertaking; • acquisition of all, or a substantial part, of the assets of another undertaking; • acquisition of shares in another undertaking of 25% or more or 50% or more; and/or • any other combination enabling one or several undertakings to exercise a material competitive influence over another undertaking. Notably, in contrast to many other jurisdictions, Ger - man merger control captures the acquisition of a non- controlling minority shareholding if the threshold of 25% is reached (or even below 25% if the acquirer will have a material competitive influence over the target post-merger). Secondly, at least one of the following two thresholds must be met. • Turnover threshold – the criteria for meeting this threshold are: (a) the combined aggregate worldwide turnover of the undertakings concerned exceeds EUR500 million; (b) the turnover of at least one of the undertak- ings concerned exceeds EUR50 million within Germany; and (c) the turnover of another of the undertakings concerned exceeds EUR17.5 million within Germany. • Transaction value threshold – the criteria for meet - ing this threshold are: (a) the combined worldwide turnover of all the undertakings concerned exceeds EUR500 mil - lion; (b) the turnover of at least one of the undertak- ings concerned exceeds EUR50 million within Germany; (c) the total transaction value amounts to more than EUR400 million; and (d) the target has substantial activities in Germany.
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