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
• certain AI-based goods for certain listed activi - ties, such as cybersurveillance or the prevention of cyber-attacks; • automated or autonomous motor vehicles, unmanned aerial vehicles, or essential components or essential software for these; • industrial robots (including software and technol - ogy) or providers of specific IT services for these; • (or refiners of) certain semiconductors; or • goods that specifically serve the operation of wire - less or wire-bound data networks; or companies that extract, treat or refine critical raw materials and the ores derived from these materials. Furthermore, follow-up investments and the attribu - tion of voting rights raise typical transaction issues under the FDI screening mechanism. Follow-Up Investments Follow-up investment leading to an increase in the shareholding of a German company at or above the applicable entry screening threshold (10%, 20% or 25%) is reviewable in the FDI screening if the cumulat - ed post-closing voting rights share meets or exceeds subsequent thresholds of (20% or 25%), 40%, 50% or 75%. Clearance Exemption for Public Acquisitions Acquisitions of publicly listed critical targets via a stock exchange must be notified as per other acquisitions but may be closed prior to FDI clearance. However, the parties must observe the gun-jumping prohibitions until FDI clearance has been issued (see 7.4 National Security Review Enforcement ). Attribution of Voting Rights and Atypical Acquisitions In certain circumstances, voting rights held by a third party are attributed to a foreign investor. This is par - ticularly the case if the investor holds at least the required 10%, 20% or 25% of the voting rights in the third party, or if the investor and the third party have agreed to jointly exercise the voting rights in the Ger - man target company (in a voting rights agreement). The term “voting rights agreement” includes agree - ments concluded post-closing.
In addition, the FDI regime extends to transactions in which the investor obtains other forms of effective participation in the target’s management, that is, in the following circumstances: the purchaser acquires voting rights accompanied by special rights (eg, addi - tional board seats/majorities, veto rights for strategic decisions, or special information rights), and this pro - vides a level of control comparable to that provided by the respective applicable threshold of voting rights. FDI Exemption for Greenfield Investments On the other hand, the creation of a new German company (greenfield investment) is not (yet) subject to restrictions under the German FDI regime. An exten - sion of the FDI regime to also cover greenfield invest - ments is under discussion. By contrast, the contri - bution of existing German businesses to a new joint venture (entity) is reviewable if the foreign investor holds voting shares above the applicable screening threshold. FDI Filing: Clearance and Certificate of Non- Objection An FDI filing by the direct acquirer of the German tar - get company (acquisition entity) is mandatory in the case of a critical target (10% or 20% screening thresh - old applies). For other acquisitions, the acquirer may voluntarily submit an application for a “certificate of non-objection”. Such a certificate confirms that the transaction endangers neither public order nor secu - rity. In both cases, the FDI submission to the MoE must contain information on the planned acquisition, the acquirer and the German target company, as well as on their respective business areas. The FDI filing is typically submitted promptly after the conclusion of the acquisition. However, it can also be submitted prior to signing if the transaction param - eters are sufficiently concrete. Screening Periods The deadline for the MoE’s initial FDI review (Phase I) is two months. The FDI certificate is deemed to have been issued if the MoE does not open an investiga - tion procedure following the expiry of the two-month period after signing and the MoE’s knowledge of the transaction or a filing. However, it is MoE practice to
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