GERMANY Law and Practice Contributed by: Marc Löbbe, Michaela Balke, Oliver Schröder and Martin Kolbinger, SZA Schilling, Zutt & Anschütz
3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments As noted in 2.3 Restrictions on Foreign Invest- ments , German FDI rules have recently been significantly tightened, and the Foreign Subsidy Regulation has been introduced on an EU level (see 2.2 Primary Regulators ). 3.2 Significant Changes to Takeover Law In September 2018, the German Federal Supreme Court ( Bundesgerichtshof , or BGH) took a landmark decision on the definition of “acting in concert” under the German Securi - ties Trading Act. The legal instrument of acting in concert has various impacts on the scope of co-operation between two or more shareholders of a public listed company. The BGH ruled that a one-time agreement between two shareholders regarding the exchange of the members of the supervisory board in order to achieve business realignment does not constitute acting in concert. Therefore, a co-operation does not lead to a mutual alloca - tion of voting rights under the German Securities Trading Act. While the decision was issued in the context of voting rights notifications, the analysis applies to acting in concert potentially triggering a mandatory takeover offer as well. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies Stakebuilding in listed companies below the mandatory offer threshold is subject to strict notification requirements (see 4.2 Material Shareholding Disclosure Threshold ), so that it is in practice limited to a level of sharehold - ing/instruments below the notification threshold
to review concentrations, depending on applica - ble turnover thresholds. If certain (higher) turno - ver thresholds are met, competence for merger control is shifted away from the national (Ger - man) authority to the European Commission. 2.5 Labour Law Regulations In the public M&A context, the target company’s management board must, without undue delay, inform the company’s works council or, if there is no works council, the workforce directly of a takeover announcement, and must forward the public offer document to them. The works council may comment on the offer; its comments have to be attached to, and published with, the target’s management board’s reasoned opinion. In private M&A, the (economic committee of the) works council of the target must equally be informed of any acquisition of the enterprise before binding documents are executed. According to the German Co-Determination Act ( Mitbestimmungsgesetz ), certain companies (stock corporations, partnerships limited by shares, limited liability companies and co-oper - atives) with more than 2,000 employees have to establish a supervisory board, in which half the members must be employee representatives. The same applies to companies with more than 500 employees, pursuant to the German One Third Participation Act ( Drittelbeteiligungsge- setz ), but only one third of the members are required to be employee representatives. 2.6 National Security Review See 2.3 Restrictions on Foreign Investments .
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