Updated Regulations on Foreign Direct Investment in Germany – Focus on High-Tech Sectors

Mayer Brown

Introduction of the new Rules

The revised rules of the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung or AWV) further extend the competences of the Federal Ministry for Economic Affairs and Energy, which is the governmental body responsible for FDI control. The new rules can be traced back to the joint initiative of Germany, France and Italy who championed amendments to the European legal framework for FDI to protect its key industries from controversial acquisitions by foreign-backed investors. The new amendment further implements the EU-Screening Regulation (Regulation (EU) 2019/452). The new rules entered into force shortly after its adoption, on 1 May 2021.

In essence, there are three material additions to the Government’s toolbox to block transactions that may harm national interests:

  • extended notification requirements, qualifying 27 sectors and industries to be subject to pre-closing notification and cross-sectoral examination, empowering the Government to pre-emptively scrutinize such M&A deals;
  • additional notification requirements for staggered acquisitions even if FDI-clearance has already been obtained; and
  • review of the acquisition of  control rights outside of formal voting rights (although there is no requirement to file such transactions).

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