Tightening of investment control: new challenges for M&A practice

This year's tightening of investment audits under the Foreign Trade and Payments Act (AWG) and the Foreign Trade and Payments Ordinance (AWV) pose new challenges for M&A practice. In particular, the scope of application was expanded, a prohibition of enforcement for reportable shareholdings was introduced, and prohibitions were facilitated. The implications are far-reaching and affect even transactions that at first glance appear problem-free. In addition, the federal government is currently already discussing about further tightening.

Scope of application of investment control

Investment control covers direct and indirect investments in German companies by acquirers from outside the EU or EFTA (so-called non-EU parties). If the target company is active in an area that fulfills a catalog criterion, the scope of application is already opened at an acquisition of 10% of the voting rights.