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Overall, German legislation is quite liberal toward foreign direct investment in German companies. However, given the recent influx of investors from countries outside the EU, and more specifically, recent acquisitions of high-tech companies by Chinese investors, German regulatory authorities have changed their approach toward FDI regulation. As part of this policy, amendments have been made to the current laws within the 2017-2020 period. 

So, let’s have a closer look at FDI regulation in Germany.

Under the current laws, Germany’s Economic Affairs & Energy Ministry must be informed of any upcoming investment in objects of critical infrastructure by both domestic & foreign investors. This requirement particularly applies to M&A deals that may lead to direct or indirect acquisition of a 10 per cent stake in companies. If it turns out that an investment deal poses a threat to national security, the Ministry may prevent the investment from taking place or impose additional sanctions.

The two pieces of legislation governing FDI in Germany are the Foreign Trade & Payment Act & Foreign Trade Ordinance Act. Procedure for rendering a decision regarding a particular investment is described in the Code of Administrative Procedure. 

Under the Foreign Trade Ordinance, cross-industry verification is applied to investors who do not have EU citizenship or reside outside the EU. To prevent fraud or circumvention of FDI rules, EU-based investors may also be subject to relevant FDI legislation. This may apply to investors that aren't involved in any independent economic activities or do not have any office space, staff or equipment in countries of the EU.

Concluding M&A Deals in Germany

The number one authority responsible for verification of M&A deals in Germany is the Economic Affairs & Energy Ministry. It has the legal power to prevent acquisition of businesses in Germany; however, to be able to do that, it has to secure the consent of the federal government. In its turn, the federal government is unable to interfere with any acquisition unless it has secured the consent of the Economic Affairs & Energy Ministry.

German financial regulators are required to investigate M&A deals in Germany which may result in investors purchasing a twenty five per cent stake in a business entity. In their turn, investors must inform the Economic Affairs & Energy Ministry of an upcoming acquisition if:

  • their investment is made in a specific sector;
  • their investment is subject to intersectoral verification & poses a threat to national security.

Other elements of M&A deals, such as a company’s value & turnover require no prior notification or submission of an application to the Economic Affairs & Energy Ministry.

However, investors not covered by the notification obligation are recommended to either notify BMWi of the acquisition or apply for a certificate.


To sum up, there’s a goball tendency toward a stricter approach to foreign direct investment, and Germany is no exception to this rule. And that wraps up our analysis of the specifics of concluding an M&A contract in Germany & FDI regulation in Germany. 

In case you’ve got any questions concerning investment projects in Germany or need legal advice on FDI regulation in Germany, IQ Decision UK is always at your service.