Conducting an M&A transaction in Germany requires obtaining permission from the FCO (the local regulator). The regulator must also be sent written notification of a deal before & after its completion. Initiating a transaction prior to sending a notification or submitting incorrect or incomplete documentation may entail penalties.
Both buyers & sellers are responsible for registering an M&A deal in Germany. However, it’s purchasers that normally apply for registration on behalf of everybody involved in a transaction.
Acquiring shares of a German company also requires sending a notification to the regulator. Application fees rarely exceed fifty thousand euros (if no major influence is exerted on the German market). Sometimes, participants may be required to pay one hundred thousand euros or more (if a deal is concluded under exceptional circumstances). Determined by the regulator, the commission size is calculated based on the deal’s administrative & economic significance.
M&A deals in Germany can’t be completed unless there’s a confirmation from the regulator or a waiting period of thirty days (Stage I) or 120 days (Stage I & II) expires after a notification is made.
Those planning to conclude an M&A deal in Germany should keep in mind that they may be granted a waiver if there’s sufficient reason for doing so (e.g. if it’s established beyond a reasonable doubt that granting a waiver can prevent serious damage to the participants or 3rd parties). Participants have a right to withdraw their notice at any time if the regulator decides to complete the procedure.
Initiating an M&A deal in Germany before obtaining permission may result in fines:
- of up to EUR 1 mln;
- of up to ten percent of a company’s total world turnover in the previous fiscal year.
Germany: M&A Transactions Involving Foreign Companies
Concluding retention agreements between foreign firms prior to getting approval from the regulator is possible if no significant influence is exerted on the market. However, for that to happen, the regulator must carefully analyze a deal & issue its verdict.
Germany: Public M&A Deals
Concluding a public M&A deal in Germany doesn’t always require obtaining prior permission. Initiating a transaction by conducting a public tender in Germany is possible if buyers refrain from exercising voting rights associated with transaction-related securities.
German regulatory authorities require participants to provide only basic information in their notification. It includes:
- registration place;
- business type;
- turnover (internationally, domestically & in the EU);
- market shares (domestically);
- basis for own calculation, if the aggregate market shares are 20% or more;
- owned securities (in the event of purchasing a German company’s shares).
Notifications must be submitted in German. Foreign participants are required to appoint authorized representatives formally responsible for communication with regulatory authorities.
If additional information or data verification is required, the regulator may contact other market participants to get their feedback.
If it’s determined that the conclusion of an M&A deal in Germany poses no danger to competition (Stage I), the regulator may issue an informal letter of authorization which cannot be appealed by any 3rd parties.
If there’s concerns regarding competition, the regulator must inform the participants of its plans to launch an investigation (Stage II).
Considering concluding an M&A deal in Germany? Need advice on m&A regulation in Germany? Why not contact IQ Decision UK?