To avoid any security risks, the Federal Ministry for Economic Affairs and Energy (BMWi) may review the acquisition of domestic companies by foreign buyers in individual cases. The Foreign Trade and Payments Act and the Foreign Trade and Payments Ordinance provide the legal basis for this.

As a rule, the cross-sector investment review procedure applies here (Section 5 Subsection 2 of the Foreign Trade and Payments Act, Sections 55 - 59 of the Foreign Trade and Payments Ordinance). This procedure applies in principle to all sectors regardless of the size of the companies involved in the acquisition. Special rules apply to the acquisitions of certain defence and IT security companies (cf. sector-specific investment review, Section 5 Subsection 3 of the Foreign Trade and Payments Act, Sections 60 - 62 of the Foreign Trade and Payments Ordinance).

Review of company acquisitions >25 % Enlarge

Review of company acquisitions >25 %

© BMWi


Infografic as (PDF, 23KB)

Legal framework of cross-sector investment review

Any acquisition of a company by investors located outside the territory of the EU or the EFTA region whereby investors acquire ownership of at least 25 % of the voting rights of a company resident in Germany can be subjected to such review. If the direct buyer is resident in the territory of the EU, such review may be performed if there are indications of an abusive approach or a circumvention transaction (Section 55 Subsection 2 of the Foreign Trade and Payments Ordinance).
The review considers whether the respective acquisition poses a threat to the public order or security of the Federal Republic of Germany, i.e. whether the acquisition represents a sufficiently serious and present threat which affects a fundamental interest of the society. The text of the Act therefore refers directly to EU legislation and the case law of the European Court of Justice (ECJ). To date, the ECJ has acknowledged that public security may be affected by acquisitions related to issues such as security of supply in the event of a crisis, telecommunications and electricity, or the provision of services of strategic importance.

  • Review procedure
    In the current legal situation, there is no general requirement for investors to obtain approval for an acquisition undertaken by them. Acquirers of companies, which operate critical infrastructures in Germany or support operators of critical infrastructures with customized software have to notify the acqisition to the Federal Ministry for Economic Affairs and Energy. In all cases, the Economic Affairs Ministry may ex officio conduct a review within three months from the day of obtaining knowledge of the acquisition agreement (Section 55 Subsection 3 of the Foreign Trade and Payments Ordinance).

    Irrespective of this, an investor may request a binding certificate of non-objection from the Economic Affairs Ministry (Section 58 of the Foreign Trade and Payments Ordinance) prior to the planned acquisition in order to obtain legal certainty at an early stage. The certificate of non-objection confirms that the acquisition does not raise any concerns related to the public order or security. The written application shall include basic information on the planned acquisition, the domestic company that is the subject of the acquisition, and the respective fields of business. If the Economic Affairs Ministry does not open an in-depth review within two months from the receipt of the buyer's written application for a certificate of non-objection, the certificate shall be deemed to have been issued (Section 58 Subsection 2 of the Foreign Trade and Payments Ordinance).

    In the event that an in-depth review is opened, the buyer shall be obligated to submit all relevant documents. Detailed information on this was published in the Federal Gazette (Bundesanzeiger) on 2 September 2013 by means of a general order. Furthermore, the Economic Affairs Ministry may request additional documents for the review. The acquisition may be restricted or prohibited only within four months after the full set of documents has been submitted.
    During the review period, the legal transaction on which the investment is based shall be effective. However, the acquisition shall be subject to the resolutive condition of the acquisition being prohibited.

    The Economic Affairs Ministry is responsible for the implementation of the review procedure. It shall involve other federal ministries concerned in the particular case within the scope of their respective competences. The issuance of orders or prohibitions may require the consent of the entire Federal Government. This provision underlines the exceptional character of restrictions or prohibitions of foreign direct investments.

Legal framework for sector-specific investment reviews

Special rules for investment reviews apply to the acquisition of companies that operate in sensitive security areas. This includes manufacturers and developers of war weapons, ammunition, military equipment and products with IT security features that are used for processing classified government information. Similar special rules also apply to the acquisition of a company that operates a high-grade earth remote sensing system (Section 10 of the Act on Satellite Data Security).

Any acquisition of a company by foreign investors whereby these acquire ownership of at least 25 % of the voting rights of a company resident in Germany can be subjected to such review. The review considers whether the respective acquisition poses a threat to essential security interests of the Federal Republic of Germany. In this context, relevant EU legislation and the case law of the European Court of Justice (ECJ) need to be taken into account.

  • Review procedure
    In contrast to acquisitions covered by the cross-sectoral rules, all these sensitive acquisitions must be notified for the sector-specific investment review (Section 60 Subsection 2 of the Foreign Trade and Payments Ordinance). The written notification shall include basic information on the planned acquisition, the buyer, the domestic company that is the subject of the acquisition, and the respective fields of business. If the Economic Affairs Ministry does not initiate a formal review procedure within three months from the receipt of the buyer's written notification, the acquisition shall be deemed to have been approved (Section 61 of the Foreign Trade and Payments Ordinance).

    In the event that a review procedure is opened, the buyer shall be obligated to submit further documents. Detailed information on this was published in the Federal Gazette (Bundesanzeiger) on 2 September 2013 by means of a general order. Furthermore, the Economic Affairs Ministry may request additional documents for the review. The acquisition may be restricted or prohibited only within three months after the full set of documents has been submitted (Section 62 of the Foreign Trade and Payments Ordinance).

    The legal transaction on which the acquisition is based shall be provisionally ineffective until the Economic Affairs Ministry grants its express or implied approval within the time periods specified above. The Economic Affairs Ministry is responsible for the implementation of the review procedure. It shall involve other federal ministries concerned in the particular case within the scope of their respective competences. Any orders or prohibitions shall be issued where appropriate by agreement between the Federal Foreign Office, the Federal Ministry of Defence, and - concerning IT-related matters - the Federal Ministry of the Interior.

Judicial review

Any decisions resulting from review procedures for foreign trade and investment are subject to judicial review by an administrative court.