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[Translate to English:] Foreign Direct Investment

Investment controls / foreign direct investment (FDI)

Against the backdrop of geopolitical tensions and global market shifts, transactions in which foreign investors acquire stakes in German companies or take them over entirely are gaining in strategic importance. German lawmakers – like those in many other jurisdictions – are responding to this development with strict reporting obligations and far-reaching investigative powers. Their goal is to stringently monitor acquisitions in sectors critical to security and supply chains, as well as in particularly innovative industries, and to prohibit them or impose conditions where necessary.

It is therefore crucial that the companies involved identify investment control risks at an early stage and consistently comply with the requirements of (German) foreign trade law, alongside other regulatory clearance and reporting requirements (specifically merger controls – Find out more about our advisory services in antitrust law here). This applies to both the German target company and the foreign buyer or investor. At the same time, there is a growing need for sound, prudent advice that combines regulatory, industry-specific and transaction law expertise in order to successfully execute complex cross-border investment projects.

Our advisory services

Our team advises (international) strategic and PE/financial investors as well as (German) target companies and their sellers on all matters related to cross-sector and sector-specific investment controls.

We provide you with comprehensive and forward-looking advice on clarifying potential reporting obligations in Germany and – where applicable – other European and international jurisdictions. Our team assists you in structuring legally compliant transactions and oversees investment review proceedings with the relevant authorities in an efficient and solution-oriented manner. In doing so, we always keep the transaction timeline in view and integrate investment control requirements into the overall process at an early stage.

Why is that crucial for you as a client? Forward-looking investment control compliance is what makes the difference between swift, legally compliant closing and costly delays, imposed conditions or prohibitions – directly protecting your transaction security, timelines, budget targets and reputation goals.

assessment of the applicability of investment control regulations,
evaluation of the feasibility of merger proposals under investment law, in particular related to the risk of conditions being imposed or prohibition,
where appropriate, early “unofficial” contact with the relevant authorities and ministries in advance,
drafting investment control clauses in sale of business agreements (e.g. closing conditions, covenants, long stop dates),
preparation and submission of investment control applications to the relevant authorities,
close collaboration with and coordination of local counsel in international jurisdictions to ensure the cross-border preparation, submission and management of investment control applications as well as to consistently manage the process in coordination with all parties involved, and
coordination with merger control proceedings and other regulatory proceedings to create synergies – specifically merger controls and foreign subsidies regulation (FSR).

We support you throughout all phases of investment control proceedings: starting with strategic preparation and the decision between applying for a certificate of non-objection and a formal review process, through to the preparation of applications and communication with the relevant authorities, right up to negotiations on conditions imposed, commitments or other ancillary provisions. If you wish, we can also assist you in structuring internal processes to ensure ongoing compliance with investment control and foreign trade regulations.

Thanks to our interdisciplinary expertise and our clear industry focus, we are familiar with the industries under particular scrutiny by the Federal Ministry for Economic Affairs and Energy (BMWE), under whose purview investment controls fall. With foresight, experience and diligence, we support you in bringing international transactions – particularly those with German target companies – to successful and efficient completion.

With investment control regimes in Germany, the European Union and numerous third countries significantly tightened in recent years and growing political sensitivity toward foreign investments, a careful investment control analysis is an integral part of any international transaction. When we carry out such an analysis, we place particular emphasis on conducting consistent reviews of the often-numerous regulatory requirements for a transaction and managing administrative proceedings centrally. Against this backdrop, we are a one-stop shop for merger controls, investment reviews, foreign subsidies regulation (FSR) and state aid issues. In this way, we help you to take interdisciplinary requirements into account in a legally compliant, efficient manner to avoid delays, prohibitions, legal sanctions and, ultimately, risks to your reputation.

Many German companies have branches in China and, conversely, many Chinese companies make direct investments in Europe. We assist you with your global investments. What sets Luther’s FDI expertise apart is our exceptional knowledge of the Asian market, with our own offices directly on the ground allowing us to provide excellent advice on China outbound transactions as well as inbound reviews, which are part of the day-to-day work of our Asian offices. Find out more about our expertise in one of the world’s most dynamic investment environments: China | Luther Lawfirm