Planned reform of German Investment Review Law: Stricter reviews, streamlined procedures – What investors and companies need to prepare for

I. Background and objectives of the proposed legislation

The legislature is pursuing two main objectives with the IPG: On the one hand, in light of the ongoing and increasingly tense geopolitical situation, the aim is to address risks to the national and economic security of Germany and the EU in a more targeted manner and to close existing gaps in protection. On the other hand, uniform and simplified procedures, shorter deadlines, and a focus on relevant cases are intended to ease the burden on the businesses and government departments, as well as to increase legal certainty and clarity, thereby improving the predictability of transactions.

In addition, German investment screening law is being aligned with the new EU Screening Regulation (EU) 2026/1386, which aims to achieve partial harmonization of the national screening regimes of EU member states. The new EU Screening Regulation will be mandatory as of mid-January 2028. For Germany, this mainly means additional categories of cases that must be reported to the BMWE.

II. New structure in the IPG and IPV

The most obvious difference for legal practitioners is the new structure of the regulatory framework: The provisions previously scattered throughout the Foreign Trade Act (“AWG”) and the Foreign Trade Ordinance (“AWV”) are to be consolidated and systematized into a single, unified law, namely the IPG. In particular, this law sets forth general definitions, the scope of application of investment reviews (definition of relevant acquisitions and thresholds), prohibitions on implementation, reporting obligations, and procedural flow, as well as provisions on criminal penalties and administrative fines. The security-relevant sectors are additionally catalogued in a concise regulation, the IPV.

The draft bill distinguishes three types of procedures:

• The sector-specific procedure applies – as before – primarily to defence equipment and certain IT security products. It continues to cover all foreign acquirers, i.e., including those from other EU member states. 
• The new case-specific procedure applies to other legally defined security-relevant areas, such as critical infrastructure and sensitive technologies. It applies only to acquirers from outside the European Union. This case group comprises acquisitions that were previously subject to reporting requirements under Section 55a (1), (4) AWV.

Under these two procedures, the acquisitions in question remain subject to the reporting requirement as usual and are subject to a prohibition on implementation until approval is granted by the BMWE.

• The cross-sector procedure serves as a catch-all procedure for acquisitions by non-EU acquirers outside the sector catalogs contained in the IPV. There is no reporting requirement in this case; however, the BMWE may review the acquisition ex officio. In such cases, acquirers may voluntarily apply for approval to obtain legal certainty. 

All three types of procedures are set forth in Section 5 of the IPG. The procedural flow, deadlines, and final decisions are to be largely standardized. For the first time, the new draft law also explicitly sets forth, in Section 5 (4) of the IPG, review criteria relating to the target company that must be given special consideration, such as the outflow of know-how and technology, the loss of production capacity with consequences for public services or security of supply, and economic and technological sovereignty and cumulative concentration of acquirers from the same country within a sector. 

III. Substantive changes to German Investment Review

The following changes to investment review law are particularly important for transaction practice:

1. Broader coverage of foreign investors 

The new IPG broadens the personal scope of application: The previous equal treatment of EFTA and EU acquirers no longer applies, meaning that acquisitions by investors from Switzerland, Norway, Iceland, and Liechtenstein will in the future be subject to review procedures. 

The law is also becoming stricter with regard to natural persons: Only individuals who, in addition to having their domicile or habitual residence in Germany, also hold exclusively German citizenship are to be considered domestic investors. As a result, foreign nationals and dual citizens living in Germany would also fall within the expanded scope of the rules. The explanatory memorandum justifies this expansion in particular by citing potential close ties to and civic obligations toward a third country. To be considered a resident of the European Union, the acquirer must hold only EU citizenship and have a domicile or habitual residence in the EU; EU citizens with additional third-country citizenship are therefore considered non-EU residents. This requires the parties to carefully assess the personal circumstances of relevant natural persons throughout the acquisition chain, including ultimate beneficial owners and persons exercising control, from the outset of transaction structuring.

2. Adjustment of Ownership Thresholds 

The draft partially revises the thresholds for reporting obligations under investment control law:

• Thresholds for initiating a review: 
  The 10 percent threshold for triggering a review in the sector-specific procedure remains in place (weapons of war and defense equipment or IT security pursuant to Section 1 IPV). In the case-group-specific procedure, § 2 and § 3 IPV will in the future simplify the determination of the relevant ownership percentage; in each case, the heading of the provision specifies which ownership threshold applies to which listed cases (10% or 25%, depending on the security relevance of the case group; the previous 20% threshold is eliminated). The 25% threshold for initiating a review also applies to the cross-sector procedure. For publicly traded target companies, a reduced threshold of 15% applies instead of 25%, because in such cases, depending on attendance at the annual general meeting, shares below 25% can effectively constitute a blocking minority.
• Additional Acquisition Thresholds:
  The 40% additional acquisition threshold is eliminated; the remaining thresholds remain in effect. In addition, reaching 100% of the voting rights becomes subject to review in all cases. This is because a full acquisition eliminates any veto rights held by other shareholders. For publicly traded companies, reaching 30% of the voting rights through additional acquisitions is to be subject to review.

3. Addition and expansion of security-relevant sectors in the IPV

In accordance with the new EU Screening Regulation, the new IPV expands the list of security-relevant sectors in the case-group-specific procedure to include the following illustrative case groups:

• Companies that develop, manufacture, or distribute goods listed in Annex I of the Dual-Use Regulation (25%). Any update to this list – most recently the amendment adopted by the European Commission on September 14, 2026, which has not yet entered into force – automatically expands the scope of reporting requirements due to the dynamic reference; 
• Research and development of AI technologies (25%; now tailored to general-purpose AI models);
• In addition to the operator, the scope now also includes whoever exercises actual control over a critical infrastructure (10%);
• Ownership, development, or operation of specially designed election systems, voter registration databases, and systems for determining, verifying, or validating election results (25%);

4. “Atypical acquisition of influence” without increased voting rights as a relevant acquisition trigger; asset deals 

In the future, the IPG is also intended to cover the so-called “atypical acquisition of influence” in order to close existing regulatory gaps. Even without the acquisition of additional voting rights, certain special rights are intended to trigger an investment review, e.g., guaranteed seats on governing bodies, veto rights regarding strategic business or personnel decisions, and certain information rights. Contractual arrangements for which there are indications that they are intended to circumvent or actually do circumvent an investment review are also considered acquisitions.

Another new provision is that, in the context of asset deals, the granting of a license (according to the legislative rationale) as well as the acquisition of domestic assets by foreign companies are subject to review, provided that such assets constitute a significant portion of the foreign company’s total assets (Section 6 (1), (3) IPG). Furthermore, it is clarified that individual assets of a domestic company are subject to review if they constitute a significant portion of its assets.

5. Exclusion of greenfield investments and non-critical intra-group restructurings 

Greenfield investments remain outside the scope of the IPG. The explanatory memorandum explicitly clarifies this point, noting that newly established businesses typically do not give rise to the same security risks as the acquisition of an existing company.

Intra-group restructurings will be granted greater preferential treatment in the future under Section 6 (4) of the IPG: The exception applies for the first time to all three types of transactions and now also covers transfers between group companies with places of management in different countries. The prerequisite is that the shares of the companies involved are held in their entirety by the same controlling company and that there are no changes regarding the ability to influence the German target company; furthermore, the restructuring must not result in the entry of an acquirer from a country not previously represented. In the future, the provision will also explicitly cover cases where the parent company itself is the acquirer or seller (Section 6 (4), sentence 3, IPG).

6. Tighter deadlines and a uniform approval procedure, EU-wide coordination of applications

The first review phase is being shortened from two months to 45 calendar days and can no longer be extended. However, the deadline no longer begins when the BMWE becomes aware of the conclusion of the contract, but rather on the day after receipt of the complete review documents. It is therefore crucial to prepare the documents well in advance. The second review phase is being adjusted from four months to 120 calendar days; extensions of up to 90 days with the acquirer’s sole consent, as well as suspensions of the deadline remain possible. A notable new provision is the explicit rule that the deadline in the second review phase is suspended if other EU member states or the Commission submit questions as part of the EU screening mechanism. 

The time limit for ex officio reviews is shortened from five to three years from the conclusion of the contract. This provides the parties with legal certainty sooner, particularly in the case of acquisitions not subject to notification (i.e., cross-sectoral proceedings, see above).

The previous distinction between approval and a certificate of no objection is eliminated: In the future, the BMWE will grant approval in all proceedings. If an in-depth review procedure is not initiated within the applicable time limits or if no measures restricting the acquisition are taken, a presumption of approval applies. For acquisitions not subject to notification, it remains possible to submit a voluntary application for approval (instead of the previous application for a certificate of no objection). 

In implementing the new EU Screening Regulation, for transactions subject to investment review in multiple EU member states, notifications or applications “should” be submitted on the same day and cross-reference one another. This requires early cross-border coordination. 

7. Preliminary measures by the BMWE, a shorter judicial review process, and publication of prohibitions

The BMWE is granted independent statutory authority to issue provisional measures during an ongoing review proceeding or even before it begins – such as restrictions on voting rights and access to information, or the issuance of a provisional injunction. This is intended to prevent irreversible facts from being established before the review is concluded. These powers are particularly relevant in cases of imminent “gun-jumping”, failure to file a notification (Section 19 (2) IPG), or in cross-sectoral acquisition proceedings where statutory prohibitions on implementation do not apply. A prerequisite is that the measures are necessary to safeguard the review process; they may be taken as soon as the BMWE becomes aware of the imminent conclusion of the acquisition agreement. The measures must be limited in duration to no later than the conclusion of the review process (Section 19 (1), sentence 2, IPG); it is also possible to transfer the voting rights to a trustee at the acquirer’s expense (Section 19 (1), (3), IPG).

In the future, the Federal Administrative Court – and thus, as a rule, the Higher Administrative Court of Berlin-Brandenburg (OVG Berlin-Brandenburg) – will have jurisdiction in the first instance over legal disputes, including those concerning these provisional measures, in order to provide the parties involved with greater legal certainty and investment security more quickly.

In the future, prohibitions will no longer require a cabinet decision but rather the agreement of the relevant ministries only, and will be published on the BMWE’s website. However, there remains the possibility of unreported cases of acquisitions that are effectively blocked: cases in which investors abandon their projects based on informal advice from the BMWE are not published as prohibitions; these already account for the vast majority of projects effectively blocked under current practice.

IV. Practical implications for transactions

The planned changes will make investment screening relevant to a wider range of transactions: In particular, the expansion of the reporting requirement to all target companies that develop or manufacture dual-use goods, as well as the broadening of the personal scope of application of the IPG to include EFTA states within the cross-sector review, are likely to necessitate assessing potential reporting obligations in a wider range of cases. Furthermore, in multi-country deals, a focus solely on Germany is no longer sufficient: The envisaged same-day submission of notifications in multiple EU Member States will require closer coordination among advisers and alignment of filing processes. 

On the other hand, the increase of the threshold from 20% to 25%, the elimination of the 40% additional acquisition threshold, and the expanded exemption for intra-group restructurings provide some relief. The three-year time limit on the “call-in” authority is welcome; however, the possibility of retroactive review continues to hang like the sword of Damocles over the transaction, undermining planning certainty. The BMWE remains open to informally discussing any potential filing requirements in advance. 

That said, investment review is increasingly becoming a standard consideration for cross-border investments and should be taken into account from the very beginning of transaction planning.