Germany Approves Law to Limit Foreign Takeovers

The legislation does not affect investors from Germany's 26 partners in the EU as well as those from Iceland, Norway, Switzerland and Liechtenstein

The German parliament gave final backing on March 6 to a law allowing the state to prevent certain foreign investors from acquiring more than 25% of the voting rights in companies deemed strategic .

The economy ministry will be able to oppose such acquisitions if they are seen to represent a threat to "public order and security," according to a text of the legislation, approved by the upper house, or Bundesrat. The lower house, the Bundestag, approved the law on February 13.

The legislation does not affect investors from Germany's 26 partners in the EU as well as those from Iceland, Norway, Switzerland and Liechtenstein.

When the text of the law was adopted by the cabinet last August, the economy minister at the time, Michael Glos, said the legislation would be applied "with maximum restraint," noting that it was rare for foreign investors to take a stake of more that 25% in German businesses.

The law originated in 2007 in response to the growing clout wielded by powerful sovereign wealth funds in China, Russia and some oil-powered Arab states.

Copyright Agence France-Presse, 2009

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