The following summary highlights selected legislative changes and recent court cases in the general corporate sphere which we deem of specific future interest for the transactional business in Germany and the M&A market at large in the year 2022 and beyond.
While German corporate legislative activities in 2020 were, at least partly, characterized by short-term responses to the COVID-19 pandemic, the major corporate reform in 2021 (i.e. the Act on the Modernization of the Law on Partnerships (Gesetz zur Modernisierung des Personengesellschaftsrechts, MoPeG) discussed below in section 3) and Germany’s continued and robust drive for more beneficial ownership transparency of corporate structures (see section 4 below), but also the German Federal Supreme Court’s (Bundesgerichtshof, BGH) decision on the future qualification of English limited liability companies under German law following the completion of Brexit (see below section 5), reinforce traditional dogmatic choices and existing German preferences in favor of public registers also for the longer-term future and in the international context.
At the same time, the international competition between national legal orders remains vibrant. The German legislature appears recognizant of the resulting need for continued globalization whilst safeguarding typical German core values: Both the continued expansion of the catalogue categories of the German Foreign Trade and Payments Ordinance (Außenwirtschafts¬verordnung, AWV) discussed in section 1 and the German Business Stabilization and Restructuring Act (Unternehmensstabilisierungs- und restrukturierungsgesetz, StaRUG) introduced with effect as of January 1, 2021 (see section 2) can be seen as reactions to continued globalization, but also as attempts to serve and protect national interests.
We will round off our selected summary of noteworthy German-law changes and initiatives with another key area of expected future change, the area of ESG (environmental, social, governance, see section 6). In particular with the Green Party (Bündnis 90/Die Grünen) featuring as one of the junior partners in the newly elected German government coalition, it can be expected that this area will be a focal point of legislative and social reforms that will also affect the way business and, thus, M&A will be done in the future.
Certain of these changes will affect M&A activity and how transactions are structured in the future more immediately than others: While the need to consider a potential foreign direct investment (“FDI”) clearance by the German Ministry for Economic Affairs (BMWi) is quickly turning into a second standard pillar of regulatory work besides the traditional anti-trust review, the impact of ESG considerations on transactional due diligence reviews is only just starting to be felt in certain limited M&A transactions.
Similarly, the need to disclose the ultimate beneficial owner in the German transparency register will likely not shape how M&A transactions are done, but nevertheless indirectly influences soft factors of the general investment climate. The impact of certain other of the above discussed corporate headline changes for 2022 will probably also be felt mostly by similar indirect reflex.