On 29th April 2015 the German federal government (Bundesregierung) published a draft bill implementing the Transparency Amendment Directive on transparency requirements for listed companies ('Transparency Amendment Directive') (Transparenzrichtlinien-Änderungsrichtlinie)) into German law ('Revised Transparency Directive Transposition Act' (Gesetz zur Änderung der Transparenzrichtlinie-Änderungsrichtlinie)).
The European Transparency Directive regulates transparency requirements for listed companies, inter alia notification requirements regarding shareholdings in companies whose securities are admitted to trading on a regulated market and to which voting rights are attached. Member States are required to implement the Transparency Amendment Directive by 27th November 2015. The main objectives of the Transparency Amendment Directive are:
- to make the capital markets more attractive for small and midcap enterprises by the abolishment of the obligation to publish interim management statements;
- the harmonization of the notification requirements, in particular to prevent misleading information of corporate ownership by secret acquirements of stocks;
- the introduction of common guidelines for the enforcement of the transparency requirements through effective sanctions.
The implementation of the Transparency Amendment Directive into German law affects mainly the German Securities Trading Act (Wertpapierhandelsgesetz ("WpHG")). The Revised Transparency Directive Transposition Act provides inter alia adapted notification requirements and strengthened sanctions.
The notification requirements (under sections 21 et seq. WpHG) apply to holdings of voting rights in listed companies. They require shareholdings that reach, exceed, or fall below certain voting rights thresholds to be disclosed immediately, starting with 3% and with a sliding scale up to 75%.
Inter alia, the draft bill contains the following amendments to the current legal situation:
- Under the draft bill the reporting obligations are triggered by the unconditional, immediately to be fulfilled conclusion of the share purchase agreement under the law of obligations (schuldrechtliches Kausalgeschäft) and regardless of an effect in rem (dingliche Wirkung) in order to adapt to the conditions of the other Member States.
- As a legal consequence of the infringement of the notification requirements the investor loses his voting rights. Under the draft bill this loss of rights shall be extended to all assignments of voting rights regulated under section 22 WpHG.
- So-called administrative offences (Ordnungswidrigkeit) against sections 21 et seq. WpHG are punishable with fines up to 10 million Euros for legal persons and 2 million Euros for natural persons. In certain cases the BaFin (Federal financial supervisory authority) may impose higher fines.
The Revised Transparency Directive Transposition Act also affects the Securities Prospectus Act ("Wertpapierprospektgesetz"), the Capital Investment Code ("Kapitalanlagegesetzbuch"), the Securities Acquisition and Takeover Act ("Wertpapiererwerbs- und Übernahmegesetz") and the Commercial Code ("Handelsgesetzbuch").
The draft bill is still awaiting adoption by the German federal parliament (Bundestag). Although it may still be amended, listed companies, shareholders and financial institutions should be making preparations to adapt their internal reporting systems.