Germany reviews takeover laws to protect shareholders

The German Federal Ministry of Finance is reviewing potential reforms to the country’s takeover laws to better protect shareholders from “low-ball offers.” These proposed changes follow recent high-profile cases involving Commerzbank and Hugo Boss, where investors significantly increased their control over target companies without offering substantial premiums to existing shareholders.

Under current German law, the 30 percent voting rights threshold is a critical turning point. Experts note that investors can exploit loopholes, such as using derivatives to bypass certain restrictions, to expand their influence once they cross this threshold. This has allowed entities like UniCredit to move from just under 30 percent to 49 percent ownership, enabling them to restructure boards and management.

A legislative draft is expected to be introduced by the coalition government in 2026, with a potential decision by the Bundestag in the first half of 2027. Critics and financial experts argue that the existing Securities Acquisition and Takeover Act (WpÜG) focuses too heavily on legal formalities rather than economic realities, leaving small investors vulnerable to undervalued takeover attempts.