In July 2020, the Federal Government of Germany amended the Foreign Trade and Payments Act, introducing a tighter FDI screening regime. 



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Federal Gazette, Erstes Gesetz zur Änderung des Außenwirtschaftsgesetzes und anderer Gesetze, 16 July 2020:*[@attr_id=%27bgbl120s1637.pdf%27]#__bgbl__%2F%2F*%5B%40attr_id%3D%27bgbl120s1637.pdf%27%5D__1615995620597

Federal Ministry for Economic Affairs and Energy, Änderungen im Außenwirtschaftsrecht, 29 October 2020:

Federal Ministry for Economic Affairs and Energy, Press Release, Minister Altmaier: “We want to protect our security interests more effectively and to make our screening more transparent”, 18 June 2020:

Federal Ministry for Economic Affairs and Energy, Runderlass - Sechzehnte Verordnung zur Änderung der Außenwirtschaftsverordnung, 28 October 2020:

Inception date: 17 Jul 2020 | Removal date: open ended

FDI: Entry and ownership rule

In July 2020, the German authorities issued the first amendment to the Foreign Trade and Payments Act ("Erstes Gesetz zur Änderung des Außenwirtschaftsgesetzes") implementing a tightened screening regime following the EU FDI Screening Regulation. The amendment was published on 16 July 2020 in the Federal Gazette and entered into force on 17 July 2020. 

The focus of the amendment is the new scope of the foreign acquisition review. With the amendment, acquisitions of German companies by foreign investors posing "probable impairment" to public order and security are subject to a mandatory screening review whereas before only an "actual risk" would initiate a governmental review. Additionally, the screening mechanism not only refers to Germany's public order and security but also reviews possible impacts on the other EU Member States as well as the impact on EU programs and projects. To support the cooperation mechanism intended by the EU screening regime, the Federal Ministry of Economic Affairs and Energy is established as the national contact body. 

In addition, the Act foresees that the acquisition is suspended for the duration of the review and is deemed provisionally invalid until governmental approval is granted. Certain steps like the exercise of voting rights or sharing of specific information on the target company are also prohibited until the conclusion of the screening review by the Federal Ministry of Economic Affairs and Energy. Infringement of those provisions may lead to criminal proceedings and penalties, including fines and imprisonment. At the same time, the amendment has created new provisions determining time limits for the different stages of the screening review. 

According to a press release of the Federal Ministry of Economic Affairs and Energy, the aim of the amendment was "to make the German investment screening system more effective and resilient." 

The German FDI screening regime is regulated in two acts, the Foreign Trade and Payments Act (Außenwirtschatsgestz) and the Foreign Trade and Payments Ordinance ("Außenwirtschaftsverodnung"). To fully harmonise those two acts, the German authorities published a variations regulation ("Sechzehnte Verordnung zur Änderung der Außenwirtschaftsverordnung") on 28 October 2020, amending the Foreign Trade and Payments Ordinance by the changes already implemented with the first amendment in July 2020. The variation regulation entered into force on 29 October 2020.

For more information on the EU FDI Screening Regime (Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union), see the related State Act. 



On 1 May 2021, a further tightening of the FDI screening regime was adopted by the German government. The new regulations introduce investor screening for several economic activities mostly in the high tech sector, see also the related State Act.