Few proposed reforms in German foreign trade law have been so long awaited: the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie, “BMWE”) has published the ministerial draft of a standalone Investment Screening Act (Investitionsprüfungsgesetz, “IPG”, dated 13 October 2026). The draft consolidates the investment screening rules currently scattered across the Foreign Trade and Payments Act and the Foreign Trade and Payments Ordinance (Außenwirtschaftsgesetz/Außenwirtschaftsverordnung, “AWG”/“AWV”) into a single statute and implements the EU Screening Regulation (EU) 2026/1386. It is still only a first draft, and changes are likely. However, it already indicates the direction in which investment screening is heading – and where investors need to look more closely.
By way of reminder: if a foreign investor acquires a German company or a stake in it, the BMWE may review the acquisition and, under certain conditions, restrict or prohibit it. Current law provides for two procedures: the sector-specific procedure for defence and IT security, which always requires approval, and the cross-sectoral procedure, in which only non-EU investors are reviewed and only investments in particularly sensitive sectors – such as critical infrastructure and key technologies – are subject to approval; in all other cases, the BMWE has the power to review the transaction. Acquisitions subject to approval may only be completed once the review has been concluded. If the BMWE’s decision is favourable, the outcome is a “clearance” in cases requiring approval or – upon request in other cases – a “certificate of non-objection”.
The present ministerial draft of the IPG retains this logic but reorganises it: alongside the sector-specific procedure, a case-group-specific procedure is to be introduced for the case groups previously subject to approval under the cross-sectoral procedure. Both types of procedure trigger an approval requirement. The cross-sectoral procedure would remain a catch-all provision, with the BMWE retaining the authority to review cases. The sectors subject to approval are to be listed in a new Investment Screening Ordinance (Investitionsprüfungsverordnung – “IPV”). Instead of clearances and certificates of non-objection, there would in future be a single, uniform “approval”.
New threshold architecture
Whether the BMWE is authorised to review an acquisition depends on the percentage of voting rights acquired through the transaction. Currently, three thresholds apply: 10% for defence, IT security, critical infrastructure and related sectors; 20% for the remaining sectors subject to approval (in particular key technologies); and 25% for all other sectors. In future, the 10% and 25% thresholds would remain, while the threshold for the 20% case groups would be raised to 25%. However, this increase is likely to have only limited practical impact: according to the BMWE’s own evaluation, the 20% threshold has never led to any restrictions. For publicly traded companies, a new separate threshold of 15% (instead of 25%) is to be introduced in the case-group-specific procedure. The rationale is that, with low attendance at annual general meetings, even smaller stakes can effectively constitute a blocking minority. For publicly traded target companies, the reorganisation thus tends to have a more restrictive effect.
The ministerial draft would also introduce changes for add-on acquisitions. At present, an add-on acquisition can only be reviewed when certain further thresholds (20%, 25%, 40%, 50% and 75%) are reached, and only up to 75%. The BMWE intends to abolish this “safe harbour”: increasing ownership to 100% would also become subject to review or require approval, as this could result in co-shareholders losing their veto rights. The 40% threshold would be eliminated. For publicly traded companies, an add-on acquisition threshold of 30%, modelled on section 29(2) Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, “WpÜG”), is to apply in future in both the sector-specific and the case-group-specific procedures. In addition, the ministerial draft would expressly attribute to the acquirer voting rights held by a third party for the acquirer’s account – for example in trust and fund structures, according to the explanatory memorandum.
Broader concept of what constitutes an “acquisition”
In future, the concept of an acquisition is to be defined centrally and broadened in three respects. In the case of an asset deal, a “substantial portion” of the assets – which, according to the explanatory memorandum to the ministerial draft, can also comprise a licence – would be sufficient, including assets located in Germany, even if they belong to foreign companies. The acquisition of influence through special rights, such as seats on governing bodies or veto positions, would be subject to review even without the acquisition of any voting rights. And, following the model of antitrust law, the anti-circumvention provision would also cover arrangements that are not intended to circumvent a review but objectively avoid one.
On the positive side, the scope of investment screening would be limited for intra-group restructurings: no acquisition within the meaning of the IPG would be deemed to have taken place where the transaction is concluded solely between companies with the same parent company – or with the parent itself – and no acquirer from a new third country enters the chain of ownership. Unlike under current law, this exemption would apply in all procedures – including sector-specific investment screening –without requiring the parties to the acquisition to have their registered offices in the same third country. Intra-group restructurings would thus in many cases no longer be reviewable. Takeovers by way of resolution tools for banks, central counterparties and insurers would also be exempt, as decisions in such cases regularly have to be taken within a few days.
Greenfield investments are deliberately excluded from the ministerial draft. Only the acquisition of existing companies would be reviewed; according to the explanatory memorandum to the ministerial draft, establishing a new business does not involve the typical risks associated with acquisitions of existing businesses. For greenfield investments in critical sectors, the BMWE points to sector-specific legislation with its own approval requirements.
EFTA privilege removed
Acquirers from EFTA countries (Switzerland, Norway, Iceland and Liechtenstein) are currently treated in the same way as EU acquirers and are subject only to the sector-specific procedure. However, as the EU Screening Regulation classifies every non-EU country as a third country, they would be subject to all three investment screening procedures in future.
Nationality instead of residence
At present, residence in Germany or the EU is sufficient for classification as a domestic or EU acquirer. The ministerial draft would additionally require that domestic or EU acquirers hold German or EU citizenships only. Dual nationals holding third-country passports would therefore always remain foreign acquirers.
Additional and expanded case groups
The IPV would adopt the existing case groups subject to approval and add the sectors specified by the EU Screening Regulation, including semiconductors, quantum technology, certain AI models, critical raw materials (including stockpiling) and electoral systems. The dual-use category is particularly far-reaching: in future, it is intended to cover all listed dual-use goods, such that their development, manufacture or distribution would trigger an approval requirement once 25% of the voting rights are acquired. For critical facilities, actual control would suffice in future, rather than operator status. Meanwhile, the case groups related to personal protective equipment and pharmaceuticals, for example, would be defined more narrowly. Several categories have yet to be agreed upon between the ministries.
New review periods
The review periods appear shorter on paper: Phase I is to last 45 days instead of two months and cannot be extended, while Phase II (the in-depth review) is to last 120 days instead of four months, with the option of an extension of up to 90 days. The catch lies in when the review periods begin: both would only start to run upon receipt of the complete documentation, rather than from knowledge of the signing of the agreement. Whether and when the review period actually begins would therefore depend on the completeness of the documentation – yet the draft does not specify when the BMWE must confirm this. An extension by mutual agreement would only be possible in Phase II and would require only the consent of the acquirer, no longer also that of the seller. Also new is a suspension of the review periods for as long as questions from other Member States or the European Commission under the EU cooperation mechanism remain open. The shortened call-in period after signing – to be reduced from five to three years – promises greater legal certainty if no application for approval is filed.
BMWE’s powers and oversight
The BMWE’s toolkit would be significantly expanded to include interim measures up to and including a prohibition on closing, including in the cross-sectoral procedure and as soon as the BMWE becomes aware of an imminent signing; disclosure obligations for uninvolved third parties such as customers and competitors; and the discontinuation of proceedings that are not being pursued. Investors could no longer rely on the current certainty that screening decisions are, as a rule, not made public: prohibitions would be published naming the parties involved, and other orders would be published at the BMWE’s discretion. There would at least be no right of access to files under the Freedom of Information Act (Informationsfreiheitsgesetz – “IFG”). For the first time, failures to notify, incomplete or late documents and unanswered requests for information would be subject to fines, albeit only of up to EUR 100,000. Fines of up to EUR 1 million would apply to negligent breaches of closing prohibitions, orders or prohibitions. Intentional breaches would remain criminal offences punishable by up to five years’ imprisonment. In future, prohibitions would no longer require a Cabinet decision; instead, the agreement of the Federal Chancellery, the Federal Foreign Office and the Ministries of the Interior, Defence and Finance is to suffice – a lower hurdle for prohibiting an acquisition.
Comment and outlook
Consolidating the provisions into a single dedicated statute is long overdue and would make the law easier to read and understand. Taken as a whole, however, the additional burdens on foreign investors outweigh the benefits. The relief measures – the removal of the 20% and 40% thresholds, the shorter call-in period and the broader exemption for intra-group restructurings – are welcome, but mostly concern cases that are rarely problematic even under the current regime. New and significantly expanded sectors subject to approval, as well as the broadening of the concepts of “foreign acquirer” and “acquisition”, on the other hand, would lead to a substantial increase in the number of acquisitions subject to review.
The ministerial draft is currently undergoing inter-ministerial consultation, in which numerous IPV categories in particular are expected to be up for discussion. The BMWE is now consulting the federal states, industry associations and other stakeholders before launching the parliamentary legislative process. The IPG still has a long way to go before it is enacted as law, and where EU law does not lay down mandatory requirements, far-reaching changes are still possible. Various ministries are already putting forward proposals to tighten the rules, particularly regarding greenfield investments and the screening of EU investors, for example in the area of critical infrastructure.
In terms of timing, the new law is to apply to agreements concluded on or after a cut-off date in 2027 that has yet to be determined; until then, the AWG and AWV would continue to apply. The EU Screening Regulation itself becomes mandatorily applicable from 17 January 2028. In future, the IPV is to be issued as a ministerial ordinance of the BMWE without the consent of the Federal Council (Bundesrat), meaning that the case groups could also be adapted relatively quickly at a later stage.
Forward
