On 20 May 2025, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin") launched the consultation to propose substantial amendments to the German Ownership Control Ordinance (Inhaberkontrollverordnung, "InhKontrollV") (“Draft Regulation”). These amendments are intended to reduce the administrative burden in relation to information and documents to be submitted as part of qualifying holding procedures (“QHP”). The overall goal is to shorten the overall timeline of QHPs generally.
Objectives of the InhKontrollV
The main focus of QHPs is to allow regulators to assess whether the proposed (direct or indirect) acquirers are reliable and financially sound. Generally, the InhKontrollV specifies the information which proposed acquirers have to provide to BaFin in order to allow BaFin (and ECB in cases where the target is a CRR credit institution) to assess the proposed acquirers in a complete and timely manner.
Experience with the current InhKontrollV
Under the current InhKontrollV, the complexity of QHPs has been seen criticised by market participants as too burdensome and time-consuming in particular due to the amount of documents, form and language requirements. Consequently, the time required to collect and prepare all required documents is lengthy. As the official (60 to 90 working days) assessment period is only triggered after BaFin has confirmed the completeness of the filing the overall timeline of the QHP can have a serious impact on the underlying transaction and for instance needs to be reflected when considering a long-stop date in the SPA.
Key changes to the InhKontrollV
Opportunity to allow electronic submissions (without an additional physical submission)
In order to reduce the number of physical documents to be submitted to BaFin and Bundesbank, the Draft Regulation allows BaFin and the German Central Bank (Deutsche Bundesbank, “Bundesbank”) to opt for an electronic filing of the relevant documents and information. Although this way of submission will depend on the authorities’ request to submit the documentation electronically and might also be limited to only certain documents, it will ease the submission of documents as neither postal delivery nor the printing of extensive documents (e.g. annual report which may exceed 500 pages) will be necessary in the future.
Enhanced recognition of non-criminal records of foreign countries
With respect to persons which have been resident outside Germany in the past ten years, a certificate of non-criminal record will be required only for those countries which are not included in the European non-criminal record certificate (Europäisches Führungszeugnis) pursuant to section 30b of the German Federal Central Register Act (Bundeszentralregistergesetz, “BZRG”). Hence, it will be sufficient for persons resident in an EU member state (as well as the United Kingdom and Northern Ireland) during the past ten years to submit a European non-criminal record certificate.
No wet-ink signature requirement for CVs
Under the Draft Regulation CVs of the proposed acquirers’ board members do no longer need to be personally signed in wet-ink. However, there is no indication in the Draft Regulation that declarations of reliability of board members could also be submitted without a wet-ink signature.
Unlimited reference to previous filings
Under the current InhKontrollV, documents and information provided in the course of previous QHPs do not need to be re-submitted to BaFin if they have been submitted in the past two years and are still up to date. Under the Draft Regulation such time limit is lifted and no longer limited to previous QHPs. However, a new time limit of 12 months is implemented as far as certificates of non-criminal record and German central trade register excerpts are concerned.
Exemption for intermediary entities acquiring or increasing a qualifying holding
Notifying parties which are part of a group, do not qualify as parent entity of such group and are not the direct acquirer of the target entity would only be required to submit (i) the respective notification form and (ii) if needed, a form for complex shareholding structures including a structure chart. No additional documents would be required for such intermediaries. In particular for complex group situations and internal reorganisations, this amendment of the InhKontrollV will enhance the efficiency of the QHP significantly. It is also reasonable as intermediary companies usually do not have direct operational influence on the target entity.
Requirements for existing qualifying shareholders
Existing qualifying shareholders are required to notify BaFin and Bundesbank about appointing new authorised representative (typically executive board members) by providing the required documents for a fit and proper assessment of these candidates (i.e. a declaration of reliability, a CV, a certificate of non-criminal record and an excerpt from the German Central Commercial Register). Under the Draft Regulation, indirect qualifying shareholders which are not the ultimate parent entity of the group, only need to provide such fit and proper documents if requested by BaFin. For direct qualifying shareholders or indirect qualifying shareholders which are the ultimate parent of the group, BaFin may waive the requirement to submit such documents.
Resume
Although some of the changes are already accepted by BaFin in practice, the Draft Regulation proposes reasonable changes to enhance the efficiency of QHPs. By reducing the administrative burden for the proposed acquirers, a faster confirmation of completeness of the filing seems achievable. In this respect, the assessment period can begin earlier and the proposed changes may have the potential to shorten the overall timeline of the QHP.
With respect to the lifted two-year limitation of previous filings, it would be advisable and desirable – for the sake of regulatory consistency – to also reduce the time limitation in section 8 para. 1 of the Investment Firm Ownership Control Ordinance (Wertpapierinstituts-Inhaberkontrollverordnung – “WpI-InhKontrollV”) as there is no material reason for treating those cases differently.
Forward
