The Associated Press | Wednesday, August 20, 2008

Germany approves law against some foreign investor actions

BERLIN: The German government on Wednesday approved a law that would allow it to block moves by foreign investors to take large stakes in German companies, if it concludes that they endanger the country’s interests.

Chancellor Angela Merkel’s government has for the last year been considering rules that might make it possible to curb, for example, takeovers by state-controlled foreign funds.

The plan that got support from the Cabinet on Wednesday requires approval in parliament, where Merkel’s "grand coalition" of right and left has a large majority.

The legislation would allow the government to examine planned purchases of 25 percent or more of a German company’s voting shares by investors based outside the European Union or the European Free Trade Association, the Economy Ministry said.

The government would be able to initiate an examination only within three months of the deal, it added. It would be able to impose restrictions on or block a deal, if it is deemed to pose "a threat to public order or security," a ministry statement said.

"Germany is and remains open to foreign investments," Economy Minister Michael Glos said. He stressed that "the majority of foreign investments will not be affected by the draft law."

His ministry said that foreign state funds often take stakes of less than 25 percent in companies. It added that the plan is in line with EU law.

Germany started drawing up the law amid concerns that countries with large currency reserves, such as China or Russia, might seek big investments elsewhere.

The plan requires approval in parliament, where Merkel’s "grand coalition" of right and left has a large majority.