Germany - Changes to the Regulation on the Supervision of Shareholdings (InhKontrollV)

Key issues of the Second Regulation on the Supervision of Shareholdings

The implementation of new European requirements is leading to changes in the German Banking Act (Kreditwesengesetz (KWG)) and the Regulation on the Supervision of Shareholdings (Inhaberkontrollverordnung (InhKontrollV)). The German Federal Financial Supervisory Authority (BaFin) will announce the new InhKontrollV after a consultation period ending on 5 June. On 8 May 2015 BaFin announced the intended changes on its webpage. The amendments include new methods for calculating substantial holdings and an extension of the requirements to provide proof as to the reliability of the holder (of the notified shareholding).

The key issues are:

1. New calculation method regarding substantial holdings ("bedeutende Beteiligung") in credit-institutions and financial service providers.

A ‘substantial holding’, as defined in Section 1 (9) KWG, is considered to have the same meaning as a "qualifying holding" pursuant to Article 4 (1) no. 36 of the European regulation (No 575/2013).

According to the definition set out in the European regulation, the following are regarded as being "qualifying" or "substantial" holdings in a target company:

• a holding of at least 10 % of the capital or voting rights directly, or
• a holding of at least 10 % of the capital or voting rights indirectly, or
• the ability to exercise significant influence over the management of the target company.

One or more of these conditions may apply for a holding to be considered ‘substantial’.

For examples please click here.

2. Extended obligations to prove reliability: the obligation to submit certificates of good conduct and extracts from the central commercial register (Gewerberegister).

In the course of the so-called ownership control procedure, notifying natural persons have to prove their reliability by submitting "certificates of good conduct for submission to a state authority" and extracts from the central business register. In the case of residents of another European state, the persons have to prove their reliability by submitting a "European certificate of good conduct for submission to a state authority". If such documents are not issued by the authorities of the country of residence, the notifying persons have to submit a similar original certificate showing proof of reliability issued by a supervising authority of their country of residence. In the case of a notifying party having his residence in different states in the last ten years, such certificates and other relevant documents of all relevant states have to be submitted.

The documents must not be older than three months.

3. The necessary notification forms will also be changed.

4. For details please refer to BaFin’s webpage.

5. Before the new InhKontrollV can enter into force, BaFin has to consult the central associations of the institutions, the insurance supervisory authorities of the German States and the German Federal Bank (Deutsche Bundesbank). BaFin is currently undertaking this process and it is therefore uncertain when precisely the changes will come into effect.