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Disclosure Rules in Takeovers: Making Sense of Fragmentation in German Law

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Takeover Law in the UK, the EU and China
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Disclosure rules serve the acquirer to prepare a formal bid or acquisition and the formation of the price. Financial markets regulators have a range of interests in receiving accurate data from listed and unlisted companies and other market players. Presently, legislatures also seek to react to inbound foreign investment reflecting a perceived need to protect domestic industry from foreign takeovers. This involves a flurry of problems ranging from policy formulation to implementation and application of the relevant rules. In this chapter, the author argues that German takeover law suffers from historic fragmentation and a poor formulation of industrial policies and legislative objectives. She suggests a method of reorganising the methodology of legal classification of such rules in four layers. The chapter explains these issues by drawing on a prominent recent example of inbound foreign investment as well as an industrial scandal, both testing the current legislative landscape in Germany.

Dr Maren Heidemann is Associate Research Fellow at the Institute of Advanced Legal Studies, School of Advanced Studies and Visiting Lecturer at the Centre for Commercial Law Studies at Queen Mary, University of London. Assessor Iuris (Germany), PhD, LLM (Nottingham). She is also a director of The London Centre for Commercial and Financial Law, London.

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  1. 1.

    See for instance Oetker (2019), p. 9. This may look distinctly oversimplified when considering the historic evolution of commercial law, see for instance Horn (2005). Nevertheless, academic debate has focussed more on the distinction of commercial law from general civil law than on the role of the public/private dichotomy in this area of law. See on this also Heidemann (2016). Petra Buck-Heeb emphasises the interlaced nature of German capital markets law in particular with rules of a civil, public and criminal law nature, see Buck-Heeb (2014), p. 7.

  2. 2.

    See on this Andenas (2018), Cherednychenko (2015), Deipenbrock (2018a), Bridge and Braithwaite (2013).

  3. 3.

    See Buck-Heeb (2014), pp. 3–7, 14.

  4. 4.

    See below Sect. 3. et seq.

  5. 5.

    See below Sect. 5.

  6. 6.

    See for a concise overview of UK law in this area Moore and Petrin (2018), especially Chapters 3 and 10 on takeovers.

  7. 7.

    An extended overview can be found in Buck-Heeb (2014), pp. 7–14.

  8. 8.

    See below Sect. 3.1 for more detail.

  9. 9.

    See below Sect. 3.2.

  10. 10.

    See further below Sect. 1.3.

  11. 11.

    See Cole in this volume.

  12. 12.

    See Meijers in this volume.

  13. 13.

    Section 1.2 above.

  14. 14.

    See above Sect. 1.

  15. 15.

    Buck-Heeb (2014), p. 3.

  16. 16.

    The events are being referred to as “Black Tuesday” after the stock market crash beginning on Tuesday, 29 Oct 2019 at the New York stock exchange leading to panic selling and ensuing total loss of value to the extent of over 400 billion dollar in today’s money. See also below Sect. 3.2.

  17. 17.

    A lack of relevant regulation had been one cause for this catastrophic event which led to a world wide economic crisis which itself supported political instability and unrest in Europe which is considered to be one cause of World War II.

  18. 18.

    The Northern Rock crisis, triggered by a mishandling of derivative financial instruments based on so called subprime mortgages taken out by customers on properties predominantly situate in the US.

  19. 19.

    The collapse of Lehman Brothers.

  20. 20.

    See below.

  21. 21.

    These changes were agreed by a number of regulators including the “Basel Committee” and the Bank of International Settlement (BIS) in Basel, Switzerland, who adopt the “Basel Accords” on a regular basis in a traditional form of transnational industry self regulation. The EU had reformed its regulatory framework establishing the European System of Financial Supervisors (ESFS) consisting of three sectoral supervisory bodies at EU level, the European Securities and Markets Authority, (ESMA) according to Regulation (EU) No 1095/2010; the European Banking Authority (EBA) according to Regulation (EU) No 1093/2010 and the European Insurance and Occupational Pensions Authority (EIOPA) according to Regulation (EU) No 1094/2010.

  22. 22.

    See further Alexander et al. (2018).

  23. 23.

    Tilman Repgen has reflected on this problem extensively in his analysis of the creation of the present German civil code adopted in 1900, Repgen (2001). See also Bydlinski and Mayer-Maly (1994).

  24. 24.

    See on this in the area of EU banking regulation and business conduct rules Andenas (2018); Della Negra (2020).

  25. 25.

    This phenomenon is often exacerbated by the choice of legislative organ as in the case of EU institutions with their limited treaty derived competences as opposed to state legislatures who have a full range of options as to how best to approach a given problem.

  26. 26.

    VO (EU) Nr. 462/2013.

  27. 27.

    See on this in detail Deipenbrock (2018b), Andenas (2018), Cherednychenko (2015), Veil (2014).

  28. 28.

    Buck-Heeb (2014), p. 7. This difficulty is due to the nature of the regulations which constitute a general duty, not a specific duty of care towards the individual as well as the nature of the capital market (price formation) and its double function in corporate law and financial markets law. The German supreme court, Bundesgerichtshof (BGH) has accepted that a breach of information duties can lead to liability under §826 of the civil code (BGB) where the intentional or reckless infringement of a regulatory norm constitutes an immoral act, see e.g. the decisions in BGHZ 160, 134 and 149 (“Infomatec”); BGH NJW 2005, 2450 (“EM.TV”) and BGH WM 2007, 486 (“ComROAD III”).

  29. 29.

    See for instance a recent decision of the German Federal Supreme Court on acquisitions of private limited companies: BGH 6.11.2018, II ZR 199/17.

  30. 30.

    See Oosterhuis (2018), D’Alvia (2018).

  31. 31.

    See on this Oosterhuis (2018).

  32. 32.

    See Andenas and Wooldridge (2009).

  33. 33.

    Some consider that such rules may be subject to a so called split interpretation according to their ‘split’ legal nature as Petra Buck-Heeb explains, Buck-Heeb (2014), p. 15.

  34. 34.

    Through the EU Commission and the national competition authorities.

  35. 35.

    Through the distinctive civil litigation channels such as class actions and punitive damages.

  36. 36.

    See comprehensively on this Furse (2012).

  37. 37.

    See for instance Oetker (2019), p. 8. See also generally Brinktrine (2010).

  38. 38.

    A supreme court judgment in these cases has not yet been reached because the disputes have eventually mostly been settled. Arguments were based on contractual rights and established case law on misrepresentation rather than on defective performance. See Oberlandesgericht (Upper Regional and Appeal Court) Bamberg – 6U 5/17 – decision of 20 September 2017.

  39. 39.

    It could be understood to serve as a kind of limitation of state liability.

  40. 40.

    See BGH Decision of 8 January 2019, VIII ZR 225/17, available at (last accessed 21 March 2019). The reason for this conclusion is the fact the licensing authority is entitled to revoke the licence of the car at any point due to the breach of emission rules—a device which had been installed in contravention of Art 5 (2) first sentence of Regulation 715/2007/EC—which renders the car unfit for the contractually agreed purpose. Cf. section I Lit. 1 (c) of the underlying judgment of the Regional Court in Bayreuth, LG Bayreuth 21 O 34/16, available at, (last accessed 21 March 2019).

  41. 41.

    See Regional Court of Cologne, judgment of 12 April 2018, Az. 24 O 287/17 damages paid upon return of the used car relying on §826 BGB confirmed on appeal by Upper Regional Court OLG Cologne with decision of 3 Jan 2019, Az. 18 U 70/18 available at (last accessed 21 March 2019). See also judgment of 14 Nov 2018 by the Regional Court of Augsburg Az. 021 O 4310/16 where for the first time the buyer was granted a right to return the car for a full replacement of the purchase price with interest and no deductions were made for the actual use of the car. Text of the judgment available at (last accessed 21 March 2019).

  42. 42.

    This rule is operated on a ‘comply-or-explain’ basis.

  43. 43.

    See in detail Veil (2014), chapter 4, who gives an overview of scholarly debate on the subject of enforceability and liability for breaches of the disclosure rules.

  44. 44.

    See on this Heidemann (2019).

  45. 45.

    According to §17 of the Wertpapierprospektgesetz (WpPG).

  46. 46.

    §40 WpHG. See also below Sects. 4 and 5 for more detail.

  47. 47.

    Quoted from the English version of the German Securities Trading Act as published by BaFin available at;jsessionid=5831AFCE61BB352696FD170F1CE42687.1_cid390?nn=8379954#doc7856864bodyText39 (last accessed 2 Aug 2019).

  48. 48.

    See Oetker (2019), p. 7.

  49. 49.

    See Tran (2002).

  50. 50.

    The facts can be reviewed at a glance on the news website of the BBC: BBC News (2002) and CNN: CNN (2019).

  51. 51.

    Excessive bonus payments, a hire-and-fire-culture, lack of oversight were all made out to be reasons for spectacular failures such as the demise of Barings Bank and the sub prime mortgage crisis which started with the crisis of the British bank and building society Northern Rock in 2007.

  52. 52.

    The Basel Accords are guidelines, recommendations of good governance and a transnational industry standard in the financial sector adopted by an international committee of central bankers (the Basel Committee) meeting periodically at the Bank for International Settlement (BIS) in Basel, Switzerland. The guidelines are an example of industry self governance and have acquired an increased significance in the wake of the financial crisis of 2008 informing regulators, especially in prudential regulation for banks. The relevant set of principles is referred to as “Basel III”. The text of these as well as the history of the Basel Committee can be found on the Committee’s website (last accessed on 28 July 2019.).

  53. 53.

    See on this Deipenbrock (2018a), Sergakis (2018), chapter 13.

  54. 54.

    This time limit runs from the time when the purchaser or seller becomes aware of the circumstance giving rise to the reporting duty. It is presumed that this will be the case within two trading days, § 33 (1) 3rd sentence WpHG.

  55. 55.

    See generally on this Brinckmann (2014).

  56. 56.

    Directive 2004/25/EC, OJ L 142/12 (30 April 2004).

  57. 57.

    See for instance the ‘Shrimp/Turtle caseʼ (United States—Import Prohibition of Certain Shrimp and Shrimp Products) WTO Dispute DS58, materials available from, [last accessed 28 Aug 2019].

  58. 58.

    Current negotiations where such policies are publicly debated include the (now suspended) Transatlantic Trade and Investment Partnership (TTIP) between the EU and the USA as well as the Comprehensive Economic and Trade Agreement (CETA), the recent EU-Canada trade agreement.

  59. 59.

    Manager Magazin (2019).

  60. 60.

    “Nach Auffassung des Bundesfinanzministeriums hätte der Investor sein Engagement einen Tag früher bekannt geben müssen”, (“The federal ministry of finance is of the opinion that the investor would have had to announce his investment one day day earlier”), Handelsblatt (2018).

  61. 61.

    Handelsblatt (2018), Kroener (2018), Manager Magazin (2018). The detailed steps of the acquisition are described by Jourdan and Shirouzu (2018) and Wilk (2018).

  62. 62.

    Manager Magazin (2018).

  63. 63.

    Bartz et al. (2018).

  64. 64.

    Deutscher Bundestag (2018a, b).

  65. 65.

    Response of 15 June 2018 published in the Parliamentary Gazette Bundestagsdrucksachen BT-Drs. 19/2771. Kroener (2018).

  66. 66.

    See Wilk (2018).

  67. 67.

    In fact, in late 2018, the German Federal Financial Supervisory Authority, short BaFin, imposed a fine on Morgan Stanley for infringing §§ 33 and 34 WpHG, see Bundesanstalt fuer Finanzdienstleistungsaufsicht (2019): “On 3 December 2018, BaFin imposed administrative fines amounting to 2.4 million euros against Morgan Stanley & Co. International plc.” The investment firm was also involved in helping Li Shufu’s business acquire the desired amount of shares in Daimler which allowed the transaction certain exemptions from the disclosure rules.

  68. 68.

    §44 (1) second sentence WpHG, §§58 (4) and 271 AktG.

  69. 69.

    See for instance the news coverage by the BBC (BBC News, 11 Feb 2000, available at;even, last accessed 30 July 2019); even 10 years later it has been referred to as “The mother of all takeovers” (Deutsche Welle, the international German radio station, “Mannesmann: The mother of all takeovers”, 3 Feb 2010, available at The deal produced no lasting economic success (The Telegraph lists it under “top 5 worst merger deals ever” on 29 July 2019, see, last accessed 30 July 2019). Nevertheless, it was felt in the public perception as a painful loss to German traditional industry. It also prompted the adoption of the WPÜG in 2000.

  70. 70.

    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, OJ 21 March 2019, L 79 I/1, See also the earlier contributions on this subject made for the International Federation for European Law (FIDE)’s congress 2010 collated in Rodriguez Iglesias and Ortiz Blanco (2010).

  71. 71.

    CJEU, case C-604/11, Bankinter, para 57. See also CJEU, case C-222/02, Peter Paul, ECLI:EU:C:2004:606; Moeslein (2015), Andenas (2018).

  72. 72.

    Dohmen et al. (2019) and Hoffmann (2018).


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Heidemann, M. (2021). Disclosure Rules in Takeovers: Making Sense of Fragmentation in German Law. In: Lee, J. (eds) Takeover Law in the UK, the EU and China. Springer, Cham.

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