Voting rights in German companies
How to comply with BaFin's notification requirements and avoid fines
If you hold voting rights or equivalent instruments in German companies, you need to be aware of the notification regime that applies to changes in your holdings. Failing to notify the issuer and the German Federal Financial Authority (BaFin) of reaching, exceeding or falling below certain thresholds can result in hefty fines, often reaching seven figure sums, suspension of voting rights, publication of the breach and damage claims.
In this article, we explain the legal background, the notification triggers, the sanctions and the mitigation strategies for breaches of the German voting rights disclosure obligations.
Legal background
The German voting rights disclosure obligations aim to ensure transparency and efficiency in the financial markets and to reduce information asymmetries among investors.
Read more Legal backgroundConsequences of a breach
Many companies miss the notification requirements for voting rights in Germany, which have very short deadlines and unclear legal rules. They may forget to notify, send wrong, incomplete or late information, or not follow the correct format.
Read more Consequences of a breachHow can I mitigate the fine?
If you want to avoid a long and costly administrative fine proceeding, you should consider negotiating a settlement with BaFin. This strategy can help you save time and money, as well as secure a favourable outcome. Settlements can also lower the fine significantly.
Read more How can I mitigate the fine?The following calculator is intended to give you an idea of the scale for a fine resulting of a particular breach of notification requirements.
Please note that BaFin has a wide discretion when determining the fine and the final amount of the fine will depend on the particular circumstances that might mitigate or aggravate the breach of notification requirements.
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Q&A
- Is it better to keep quiet about a breach of the notification duties that you have noticed or to come forward with it afterwards?
- Does a breach of notification duties prescribe?
- How long does an administrative fine procedure typically last?
- What costs do I have to expect during the fine proceedings?
- Can my breach and the corresponding sanction be published?
- Do I have to expect further consequences after the conclusion of a fine procedure (e.g. stricter sanctions in future fine procedure)?