Foreign Investment Control (AWG/AWV)

Foreign investment control in Germany: an overview

Foreign investment control in Germany allows the Federal Ministry for Economic Affairs and Energy to review acquisitions of German companies by foreign investors and, where public order or security is likely to be affected, to impose conditions or prohibit the transaction. The current legal basis is the Foreign Trade and Payments Act (Außenwirtschaftsgesetz, AWG) and the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, AWV).

There are two regimes: a cross-sectoral review of acquisitions by investors from outside the EU and EFTA, covering all sectors but with mandatory notification in listed sensitive sectors (§ 55 AWV), and a sector-specific review of acquisitions by any foreign investor, including EU investors, in defence and certain security-related sectors (§ 60 AWV).

For investors, foreign investment control has become a standard element of deal planning in Germany. Mandatory filings come with a standstill obligation: until clearance, the transaction is provisionally ineffective and certain actions, such as granting the investor voting rights or sharing sensitive information, are prohibited. Reviews can take several months, the ministry can impose conditions such as security agreements, and in rare cases it has prohibited acquisitions. Private equity funds, sovereign investors, family offices and corporate buyers from outside the EU are all affected, as are EU-based funds controlled from outside the EU.

The framework is about to change. On 22 October 2026 the ministry published a draft bill for an Investment Screening Act (Investitionsprüfungsgesetz, IPG) with a companion ordinance, which would consolidate the screening rules in a new statute; the consultation with the federal states and associations was scheduled to run until 12 November 2026, according to the ministry's announcement. The draft also aims to incorporate the revised EU Screening Regulation (EU) 2026/1386, which according to the ministry applies from 17 January 2028. This page describes the law currently in force and notes where reforms are planned.

Cross-sectoral and sector-specific review

The cross-sectoral review covers acquisitions of German companies, or of direct or indirect holdings in them, by investors from outside the EU and EFTA (§ 55 AWV). The ministry can examine whether the acquisition is likely to affect public order or security in Germany, another EU member state, or projects or programmes of Union interest. The AWV lists factors that indicate a likely effect, including whether the target operates critical facilities, develops or manufactures critical components, provides cloud computing services, or is active in areas such as media, health, critical raw materials, semiconductors, artificial intelligence, robotics, quantum technology and other technologies (§ 55a(1) AWV).

For targets in these listed sectors, the acquisition must be notified before signing or immediately after signing, and the standstill applies.

The sector-specific review applies to acquisitions by any foreign investor, including investors from other EU member states, where the target develops or manufactures war weapons and other military equipment, certain products with IT security functions for classified information, or other specified defence-related goods (§ 60(1) AWV). Here the standard is whether essential security interests of Germany are likely to be affected. Notification is always mandatory, and the standstill applies.

The thresholds refer to the voting rights held directly or indirectly by the acquirer after the acquisition (§ 56 AWV). Further notifications are required when an investor that already holds a stake crosses additional thresholds of 20%, 25%, 40%, 50% or 75%, depending on the sector.

Voting rights of third parties with whom the acquirer has agreements on the joint exercise of voting rights are attributed. Atypical control, for example through board seats or veto rights below the thresholds, can also be relevant. Indirect acquisitions are covered: a takeover of a foreign parent with a German subsidiary in a sensitive sector requires a German filing. The same applies to internal reorganisations within a non-EU group if the direct holder of the German shares changes, although such cases are often cleared quickly. Increases of an existing stake, for example in a later financing round, must be checked against the next applicable threshold each time.

Asset deals, carve-outs and greenfield investments

Foreign investment control in Germany is not limited to share deals. The acquisition of a definable part of a German company's business, or of all essential operating assets of such a part, is treated as an acquisition of a company if the assets are needed to carry on the business. Carve-outs of sensitive divisions, sales of intellectual property portfolios together with the related teams and asset deals from insolvency administrators can therefore be notifiable. Greenfield investments, such as building a new plant, are not covered by the current review, but cooperation agreements and licensing arrangements that give a foreign investor control over sensitive technology can raise export control issues instead.

Listed targets and takeover offers

For public takeovers, the review period begins when the bidder publishes its decision to make an offer or the acquisition of control, rather than when a purchase agreement is signed. Bidders must build the screening timetable into the offer, usually as an offer condition, and the acceptance period and the regulatory long-stop must accommodate it. Stakebuilding before an offer must be checked against the thresholds, because acquiring 10% or 20% of a listed target in a sensitive sector already requires a filing.

Procedure and timelines

Mandatory notifications are made to the ministry, which has two months from obtaining knowledge of the signing to open a formal review procedure; if it does not do so, the acquisition is deemed cleared. If it opens a review, it requests a full set of documents, and it has four months from receipt of the complete documents to decide whether to impose restrictions or obligations (§ 14a(1) AWG).

The period can be extended in complex cases or where the defence or security interests of Germany are particularly affected, and it is suspended while the ministry negotiates with the parties on mitigating agreements or while information requests are outstanding. In practice, simple cases are often cleared within the first phase, while sensitive cases can take six months or more.

For voluntary filings in the cross-sectoral review, the acquirer can apply for a clearance certificate (Unbedenklichkeitsbescheinigung), which the ministry issues if no concerns exist (§ 58 AWV). Obtaining a clearance certificate gives legal certainty, because the ministry can otherwise open a review ex officio within the statutory periods after learning of the signing, and in any event within five years of signing. For transactions near the line of the listed sectors, a voluntary filing is often advisable.

What the ministry looks at

In the review, the ministry examines the acquirer and the target. On the acquirer side, it considers whether the investor is directly or indirectly controlled by the government of a third country, including through ownership structures or significant funding, whether it has previously been involved in activities affecting public order or security, and whether there is a significant risk that the investor or persons acting for it engage in criminal activities or sanctions violations. On the target side, the focus is on the criticality of its products, services, technologies, data and infrastructure, its role in supply chains and its customers in government and defence.

Investors should prepare a clear and documented description of their ownership, governance, funding sources and plans for the target, as incomplete or inconsistent information is the most common cause of delays.

The review also considers the cumulative effect of investments. A series of small stakes by investors from the same state in a specific technology field, or an acquisition that would give an investor access to a German company's know-how through board seats or cooperation agreements, can attract attention even where each step on its own appears harmless. Investors with a long-term strategy in Germany benefit from early informal contact with the ministry and a consistent approach across transactions.

Standstill obligations and sanctions

Where a filing is mandatory, the transaction is provisionally ineffective until clearance (§ 15(2) AWG). In addition, the parties may not, before clearance, enable the acquirer to exercise voting rights directly or indirectly, grant the acquirer dividends or other economic benefits, or provide information on the target that is relevant to the review, such as information on security-relevant technologies. Breaches can be administrative offences or, in the case of intentional violations, criminal offences. The prohibition is broader than the merger control standstill and requires particular care with information shared in due diligence and integration planning, for example through clean rooms for technical documentation.

The ministry can clear a transaction subject to conditions or obligations, typically set out in a public law agreement with the acquirer. Common mitigation measures, which are monitored by the ministry after closing, include protecting sensitive technology and data, maintaining specific capabilities or supply obligations in Germany, restricting access to certain information, and governance commitments. Prohibitions are rare and usually concern acquirers from specific states in highly sensitive sectors, but the possibility affects negotiations and deal certainty. Sellers therefore increasingly ask bidders for commitments to accept mitigation measures and for reverse break fees if clearance is refused, and they assess the regulatory risk of each bidder when choosing between offers.

EU cooperation and other member states

Under the EU Screening Regulation, Germany notifies screened transactions to the European Commission and the other member states, which can comment, and the Commission can issue opinions where projects or programmes of Union interest are concerned. Germany itself comments on screenings in other member states. Investors acquiring groups with subsidiaries in several EU countries must often file in several member states, each with its own thresholds, timelines and standstill rules. A coordinated approach with consistent information on the investor's ownership and intentions avoids contradictions that could delay clearance.

Foreign investment control in deal planning

Foreign investment control in Germany interacts with other reviews. Merger control by the Federal Cartel Office or the European Commission, the EU Foreign Subsidies Regulation for larger transactions, sector-specific approvals and screening in other EU member states often apply in parallel. The EU Screening Regulation provides a cooperation mechanism under which other member states and the Commission can comment on a German review. Investors should coordinate filings across jurisdictions and present consistent information, and should expect questions from the ministry on the competition filings as well. Clearance in one jurisdiction does not bind another, so the slowest review usually determines the closing date. See our pages on merger control and state aid and the FSR.

Investment funds require a look-through analysis. The acquirer for these purposes is identified by looking at the persons who control the fund, typically the general partner and manager, and in some cases at significant investors. A fund managed from the EU can be treated as a non-EU acquirer if it is controlled by non-EU persons. Venture capital investments in German technology start-ups are frequently within the listed sectors, so non-EU investors in financing rounds must check the 10% and 20% thresholds; see our pages on venture capital and private equity.

• Map the acquirer's ownership chain and nationality up to the ultimate investors.
• Check the target's activities against the sector lists in §§ 55a and 60 AWV.
• Respect the standstill, including restrictions on information sharing.
• Prepare for mitigation discussions in sensitive sectors.
• Monitor the Investment Screening Act and the revised EU Screening Regulation.

The planned Investment Screening Act

The draft Investment Screening Act published in October 2026 is intended to make reviews faster and simpler, close gaps in sensitive areas and bring German law into line with the revised EU Screening Regulation. Because the bill was at the consultation stage when this page was written, its final content, including any changes to the sector lists and thresholds, and its entry into force remain open. Investors planning transactions that will be signed in 2027 or later should monitor the legislative process and consider transitional rules in their documentation.

How TRW & Co helps

We advise foreign and domestic investors, sellers and target companies on foreign investment control in Germany. We analyse whether a transaction requires a filing, prepare notifications and applications for clearance certificates, manage the review procedure with the Federal Ministry for Economic Affairs and Energy, and negotiate mitigation agreements. We draft conditions, information protocols and long-stop provisions in transaction documents and coordinate German filings with merger control, foreign subsidies and screening procedures in other countries. To discuss a planned investment, please contact us.