On 26 November most provisions of the Act implementing the Transparency Amendment Directive (2013/50/EU of 22 October 2013) entered into force. The implementation results, inter alia, in a significant tightening of the capital market rules on the disclosure of shareholdings in listed companies. These are being harmonised by the directive throughout the EU. In addition, although not connected to the directive and its implementation, the new act introduces a new delisting regime, which had been proposed only shortly before the new act was adopted by the German parliament.

Amongst the amendments to the provisions of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG) on the disclosure of shareholdings, the following are particularly worth noting:

• The structure of the provisions on disclosures has been adjusted. The disclosure obligations regarding voting rights from shares owned or attributable to a person continue to be governed by secs. 21, 22 Securities Trading Act. The notification duties regarding instruments affording to their holder an unconditional right or, respectively, a possibility to acquire, voting rights, which were previously contained in two separate provisions, i.e., secs. 25 and 25a Securities Trading Act, have been consolidated in the new sec. 25 Securities Trading Act. The new sec. 25a Securities Trading Act now provides for an obligation to notify the aggregated holdings of voting rights pursuant to sec. 21 Securities Trading Act and of instruments pursuant to sec. 25 Securities Trading Act.
• The federal financial supervisory authority BaFin issued a standard form, which must be used for any notifications according to secs. 21, 25 and 25a Securities Trading Act.
• The point in time of crossing a notification threshold pursuant to secs. 21, 22 Securities Trading Act has been brought forward. The notification duty is no longer triggered by the transfer of title to the respective securities (typically the booking into the depository account), but already by the underlying contractual agreement. In addition, the rules on the commencement of the notification period have been revised. In this respect it is now being distinguished between the active and the passive crossing of a threshold.
• The relevant amount of voting rights attaching to cash-settled derivatives falling under sec. 25 Securities Trading Act must, according to the revised sec. 25 sub-sec. 3 Securities Trading Act, be calculated on a delta-adjusted basis, meaning that the nominal volume of the underlying securities must be multiplied with the delta applying to the instrument. The delta factor indicates the price change of the instrument in relation to the price of the underlying securities in the event of a change of the stock price and must be determined pursuant to the applicable EU-wide technical standards.
• Pursuant to sec. 24 Securities Trading Act, subsidiaries are exempted from notification duties, if the relevant notifications are made by the parent or grandparent entity. Group notifications are, therefore, possible.
• The obligation of issuers to make a notification if their holding of own shares stock reaches, exceeds, or drops below the relevant thresholds pursuant to sec. 26 sub-sec. 1 sentence 2 Securities Trading Act now also explicitly includes own stock held through subsidiaries.
• Pursuant to sec. 26a Securities Trading Act, any increase or decrease in the total number of voting rights must be published by the issuer within two trading days at the latest, not, as previously, until the end of the calendar month. The publication needs to include the date on which the increase or decrease occurred.
• The sanctions for non-compliance with the disclosure obligations (but also with other capital market rules) have been significantly tightened. In particular, sec. 39 Securities Trading Act provides for far higher fines, the consequence of a loss of rights according to sec. 28 Securities Trading Act has been considerably extended, and a new sec. 40c Securities Trading Act has been introduced, pursuant to which the BaFin must publish any sanctions on its website, indicating the underlying violation and the name of the natural or legal person on whom the sanction has been imposed ("naming and shaming").

Furthermore, through the implementation of the Transparency Amending Directive

• the conditions, on which the Federal Republic of Germany is deemed an issuer's home country, have been changed, and an ensuing obligation of issuers to make a publication if the Federal Republic of Germany is deemed their home country has been introduced (secs. 2 sub-secs. 5 and 6, 2b and 2c Securities Trading Act),
• the provisions on enforcement proceedings have been amended, e.g. event-driven audits may cover financial statements for previous years,
• the obligation of issuers to publish interim management statements concerning the development of their business pursuant to the former sec. 37x Securities Trading Act has been abolished, in order to increase the attractiveness of the capital markets for small and medium companies, and
• sec. 37x Securities Trading Act has been amended to provide for additional reporting obligations of issuers in the extractive or logging of primary forest industries in relation to payments made to governments, which in particular aim at preventing corruption.

Independently from the implementation of the directive, the rules governing a withdrawal from the regulated market ("delisting") have been changed by amending sec. 39 Stock Exchange Act (Börsengesetz). As a result, a delisting now requires a takeover offer in accordance with the Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz), but not an approval by the general meeting of shareholders. The new provisions also cover a move from a regulated market to an open market ("downlisting") und apply to all applications for a delisting or downlisting made after 7 September 2015. For further details please refer to the article "Bundestag adopts new delisting provisions", published on this website on 1 October 2015.

The German text of the Act implementing the Transparency Amendment Directive has been published in the online version of the Federal Law Gazette (Bundesgesetzblatt), Part I, no. 46, dated 25 November 2015, p. 2029 et seq. If you are interested in any further information on any of the above topics, please do not hesitate to contact Christine Oppenhoff.