Regulatory Due Diligence
Thorough legal due diligence is indispensable in larger M&A transactions. Yet key aspects of financial regulatory law are frequently overlooked or underestimated. A target company may, for example, have regulated subsidiaries – such as licensed institutions under the KWG, payment service providers under the ZAG or insurance undertakings under the VAG. In such cases, it is essential to verify whether the necessary licences are in place; ownership control proceedings may need to be initiated. Early and comprehensive analysis of potential regulatory implications is a consistent feature of our advisory approach.
Even where no obvious regulatory nexus exists, activities within the target group may prove to be licensable. Time and again, due diligence processes reveal business models in which payment services are conducted without the required authorisation. Our in-depth regulatory expertise allows us to identify and mitigate such risks at an early stage.
Public Takeovers – Planning and Execution
Public takeovers of listed companies in the EU are subject to specific rules, notably the EU Takeover Directive and the German Securities Acquisition and Takeover Act (WpÜG). In these processes, it is essential to monitor capital markets and regulatory requirements throughout – from strategic planning and preparation of the offer document to the acceptance phase. This extends beyond the transaction itself to include ongoing reporting obligations and restrictions on subsequent acquisitions. Poorly designed takeover processes are difficult to correct at a later stage, particularly due to tight timelines, strict statutory deadlines and early-triggered legal consequences.
Our extensive experience in dealing with supervisory authorities ensures that the process runs efficiently and regulatory requirements are taken into account from the outset.
Insider Law, Ad Hoc Disclosure and Other Pitfalls in Capital Markets Transactions
Where a transaction involves financial instruments traded on a regulated market, MTF or OTF, the Market Abuse Regulation (MAR) generally applies. MAR imposes a wide range of obligations that are particularly relevant in M&A contexts. Such transactions frequently give rise to inside information, the unlawful disclosure or use of which must be prevented through robust organisational measures, including temporary exemptions and insider lists. Close monitoring and proactive action are essential.
The desire of capital market participants for transparency, and investors’ interest in thorough preparation and execution, often sit in tension with each other – resulting in complex procedural requirements. We support clients with our expertise, including in determining when an ad hoc disclosure is required. Under the recently adopted EU Listing Act, we have successfully litigated cases concerning whether and when intermediate steps in protracted transactions must be disclosed.
Ownership Control Proceedings
Acquiring qualifying holdings in regulated institutions (such as credit institutions, financial services institutions, payment service providers or insurance undertakings) generally triggers ownership control proceedings. These proceedings are formally complex and can significantly affect transaction timelines. If the requirement is recognised too late, inadequately prepared, or overlooked entirely, the process can become a “poison pill” for the transaction. We therefore assess the relevance of ownership control at an early stage and ensure that all formal requirements are properly addressed.