GERMANY - Plans by the German government to raise the bar for sovereign wealth funds (SWFs) investing in German companies have come under fire from the American Chamber of Commerce (AmCham).

German political parties have been in dispute for several months now over regulations aimed at keeping the influence of foreign SWFs to a minimum.

Most recently, the plans comprised a provision under which investments into German companies by non-EU or EFTA investors exceeding 25% of the firm's capital could either be rejected altogether or restrictions coud be imposed on the investment.

The non-profit organisation AmCham with the self-proclaimed goal to "further the competitiveness of Germany as an investment location" said in a statement the planned regulations "present a certain risk to the investment climate", adding:

"Sovereign wealth funds should by no means be seen as a threat. In order to ensure open conditions favorable to investment, it is important to dispel doubts about sovereign wealth funds as early as possible," said the business group.
 
AmCham noted SWFs have never influenced the operational activities of a company or the policies of a state in which they are invested and have proven to be "reliable, unproblematic investors" over the last decades.

The organisation also pointed out SWFs have so far seldom owned more than 10% of a company via investments.

In order to ensure further investments by these and other funds, AmCham has urged the government to consider short deadlines for approving investments by SWFs.

"AmCham Germany advises against excessive processing times and therefore calls for the possibility for appeal, the so-called 'Aufgreiffrist' to be limited to three months. Decisions either for or against approval should be made after a brief processing period of no more than four weeks."

The organisation confirmed it preferred multilateral solutions to national measures and added the EU had already suggested self-commitment rules for these funds to comply with certain transparency standards.

"Public discussions alone could give the impression that Germany discourages investors and needlessly limits vital international capital flows," AmCham warned.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

Topics