Disclosure Requirements - Germany

16.06.2011

Disclosure Category: 2

In the case of bearer shares, there is no legal obligation on CBL to disclose the identity of its customers or their holdings to issuers or to the regulator.

In the case of registered securities, there is a legal (contractual) obligation on the part of CBL to disclose the identity of the shareholder to the issuing company.

Consent

Customers holding German registered shares consent and are hereby deemed to consent to disclosure and to the appointment of the requestor as their attorney-in fact, under power of attorney to collect from CBL such information as is required to be disclosed. Customers who do not want to grant such authority to CBL should refrain from holding such shares in their account with CBL.

Disclosure requirements

With regard to German registered shares accepted in CBL, customers should be aware that the German company issuing the shares may require CBL, on request and/or on a regular basis, to disclose to that company information relating to the identity of CBL customers holding any of the company's registered shares in CBL and the quantity of shares held.

Furthermore, should the above reporting reveal that a customer's holding in the registered shares of some German companies whose shares are accepted in CBL exceeds a certain amount of shares, the company may require CBL to request the customer to disclose the legal status and location of the final beneficiaries of that customer's holding; no information relating to the identity of the final beneficiaries need be disclosed.

Background and legal basis

In Germany, companies may issue shares in bearer or registered form.

In the case of bearer shares, there is no obligation on custodians to disclose customer information, although shareholders themselves may have the obligation to disclose, for example, when crossing reporting thresholds.

In the case of registered shares, the Articles of Association of a German company issuing such shares may require CBL, upon request and/or on a regular basis, to disclose to that company information relating to the identity of its customers. CBL typically registers such holdings in its own name and is consequently bound by the rules of the issuing company.

Corporations that have issued registered shares may insist, in the Articles of Association, that company approval (from the board of managing directors or from the supervisory board) or shareholder approval (at the AGM or at an EGM) is required before shares can be transferred.

Obligation to report threshold crossings

Notification and disclosure requirements relating to major holdings of voting rights in listed companies are governed by Sections 21 and following of the German Securities Trading Act (WpHG) covering companies domiciled in Germany whose shares are admitted for trading in a regulated market on a stock exchange. There is an obligation on the shareholder to notify the Federal Financial Supervisory Authority (BaFin) or the listed company.

According to Sections 21 and following of the Securities Trading Act (WpHG), any person whose shareholding in a listed company reaches, exceeds or falls below the 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75% thresholds of the voting rights in a listed company by purchase, sale or any other means shall notify the company and BaFin in writing of having reached, exceeded or fallen below any of the said thresholds and of the size of its percentage of the voting rights, stating its address and the day on which it reached, exceeded or fell below the threshold.

Notification must be made immediately and at the latest within four business days.

The legal basis for such disclosure is found in the following applicable legislation:

  • Securities Trading Act (Wertpapierhandelsgesetz);
  • Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz);
  • Stock Corporation Act (Aktiengesetz);
  • Directive 2004/109/EC of the European Parliament and the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (Directive 2004/109/EC; O.J. 2004 L390 p.38);
  • Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission of securities to official stock exchange listings and on information to be published on those securities (Directive 2001/34/EC; O.J. 2001 L 184 p.1);
  • Investment Act (Investmentgesetz).

Sanctions

Any person who does not fulfil their disclosure obligations is subject to administrative fines.