An effort in Germany to keep foreign investors at bay has sparked an uproar among governance activists, who say new legislation to keep the so-called “locusts” in check will also hamper efforts to raise boardroom standards and encourage responsible share ownership.
At issue is Germany’s Risk Reduction Act, which expands the scope of what it means for one investor to be “acting in concert” with another. German law already requires investors who own more than 30 percent of a company to launch a bid for the rest if they are working together and to make disclosures about their plans. But last year an important court ruling sharply narrowed the situations where this applied, effectively limiting its scope to coordinated voting at annual shareholder meetings. Now the government is proposing new laws to undo that court ruling and cast the net wider.
