Cutting red tape for notifications on qualifying holdings in regulated entities

The German Regulation on Controls of Qualifying Holdings (Inhaberkontrollverordnung) governs the requirements for the prudential assessment of individuals and entities intending to acquire or increase a qualifying holding in certain regulated financial institutions. When intending to acquire or increase a qualifying holding such notifications, including all pertinent documents, must be filed immediately. Notifications under the Regulation on Controls of Qualifying Holdings often prove to be onerous and lengthy, in particular as regards the collection of the documents which must be submitted together with the application. Nonetheless, submission of a proper notification is of particular importance, as the deadline of 60 to 90 working days for BaFin’s assessment and potential refusal of a transaction will only commence where BaFin confirms that the notification is complete.

BaFin wishes to reduce the length of these notifications and has identified several aspects of the current German requirements that are not strictly necessary from a regulatory perspective and – from a practical perspective – could help reducing the bureaucratic burdens for the submission of complete notifications. Therefore, BaFin now launched a consultation on changes to the Regulation which aim at facilitating complete notifications so that the statutory time period for BaFin´s control of qualifying holdings may start at an earlier stage and thus contribute to a shortening of the procedure. The review will also affect certain requirements of the German Regulation which could be seen as “gold plating” in comparison to the Joint ESA “Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector”.

We would like to highlight the following changes proposed by BaFin:

• BaFin may now require that notifications are submitted electronically.
• The draft introduces changes relating to documents on the reliability of the applicant. In particular, there shall be less rigid requirements for the use of foreign documents merely comparable to official German certificates of conduct (Führungszeugnis).
• CVs shall no longer require handwritten signature.
• The use of up-to-date and still valid information that has already been submitted to BaFin in another context shall be extended. Currently, such use of information is limited to information submitted in the course of another notification of qualifying holding and that is not older than 2 years. The proposed changes shall allow such use of information to information and documents that have already been submitted in the course of other notifications (not necessarily another notification of qualifying holdings but also e.g. license applications or notifications on the appointment of managing directors). Furthermore, this shall not be restricted to information not older than 2 years.
• BaFin also suggests a significant reduction of the documentation for entities belonging to the same group. There shall be no need to submit documents where the entity obliged to make a notification for the acquisition or increase of an indirect holding forms part of a group and is not the group’s parent company. This includes alleviations for entities in the group structure already having notified a qualifying holding in the past if they merely wish to notify personal changes.
• Finally, BaFin wishes to introduce significant easing as regards the documentation to be provided by notifying financial services institutions only providing factoring and/or financial leasing.

Since the German Regulation on Notifications and Submission of Documents under the German Banking Act (Anzeigeverordnung) has similar requirements as regards the submission and recognition of foreign certificates of conduct and excerpts from commercial registers, the present consultation also suggests changes to this Regulation that correspond to the respective above mentioned changes in the Regulation on Controls of Qualifying Holdings.

We will of course keep you posted on the further developments and the outcome of this consultation and are happy to assist you with any queries relating to notifications of qualifying holdings.