Publication of a draft Third Financial Markets Promotion Act (Drittes Finanzmarktförderungsgesetz) aimed at further enhancing the economic and legal framework for the operation of the German capital markets is now imminent. A number of the key changes to be introduced by the proposed Act are:
- companies whose shares or debt securities are listed on a Germany Stock Exchange will in future be entitled to de-list their securities. To date there has been no clear statutory basis for de-listings.
- the Exchange Act (Börsengesetz) will be further amended to allow for the establishment of a new securities market called the 'New Market' for trading shares in smaller companies which will compete with Easdaq and other foreign markets.
- stock corporations will be allowed to purchase up to 10% of their own shares.
The Third Financial Markets Promotion Act is another piece of legislation enacted as part of the government's efforts to improve the overall investment climate in Germany.
It is expected that the legislation will include or be accompanied by significant changes in the tax laws. In particular, banks, stock exchanges and others have lobbied vigorously for an exemption from capital gains tax on profits from the sale of securities if they are sold within six months from the date of acquisition as well as changes to the discriminatory tax treatment of investments in securities compared with life insurance. In addition, there has been severe criticism of the existing minimum reserve requirements which compel German banks to maintain non-interest bearing deposits with the Bundesbank calculated as a percentage of certain of their obligations towards customers. It is hoped the reserve requirements will be significantly relaxed as part of efforts to improve Germany's appeal as an attractive location for business.
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