Politics

The law protecting small shareholders will only come into force in 2016

The Ministries of Finance and Justice have decided to make concessions to the financial sector in terms of the envisaged legislation on protecting small shareholders. Some of the provisions will only come into force in 2016 and not, as initially announced, next Spring. The Federal government’s coalition contract stated its objective of supporting small alternative projects such as independent schools and kindergartens, wind farms and city solar panel arrays, small town shops, living space projects and homes funded by direct credit. If the envisaged law on protecting small shareholders came into force as it presently stands, it would lead in the exact opposite direction. The Ministry of Finance Bill, provides that for projects to qualify for funding of this kind they must be accompanied by a brochure produced by a specialised lawyer and examined by BaFin (control authority for financial transactions) for a cost of 50,000 Euros – as though the fund had millions of Euros waiting to be handed out. Moreover, this measure has directions at European level that are anything but clear. Added to that, ESMA works simultaneously on the rules of how the EUMiFIR ordinance and the MiFID II directive have to be implemented. In July, the German government tabled a first draft of the law for protecting small shareholders; it was met with a barrage of criticism from financial quarters because it anticipated part of the revised directive on the MiFID II financial market and the definition of the target market. It is quite likely that the intention of this law on protecting small shareholders is to introduce rules in Germany that will have to be adjusted by the banks before two years are out.