Standortfördergesetz on the way: further steps needed to strengthen capital markets

Today, the German Bundestag will pass the Standortfördergesetz (Location Promotion Act). Among other things, the legislature aims to stimulate the financing of innovation and growth via the capital market. Deutsches Aktieninstitut welcomes the Act as a step towards strengthening the capital markets, but one that must be followed by further steps.

‘With the Standortfördergesetz, the coalition recognises the importance of capital markets for growth and prosperity. We very much welcome this,’ comments Henriette Peucker, Chief Executive and Member of the Board of Deutsches Aktieninstitut. ‘A genuine paradigm shift requires even broader use of the stock market in all three pillars of pension provision, as well as a fundamental reform of the Stock Corporation Act.’

The Standortfördergesetz is intended to amend a number of capital market laws. We welcome the planned introduction of shares with a nominal value of one euro cent, following the example of other EU countries, as well as the waiver of a mandatory German-language summary in English-language securities prospectuses. Both make it easier for companies to raise capital.

However, many sensible measures to increase flexibility and align with international standards have not been taken into account, meaning that avoidable location disadvantages remain. For example, companies in the Netherlands have much greater access to authorised capital and can therefore finance growth more flexibly as needed.