German Government Mulling Tighter Controls On Hedge Funds

by Ulrika Lomas, for LawAndTax-News.com, Brussels

10 June 2005

A working group tasked by the German government with finding ways of increasing hedge fund controls in the wake of the Deutsche Boerse boardroom coup has rejected plans to limit the shareholder voting rights afforded to the funds.

Presenting a report to Chancellor Gerhard Schroeder this week, the panel argued against French-style restrictions on the voting rights of certain types of investors, much to the relief of the hedge fund community.

However it did propose that a reporting requirement below the current 5% threshold be put in place when such investors gain stakes in a company.

The panel also called for financial markets regulator, BaFin to be afforded more powers to investigate takeovers, in addition to the payment of increased dividends to shareholders that attend AGMs.

The working group finally urged new requirements obliging hedge funds to be more transparent in their short-selling activities.

Mr Schroeder reportedly plans to respond to the proposals officially at an SPD conference on Monday.

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