Germany proposes new capital markets rules for start-ups

 

BERLIN – The German government is proposing new capital markets rules aimed at making it easier for start-up companies to obtain financing and making the country a more attractive destination for innovative new firms.

 

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The Future Financing Act was introduced in Germany’s parliament on Thursday. The legislation would lower hurdles for companies to make initial public offerings (IPOs) on German public stock markets and make it easier to offer employees stock compensation.

Justice Minister Marco Buschmann, a member of the pro-business Free Democrats (FDP), said that young companies have gone abroad to raise funding for many years. He said capital markets in Germany need to be made more attractive for company founders and innovators.

Finance Minister Christian Lindner, the leader of the FDP, has backed the legislation but missed Thursday’s debate while sick with Covid-19.

Linder previously told dpa that more attractive compensation rules are also needed to attract highly qualified workers to Germany. The legislation would raise the tax-free allowance for employee stock compensation from €1,440 ($1,534) to €5,000 ($5,328).

Opposition lawmakers criticized the proposal during Thursday’s debate. Members of the centre-right Christian Democrats bloc said it didn’t do enough to address bureaucratic hurdles, while members of the far-left The Left party warned against circumventing worker rights and weakening protections for small investors.

The law is part of the German government’s start-up strategy, which was presented more than a year ago. Anna Christmann, the Economy Ministry’s commissioner for the digital economy and start-ups, recently said that more than half of startups are finding future business development difficult, particularly due to higher interest rates and inflation.