Navigating through Covid-19

The German legal hub

Navigating through Covid-19: The German legal hub

The rapid spread of the coronavirus disease (Covid-19) is a public health challenge that has affected the entire globe. Above all, this is a human and social crisis, necessitating some significant changes in our daily lives. As efforts to manage the spread radiate across the world, the impact on businesses and economies increases significantly.

Our clients (and ourselves) are continuously assessing ways to address the threat posed by Covid-19 to the workforce, customers, suppliers and wider stakeholders. Commercial relationships are facing substantial challenges and financial markets are experiencing strong turbulences.

This page features a collection of our insights on some of the key issues affecting businesses in Germany and their possible solutions. For more detailed information in German language please see our dedicated information hub on linklaters.de.

As Covid-19 continues to spread across the world, the likelihood of your organisation being directly impacted by the outbreak (e. g an infected customer, employee etc.) also increases. Each organisation should insure that it has in place a robust organisational resilience plan which addresses all relevant issues. 

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All around the world, whole companies have shifted their activities to home-based work and employees are working remotely. We address the question of how agreements can be practically executed in these circumstances and how documents can be signed electronically in compliance with the formal requirements of German law.

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After establishing a "protective shield for employees and companies" to mitigate the effects of the Covid-19 pandemic, the German government has significantly expanded this package. Whilst it still concentrates on ensuring liquidity for companies, in particular through loans and guarantees, additional measures to protect the economy are now being added.

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Governments all over the world have responded to the economic effects of Covid-19 with tax measures. Essentially, these measures aim at a reduction of current tax burdens to safeguard sufficient liquidity of companies. We report continuously on key tax measures in Germany and other jurisdictions in our International Tax Round-up.

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We assess what funding measures could be available specifically to Fintechs in Germany (from SMEs to start-ups).

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As people, and employees, return to a “new normality” in Germany, we examine where we are at now, what is to come and the long-term impact on the working environment.

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Many German employers across various sectors are exploring instruments to assist them with their staffing in the short term. Whether more drastic measures, including restructuring and redundancies, can be avoided in the medium and long term will depend on how long the crisis lasts and the damage it has already done.

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The corona crisis is also affecting the capital market dependant area of company pensions. The already tense situation of many pension providers such as pension insurance funds could deteriorate over time. We address some questions relating to this issue.

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Many businesses are confronted with serious commercial consequences, such as delays in the delivery of goods and services, and may look for ways to mitigate the impact on contractual performance. In this situation, they may face questions on whether and to what extent force majeure and related provisions in their contracts and in the applicable statutes may be implicated.

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If a second wave of the Covid-19 pandemic or a further lockdown should occur, disruptions to contractual performance are no longer “unforeseeable” as required by force majeure, hardship or statutory provisions. Parties are therefore advised to insert specific pandemic clauses into new commercial contracts.

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Landlords and tenants need to consider the impact on their rights and obligations under existing leases as well as in relation to proposed new leases. We provide answers to some of the key issues affecting landlords and tenants of commercial leases in Germany.

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Many governments are announcing support and are undertaking emergency measures relating to the energy sector aiming at relieving consumers and enterprises from utility costs during the pandemic. German consumers and micro-enterprises that cannot afford to pay their utility bills due to the Covid-19 pandemic can pay their bills later and do not have to fear supply cuts according to new rules that came into force on 1 April 2020.

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The German legislator has passed a new law to allow companies to temporarily hold virtual annual meetings as well as to delay these meetings. 

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Furthermore, like in many other countries, the duty to file for insolvency was temporarily suspended and the liability of the management was adjusted accordingly.

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Several jurisdictions are considering novel steps to suspend or extend statutory review periods in view of merger control filings. While these measures are only expected to be transitional, further extensions are likely with some backlogs expected in the most impacted jurisdictions.

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As concern has grown that the economic fall-out from the Covid-19 pandemic may lead to foreign investors seeking to acquire undervalued strategic assets, national governments have been rapidly tightening their foreign investment control rules to protect sensitive industries, with a particular focus on healthcare.

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Investigations into excessive pricing practices have been opened in some European countries. In practice, however, it will not be easy for competition authorities to enforce against price hikes and other exploitative behavior.

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The rapid spread of Covid-19 has resulted in unprecedented volumes of trading in the derivatives markets as the real economy turns to those markets to hedge its risk. Although cleared derivatives markets have experienced considerable turbulence as a result of this activity, they are proving resilient in absorbing this turbulence and the associated risk. 

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With the economy requesting further support and liquidity due to Covid-19, the banking sector is put under increasing pressure. To alleviate the immediate market stress for banks, the supervisory authorities at EU and national level are coordinating efforts. This includes measures such as relaxing inspections and reporting dates and forbearance of meeting capital buffers with non-CET1 capital.

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x Covid-19 Resource Hub