Pursuant to the German Securities Trading Act (WpHG) investors are required to notify Merck KGaA, Darmstadt, Germany and the German Federal Financial Supervisory Authority (BaFin) if certain thresholds are reached or crossed. In case of an investor with a multi-level structure, each company in the chain of companies controlled by the investor is subject to the obligation to notify reaching, exceeding or falling below the legal thresholds for significant shareholdings pursuant to Sections 21 ff. German Securities Trading Act (WpHG).
If, for instance, an investor acquires 3% of the voting rights in Merck KGaA, Darmstadt, Germany indirectly via a second-tier subsidiary, the parent company, the subsidiary, and the second-tier subsidiary must notify that they have reached the 3%-threshold, although the investor does not hold 9% but only 3%, effectively. This fact is indicated in the notification that must refer to the attribution of voting rights held by subsidiaries (Section 22 para 1 sent. 1 no. 1 and Section 22 para 1 sent. 2, sent. 1 no 2 - 8 German Securities Trading Act (WpHG)). Publication by the issuer is strictly bound to the contents of the notification of the investor. Further, investors are obliged to notify reaching, exceeding or falling below the legal thresholds for significant shareholdings to other (financial) instruments that do not grant an enforceable right to acquire shares, but make such an acquisition possible (see Section 25 German Securities Trading Act (WpHG)).