The German Parliament (Bundestag) will start discussing today the reform of the Kapitalanleger-Musterverfahrensgesetz (KapMuG), a law regulating a form of class action to claim damages for false or misleading capital market information, it confirmed yesterday.

The government has put forward a draft bill to reform the existing law, which will expire on 31 August. 

With the reform, the cabinet wants to strengthen the role of the higher regional courts in class action proceedings. 

According to the draft law, the higher regional courts should have the power in the future to formulate legal questions inherent to the proceedings, to ultimately provide answers dealing with claims for damages.

This puts the Higher Regional Court in a position to determine the matter of the proceeding relevant for the cases, and in such a way that it is possible to conduct the proceeding efficiently while at the same time bundling proceeding as much as possible, according to the draft. 

‘Urgent’ 

The KapMuG, which entered into force in 2005 and was last amended in 2020, lays the legal basis to bundle proceedings running in parallel. 

Moreover, the new rules are intended to shorten the period necessary to bring a case from the regional court to the higher regional court, it added. 

The government is also aiming also to digitise proceedings, expanding the scope of the law to cover crypto asset trading, it said. 

The bill to reform the existing rules is urgent to avoid halting cases brought before the higher regional courts, Chancellor Olaf Scholz wrote in the document presenting the law to the present of the Bundesrat, the chamber representing the states. 

Last year, the highest regional court in Bavaria paved the way for the start of class action proceedings according to KapMuG law against Wirecard, based on the case of the private investor Kurt Ebert. 

Law firm TILP represents 182 institutional investors in the proceeding against EY for its role in examining Wirecard’s  balance sheets, mainly from Europe, the US and Asia, it said.

TILP has criticised the government’s draft bill, saying that it suffers from numerous shortcomings, which are likely to lead to significant problems in practice.

The draft law must be reviewed and improved before is passed, the law firm said in a statement.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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