A German shareholder lobby group on Tuesday urged Berlin to improve regulation of capital markets amid rising investor irritation about “creeping takeovers” such as Schaeffler’s hostile move on Continental, the car parts and tyre maker.

The action took place as Conti and Schaeffler resumed talks on Tuesday, but there was no news of progress. Klaus Schneider, head of SdK, which represents shareholders’ interests, said Schaeffler’s approach on Conti could have disadvantaged those who sold their shares early: “It is time for the German government to think about this issue.”

Schaeffler used so-called cash swaps to build a 36 per cent stake in Conti. Then it launched a €11.3bn bid – at the minimum price level required by German law. The decision triggered a fierce takeover battle but has left corporate Germany largely unruffled.

“If it was a sovereign wealth fund from Asia, the public outcry would have been immense,” Mr Schneider said. He urged the government to change disclosure rules about the use of cash swaps.

His call follows an intensifying international debate about use of such derivatives. The UK has recently tightened its rules to force investors to make such a disclosure.

Hans-Christoph Hirt, Director of Hermes, a British pension fund, said: “It would make sense to reassess the disclosure rules.”

Bafin, the German regulator, is to investigate the Conti case but German government officials said they did not see any need for regulatory changes. A spokeswoman for the finance ministry pointed to fresh legislation in this area that takes effect this week.

However, the so-called “risk limitation” law would not have prevented the use of cash swaps to conceal the build-up of a stake.

Before the Conti takeover battle, Porsche, the luxury carmaker, had pursued a “creeping takeover” of its much bigger rival Volkswagen.

Carsten Maschmeyer, head of financial group AWD, has also raised international investors’ eyebrows as he secured secretly a big stake in rival MLP and sold it to Swiss Life.

One of the big institutional investors in Conti said it was “quite surprising and shocking” to see what Schaeffler could do. “I do not think this could have happened anywhere else.”

Investment bankers said this might lure other investors to build up big stakes in German companies, as many do not have a blocking shareholder and share prices have fallen considerably.

The debate comes as negotiations between Conti and Schaeffler enter a vital week in the takeover battle.

This week it emerged a rift had resurfaced in Conti’s top management that has seen Manfred Wennemer, chief executive, clashing with Hubertus von Grünberg, supervisory board chairman.

Mr von Grünberg had suggested he should join its managers in the negotiations, pointing out Maria-Elisabeth Schaeffler, Schaeffler’s owner, was also taking part. Mr von Grünberg knows the billionaire widow of Schaeffler’s founder well.

Mr von Grünberg had come under scrutiny as some investors suspect he was unwilling to fight for a premium but wanted instead to form a company with a big family shareholder.