"The government will do everything possible to avoid using expropriation," of HRE investors, which would only occur as a "last resort" and be compensated based on the share's stock market value, a government statement said.
German officials seek full control of the troubled bank and want to "avoid HRE finding itself in a situation that would threaten not only German markets but international markets as well," it added.
Berlin is concerned an HRE failure could have catastrophic consequences similar to those provoked by the bankruptcy of US investment bank Lehman Brothers in September, which slammed financial markets around the world.
HRE has already benefited from more than €100 billion ($136 billion) in private and public aid to keep it afloat.
Flowers, who heads a consortium that owns 25 percent of the shares in HRE, has said he wants to hang onto the stake, and warned that an expropriation would harm Germany's reputation among international investors.
Following its approval by deputies in the Bundestag, or lower house of parliament, the bill must now be approved by the Bundesrat, or upper house, on April 3.
According to news agency DPA, it is yet unknown what Flowers will decide to do with his HRE shares. He will be allowed to sell them via the SoFFin (Sonderfonds Finanzmarktstabilisierung, or Financial Market Stabilization Fund) until early April.