Stand:updated on 28.11.2017 | Topic Investment funds Registered office and head office in Germany
Companies wishing to manage investment funds as German asset management companies with their registered office and head office in Germany need written authorisation from BaFin or must register with BaFin. Such activity is considered management of an investment fund when the company provides at least portfolio management or risk management.
Investment funds are divided into UCITS and AIFs. Undertakings for collective investment in transferable securities (UCITS) are investment funds that meet the requirements of Directive 2009/65/EC (UCITS Directive). All other investment funds are AIFs. Correspondingly, there are German UCITS management companies and AIF management companies. German asset management companies can also manage both forms of investment fund, provided they fulfil the requirements applicable to both forms.
What information and documents must accompany an application for authorisation for a German UCITS management company or respectively an application for authorisation for a German AIF management company and further information on the process of granting authorisation can be found in a guidance notice (only available in German) for an application for authorisation for a German UCITS management company or respectively in a guidance notice (only available in German) for an application for authorisation for a German AIF management company.
Under certain circumstances, German AIF management companies need only to register with BaFin. German AIF management companies have their registered office and their head office in Germany and manage alternative investment funds (AIFs).
Registration is sufficient for German AIF management companies if
- they exclusively manage special AIFs and the managed assets do not exceed the value of €100 million with the use of leverage or €500 million without the use of leverage, where in the latter case investors cannot exercise redemption rights within five years of the first investment ; or
- they manage closed-ended retail AIFs in Germany whose units are held by not more than five natural persons and whose assets do not exceed the sum of €5 million with leverage; or
- they manage directly or indirectly closed-end ed AIFs issued in Germany, including retail AIFs, and their assets do not exceed the sum of €100 million with leverage.
What is a Special AIF?
Special AIFs are AIFs whose units may, as a result of written agreements with the management company or as a result of the AIF's constitutive documents, only be acquired by
- professional investors within the meaning of section 1 (19) no. 32 of the German Investment Code (Kapitalanlagegesetzbuch – KAGB) and
- semi-professional investors within the meaning of section 1 (19) no. 33 of the KAGB ; an investor who acquires units in a special AIF by virtue of law is regarded as a semi-professional investor.
All other investment funds are retail investment funds.
What is leverage?
Leverage designates any mechanism used by management companies to increase the investment level of an investment fund managed by it – either by borrowing, securities loans, leverage embedded in derivatives or any other means. Criteria regarding
- the determination of the methods for leverage of AIFs, including any financial or legal structures involving third parties controlled by the relevant AIF and
- how leverage of AIFs is to be calculated
result from Articles 6 to 11 of the Delegated Regulation (EU) No. 231/2013 (AIFM DR).
The shares or units of open-ended AIFs can be repurchased or redeemed prior to the commencement of its liquidation phase or wind-down, in accordance with the procedures and frequency set out in its rules or instruments of incorporation, prospectus or offering documents.
If this possibility does not exist, it is a closed-ended AIF.
BaFin has published an expert article on the differences between German asset management companies with authorisation and those that are merely registered.