BaFin supervises German asset management companies (Kapitalverwaltungsgesellschaften) and investment funds offered by such companies under the provisions of the German Investment Code (Kapitalanlagegesetzbuch – KAGB).
Investment funds within the meaning of the KAGB include open-ended and closed-ended investment funds. While open-ended investment funds generally invest in financial instruments (with an exception being open-ended real estate funds), closed-ended investment funds tend to invest in physical assets.
In order to obtain authorisation, German asset management companies must, among other things and depending on their structure, have initial capital of at least 300,000 euros or 125,000 euros, an appropriate organisation and "fit and proper" senior managers/executive directors (solvency supervision). The market conduct of German asset management companies is also supervised under the Investment Code (market supervision).
In the case of investment funds that are launched in Germany, BaFin also carries out product supervision and, for example, approves the fund rules of retail funds. Furthermore, German asset management companies must observe a number of statutory investment provisions.
In addition, on the basis of the KAGB, BaFin also monitors the marketing material of German and foreign investment funds that are intended to be distributed in Germany. It may prohibit any such distribution if the conditions are not, or are no longer, met.
updated on 01.04.2016