GERMANY Law and Practice Contributed by: Tarek Mardini, Antonia Puglisi and Enzo Biagi, POELLATH
investments. Therefore, closed-end funds can invest in real assets, such as real estate, ships, aeroplanes and infrastructure, or in non-listed equities. With regard to open-end and closed-end special funds, the only investment limitation is that the assets must have a market value (in addition to the fund being risk-diversified). However, the KAGB also pro - vides for a so-called “special fund with fixed invest - ment guidelines”. The special fund with fixed invest - ment guidelines is popular with institutional investors as an investment platform, as it offers the possibility of being tax transparent and being exempted from group consolidation under German accounting rules. Closed-end special funds can grant loans to non- consumer borrowers within strict limits (see 2.5 Loan Origination ). The EuVECA, EuSEF and EU-ELTIF regimes In addition to the above regimes, the European Venture Capital Funds (“EuVECA”) regime and the European Social Entrepreneurship Funds (“EuSEF”) regime are directly applicable in Germany, as well as the ELTIF regime. The ELTIF regime was only recently amended by EU legislature (ELTIF 2.0) with the goal of opening up the private capital market to retail investors (see 1.2 Key Trends ). Timing with regard to regulatory approval in Germany As mentioned above, regulatory approval in Germa - ny needs to be obtained by the manager of the fund and not by the fund itself. Depending on the type of licence, BaFin must make its decision for approval within certain statutory deadlines. The deadlines begin from the date of receipt of the complete documents required for the approval of the respective licence. Such deadlines are: • two weeks for a sub-threshold manager; • two months for a EuVECA/EuSEF manager; and • six months for a fully licensed manager. However, when the required documents for approv - ing the respective licence are considered to be “com - plete” remains at the sole discretion of BaFin. That said, in practice the usual time indication for receiving the respective approval is:
• two to four weeks for a sub-threshold manager; • three to six months for an EuVECA/EuSEF man - ager; and • 12 to 18 months for a fully licensed manager. At a recent conference organised by BaFin, some case officers revealed that one of BaFin’s key goals in the upcoming years is to reduce the processing times for applications of fully licensed managers. 2.3 Disclosure/Reporting Requirements Prospectus In respect of special funds (ie, non-retail funds) Article 23 AIFMD disclosures must be provided if the fund is marketed in Germany or in the EU. In any case, a private placement memorandum (PPM) is commonly produced for all special funds, to protect fund spon - sors from civil litigation liability. Key Information Document If the fund is marketed to semi-professional investors, a key information document must be produced. Annual Reporting There are annual reporting requirements for both man - agers of retail funds and managers of non-retail funds. In addition, there are semi-annual reporting require - ments for contractual funds and investment stock corporations ( Aktiengesellschaft or AG) with variable capital. The reports must be published. Federal Bank Reporting Investment funds (ie, in particular AIFs) must submit (monthly) reports to the German Federal Bank for sta - tistical purposes. The reports must contain, among other things, information on the amount and composi - With regard to a German partnership, its limited part - ners need to be registered with the local commercial register. The records maintained at the commercial registry are publicly available via the internet. This includes the identity of the investors as limited part - ners and their liability amounts (typically expressed as a small percentage of the capital commitment). Such disclosure can be avoided by interposing a nominee as a direct limited partner, to hold and manage the tion of the fund assets. Partnership Structures
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