GERMANY Law and Practice Contributed by: Tarek Mardini, Antonia Puglisi and Enzo Biagi, POELLATH
• a significant shareholding of the manager is acquired or relinquished; • the participation thresholds of 20%, 30% or 50% of the voting rights or of the capital have been exceeded or have dropped, or the manager becomes or ceases to be a subsidiary of another company; or • the manager intends to merge with another AIFM. The notification enables BaFin to examine whether there might be a reason to prohibit such transaction due to the lack of reliability of the holder of the signifi - cant participation, or whether to subsequently revoke the licence of the manager. It also provides clarity about the origin of the manager’s capital, not least, to prevent money-laundering activities. Violations of these obligations are subject to fines. EuVECA Managers As with the national provisions for fully authorised managers and pursuant to the EuVECA Regulation, BaFin must be informed of subsequent material changes to the registration before they are implement - ed. This also refers to intended or decided changes of control that have not yet been implemented. BaFin must respond to such submissions within one month. This deadline might be extended by one month at the Sub-threshold managers are subject to a reduced reg - ulatory regime that requires them to notify BaFin about changes to their registered office, address, corporate purpose and contact details, but does not require them to notify about a change of control. Following the implementation of AIFMD II, sub-threshold man - agers will now also be obliged to inform BaFin about a change in management and a change of significant shareholders of the manager. Investor Approval In line with clauses containing key-person provisions, German fund agreements often contain change-of- control clauses. As investors have a strong interest in controlling the different cash streams in the fund structure to ensure a proper alignment of interest, such clauses regularly cover changes of control at the manager level and at the level of the carry and sole discretion of BaFin. Sub-Threshold Managers
team vehicles. If a change-of-control event occurs, the investment activities of the fund are typically sus - pended, and the fund agreement ties the continuation of such investment activities to approval of the change of control on the part of a super-majority of the total capital commitments. If the investors do not approve the change of control, a liquidation of the fund is often triggered. 3.10 AI and Use of Data On 12 July 2024 the EU Artificial Intelligence Act (EU AI Act) was published in the Official Journal and came into force 20 days later on 1 August 2024. This new legislation implements new obligations for companies that provide, distribute, import or use AI systems and general-purpose AI (GPAI) models in the EU by follow - ing a risk-based approach – that is, the higher the risk that the relevant AI system can cause harm to society, the stricter the rules. Violations of the AI Act will be subject to hefty fines of up to EUR35 million or 7% of the total worldwide annual turnover, whichever is higher. The application of the EU AI Act requirements is structured into different phases, starting with the prohibition of certain applications of AI (eg, AI systems that exploit individuals’ vulnerabilities, untargeted removal of facial images from the internet, or CCTV footage to create facial recognition databases). These phases first started to apply six months after the EU AI Act came into force. The new regulation also provides for a grace period with regard to AI systems and GPAI that are already offered in the EU. Germany was required to adopt national provisions for the implementation of the EU AI Act by 2 August 2025, including the designation of competent supervi - sory authorities and the introduction of penalty provi - sions. While this deadline has passed without formal adoption, a draft national implementation law – the AI Market Surveillance and Innovation Support Act ( KI- Marktüberwachungs- und Innovationsförderungsge- setz or KI-MIG) – was published in September 2025 and is currently undergoing consultation. 3.11 Anticipated Changes for Fund Managers Whistle-Blower Protection The German Whistleblower Protection Act ( Hinweisge- berschutzgesetz ) has obliged managers, since 2 July 2023, to establish and operate an internal reporting
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