GERMANY Law and Practice Contributed by: Amos Veith, Jens Steinmüller, Ronald Buge and Stephan Schade, POELLATH
Registration procedure The registration process is relatively simple. It requires the submission of a registration request together with certain documents on the manager and the investment fund(s) the manager intends to manage (such as the fund’s anticipated strat - egy and investor base and the manager’s arti - cles of association). In addition, a Special AIF may not require the investors to pay in capital in excess of their respective original capital com - mitment. Ongoing compliance issues An advantage of the registration is that only a few provisions of the KAGB apply to “registered- only” managers – mainly the provisions on the registration requirements, some ongoing report - ing requirements and the general supervisory powers of BaFin. However, fund-specific require - ments do not apply to “registered-only” manag - ers and their funds. In particular, the depository requirements and marketing requirements do not apply, nor do the additional requirements of the KAGB for fully licensed managers, except that certain additional internal governance and reporting obligations apply to the extent that any debt funds are managed. In exchange for such light regulation, “regis - tered-only” managers do not benefit from the European marketing passport under the AIFMD. A registered manager can, however, opt to become a fully licensed manager (or upgrade to be a European Venture Capital Fund (EuVECA) manager). Since 2021, “registered-only” man - agers have been required to audit their annual financial statements. Such audit must include a review of compliance with the KAGB and Ger - man anti-money laundering law.
Fully Licensed Manager – Licensing Process Availability Fund managers who do not qualify for a registra - tion or who opt to upgrade must apply for a full fund management licence with BaFin under the KAGB. A full fund management licence opens a door for managers to market funds to retail investors, and also gives access to the market - ing passport under the AIFMD. Retail investors are neither professional nor semi-professional investors. Licensing procedure The licensing procedure is a fully fledged author - isation process with requirements equivalent to the requirements for granting permission under Article 8 of the AIFMD or Article 6 of the UCITS Directive. The licensing procedure checks requirements such as sufficient initial capital or owned funds, adequate experience of the direc - tors, sufficiently good repute of the directors and shareholders, and organisational structure of the manager. Ongoing issues The licensing of the manager results in the man - ager being subject to the entirety of the KAGB, which entails the following in particular: • the appointment of a depositary for the funds; • access to setting up contractual funds; • adherence to the corporate governance rules for funds set up as investment corporations or investment limited partnerships (so-called Investment KGs); • adherence to the fund-related requirements of the KAGB; • adherence to the pre-marketing and market - ing rules of the KAGB; • access to the marketing passport under the AIFMD or UCITS Directive;
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