GERMANY Law and Practice Contributed by: Amos Veith, Jens Steinmüller, Ronald Buge and Stephan Schade, POELLATH
• access to the managing passport under the AIFMD or UCITS Directive; and • adherence to the reporting requirements of the KAGB. 2.1.3 Limited Liability Investors admitted to investment funds in Ger - many typically benefit from limited liability. As limited partners of a limited partnership, which is the most frequently used structure for alterna - tive investment funds in Germany, their liability in relation to third parties for obligations of the fund is limited to their respective liability amount registered with the commercial register of the respective fund partnership. The liability amount is typically a small portion (ie, 0.1%) of their capital commitment or a small fixed amount. Once this portion of their capital commitment has been contributed to the alternative invest - ment fund, their liability in relation to third parties ceases to exist. Regarding the relationship of the investors to the alternative investment fund itself, the liability is restricted to the unpaid portion of the inves - tor’s capital commitment. For fund structures other than limited partnerships, an even stricter limitation of liability applies. Legal opinions are commonly issued to confirm such limitation of liability. 2.1.4 Disclosure Requirements For the usual AIFs that are marketed to non- retail investors, there is no legal requirement to issue a private placement memorandum (PPM); however, all fund managers are subject to the SFDR disclosure obligations and disclosures under Article 23 of the AIFMD must be provided if the fund is marketed under the AIFMD. In any case, a PPM is commonly produced for all AIFs to ensure that the investors are informed – com - pletely and correctly, and in a non-misleading
manner – about the respective AIF, its manage - ment, its investment strategy, the risks associ - ated with an investment and the expected tax consequences of the investment. These disclo - sures are recommended in order to avoid the liability of the sponsor or managers under gen - eral prospectus liability rules. If the fund is marketed to semi-professional investors, a key information document must be produced. There are annual reporting requirements for managers of retail funds and managers of non- retail funds. There are also semi-annual reporting requirements for contractual funds and invest - ment stock corporations (AG) with variable capi - tal. The reports need to be published. Furthermore, notification requirements imple - menting Council Directive (EU) 2018/822 for cross-border tax arrangements apply for inter - mediaries of funds (usually the fund manager). 2.2 Fund Investment 2.2.1 Types of Investors in Alternative Funds During the last two decades, alternative funds have experienced a considerable and increasing capital inflow from German institutional investors. A significant portion of the institutional investors are professional pension schemes ( berufsstän- dische Versorgungswerke ), insurance compa - nies, tax-exempt or taxable pension funds ( Pen - sionskassen , Pensionsfonds ) and, increasingly, banks. Furthermore, industrial companies can be found as investors in alternative investment funds, especially in specialised private equity or venture capital funds, which promise strategical - ly interesting investment opportunities. Finally, public investors ( öffentlich-rechtliche Geldgeber ) invest in alternative funds, often motivated by reasons of broader structural economic policy.
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