After the Investment Ordinance has come into force in the meantime, we are using this newsletter for some more in-depth information.
Furthermore, BaFin has updated the KAGB application letter. With the revision, the supervisory authority is pre-empting a proposal by the German Federal Council on the Small Investor Protection Act and is removing cooperatives from the regulated scope of application. BaFin also revised its FAQ letter on sales. The submission deadline for the AIFMD reporting has been postponed by BaFin to mid-May 2015 at the earliest.
At the European level, ESMA has published its updated FAQs on the AIFM Directive.
In addition, the Bundesrat approved the German implementation law for “Solvency II”.
We hope you enjoy reading this issue and wish you a happy Easter.
With best regards
Dr. Ulrich Keunecke
The investment regulation now promulgated and which came into force on March 7, 2015, allows, among other things, investment funds that invest 100 percent in unsecuritized loan receivables (debt funds) in the tied assets of insurers. It remains unclear whether such funds regularly fall under the newly introduced blending ratio for alternative investments of 7.5 percent or whether other models are also conceivable.
In the future, investments in open-end and closed-end special real estate investment funds and in closed-end public real estate investment funds, among others, will also be eligible for the real estate quota if structured appropriately. Both German and EU investment assets are eligible as fund vehicles.
Furthermore, “private equity funds” in the form of domestic closed-end public AIFs and special AIFs are now explicitly covered by the Investment Regulation.
On March 9, 2015, BaFin updated the interpretative letter on the scope of application of the KAGB and the concept of investment assets. The scope of application with regard to cooperatives has been amended. In the opinion of BaFin, the mandatory orientation of the cooperative towards a special promotional purpose, as laid down in the Cooperatives Act, precludes a pure profit-making intention that is typical of funds. Accordingly, cooperatives regularly do not pursue a fixed investment strategy, so that there is no investment fund within the meaning of the KAGB.
BaFin has thus moved ahead of the proposal of the Bundesrat in its opinion on the Small Investor Protection Act (cf. Newsletter AIL February 2015).
On March 20, 2015, BaFin published a revision of the letter “Häufige Fragen zum Vertrieb und Erwerb von Investmentvermögen nach dem KAGB”. BaFin clarifies that the term “placing” within the meaning of section 293 para. 1 sentence 1 KAGB includes any active disposal of units or shares of an investment fund. The term placement in the KAGB thus does not correspond to the term placement used in the KWG or WpHG.
BaFin has again amended the “Merkblatt zu den Meldepflichten von AIF-Verwaltungsgesellschaften” on March 5, 2015. The initially announced initial submission deadline of March 16, 2015 is no longer applicable. This is justified by technical delays at ESMA. BaFin currently assumes that the first report will be required from around mid-May 2015.
On March 26, 2015, ESMA published its updated FAQ on the AIFM Directive. Among other things, there are new developments in the areas of reporting and notification requirements as well as in the calculation of leverage. Supplementary questions regarding additional own funds and the scope of application were also answered.
On March 6, 2015, the Bundesrat approved the Act on the Modernization of Financial Supervision of Insurance Companies. The law is scheduled to enter into force on January 1, 2016. It transposes the 2009 European “Solvency II” Directive into German law.
Among other things, the law requires insurance companies to hold more equity capital as a precaution for times of crisis. It also mandates the implementation of improved risk management. In return, insurers are to be given more flexibility in investing the funds they manage. The current quantitative investment criteria are to be replaced by qualitative capital adequacy requirements.
At the end of February 2015, ESMA presented its work program for 2015. With regard to alternative investments, ESMA must publish both an opinion on the functioning of the EU passport and a recommendation on its application to the marketing of third country AIFs or by third country AIFMs by 22 July 2015 at the latest.
Both papers are prerequisites for the adoption of delegated acts to implement the envisaged passport scheme in a binding manner in all member states. The EU passport for all AIFs and AIFMs has so far essentially regulated under which conditions units or shares of an EU AIF may be marketed in EU member states other than the home state of the AIFM and which conditions must be met for an EU AIFM to be allowed to manage an EU AIF domiciled in another member state.
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