28.02.2017 | KPMG Law Insights

Alternative Investments Legal – Alternative Investments Legal | Issue 2/2017

Dear Readers,

The carnival season is drawing to a close. But despite the carnival and confetti, the regulator did not remain idle, so that there is once again exciting news on the subject of alternative investments, which we present to you in this issue.

For example, BaFin has, among other things, put out for consultation an interpretative letter intended to distinguish the tasks of capital management companies from those of the AIF investment companies they manage externally.

In addition, BaFin has informed the relevant associations about its administrative practice regarding information obligations pursuant to § 307 para. 5 KAGB informed.

We wish you an insightful reading and remain

With best regards

Dr. Ulrich Keunecke


BaFin Consultation 01/2017 – Capital management companies and externally managed AIF investment companies

On February 3, 2017, BaFin issued for consultation an interpretative letter on the distinction between the tasks of a capital management company and the tasks of the AIF investment companies it manages externally.

Accordingly, by entering into a third-party management agreement, the AIF investment company transfers all collective asset management activities to the KVG and grants it a full power of attorney under civil law, so that the KVG is exclusively responsible and liable for the collective asset management of the AIF investment company. According to § 1 para. 19 No. 24 KAGB, the term collective asset management includes, in addition to portfolio management and risk management, administrative activities, distribution and activities related to the assets of the AIF. The AIF investment company, on the other hand, is to retain tasks such as participation in general meetings and shareholders’ meetings and the passing of resolutions at these meetings.

The interpretative letter also addresses the cases in which the KVG acts on its own behalf and when it enters into contracts with third parties on behalf of the AIF investment company. Portfolio management and risk management are core tasks of collective asset management in which the KVG acts in its own name according to the interpretative letter. Only the specific execution actions within the scope of portfolio management are carried out by the KVG on behalf of the AIF investment company. Even when the KVG performs the other tasks (administration, sales, etc.), it acts in its own name.

BaFin also clarifies that a reassignment of the KVG tasks to the AIF investment company is neither compatible with legal principles nor with investor interests.

Not least from a tax perspective, the current draft could be improved in some places. After extension of the deadline, the consultation period ends on March 3, 2017.

Related links

All documents relating to this consultation can be viewed here.


Administrative practice on § 307 para. 5 KAGB (information obligations towards semi-professional investors)

On February 6, 2017, BaFin informed the relevant associations about its administrative practice regarding information requirements pursuant to the German Banking Act. § 307 para. 5 KAGB informed. The background to the BaFin announcement is the provision introduced by the 1st FiMaNoG under section 307 para. 5 KAGB, according to which a KID must be made available to semi-professional investors before they acquire units in AIFs.

After the effective date of the PRIIPs Regulation was postponed by one year, BaFin has now clarified that it will exercise the discretion granted to it in the event of a breach of section 307 para. 5 KAGB to the effect that it will not issue an enforcement order in this regard. This administrative practice will end with the entry into force of the PRIIPs Regulation.

However, the flexible handling on the part of BaFin does not affect civil law consequences and possible liabilities. Against this background, it may nevertheless be necessary to fulfill the legally required information duties.

Related links

The related information of the BAI can be viewed here.


Circular on the minimum requirements for the business organization of insurance companies (MaGo) published

On January 25, 2017, BaFin published Circular 2/2017 (VA) on the regulatory minimum requirements for the business organization of insurance companies (MaGo), which was open for consultation last fall. The circular summarizes various minimum requirements formulated by BaFin in interpretation of the reformed ISA and the Delegated Regulation on the Solvency II Directive. It replaces the circular on the minimum regulatory requirements for the risk management of insurance companies (MaRisk VA), which was repealed at the end of 2015. The aim of MaGo is to bring together overarching aspects relating to business organization without repeating the requirements of the ISA, the Delegated Regulation and the EIOPA guidelines on business organization (governance system). In particular, key concepts such as “proportionality” and “administrative, management or supervisory body” are explained and initial experiences from supervisory practice under the new Solvency II supervisory regime are taken into account. The Circular entered into force on February 1, 2017, which also repealed several interpretative decisions (including on governance requirements, risk management and outsourcing).

Related links

The new MaGo can be viewed here, and the January 26, 2017 MaGo companion text can be viewed here.


Questions and answers on the implementation of MiFID II updated

On February 2, 2017, ESMA published its updated Q&As on MiFID II implementation. New questions will be answered on the following topics:

  • Date and time of the application for admission,
  • Indicator of the instrument and the basic instrument,
  • Due Date,
  • Classification of Financial Instruments (CFI) and Instrument Short Name (FISN),
  • Application for admission to trading by the issuer and
  • Basis point spread of the index / benchmark of a floating rate bond.

Related links

The updated Q&As can be viewed here.


Consultation on investment products for retail investors with social and environmental objectives according to PRIIPs

On February 8, 2017, the three European financial supervisory authorities (EBA, ESMA and EIOPA) published their “Joint Consultation Paper on PRIIPs with environmental or social objectives.” According to Art. 8 para. 4 PRIIPs Regulation, legal acts are to be adopted setting out the details of the procedures for determining whether a PRIIP seeks to achieve specific environmental or social objectives. The consultation ends on March 23, 2017.

Related links

All information on the consultation can be found here can be viewed here.

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Dr. Ulrich Keunecke

Leiter Sector Legal FS Insurance

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