Regulatory Environment
Recent changes in the regulatory environment in Germany and the EU as a whole, have created additional complexities for AIFMs, resulting in a reduced number of eligible funds.
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EU Directive on Alternative Investment Funds Managers (AIFMD)
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In July 2011, the EU Directive on Alternative Investment Funds Managers (AIFMD) came into force, harmonising national regulation across the EU.
- The Directive aims at increasing transparency, protecting investors, and reducing systematic risk by introducing reporting, risk management, depositary, compensation/remuneration, prudential capital, and other requirements.
- The AIFMD applies to EU and non-EU Alternative Investment Fund Managers (AIFMs), managing or marketing Alternative Investment Funds (AIFs) within the EU.
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In July 2011, the EU Directive on Alternative Investment Funds Managers (AIFMD) came into force, harmonising national regulation across the EU.
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German Capital Investment Act (“Kapitalanlagegesetzbuch” or KAGB)
+- In Germany, the AIFMD was transposed into national law through the German Capital Investment Act (“Kapitalanlagegesetzbuch” or KAGB), which came into effect in July 2013.
- Prior to the KAGB, AIFMs were relatively free to market AIFs incorporated in offshore jurisdictions to institutional/professional investors in Germany as long as these private placements did not qualify as public offers and did not trigger prospectus publication duties.
- However, this largely unregulated private placement regime has come to an end since the KAGB requires AIFMs marketing AIFs in Germany either to register or to hold a European passport.
- In Germany, the AIFMD was transposed into national law through the German Capital Investment Act (“Kapitalanlagegesetzbuch” or KAGB), which came into effect in July 2013.
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MIFID II/MIFIR
+- Since January 2018 the second Markets in Financial Instruments Directive, MiFID II, has been in force. Its aim was to improve the functioning and transparency of financial markets and protect consumers within the European Union (EU). MIFID II was complemented by the Markets in Financial Instruments Regulation (MiFIR). This created the framework for national supervisory authorities to monitor, restrict or ban the marketing or selling of financial instruments.
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EU General Data Protection Regulation (GDPR) and Fifth EU Anti-Money Laundering Directive
+- The EU also tightened the rules for data protection and the prevention of money laundering. In May 2018 the GDPR was introduced and on January 1, 2020, the German Anti-Money Laundering Act was revised to comply with the Fifth EU Anti-Money Laundering Directive.
The harmonization and tightening of EU rules for data protection and anti-money laundering has created new challenges for the distribution of AIFs by non-EU fund managers. The increasingly complex administrative requirements underpin the need for highly specialized professional advice based on profound knowledge of local rules and regulations.
Wickenkamp Consulting GmbH, Tel.: +49 221 270575-11, mcs@wickenkamp-consulting.com, www.wickenkamp-consulting.com