AIFMD: How to raise capital and market AIFs in Germany

AIFMD: How to raise capital and
market AIFs in Germany
September 2013 – Marketing Key Points
Every non-EU manager seeking to market its funds to German investors
must become AIFMD compliant and go through a notification procedure
with the German Federal Financial Services Supervisory Authority
(BaFin) per fund. Additionally, strategic and organizational aspects of
marketing in Germany should not be overlooked by non-EU AIFMs.
Key dates
• 22 July 2013:
• 22 July 2014:
• In 2015:
Effective date of implementation of the AIFMD by EU member states. Start of
transition period and best effort compliance. Private placement rules are
abolished in Germany. Grandfathering regime may apply.
End of transition period. All Non-EU AIFMs must generally be AIFMD compliant and
go through the notification process in every EU member country where they want to
market or manage their AIFs.
Passport available for Non-EU AIFMs. Managers can now passport their AIFs
without being registered in every targeted EU member country.
I. Strategic Considerations
A non-EU manager should assess the marketing
and implementation impact of AIFMD as a whole,
including third country considerations. The
following are some initial considerations:
• Does my investor expect or require
me to be AIFMD compliant?
• Germany vs. other EU Member State
as State of Reference?
• Where do I have most AuM,
investors or domiciled AIFs?
• Determination of AIFM?
• Domicile of the AIF?
• Fundraising potential and marketing
requirements?
• Choice of depositary?
• Costs of AIFMD compliance?
II. Prerequisites for marketing in
Germany
There are conditions to be met when marketing as a
non-EU AIFM in Germany, including:
• There is a cooperation agreement between
BaFin and the foreign supervisory authorities
seeing to the cooperation, the efficient
information exchange and the monitoring of
systemic risks;
• The state of origin of the non-EU AIFM or AIF
does not appear on the Financial Action Task
Force’s blacklist of the non-cooperative
countries;
• Effective tax agreements have been concluded
with the state of origin of the AIF regarding an
efficient information exchange in tax matters.
PwC AIFMD Services • Germany
III. Notification
A fund manager must either register in an EU
Member State of Reference (MSR) and obtain
authorization or provide sufficient evidence of
compliance with the AIFMD when applying for
permission to market in Germany. To market an
AIF in Germany (“ingoing marketing”), every
AIFM needs to go through a notification procedure
with BaFin. With the introduction of the AIFMD,
the KAGB no longer discerns between private
placement and public offering, but has different
requirements based on the type of investor being
marketed to. Key elements of the notification letter
are:
• Business plan including information on and
specified domicile of AIF
• Contractual terms and legal documents of AIF
• Name of depositary
• Description of AIF and all information disclosed
to investors
• Proof of preventive mechanisms against
marketing to retail investors
• Further information stated in §307 (1) KAGB
IV. Classification of clients
The German Investment Capital Code (KAGB)
takes reference to the regulatory classifications
used in MiFID with respect to its definitions of
retail and professional investor. There is also
overlap with the definitions used in the US
Investment Company Act regarding professional
investors. To allow for investors who do not qualify
as a professional investor to invest in less
regulated funds, the semi-professional
investor (similar to Luxembourg’s well informed
investor under the Specialized Investment Fund
Law) has been introduced in Germany via the
KAGB. A semi-professional investor is a retail
investor who must commit to invest at least EUR
200.000 and sign a special declaration confirming
that it is aware of the lower investor protection and
risks. The AIFM/distribution partner must
evaluate his expertise, experience and knowledge.
V. Special requirements when
marketing to retail investors
When marketing to German retail investors, the
fund must be compliant with the KAGB regarding
e.g. eligible assets, structure, investment
restrictions and valuation. The non-EU AIFM must
appoint a legal representative in Germany, who
will - together with the AIFM - have the role of a
contact person for investors and EU authorities. It
shall also jointly perform with the AIFM the
compliance function relating to the AIFMD
compliant fund management and national
marketing activities. In addition, a paying agent
in Germany must be designated.
High level overview of notification procedure – if Germany is Member State of Reference
*) Depending on whether the AIF is a feeder-AIF, 2-4 months when marketing to professional investors, and 4-8 months
when marketing to semi-professional investors. For retail investors, 6 months will apply before the passporting rules have
been establisheed, thereafter 3 months.
VI. Outline of key requirements for marketing in Germany
PwC Germany Contacts:
Uwe Stoschek
Partner
Phone: +49 30 2636 5286
Mobile: +49 160 582 0641
Email: [email protected]
Michael Rinas
Senior Manager
Phone: +49 30 2636 3090
Mobile: +49 175 4362350
Email: [email protected]
Felix v.d. Planitz
Partner
Phone: +49 69 9585 6885
Mobile: +49 170 795 9111
Email: [email protected]
Sandra Horst
Manager
Phone: +49 69 9585 2757
Mobile: +49 151 1677 0960
Email: [email protected]