Following up on our Client Alert as of 18 February 2014 which covered the implications the EU Alternative Investment Fund Managers Directive (AIFMD) will have on US fund managers in general, this Client Alert sets out the essentials of the implementation of the AIFMD in Germany. Such implementation was conducted by way of introduction of the German Capital Investment Act (Kapitalanlagegesetzbuch, “KAGB”) on 22 July 2013.
Open-ended and closed-ended AIFs -
In line with a previous recommendation of the European Securities and Market Authority (ESMA) to the European Commission issued in April 2013, the KAGB distinguishes between open and closed-ended AIFs (Alternative Investments Funds), whereas open-ended AIFs are defined as funds where the investors may exercise redemption rights at least once a year, and closed ended AIFs are defined as all other funds. The European Commission has objected to such approach and by way of a EU regulation has defined AIFs established under the new regime, hence after 22 July 2013, as open in the event that investors are granted any redemption rights prior to the beginning of the liquidation period of the AIF. All other AIFs are defined as being closed. Such regulation immediately supersedes any provisions in the KAGB stipulating another differentiation between open-ended and closed-ended AIFs. The German legislator has already announced that it will amend the KAGB shortly inter alia to realign German and European law in this respect.
Please see full alert below for more information.
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