Investment Funds Update - Europe: Legal and regulatory updates for the funds industry from the key asset management centres and primary European fund domiciles - Issue 9, October 2015: Germany

by Dechert LLP

Implementation of the European Transparency Directive 2013/50/EU in Germany

All market participants investing in German stocks and other equity shares with voting rights traded on an exchange will be subject to new reporting duties as of November 27th 2015 in regard of their voting rights pursuant the German implementation of the European Transparency-Directive. Investors, e.g. Investment companies and funds, which do not comply with those obligations can face high legal fines up to 10 million Euros or five percent of their annual net income. However, there is also some facilitation in respect of constructive knowledge if voting powers change.

AIFMD Reporting and Troubleshooting

In regard of AIFMD reporting, BaFin and ESMA have informed that they will solve the following error codes “CAF-202” and “CAF-008” shortly. For this reason BaFin is postponing the reporting deadline for all affected reports to September 21st until October 2nd 2015. Furthermore BaFin is expected to publish a guideline how to handle error codes “CAM-023” and “CAF-092”.

Update German UCITS V Implementation Act

The German legislator published the proposed bill for the implementation act of UCITS V-Directive on the 23rd of September. Key changes for market participants include:

  • German Open Special-AIFs are still allowed to invest 100 percent of their NAV in loans.

    Compared with the first ministerial draft bill, which only allowed to invest no more than 50 percent of the fund’s NAV, the Implementation Act now enables such funds to hold 100 percent in loans. Such funds however must not conduct direct lending investments, i.e., can only invest in secondary loans.
  • German and EU AIFMD regulated closed-end-funds will be allowed to grant loans.

    Closed-end funds subject to AIFMD regulation will be allowed to invest 100 % of their assets in loans, both on a direct lending and secondary basis. This is however limited to non-consumer loans and leverage must not exceed 30%.
  • The Act will come into effect on March 17th 2016. Mutual-AIFs, however, will be granted a grace period until March 18th 2017 to amend their investment guidelines, prospectuses and other investor information according to the new Act.

Investment Statistics as of 31 July 2015

The German Investment Fund Association BVI has issued its latest investment statistics report dated 31st July 2015, giving an overview of the net assets and net sales within the German investment fund and asset management markets. The statistics are broken down by asset class and provider. They provide information on net assets and net inflows of investment funds and assets outside investment funds.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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