Collective Investment Schemes in Germany

Legislation on collective investment funds in Germany

Germany has several legal frameworks regulating collective investment schemes based on their type. These laws are:

• -          the Investment Act;
• -          the Investment Tax Act;
• -          the Banking Act;
• -          the Stock Corporation Act;
• -          the Securities Trading Act.

Also, all German collective investment funds must be authorized and supervised by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). The legislation acknowledges the following types of collective investment funds in Germany:

• -          open-ended retail funds
• -          closed-ended retail funds.

Our lawyers in Germany can provide you with information about the legislation on investment funds.

Open-ended retail funds in Germany

German open-ended retail funds can be registered as investment schemes managed by a capital investment company (KAG) or as investment stock corporations with variable capital (InvAG). The investment company managing an open-ended retail fund can be a German limited liability company or a stock corporation.

Investment stock corporations in Germany must fulfill the following conditions:

• -          a minimum share capital of 300,000 euros;
• -          a registered address in Germany;
• -          a custodian bank which will keep the fund’s assets.

You can request the services of our law firm in Germany if you want to set up an open-ended retail fund. Foreign investors looking to open collective investment funds in Germany may also open hedge funds.

Closed-ended retail funds in Germany

Apart from the legislation above, German collective investment schemes registered as closed-ended retail funds are also governed by the following laws:

• -          the Securities Prospectus Act;
• -          the Sales Prospectus Act;
• -          the Ordinance on Prospectuses for Non-Securities Instruments;
• -          the Civil Code;
• -          the Commercial Code;
• -          the Limited Liabilities Companies Act.

There are no licensing requirements for closed-ended retail funds in Germany. They must be only authorized by BaFin.

Collective investment schemes are usually exempt from the corporate and trade taxes in Germany. However, for complete information about the advantages of setting up an investment fund in Germany you can contact our local lawyers. Our German attorneys can also help you open any type of investment scheme.