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Nexia Ebner Stolz

The new Capital Investment Code

Uncertainty in practice - A new challenge for closed-end funds

The new Ca­pi­tal In­vest­ment Code (KAGB), which went into force on 22 July 2013, aims at a com­pre­hen­sive re­gu­la­tion of all ty­pes of in­vest­ment as­sets and their ma­na­gers.

The new Ca­pi­tal In­vest­ment Code (KAGB), which went into force on 22 July 2013, aims at a com­pre­hen­sive re­gu­la­tion of all ty­pes of in­vest­ment as­sets and their ma­na­gers. The new Code goes si­gni­fi­cantly beyond the pre­viously ap­plica­ble li­mits of the In­vest­ment Act (InvG).

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The in­no­va­ti­ons im­ply si­gni­fi­cant ef­fects for in­vest­ment prac­tices, since all clo­sed-end funds that star­ted their ac­tivity af­ter 22 July 2013 or want to start ac­tivity in the fu­ture are sub­ject to le­gal su­per­vi­sion and re­gu­la­tion for the first time.

Upon ex­pi­ra­tion of the one-year tran­si­tio­nal pe­riod on 7/21/2014, mo­re­over, clo­sed-end funds al­re­ady exis­ting prior to 7/22/2013 must also com­ply with the new re­qui­re­ments of the KAGB when they in­vest in new as­sets or even just com­pre­hen­si­vely re­struc­ture or re­pair their port­fo­lio.

Howe­ver, clo­sed-end funds are not the only in­vest­ment ve­hi­cles fa­cing the new chal­len­ges. Even a year af­ter the KAGB be­came ef­fec­tive, many mar­ket play­ers are un­cer­tain whe­ther they are sub­ject to the law, and if so, which pre­cise re­qui­re­ments and du­ties they must com­ply with. This par­ti­cu­larly in­clu­des what are known as fa­mily & fri­ends pro­grams, GmbH & Co KG struc­tures (li­mited part­nerships where the ge­ne­ral part­ner is a li­mited-lia­bi­lity com­pany), real es­tate AGs, REITs, coope­ra­ti­ves and other in­vest­ment ve­hi­cles that are ba­sed on a com­mon in­vest­ment. Even fa­mily of­fices may be af­fec­ted by the new re­gu­la­ti­ons in in­di­vi­dual ca­ses, spe­ci­fi­cally when the de­gree of re­la­ted­ness of the fa­mily mem­bers in­vol­ved is too dis­tant in the view of the re­gu­la­tors.

In ad­di­tion, a prac­ti­tio­ner com­men­tary has been publis­hed in Ger­man by C.H. Beck Ver­lag with the title “KAGB - Kom­men­tar zum Ka­pi­tal­an­la­ge­ge­setz­buch und zur Ver­ord­nung über Eu­ropäische Ri­si­ko­ka­pi­tal­fonds mit Bezügen zum AIFM-StAnpG” edi­ted by Weit­nauer/Box­ber­ger/An­ders. It has been avail­able since mid-Au­gust 2014 at books­to­res or can be or­de­red on­line.

Our real es­tate ex­perts Dr. Da­niel Kau­ten­bur­ger-Behr and Hen­ning-Günther Wind are co-aut­hors of the book. They com­ment on the area of mas­ter fee­der struc­tures and real es­tate spe­cial funds.

Ad­di­tio­nal in­for­ma­tion and or­de­ring op­por­tu­nities can be found here.

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