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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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