Practical Handbook for the Marketing of Foreign Investment Funds in Germany

This practical handbook gives a comprehensive legal overview of regulatory issues for non-German investment companies which intend to sell the units of their investment funds in Germany. It provides useful legal information for entering the German market. The authors explain the conditions in which non-German investment products come within the scope of the German Investment Act (regulated investment funds). This book assists the readers in distinguishing between the strict boundaries of private placements and the wider rules of public distribution. Readers are provided with a legal overview in relation to the private placement of regulated investment funds, including hedge funds. This book also deals with the notification of UCITS ('Undertakings for Collective Investment in Transferable Securities' which comply with the UCITS Directive 85/611/EEC) with the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) for public distribution in Germany, and sets out an investment company's regulatory reporting and information duties to German unitholders and the BaFin subsequent to a notification for public distribution. The authors explain distribution and marketing rules which apply to foreign regulated investment funds in Germany. They outline the licence requirements for foreign distributors. Consumer-related issues, such as rights of revocation, consumer information and prospectus liability are also covered. This handbook sets out the requirements for listing Exchange Traded Funds on a German stock exchange and deals with continuing listing obligations and the inclusion of foreign investment funds in stock exchange trading without the issuer's consent.

1;INDEX;8 2;LIST OF DEFINITIONS AND INTERNET LINKS;16 3;CHAPTER 1 - PREFACE;24 4;CHAPTER 2 - CATEGORISATION OF FOREIGN FUNDS;26 4.1;2.1 Investment funds under the Investment Act;26 4.1.1;2.1.1 UCITS;26 4.1.2;2.1.2 Non-UCITS;29 4.2;2.2 Fund structures outside the Investment Act;39 4.2.1;2.2.1 Private equity;40 4.2.2;2.2.2 Debt instruments;40 4.2.3;2.2.3 Certificates;41 4.2.4;2.2.4 Collective investment management;41 5;CHAPTER 3 - PRIVATE PLACEMENTS;50 5.1;3.1 Definitions;50 5.1.1;3.1.1 Public distribution, 2 para (11) sentence 1 InvG;50 5.1.2;3.1.2 Private placement;53 5.2;3.2 The internet;58 5.2.1;3.2.1 Websites in the German language;58 5.2.2;3.2.2 Websites in other languages;59 5.2.3;3.2.3 Websites intended for distribution of foreign investment funds in Germany;59 5.2.4;3.2.4 References to websites in printed marketing material;60 5.3;3.3 Applicable rules;60 5.3.1;3.3.1 Hedge funds and funds of hedge funds;61 5.3.2;3.3.2 Contract law;62 5.3.3;3.3.3 Consumer protection;62 5.3.4;3.3.4 Rescission rights (Anfechtungsrechte);64 5.3.5;3.3.5 Tort;64 5.4;3.4 Preparation of private placement information material;66 6;CHAPTER 4 - PUBLIC DISTRIBUTION OF UCITS;68 6.1;4.1 UCITS III notification procedure;68 6.1.1;4.1.1 Notification to the BaFin;69 6.1.2;4.1.2 Umbrella funds and unit classes;69 6.1.3;4.1.3 Incomplete notification;70 6.1.4;4.1.4 Complete notification and two months waiting period;71 6.1.5;4.1.5 Prohibition of public marketing before end of the waiting period;72 6.2;4.2 Paying and information agent in Germany;73 6.2.1;4.2.1 Paying agent;73 6.2.2;4.2.2 Information agent;74 6.2.3;4.2.3 Standardised services;75 6.2.4;4.2.4 Termination;75 6.2.5;4.2.5 Disclosure;75 6.3;4.3 Notification letter;76 6.3.1;4.3.1 Part A: Harmonised part of the notification letter;77 6.3.2;4.3.2 Required documentation;80 6.3.3;4.3.3 General;94 6.3.4;4.3.4 PART B: Non-harmonised part of the notification letter;99 6.4;4.4 Reporting, information and fee requirements subsequent to UCITS notific
ation;103 6.4.1;4.4.1 Updating the BaFin;103 6.4.2;4.4.2 Informing investors;106 6.4.3;4.4.3 Annual fees subsequent to notification;109 6.5;4.5 Termination of public distribution of UCITS;110 6.5.1;4.5.1 Termination by the Investment Management Company;110 6.5.2;4.5.2 Prohibition of further public distribution by the BaFin;112 7;CHAPTER 5 - DISTRIBUTION CHANNELS AND LICENSING REQUIREMENTS;118 7.1;5.1 Distribution through German service providers;118 7.2;5.2 Licence requirements for foreign distributors;119 7.2.1;5.2.1 UCITS Management Company;119 7.2.2;5.2.2 Securities trading firms passported under the EU banking regulations;125 7.2.3;5.2.3 Distributors without EU passport;128 8;CHAPTER 6 - DISTRIBUTION AND MARKETING RULES;132 8.1;6.1 General rules for public distribution of fund units pursuant to the InvG;132 8.1.1;6.1.1 Provision of documents before conclusion of a sales contract;132 8.2;6.2 Marketing rules for investment funds;134 8.2.1;6.2.1 Most important sources of marketing rules;134 8.2.2;6.2.2 Overview of important rules for marketing;135 8.2.3;6.2.3 Prohibition of marketing by the BaFin;142 8.2.4;6.2.4 Prohibition of public distribution by the BaFin;142 8.3;6.3 Tax transparency rules;143 8.3.1;6.3.1 Tax transparent and non transparent investment funds;143 8.3.2;6.3.2 Tax transparency requirements;144 8.3.3;6.3.3 Taxation of non-transparent funds;146 8.3.4;6.3.4 Relevance of tax transparency;147 9;CHAPTER 7 - INVESTOR PROTECTION;148 9.1;7.1 Rights of revocation;148 9.1.1;7.1.1 126 InvG Doorstep sales;148 9.1.2;7.1.2 Other rights of revocation and rescission;152 9.2;7.2 Consumer information;152 9.2.1;7.2.1 Applicability of German consumer protection law;152 9.2.2;7.2.2 Distance contracts;154 9.2.3;7.2.3 Electronic business dealings;158 9.3;7.3 Prospectus liability;160 9.3.1;7.3.1 127 InvG;160 9.3.2;7.3.2 44 Stock Exchange Act;164 9.3.3;7.3.3 Civil law;165 10;CHAPTER 8 - LISTING ON A GERMAN STOCK EXCHANGE;174 10.1;8.1 Exchange Traded Funds;174 10.2;8.2 Admis
sion to the FSE Regulated Market;175 10.2.1;8.2.1 The Regulated Market and its segments;175 10.2.2;8.2.2 Main admission requirements;175 10.2.3;8.2.3 Applications;178 10.3;8.3 Trading;182 10.4;8.4 Clearing and settlement;183 10.5;8.5 Ongoing obligations following the listing;184 10.5.1;8.5.1 General Standard;184 10.6;8.6 Revocation of admission;194 10.6.1;8.6.1 Upon application by the Investment Company (delisting);194 10.6.2;8.6.2 Revocation of admission ex officio by the Management Board;195 10.7;8.7 Fees;196 10.8;8.8 Inclusion of ETFs into the Regulated Market;196 10.9;8.9 Inclusion of ETFs into the Regulated Unofficial Market;198