NOTE: This article represents the InvG on comparative basis to the old right. For this purpose this comes from the perspective to 1 January 2004

The German Investmentgesetz (InvG) was created by the Investmentmodernisierungsgesetz and reformed on initiative of the Federal Government the following up to then valid regulations:

• Law over Kapitalanlagegesellschaften (KAGG) and
• Auslandinvestment law (AuslInvestmG).

These do not apply since its entry into force any longer.

The InvG serves the development of the Investmentstandortes Germany. This stands in intensive competition with other European The legal basic conditions of states such as Luxembourg, Ireland and Great Britain are considered more attractive sometimes by offerers of unit trust fund often than the national. Unit trust fund was increasingly abroad presented therefore. This development could strengthen in the years 2000 to 2004 due to the further harmonization on European level. With the Investmentmodernisierungsgesetz it concerns an article law consisting of a supervision-legal Investmentgesetz (InvG) and a Investmentsteuergesetz (InvStG).

Overview

With the Investmentgesetz the change guidelines 2001/107/EG and 2001/108/EG are converted from 21 January 2002 to the European Union-Investmentrichtlinie 85/611/EWG (guideline over organisms for common plants in securities, briefly OGAW guideline) from 20 December 1985. With the conversion of the guidelines a further step is carried out for the implementation of the European domestic market in the Investmentbereich. Besides become under pool of the law over Kapitalanlagegesellschaften (KAGG) and the Auslandinvestment law (AuslInvestmG) modernizes and standardizes the national legal regulations within the unit trust fund range.

In the InvG strengthen authorizations are to the decree intended by statutory orders, in order to be able to adapt technical detail regulations (e.g. to derivatives, for the evaluation of fortune articles, for accounting) faster and more flexibly the ever more rapidly changing economic basic conditions. At the same time the new InvG the supervision is to strengthen by the Federal Institution for supervision of financial service (BaFin). In particular over the introduction of an accelerated licensing procedure for conditions as per contract of unit trust fund become free with the BaFin capacities for more substantial tasks of supervision. In the context of an improved supervision of market besides new obligations to register are introduced, which put the BaFin into the position to proceed time near and purposefully against bad states. The supervision-legal regulations supplemental by a revised version of the catalog of the irregularities. The height of the possible penalties was adapted to the economic development.

Besides different further measures will improve the investor protection. This applies e.g. to new transparency rules in annual reports and the sales folders. In particular over the resulting costs and fees must be in more detail informed now. Standardized requirements make possible for investors besides a better comparison on the market of the offered in and foreign products.

Substantial innovations in detail

In the framework the InvG contains the following innovations of the conversion of the change guidelines on the guideline 85/611/EWG and in connection with the revision of past regulations:

Abolition of the fund categories

So far there were different legally defined fund types in Germany. The changed guideline 85/611/EWG regulates now also derivatives, Investmentanteile, money market instruments and bank assets as fortune articles. The legal fund types, which gave the classification of a special estate so far in Germany e.g. as money market special estates or as security special estates, are void. The name of a does not have to show necessarily the plant emphasis. In order to prevent, a possible incorrect information of the investor which is based on the naming, the BaFin receives the possibility of specifying in guidelines orientation measure staff how a may be put on, in order during the naming or in the advertisement as a certain fund type is designated to be able.

Simplified sales folder

Additionally to the past sales folder it will give now a new standardized, simplified sales folder so mentioned. The simplified sales folder must in form the information necessary easily understandable for the investor for a plant decision contained (abstract of the special estate, the plant information and the economic information as well as data to the acquisition and for the sale of portions). This improves the information possibilities of the investors, since the detailed sales folder is often not read by investors.

Expansion of the European passport for unit trust fund

The expansion of the guideline 85/611/EWG on bank assets, Investmentanteile, money market instruments and derivatives - and so that the first harmonization beyond security - contribute to the fact that more can receive the European passport in such a way specified (change guideline 2001/108/EG).

European passport for administrative companies

Administrative companies receive for the first time a European Union far valid permission, if they fulfill the again formulated requirements and keep the intended indicator procedure. Once certified, an administrative company may follow then to its activities also in other member states by branches or in the context of the free services. In this case then not only the special estate orders, but also investment society over a European passport.

Sinking of the initial capital of Kapitalanlagegesellschaften

The guideline 85/611/EWG in the changed version plans a substantial sinking of the necessary initial capital for administrative companies. A smaller initial capital makes a higher yield on equity possible, a criterion, which could be drawn with location decisions in the calculation. Now a minimum capital is into high ones prescribed of 125 of,000 "€ as well as additional own resources, which are dynamically oriented at the business development. Because of the credit institute characteristic residents Kapitalanlagegesellschaften must exhibit at least 730,000 "€ initial capital in Germany. In order to adjust this competitive disadvantage economically, the dynamic capital adjustment begins for German Kapitalanlagegesellschaften only with a value of the business of 3 billion "€. Administrative companies, which operate also the are to show own capital funds of 2,5 millions because of the additional operational risks "€. Same applies to Kapitalanlagegesellschaften of real estate special estate, to also so far the capital requirements already increased existed (so far 5 millions "€). Independently of it Kapitalanlagegesellschaften must exhibit own resources, which correspond at least to one quarter of their costs at each time, whereby a sufficient capitalization of the societies could be guaranteed.

Expansion of the activities of Kapitalanlagegesellschaften

Apart from the administration of special estates also the individual Finanzportfolioverwaltung is permissible as permission-requiring principal activity after the change guidelines. Part-time works like the Verwahrung of foreign funds and the selling of portions do not oppose the distribution of an European Union passport.

Paging of activities of the Kapitalanlagegesellschaft

Administrative companies may do now activities (e.g. Fund bookkeeping) to third transfer. The supervision may not be impaired however. The now also permissible transmission of the Portfoliomanagements may take place however only on such enterprises, which are certified for purposes of the administration of an estate. In order to carry for the core of the Investmentgedankens calculation, the fundamental plant decision must remain at the paging out Kapitalanlagegesellschaft during the transmission of the Portfoliomanagements. The transferring Kapitalanlagegesellschaft cannot page however their adhesion out "". Already due to the trust typical for Kapitalanlagegesellschaften the paging may not affect the interests of the investors. The legal regulation for paging gives legal security for the structuring to interested Kapitalanlagegesellschaften so mentioned "master KAG ".

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