I OVERVIEW OF RECENT ACTIVITY
As in the previous year, 2018 marked another successful year for the German fund industry. The number of open-ended investment funds grew from 6,370 (at the end of 2017) to 6,679 (at the end of 2018), while assets under management at the year ends, largely due to the fall in the stock markets in Q4/2018, largely remained constant (€2,057 billion at the end of 2018 in comparison to €2,055 billion at the end of 2017). During the same period, the number of registered alternative investment fund (AIF)2 management companies (KVGs) increased from 314 (in 2017) to 379 (in 2018), whereas the number of licensed management companies increased from 136 (in 2017) to 146 (in 2018).3 By contrast, the total number of non-German funds that are authorised to be distributed in Germany increased with respect to UCITS from 10,183 (in 2017) to 10,511 (in 2018), with respect to EU AIFs from 1,591 (in 2017) to 2,095 (in 2018) and with respect to non-EU AIFs from 285 (in 2017) to 321 (in 2018).4
II GENERAL INTRODUCTION TO the REGULATORY FRAMEWORK
i Definition of captured asset management activities
The asset management activities covered by this chapter can be divided into collective asset management (i.e., the management of investments in collective investment schemes (funds)) and individual asset management (i.e., the management of individual accounts). Before the implementation of the AIFMD5 into German law on 22 July 2013, the German fund industry was categorised into regulated funds and non-regulated funds. Regulated funds, which were always open-ended, were subject to comprehensive product regulation and ongoing supervision under the German Investment Act (InvG). Non-regulated funds were established under general corporate law and were typically closed-ended. They were subject to statutory prospectus requirements, but were generally not subject to prudential supervision and product regulation. With the implementation of the AIFMD through the Capital Investment Act (KAGB) in July 2013, the scope was extended to all collective investment schemes in Germany, save for certain exceptions specified in the KAGB. Nonetheless, open-ended and closed-ended funds are still subject to different regulatory requirements under the KAGB.
ii The KAGB as the central piece of legislation
The central piece of legislation for German investment funds is the KAGB. The KAGB contains a comprehensive, single statutory framework for all collective investment schemes in Germany, covering both undertakings for UCITS and AIFs within the meaning of the AIFMD. Unlike the AIFMD, which is limited to the regulation of alternative investment fund managers (AIFMs) and AIFs distributed to professional investors, the KAGB also regulates AIFs that can be distributed to retail investors. Furthermore, also different from the AIFMD, the KAGB contains specific investment restrictions for German AIFs.
The range of collective investment schemes regulated as AIFs under the KAGB is very diverse, and includes both funds for institutional investors (i.e., German special funds) as well as the various types of non-UCITS open-ended funds accessible to private investors.
The KAGB also governs many previously unregulated German collective investment schemes in the grey (i.e., unregulated) capital market. These funds may invest in a wide variety of asset classes, including real estate, ships, containers, wind and solar energy parks, and film rights. Owing to the illiquid nature of their assets, they are typically closed-ended. These funds usually have the legal form of a partnership and are often structured to provide particular tax benefits for their investors.
Special funds form a very important part of the fund industry in Germany. Traditionally, special funds have been open-ended, regulated investment funds limited to non-natural persons (i.e., institutional investors including financial institutions, corporates and other institutional investors, such as foundations or churches). German insurance companies constitute the single most important investor category; this institutional investor group holds a significant part of its restricted assets and technical reserves via German special funds. Under the KAGB, the scope of eligible investors for German special funds was broadened to cover professional investors and semi-professional investors. The category of professional investors is derived from the AIFMD, and includes professional investors within the meaning of Annex II of MiFID II6 and those investors upgraded to professional investor. The category of semi-professional investors is not foreseen in the AIFMD. It includes certain public law bodies as well as investors investing at least €10 million into the relevant AIF, and investors investing at least €200,000 and additionally fulfilling certain qualifications regarding investment expertise, experience and knowledge. Thus, the KAGB has also given certain private investors access to German special funds.
Owing to the limited circle of potential investors, the regulation of special funds has always been significantly lighter than for public mutual funds. Because of the well-calibrated balance of regulation and product flexibility, the German special fund has, over decades, gained enormous importance for the management of institutional assets in Germany. Attempts by foreign legislators to copy the German special funds regime, such as the introduction of the Luxembourg specialised investment funds, have not had a noticeable adverse impact on the attractiveness of German special funds.
Special funds are necessarily AIFs under the KAGB because they do not qualify as UCITS, although a special fund may adhere to the investment restrictions applicable to UCITS. The KAGB provides for three types of open-ended special funds:
- a largely liberalised form of special funds subject essentially only to the general principle of risk diversification and the requirement to invest only in assets whose market value can be determined;
- special funds with fixed fund rules, which essentially take over the regulation of special funds as previously recognised; and
- special funds qualifying as hedge funds, which is only a negligible phenomenon in Germany.
Special funds with fixed fund rules are limited to a catalogue of assets specifically permitted under the KAGB, as are German mutual funds. However, most quantitative investment limitations mandatory for public funds can be waived for special funds. The general principle of risk diversification, however, must always be observed. In line with the AIFMD requirements, the German legislature introduced as a new requirement an offering document for German special funds. While the administrative effort in setting up a German special fund has thus become somewhat more cumbersome under the KAGB, special funds can still be established in a very timely fashion. In particular, their fund rules do not require approval by the Federal Financial Supervisory Authority (BaFin), even though the KAGB requires that the fund rules of special funds must be filed with BaFin.
In addition to open-ended special funds, the KAGB also governs closed-ended special funds. Private equity funds set up in Germany must necessarily be organised as closed-ended special funds, and are then subject to the particular disclosure and notification requirements as well as the asset-stripping rules foreseen by the AIFMD.
Open-ended public funds
Regulated mutual funds were originally established by the German legislature as open-ended investment products for private investors. Despite the increasing variety and complexity of mutual funds, the main objective of their regulation is still investor protection. The fund rules must comply with the statutory requirements of one of the permissible types of fund under the KAGB, including the qualitative and quantitative investment restrictions applicable to the relevant fund type.
The most common fund type for open-ended mutual funds are UCITS. The legal provisions applicable to German UCITS are essentially limited to the implementation of the requirements under the UCITS Directive.
The permissible non-UCITS open-ended fund types under the KAGB include:
- real estate funds, which invest mainly in real estate and real estate companies;
- funds of hedge funds;
- 'mixed funds', which resemble UCITS but may also invest a limited portion of their assets in non-UCITS compliant target funds; and
- 'other funds', which, apart from UCITS eligible assets, may also invest in non-UCITS compatible target funds, unlisted corporate participations, precious metals and loans, and may also be established in the particular form of a microfinance fund.
Single hedge funds are permissible only as special funds.
Closed-ended public funds
The KAGB permits the establishment of closed-ended funds not only for professional (and semi-professional) investors, but also for private investors. However, it added product regulation of closed-ended funds to the 'mere manager' regulation required by the AIFMD. Closed-ended public funds are restricted to an exhaustive list of eligible assets. This list is broad and covers, inter alia, financial instruments such as securities, certain investment funds and participations in companies, as well as physical assets such as real estate, ships and superstructures, aircraft, renewable energy facilities, electric powered vehicles and containers; however, it is a conclusive catalogue, and does not allow closed-ended funds to invest in any other type of assets. Furthermore, closed-ended funds targeting private investors must only invest in derivatives for hedging purposes, and must generally be invested according to the principle of risk diversification, which requires an investment in at least three assets that are essentially evenly distributed, or an investment providing for a diversification of risk (e.g., real estate due to the tenant structure). The requirement of risk diversification does not apply if the minimum investment is at least €20,000.
Apart from the KAGB, there are a few other German statutes tailor-made for specific types of funds that do not provide for prudential regulation but rather offer certain benefits, typically tax benefits, to funds established in accordance with the relevant statutory requirements. The Act on Corporate Participation Companies of 1986 and the Act on Venture Capital Companies of 2008 (which has been repealed) were both designed to promote the establishment of German private equity and venture capital funds by offering certain tax benefits for funds established under the relevant statute. Neither statute has gained significant importance. The same is true for the German REIT Act: it was introduced in 2007, but at present only five German REITs exist.
iii Discretionary asset management
Discretionary asset management relating to financial instruments is an investment service subject to a licensing requirement under the German Banking Act (KWG). Besides banks and financial services institutions licensed under the KWG, UCITS and AIF management companies licensed under the KAGB can also be authorised to provide discretionary asset management services as an ancillary activity; in addition to the licensing, solvency and organisational requirements under the KWG, they must then observe rules of conduct derived from MiFID and implemented in the German Securities Trading Act.
iv Regulator: BaFin
BaFin is the competent regulator for German banks (i.e., deposit-taking credit institutions), e-money-institutions, financial services institutions (i.e., investment firms within the meaning of MiFID as well as leasing and factoring companies), insurers (including regulated pension funds) and UCITS and AIF management companies. When supervising deposit-taking credit institutions, BaFin cooperates with the European Central Bank and the German Central Bank. It also cooperates with the German Central Bank when supervising financial services institutions, but is the sole regulator for insurers and UCITS and AIF management companies.
III COMMON ASSET MANAGEMENT STRUCTURES
i Contractual funds
Contractual funds (in contrast to corporate type funds) do not have a legal personality and must be managed by a KVG licensed under the KAGB (or passported non-German investment management companies: see below). The KVG is obliged to manage the contractual fund in its own discretion, subject always to the limitations of the KAGB and the relevant fund rules. The KVG is generally not subject to instructions by investors. Particularly in the case of special funds, which often only have one institutional investor, the KVG will typically establish an investment committee in which the investor and the KVG, and potentially the depositary, are represented. The investor can influence the management of the special fund by exercising its voting rights in this investment committee. However, from a legal perspective, the investment committee has an advisory function only.
The assets belonging to a contractual investment fund are either legally owned by the KVG as trustee for the investors of the fund or by the investors themselves (as co-owners of the portfolio assets). The fund assets must be held in safe custody by a depositary. In the case of UCITS, the depositary is also responsible for administering the issuance and redemption of fund shares. Typically, fund shares are not issued to investors in physical form, but are certificated in a global certificate deposited with the German central securities depositary, Clearstream Banking AG. Fund shares can be registered shares or bearer shares; bearer fund shares must be certificated in a global certificate without the right to demand actual securities. In accordance with the German legal framework for the safe custody of securities under the Safe Deposit Act, investors hold a fractional interest in the global certificate corresponding to their investment in the fund under a multi-tier deposit structure starting with the bank maintaining their securities account and ending with Clearstream Banking AG.
With the exception of German UCITS, which can be managed by non-German UCITS management companies, and German AIFs limited to professional and semi-professional investors, which can be managed by EU-licensed AIFMs, regulated German contractual funds can only be managed by external German KVGs. Such external German KVGs can only be established as a stock corporation, a limited liability company or a limited partnership whose only general partner is a limited liability company, and must have a minimum capital of €125,000 plus 0.02 per cent of the amount of assets under management exceeding €250 million, but in any case at least an amount equivalent to one-quarter of its preceding year's fixed overhead. They must at least have two managing directors who are qualified for investment business (i.e., collective asset management and risk management), as well as sufficient personnel to conduct their business. In addition, each KVG must establish a supervisory board (or an advisory board in the case of a limited partnership) of at least three members, one of whom must be an independent board member unless the KVG exclusively manages special funds. The KVG may outsource functions, including the portfolio management or the risk management (but not both in relation to the same fund), subject to certain limitations under the KAGB. In particular, the portfolio management may only be delegated to an entity that is licensed to perform asset management activities and subject to effective supervision, but that does not simultaneously act as depositary for the respective investment fund. While generally all functions except controlling functions may be delegated, the KVG must retain sufficient personnel to control the delegated functions, and the scope of the delegations must not result in the KVG becoming a letter-box company.
iii Investment stock corporations
Under the KAGB, German investment funds can also be established in corporate form, namely in the form of an investment stock corporation. The KAGB provides for two varieties of investment stock corporations: those with variable capital as the legal form for open-ended funds, and those with fixed capital as the legal form for closed-ended funds.
Investment funds in corporate form play only a minor role in Germany. The vast majority of German regulated funds are established in contractual form. The investment stock corporation with fixed capital was originally introduced in 1998, but was abolished in 2004 because it was so unattractive due to its unfavourable tax regime that, until 2004, no such stock corporation was ever established. Under the KAGB, this legal form has been reintroduced into German investment law and is no longer subject to an unfavourable tax regime (this is also the case under the 'new' German Investment Tax Act).
The investment stock corporation with variable capital was only introduced as a legal form for German regulated funds in 2004. Originally, it was designed in particular as a legal vehicle for hedge funds, which were introduced as a new mutual fund type at the same time. In 2007, the legislature introduced further changes that also allow the establishment of investment stock corporations with different sub-funds without cross-liability. German investment stock corporations can be established as self-managed corporations or as investment stock corporations managed by an external investment management company. In the latter case, the investment stock corporation essentially only serves as a corporate shell, whereas the operational and control functions (portfolio management, risk management, etc.) are situated in the investment management company.
iv Investment limited partnerships
Besides contractual type funds and investment stock corporations, the KAGB permits investment limited partnerships as an additional legal form for German investment funds. Like investment stock corporations, investment limited partnerships can be set up both as open-ended or closed-ended investment limited partnerships. Investors participate as limited partners in the investment fund, and their liability is generally limited to the amount of capital contributed by them to the investment fund.
IV MAIN SOURCES OF INVESTMENT
i Open-ended funds
The majority of the total assets under management in German funds of €2,057 billion is invested in special funds (€1,589 billion), while merely €468 billion is managed in public mutual funds.7 The biggest investor groups in special funds are, and were historically, insurers and pension vehicles.
ii Closed-ended funds
For 2018, the German Investment Funds Association (BVI) reported assets under management in German closed-ended retail funds of only €2.05 billion and in closed-ended special funds of €6.88 billion.8
iii Discretionary asset management
Reliable data on the German market for individual discretionary asset management is even more difficult to obtain than for closed-ended funds, as there is no central industry association collecting relevant data from all market participants. According to data published by the BVI, as at 31 December 2018, KVGs managed €353 billion (€379 billion in 2017) of assets on the basis of discretionary asset management agreements outside of funds.9
V KEY TRENDS
As was already the case in previous years, the long-lasting low interest rate environment forces many German institutional investors traditionally focused on fixed income investments to look for other investments promising more attractive returns at appropriate risk levels. In this context, many institutional investors have increased their asset allocation to real estate, including investments in real estate loans. Generally, there is a high demand for a large variety of debt investments outside the securities markets (commercial loans, commercial real estate loans, trade finance).
VI SECTORAL REGULATION
The biggest group of investors in German funds, namely insurers, are themselves subject to investment restrictions under the Insurance Supervisory Act. With effect from 1 January 2016, these investment restrictions were significantly altered by the implementation of the Solvency II Directive.10
The Investment Regulation for the Investment of Restricted Assets of Insurance Companies – applicable before the implementation of the Solvency II Directive to all insurers – was newly promulgated in April 2016 with substantially the same rules as before, but since then only governs investments of technical reserves of small insurance companies (defined primarily as non-liability, credit or bonding insurance with an annual gross written premium income of €5 million or less), pension life insurers and death benefit insurers. The Investment Regulation contains an exhaustive list of eligible assets. Each investment by a German insurance company must be allocable to one of the items in this catalogue to qualify as an eligible investment, except for investments under an opening clause generally limited to 5 per cent of the technical reserves. Furthermore, the Investment Regulation allows investments of up to 7.5 per cent of the technical reserves in EU AIFs managed by EU AIFMs without any specific investment restrictions applicable to such AIF under the Investment Regulation. In December 2017, BaFin released its Circular 11/2017 (VA), which provides detailed regulatory guidance on the implementation of the Investment Regulation.
By contrast, insurers not subject to the Insurance Regulation must follow the prudent person principle of the Solvency II Directive: in other words, they must only invest in assets whose risks can be properly identified, measured, monitored, managed, controlled and reported, and appropriately taken into account in the assessment of the overall solvency needs of the insurer. In lieu of the catalogue of eligible investments set out in the Investment Regulation, insurers must establish their own internal investment catalogue to ensure that all investments meet the tests on security, quality, liquidity, profitability and availability.
The German pension system is traditionally characterised by a strong public pension pillar that is a pay-as-you-go system financed by employees, employers and governmental subsidies. Apart from this, there is a wide variety of occupational pension schemes, each with its own regulatory framework, including:
- direct pension promises, where the employer promises certain pension payments to the employee. In recent years, many German companies have established contractual trust arrangements (CTAs) to take their pension liabilities off their balance sheets. CTAs are generally not subject to statutory regulation or investment restrictions;
- direct insurance schemes, where the employer takes out a life insurance policy for the employee and pays the premiums;
- pension life insurers are specialised life insurance companies, and as such are regulated as insurance companies whose investments are subject to the Investment Regulation;
- pension funds, which can be established as stock corporations or mutual pension fund associations, and whose investments are limited by an executive regulation similar to the Investment Regulation for insurance companies; and
- support funds, which are unregulated pension schemes not subject to statutory investment restrictions.
iii Real property
Historically, the main majority of real estate funds in Germany were open-ended. Starting in the autumn of 2008, at the height of the financial crisis and shortly after the fall of Lehman Brothers, a growing number of open-ended real estate funds suffered liquidity crunches and could no longer satisfy redemption requests. None of these funds recovered from this shock, and for the first time in the history of open-ended real estate funds in Germany, such funds had to be liquidated, which was a long and painful process for their investors whose only alternative was to sell their fund units at an organised market with a substantial discount. As a consequence, the legislature changed the redemption rules and effectively created semi-opened real estate funds, and established a mandatory lock-up period of 24 months as well as the requirement to notify the AIFM of a redemption with a period of 12 months (although these periods can be overlapping).
By contrast, the market of closed-ended real estate funds continues to be relatively small, even after they became subject to regulation with the implementation of the AIFMD. In the past, closed-ended real estate funds were often established to finance a single asset. Despite the fact that a non-diversified closed-ended fund can only target the retail public if the minimum investment is €20,000, the risk diversification requirements under the KAGB for closed-ended public funds not meeting this threshold continue to be significantly lower than for open-ended public funds invested in real estate.
iv Discretionary asset management
The business of discretionary asset management is subject to a licensing requirement under German law only if it relates to financial instruments. The management of real estate, therefore, does not require any licence under German law. If the management of real estate also includes the investment of rent or other income in financial instruments, a licence for discretionary asset management is generally required.
A growing number of open-ended special funds are established as 'master funds', in other words, relatively large funds segmented into a number of 'virtual funds' (not to be confused with sub-funds in an umbrella fund structure). These segments, while not legally constituting individual funds, are for all practical purposes treated like separate funds, and their management is commonly delegated to an external portfolio manager who must be licensed for the purpose of discretionary asset management. Such a delegation is possible not only for German KVGs, banks and financial services institutions holding the requisite licence, but also for requisite non-German EU service providers holding an EU passport. This is also a growing market for non-EU asset managers (e.g., US managers supervised by the Securities and Exchange Commission, who can perform asset management services for these funds on a cross-border basis under the 'passive services exemption' – also referred to as 'reverse solicitation'); under this exemption, otherwise licensable financial services can be provided in Germany by non-EU service providers if the client relationship was established exclusively upon the client's (or its agent's) initiative. In the case of special funds, non-EU asset managers are frequently selected by investment consultants (acting for the special fund investor) who approach these managers with a request for proposal. Alternatively, non-EU asset managers may, in certain circumstances, apply for a specific licence exemption from BaFin.
v Hedge funds
In 2004, the German legislature introduced a regulatory framework for single hedge funds and funds of hedge funds as additional fund types into the InvG. The initial hopes and expectations by some lobbyists and market participants regarding the development of a significant German hedge funds industry have, however, not materialised. With the introduction of the KAGB, German single hedge funds could no longer be established as public funds, but had to be converted to special funds limited to professional or semi-professional investors. At the end of 2018, there were only 13 German single hedge funds (14 in 2017) with total assets under management of approximately €3.36 billion (€3.43 billion in 2017) and no German funds of hedge funds.11
vi Private equity
German-based private equity funds have traditionally been non-regulated vehicles. With the implementation of the AIFMD in Germany, managing and distributing private equity funds in Germany generally has become subject to regulation under the KAGB. So far, however, Germany has not been a very prominent jurisdiction for the establishment of private equity funds, and this has not changed as a result of their regulation under the KAGB.
VII TAX LAW
Germany has introduced, as of 1 January 2018, a substantially amended investment taxation regime (German Investment Tax Act 2018: InvStG 2018). This new regime abolishes the only recently introduced distinction between investment funds in the narrower sense and investing companies. The main drivers for the reform as cited by the German legislator were shortfalls of the 'old' regime in terms of complexity, abuse potential and non-compliance with European law.
The key aspect of the new regime is that investment funds are no longer treated as being tax-transparent, but rather subject to corporate income tax with respect to specific domestic income (e.g., from shareholdings or domestic real estate). Only special investment funds can, subject to certain requirements, opt for a tax-transparency regime similar to the 'old' system.
Whether a fund is an investment fund within the meaning of the InvStG 2018 very much depends on its supervisory law classification. If a fund qualifies as an investment fund for supervisory law purposes, it is in principle also treated as an investment fund for investment tax purposes. There is, however, an important exception for partnerships, which generally do not fall within the scope of the InvStG 2018 (this exception is mainly targeted at private equity funds, which are often structured as partnerships). On the other hand, one-investor vehicles, albeit not investment funds for supervisory law purposes, are explicitly covered by the scope of the InvStG 2018.
Under the new investment tax regime, both German and non-German investment funds (or sub-funds, respectively) are generally subject to a non-transparent tax regime and are therefore subject to German corporate income tax at a tax rate of 15 per cent for certain items of German-source income. These items are, in particular, dividends (or dividend equivalent payments) from German corporations and income from German-situs real estate. Investment funds, however, are not subject to tax in Germany for, inter alia, interest income, capital gains from the disposal of shares, bonds or derivatives, and all types of foreign-sourced income.
Even though certain types of income are already taxed at the fund level, investors into such investment fund who are tax-resident in Germany are nevertheless subject to German income tax or corporate income and trade tax (if any) on the investment fund's distributions, on capital gains realised upon the disposal of their investment fund units and on income deemed to be received in the form of an advance lump-sum amount. The advance lump-sum amount was intended by the legislator to replace the concept of deemed distributed income under the 'old' regime in order to allocate to the investor a deemed risk-free return for tax purposes irrespective of whether the fund actually distributes or rather retains its earnings.
To avoid or at least reduce the double taxation of the same income at the level of the fund and of the investor, the InvStG 2018 provides for partial exemptions at the investor level, subject to certain requirements. The applicable partial exemption rate depends on whether the investment fund qualifies as an equity fund, mixed fund or real estate fund. To illustrate this by means of the latter, a real estate fund is an investment fund that invests continuously at least 51 per cent of its (net asset) value in real estate and real estate companies. If these requirements are met, generally 60 per cent of the total income from the investment fund (i.e., irrespective of whether the income is derived from real estate or not) is tax-exempt at the level of the respective investor. This exemption even increases to 80 per cent if the investment fund is invested in foreign (i.e., non-German) real estate or foreign real estate companies.
A completely different regime applies, however, if the investment fund qualifies as a special investment fund. In this case, the fund has the option to be treated as tax-transparent. This means that no taxation applies at the fund level (save for a withholding tax obligation in the case of real estate income), whereas investors are fully taxable on distributions and deemed distributions.
To qualify as a special investment fund, an investment fund must not have more than 100 investors and must comply with rather narrow (investment) restrictions. In particular:
- the investment fund or its manager must be subject to investment supervision;
- the investors must be entitled to at least an annual redemption of their units;
- the fund must invest in a risk-diversified manner; and
- at least 90 per cent of the value of the investment fund must be invested into eligible assets such as securities, derivatives or real estate.
Participations in corporations are principally eligible, but are restricted in terms of fund volume (no more than 20 per cent of the fund's value) and the size of the participation (less than 10 per cent of the respective corporation's capital.
Unlike in previous years with the implementation of MiFID II or the new German investment tax legislation, there is currently no comprehensive change to the regulatory or tax environment for investment funds in the making. Nevertheless, it will remain important for investment fund managers to monitor the changing regulatory landscapes of their various investor groups. Tailor-made special funds can provide valuable instruments, for example, for insurers to assist them in meeting the requirements of the Solvency II Directive, or for banks in meeting the requirements of the liquidity coverage ratio, especially in light of the negative interests charged by the European Central Bank.
1 Christian Schmies is a partner at Hengeler Mueller. The author would like to thank Markus Ernst, counsel at Hengeler Mueller, for his contribution on taxation.
2 Alternative investment fund managers within the meaning of the Alternative Investment Fund Managers Directive (AIFMD) 2011/61/EC.
3 Annual Report 2018 of the German Federal Financial Services Supervisory Authority, p. 149.
4 Annual Report 2018 of the German Federal Financial Services Supervisory Authority, p. 151.
5 European Alternative Investment Fund Managers Directive 2011/61/EC.
6 European Markets in Financial Instruments Directive 2014/65/EU.
7 Annual Report 2018 of the German Federal Financial Services Supervisory Authority, p. 150.
8 BVI Investmentstatistik as at 31 December 2018, p. 1.
10 Directive 2009/138 of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).
11 Annual Report 2018 of the German Federal Financial Services Supervisory Authority, p. 150.