Investment Funds

Creating structures,
protecting returns.

The funds industry is governed by countless EU regulations and directives, delegated acts, guidelines, national standards and national / European supervisory practices which subject this industry – alongside the rest of the finance sector – to complex regulatory challenges. On top of the above, special tax requirements also apply to product structuring.

In order to navigate your business successfully through the stormy waters of laws and regulations, it is vital to identify, evaluate and apply innovative solutions to the relentless onslaught of regulatory updates (sustainable finance (ESG) being the latest example) and changes to established market practices.

Here at GSK Stockmann, our legal advisers will help you master these daily challenges. Our teams in Frankfurt, Munich, Berlin and Luxembourg have the necessary expertise and experience in all areas of investment law – regulation, tax and product structuring – to help you succeed on the important funds markets in Germany and Luxembourg.

As members of various German, Luxembourg and European associations such as the BVI, BVK, BII, ALFI, LPEA, InvestEurope and ZIA, we are perfectly positioned to support you when it comes to asserting your interests in the light of the latest legislative developments.

Main areas of expertise

Our highly specialised and experienced investment law team offers comprehensive advice on all supervisory, tax-related and contractual questions and concerns regarding your company and your products.

Besides ongoing institution-related support, we focus on supporting you with all product-related questions throughout the entire life-cycle of a fund.

Approval procedures
We guide our clients through licensing / licence extension procedures and registration processes in accordance with the KAGB (German Capital Investment Code) or the respective Luxembourg laws, all the way through to market launch.

Ongoing regulatory support: Besides offering advice and support on licensing, a second main focus of our ongoing regulatory support (particularly for asset management companies) is on internal business organisation. This includes risk management, reporting procedures and the implementation of KaMaRisk and outsourcing. We offer asset management companies legal and tax-related advice and support on outsourcing management, particularly where external service providers are to be involved (e.g., when outsourcing asset management). We also support clients during internal restructuring programmes involving elements of outsourcing, and can advise you on sub-advisory agreements, master AIFM agreements, portfolio management contracts and global custody structures.

Remuneration systems
Our experts in employment law focus on supervisory aspects and find viable, workable solutions that comply with the regulatory demands for remuneration in asset management companies. We can advise your company on all questions arising from the Remuneration Ordinance for Institutions. Analysing your remuneration policy from a supervisory perspective, we check for compliance not only with the above policy, but also with all aspects of employment law. This enables us to develop tailored solutions, no matter how complex the problem. Our special focus in this field lies in developing and implementing remuneration systems, advising consolidated group companies on the group-wide applicability of remuneration regulations, and acting as your representative when dealing with BaFin to coordinate guidelines accordingly.

Asset management companies are required to ensure their remuneration system is appropriate and fully consistent; some of the provisions which govern variable components within the remuneration system are particularly strict. Asset management companies must declare their remuneration policy in their initial application for approval. We have considerable experience in advising asset management companies with regard to the relevant remuneration policy legislation.

Advice and support for custodians with regard to contracts and regulatory issues, particularly when seeking approval as a custodian in accordance with the German Capital Investment Code or applicable laws in Luxembourg; international custody of bonds, conducting controls for asset management companies that manage funds, (sub-)outsourcing, etc.

Compliance
Thanks to our wide cross-section of expertise and experience, our regulatory compliance experts are ideally equipped to help you with the supervisory and tax-related investment laws which are relevant to the organisation responsible for the regulated activity, and apply these to all the business processes impacted by such regulations. We will also help you structure your compliance and anti-money laundering policies. Besides offering theoretical advice, we are also happy to provide practical help in this field where required. We will help you outsource compliance roles (e.g., Compliance Officers, Anti-money Laundering Officers, whistle-blower offices and hotlines). In the event of a crisis, we conduct internal investigations and guide you through any follow-on measures.

Litigation
Disputes over funds – prospectus liability, for example, or cases of providing wrong advice – can often be highly complex for reasons beyond content alone. In court, various special strategies need to be taken into consideration in order to protect a client’s reputation, for example, or avoid an adverse legal precedent. We advise and support our clients in public court cases, arbitration proceedings and out-of-court settlements. In all disputes, we will help you develop a tailored solution – particularly in connection with the regulatory requirements which apply to the investment industry.

Structuring funds
We will help you choose the best structure for your fund and create a perfect legal framework that also takes tax law into account. Besides opting for the appropriate product category (open or closed, public AIF or special AIF), the choice of location is also important. This aspect is frequently connected with developing the best tax strategy possible. Numerous factors play a role here, including asset class, investment strategy and the target investor group (national or international; institutions). Taking tax laws, regulatory laws, corporate law and insurance supervisory law into account, we will help you develop the best possible structure for your investment assets.

Launching funds
We will create the documents you need to actually launch your fund. Depending on the product category, these may include (general and special) investment requirements, partnership agreements, investor agreements, side letters, trust agreements, membership documents, etc. These key documents are regularly supplemented by agreements to involve third parties, e.g., order contracts with asset management companies, custodian contracts and agreements for outsourcing.

Sales documents
We specialise in creating / checking sales documents for investment funds – from classic sales prospectuses or sales literature through to accompanying information for investors (KIDs for PRIIPs).

Sales approval procedures
We will help you apply to the relevant supervisory authority for sales approval for your product and organise the necessary documents for the procedure in question. We also regularly support cross-border sales activities in this field. Besides classic sales approval procedures, we can also help you handle pre-marketing processes for special funds.

Active funds management
During the life-cycle of an investment fund, we not only offer advice and support on tax and regulatory issues, but also – depending on the asset class – on pertinent portfolio management measures, particularly with regard to acquisition and sale (e.g., in the field of material assets, securities offerings and M&A transactions for venture capital or private equity funds). In doing so, we draw on the expertise of our colleagues in the respective fields of law – real estate and corporate law, for example.

Restructuring and liquidation
Over the years, we have gained considerable experience in the field of restructuring and merging funds, as well as in winding down funds (on maturity, or due to regulatory measures). We are happy to offer you advice and support through the final phase in the life-cycle of a fund, whether it is helping you to reinvest your assets, guiding you through various supervisory, regulatory or tax-related requirements, or handling disputes with investors.

Due diligence for funds
If you are an investor, we will be happy to deploy our product-specific expertise on your behalf and conduct comprehensive due diligence checks on your investment to ensure it is reliable and safe, and complies with investment, tax and contract laws.

Marketing
A main focus of our work consists in handling the entire spectrum of issues and questions connected with the marketing of investment funds. Amongst other things, this spectrum covers areas as diverse as dealing with regulatory requirements on intermediaries, designing sales processes which comply with supervisory requirements, compiling the documentation necessary for the above, and providing advice and support through the relevant marketing approval procedures – whether national or cross-border.

Types of funds and asset classes
Our expertise covers the following asset classes and types of funds:

  • Closed and open funds
  • Retail funds and special funds
  • German and Luxembourg fund structures
  • Real estate funds and other real asset funds (e.g., renewable energy)
  • Portfolio funds
  • Securities funds
  • Private equity funds
  • Hedge funds
  • Debt funds
  • Infrastructure funds

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