Edited by Phoebus Athanassiou
Chapter 15: German Alternative Investment Fund Regulation – Wrong Answers to the Wrong Questions?
Norbert Lang* 1. 1.1 THE LEGAL FRAMEWORK FOR ALTERNATIVE OPEN-ENDED FUND INVESTMENTS The Investment Act of 2004 The purpose of the German Investment Act (Investmentgesetz – ‘InvG’), which entered into force on 1 January 2004, was to modernize Germany’s investment funds’ regulation, start up a German hedge fund industry and implement the European UCITS II and III-Directives.1 The InvG established a new legal framework for all types of open-ended funds. The Act replaced the former Capital Investment Company Act (Kapitalanlagegesellschaftgesetz – ‘KAGG’) and the Foreign Investment Act (Auslandsinvestmentgesetz – ‘AuslInvG’). It was welcomed as an important step forward, which completely restructured the German fund provisions and harmonized the regulatory provisions for German and foreign open-ended investment funds, which were regulated in the two different aforementioned Acts before.2 Hedge funds were for the first time regulated by German law. According to the draft of the InvG, the reason for the introduction of hedge fund-related provisions was to promote the Legal counsel SEB Asset Management. Directive 2001/107/EC of the European Parliament and of the Council of 21 January 2002 amending Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) with a view to regulating management companies and simplified prospectuses OJ L 41, 13.2.2002, p. 20–34 and Directive 2001/108/EC of the European Parliament and of the Council of 21 January 2002 amending Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable...
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