Germany is rightfully considered one of the most developed European countries. Among the major European countries, today it undoubtedly has the most dynamic and competitive economy and a favorable investment climate.
In Germany, there is no special law regulating the investment activities of foreign firms. Economic order guaranteed by the principle of freedom of transactions. Foreign investors have the same status as local entrepreneurs. If it is necessary to carry out certain types of activities specially authorized, the alien must meet the same requirements that are set for a German entrepreneur. It follows that foreign investors are not eligible for assistance or other incentives that may be received before German firms.
Accordingly, the set up of an investment fund in Germany requires an understanding of the legal framework of this jurisdiction. If you want to establish business or start investing in Germany, our article may be relevant for you, because it describes the features of the regulation of traditional funds in Germany.
Types of investment funds
- Equity funds
Equity funds invest in stocks of companies. Distinguish between global, regional or industry equity funds. It is believed that equity funds are the most risky types of investments among all investment funds. The exception is hedge funds, which in most cases are not available to private depositors.
- Bond funds
Bond funds invest most of their money in government bonds or corporate bonds. It is believed that bond funds are fairly reliable investment mechanisms.
The Exchange Traded Fund (ETF) is an index fund whose shares are traded on an exchange. The ETF structure follows the structure of the selected underlying index. Index funds are considered to be a cheaper alternative to active management funds.
- Real Estate Funds
Funds are invested in the purchase of real estate, leasing them subsequently. In addition, investment conditions allow you to invest in shares of companies whose main activity is real estate investment.
- Hedge funds
These are focused on maximizing profitability at a given risk or minimizing risks for given profitability. It is a pool of investor assets managed by professionals in the interests of investors. They use sophisticated trading strategies, which often include leverage, short sales, and derivatives.
Alternative investment fund (AIF) is a collective investment fund which:
- attracts external capital from a certain number of investors
- aims at investing in accordance with a specific investment policy in the interests of these investors,
- was not defined as an organization of collective investment in circulating securities.
Limitations for AIF registration in Germany
If you intend to set up an AIF in Germany please be aware that the funds are governed by the German Capital Investment Act (KAGB).
Registration of a specialized investment fund in Germany and investment can only be carried out by professional or semi-professional investors.
The management requirements for German traditional investment funds, coordinated by fully licensed managers, are similar to those for ordinary retail funds. There are no specific fund management requirements coordinated by registered managers. Please keep in mind that fund managers are obliged to report annually.
Business support and legal advice
If you need business support in Germany at the federal level, we advise you to contact the Federal Ministry of Economics and Technology http://www.bmwi.de This is the main body for managing and coordinating economic policies in promoting foreign investment.
If you decide to create a fund in Germany, we recommend that you seek professional legal support. IQ Decision UK specializes in this topic, so our staff will provide the necessary legal support for your business. Please contact us directly by filling out the special form below, or in another way convenient for you.