GERMANY: BaFin Changes its Administrative Practice Relating to Loan Funds for AIFs

Tuesday May 19 2015

On 12 May 2015, BaFin declared loan funds to be permissible. Thus, it is now possible to grant loans for the account of Alternative Investment Funds (AIFs) for which the German Investment Code (Kapitalanlagegesetzbuch – KAGB) specifies only a few or no product requirements at all.

In view of the European legal situation, as well as in consideration of current discussions at the European Securities and Markets Authority (ESMA), BaFin has changed its administrative practice to the effect that the granting of loans as well as loan restructuring and prolongation by AIFs are to be seen as part of collective investment management and are therefore permissible to the extent that they are consistent with the provisions of the KAGB.

BaFin is recommending that AIF management companies already comply with certain minimum requirements for the granting of loans, the acquisition and restructuring/prolongation of unsecuritised loan receivables, as well as for the granting of shareholder loans for the account of the AIF until the corresponding legal provisions come into effect.

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