Fund Jurisdiction Act

The Fund Jurisdiction Act is an amending law that essentially amends the German KGB. The KGB regulates investment assets (=funds), which are managed by capital management companies (=KVG).

The aim of the amendment is to make Germany more attractive as a fund location, which is necessary in order to keep pace with progressive fund sectors such as those found in Luxembourg. In essence, the aim is to prevent migration and increase growth.

Until then, the problem was that the product range in Germany was very restrictive, whereas the regulation in Luxembourg was very liberal, offering a lot of freedom and flexibility in the design of funds.

This allows for an efficient structure in terms of taxation and regulation, which Germany was not able to guarantee to the same extent before the enactment of the Fund Location Act.

The Fund Status Act is intended to make this possible by, among other things, introducing new product types and increasing the freedom of design.

The new product types include, in particular, the infrastructure fund. This represents a retail fund for infrastructure investments. This asset class was made available to the broad masses for the first time with the enactment of the Fund Location Act.

In addition, the Fund Jurisdiction Act liberalised other funds, such as the Real Estate Retail Fund, which means that more freedom was given in their design.

Among other things, the essential regulations include the reduction of bureaucracy and digitalisation. This is done against the background that communication within the KVG has not been digital so far. Since the establishment of the IT and infrastructure that is to enable digital communication still has to be set up, the law will not come into force until the following year.