1. Definition of marketing

1.1 Distinction between marketing and pre-marketing

What is the relationship between pre-marketing and marketing?

Pre-marketing is the provision of information or communications about investment strategies or investment ideas by an AIFM or third parties on its behalf to potential professional or semi-professional investors with a registered office or place of residence in the EU or an EEA country in order to test their interest in an AIF or investment compartment which is not yet authorised to engage in cross-border marketing, or not yet authorised to do so in the state where the investor has its registered office or place of residence (see the legal definition in section 1 (19) no. 29a of the KAGB). In general, this activity does not qualify as marketing. It merely triggers the notification requirement under section 306b (3) sentence 1 or (4) sentence 1 of the KAGB and in general does not prerequisite  a completed marketing notification procedure. However, it should be noted that from 2 August 2021 onwards, if an AIF is referred to in information provided during pre-marketing or its investment strategies or investment ideas are included in pre-marketing material, the applicable marketing notification procedure (see the list under 2.1 below) must be have been completed prior to any subscription for units or shares of such AIF if those units or shares are subscribed for within a period of 18 months from when pre-marketing began.

1.2 Submission of pre-marketing notifications

To whom should pre-marketing notifications be addressed from 2 August 2021?

Pre-marketing notifications can be sent to the e-mail address

Pre-Marketing-MitteilungenKAGB@bafin.de. If desired and subject to prior arrangement, it is possible to send the e-mail using encryption technology. Requests to arrange this may also be addressed to the above-mentioned e-mail address. 

 Where pre-marketing to potential investors with a registered office in a non-German speaking member state is intended or has taken place, the notification must also be sent in English. The relevant form for pre-marketing notifications can be downloaded at: https://www.bafin.de/dok/17008034.

 Who is required to send pre-marketing notifications to BaFin?

The only parties normally required to submit notifications pursuant to section 306b (3) or (4) of the KAGB are asset management companies or third-country AIFMs, but not third parties as defined in section 306b (6) of the KAGB. The home member state principle applies to notifications by EU management companies (see the third subparagraph of Article 30a(2) of the AIFM Directive). For this reason, BaFin only accepts notifications from domestic and third-country asset management companies. However, they can arrange for a third party to submit on their behalf. If this is the case, a copy of the relevant power of attorney must be attached to the notification.

Does the submissionof a marketing notification exempt from the additional requirement to submit a pre-marketing notification?

No. There are different privileges associated with a marketing authorisation and pre-marketing. Marketing as defined in section 293 (1) sentence 1 of the KAGB, in other words the offering of units or shares, is not pre-marketing. An explicit requirement of pre-marketing information issued to potential investors is that it does not constitute an offer (section 306b (1) sentence 2 no. 1 KAGB). A marketing notification procedure in progress therefore does not exempt from the requirement to submit a pre-marketing notification. However, a marketing notification can be combined with a pre-marketing notification.

How specific does the information communicated about investment strategies and ideas have to be?

It is necessary to state and describe product ideas that have been subjected to the internal checking processes of the asset management company, and for which a decision has been made to present them to potential investors. General descriptions of the range of investments that the asset management company can offer do not demonstrate the required specificity

1.3 Offering and placement of an investment fund

What is meant by offering or placement of an investment fund pursuant to section 293 (1) sentence 1 of the KAGB?

"Offering" covers offers in the legal sense of the word and more broadly, such as for example an "invitatio ad offerendum" (invitation to make an offer).

"Placement" only exists in cases of active selling of units or shares of an investment fund. This is because the word "marketing" implies an activity of the marketer directed towards selling units or shares. Merely reacting to an investor's order is thus not deemed to be marketing.

The offering or placement must also relate to an investment fund. An investment fund in this context in particular means the following:

If example investment terms and conditions with gaps to be negotiated are provided as part of the pre-marketing material for special AIFs, the requirement to notify of the commencement of pre-marketing under section 306b (3) and (4) of the KAGB must be complied with. Furthermore, if units or shares of an AIF that is referred to in information provided during pre-marketing or whose investment strategies or investment ideas are included in pre-marketing material are subscribed for within a period of 18 months from when pre-marketing began, the applicable marketing notification procedure (see the list under 2.1 below) must have been completed prior to subscription (on this point see also the comments under 1.1 above).

1.4 Particularities when pre-marketing and marketing to professional and semi-professional investors

To what extent does section 293 (1) sentence 3 of the KAGB restrict pre-marketing and the definition of marketing when marketing to professional and semi-professional investors?

Pre-marketing or marketing to professional and semi-professional investors is deemed to exist only when such marketing takes place at the initiative of the asset manager or on its behalf. Offering units or shares of an investment fund to a professional or semi-professional investor where this does not take place at the initiative of the asset manager or on its behalf is therefore not deemed to be marketing (e.g. mediation through a third party which was not commissioned by the asset manager). If the idea to establish a fund or to acquire units or shares of a fund is an initiative of potential investors ("reverse solicitation"), it is neither marketing nor pre-marketing. Even the mere advertising of an AIFM is considered to be different from advertising a specific investment fund.

Furthermore, marketing to professional or semi-professional investors is deemed to exist only when such investors have their registered office or place of residence in the EU or the EEA.

1.5 Sale of units or shares by investors

Is it classified as marketing within the meaning of section 293 (1) of the KAGB if an investor sells their own units or shares in an investment fund?

As a rule, it is not deemed to be marketing if an investor sells their own units or shares in an investment fund. The meaning and purpose of the KAGB is not to prohibit investors from selling their units or shares.
On the other hand, this must not lead to the marketing provisions of the KAGB being circumvented. This would be the case, for example, if an intermediary first took the units or shares of an investment fund onto their own books and then marketed them to their customers. Such a case would constitute marketing within the meaning of the KAGB.

1.6 No marketing to investors who are already invested

Is an investment fund considered to be marketed if the investors who are invested in this investment fund receive information about the investment fund within the scope of the KAGB?

It is not deemed to be marketing of units or shares of an investment fund when an offer is made to an investor to acquire further units or shares of the same investment fund directly or indirectly, for instance by a prospectus or other information being sent.^[3]

In addition, section 293 (1) sentence 2 no. 6 of the KAGB stipulates that the following cases are not deemed to be marketing:

These cases do not constitute marketing.

1.7 Measures to prevent marketing to retail investors

What measures are necessary to prevent marketing to retail investors in Germany?

Pursuant to section 295 (1) sentence 3 of the KAGB, asset managers which manage AIFs that do not meet the requirements for marketing to retail investors must take effective measures to prevent units or shares of the AIF from being marketed to retail investors within the territorial scope of the KAGB. This also applies when independent companies are commissioned to provide investment services for the AIF.
The following measures are necessary in particular:

1.8 Relevance of the definition of marketing for financial investment intermediaries pursuant to section 34f of the German Industrial Code (Gewerbeordnung – GewO)

Is it permitted under section 34f of the GewO for an intermediary to mediate the acquisition of units or shares of an EU AIF or third-country AIF which is not authorised for marketing in Germany, as long as said intermediary does not market it?

When an intermediary mediates units or shares of an investment fund pursuant to section 34f of the GewO, this is deemed to be investment broking. In principle, this activity falls in the first instance under investment broking as defined in section 1 (1a) sentence 2 no. 1 of the German Banking Act (Kreditwesengesetz – KWG). There is only scope for intermediary activities pursuant to section 34f of the GewO when it can be established during the examination under the KWG that the circumstances for an exemption under section 2 (6) no. 8 of the KWG exist. In the version of the KWG valid from 22 July 2013 (see German Bundestag publication 17/13395 of 10 May 2013, p. 595), this is only the case for EU investment funds and third-country AIFs if the investment fund is authorised for marketing in Germany, i.e. if a notification procedure has been completed successfully. However, the version of the KWG valid since 18 March 2016 (see Federal Law Gazette I 2016, p. 368) clarifies that the marketing notification procedure under section 330a of the KAGB does not fall within the scope of the exemption under section 2 (6) no. 8 of the KWG. The exemption under section 2 (6) no. 8 of the KWG therefore inherently does not apply in the type of case described here of an EU AIF or third-country AIF which is not authorised for marketing in Germany. In such cases, the intermediary therefore requires authorisation under the KWG.

1.9 Portfolio managers

If a portfolio manager acquires shares of an investment fund for a client, is said portfolio manager deemed to be marketing units or shares of an investment fund?

Placement within the meaning of section 293 (1) sentence 1 of the KAGB covers any active selling of units or shares of an investment fund (see question 1.1). The definition of placement in the KAGB thus does not correspond to the definition of placement used in the KWG or the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG).

If a portfolio manager acquires units or shares of an investment fund for a client, said portfolio manager is placing these with the client pursuant to section 293 (1) sentence 1 of the KAGB, because this is deemed active selling of units or shares of an investment fund. As a result, this also in principle constitutes marketing pursuant to section 293 (1) sentence 1 of the KAGB, which covers any direct or indirect offering or placement of units or shares of an investment fund.

Portfolio management was also categorised under marketing according to the Investment Act (Investmentgesetz – InvG), as the exemption under section 121 (3a) of the InvG for financial portfolio management services in the marketing chapter of the InvG would otherwise not have been necessary.

Even if the view is taken that this case does not constitute placement, an a fortiori conclusion would nevertheless have to be drawn: if an investment firm is not permitted either to offer units or shares of an AIF to its customers or place units or shares of an AIF with its clients then it certainly must not acquire these units or shares directly under the client's power of attorney. Or, in other words: if the investment firm is not permitted to ask the client to decide whether they would like to acquire a particular investment fund, it is also not permitted to make such a decision on their behalf.

However, if the client of the portfolio manager is a semi-professional or a professional investor, it is only deemed to be marketing pursuant to section 293 (1) sentence 3 of the KAGB if the placement takes place at the initiative of the asset manager or on behalf of the asset manager.

2. AIF marketing notifications

2.1. General

2.1.1. Selecting the appropriate notification procedure

Which AIF marketing notifications are applicable from 22 July 2013?

When choosing the relevant notification procedure it should be kept in mind that some notification procedures (sections 329 and 330 of the KAGB) apply only up to the date specified in the delegated act adopted on the basis of Article 66(3) in conjunction with Article 67(6) of Directive 2011/61/EU, and other notification procedures (sections 322, 324 to 328 and 332 to 334 of the KAGB) only apply from this date onwards.

This means that from 22 July 2013 until the date described above, if marketing of AIFs is intended, the notification procedure applicable in the respective scenario must be selected from the following provisions:

Further details are set out in particular in section 295 of the KAGB and in the provisions on the specific notification procedures, for example on what disclosures and documentation the notification must contain and how the procedure is carried out.

BaFin has also published guidance notices regarding marketing notifications pursuant to sections 320, 323, 329, 330 and 331 of the KAGB.

2.1.2. Entitlement to submit a notification

Is the asset manager still responsible for the marketing notification when an external marketing company is used?

The marketing notification may only be submitted by the asset manager which manages the investment fund concerned.

2.1.3. BaFin processing time limits

Does BaFin have to use up the statutory processing time limits in full for the individual marketing notifications?

No, under the KAGB BaFin is not obliged to use up the statutory processing time limits in full.

2.1.4. Changes to the marketing notification

What is the process when information or documentation submitted with the marketing notification changes again before the successful conclusion of the notification procedure (for instance due to negotiations with investors)?

The process for this depends on the circumstances in each individual case. If the notification procedure has not yet been concluded at the time when the amended information and documentation are submitted, BaFin's processing time limit always resets. In this respect, the provision regarding supplementary notifications can be applied accordingly in each case. However, BaFin is also not obliged to use up this new processing time limit in full (see answer 2.1.3). In specific cases, however, the submission of amended information and documentation may also be deemed to be a new notification, for instance when comprehensive changes are made to the submitted information and documentation.

2.1.5. Cooperation agreements

Does BaFin plan to draw up a list of the countries with which suitable cooperation agreements exist?

Yes, the list is available at: https://www.bafin.de/dok/7853196

2.2. Marketing notifications of German AIFMs pursuant to sections 316, 321 and 331 of the KAGB

2.2.1. Scope of application of section 316 of the KAGB

Can German AIFMs also submit notifications for EU AIFs and third-country AIFs under section 316 of the KAGB to market them to retail investors in Germany?

No, the notification procedure under section 316 of the KAGB only applies to German retail AIFs which are managed by a German AIFM and are to be marketed in Germany. It is not permitted for notifications to be submitted for EU AIFs and third-country AIFs which are managed by a German AIFM so that they can be marketed to retail investors in Germany.

2.2.2. Relationship between time limits in section 316 (2) and (3) of the KAGB

What is the relationship between the authorisation time limit for the investment terms and conditions and the processing time limit in the context of the marketing notification pursuant to section 316 (2) and (3) of the KAGB?

With the marketing notification pursuant to section 316 of the KAGB, the investment terms and conditions must be submitted or reference must be made to investment terms and conditions which have already been submitted for authorisation. This means that investment terms and conditions which BaFin has not yet authorised can also be submitted for the first time at the same time as the marketing notification. However, pursuant to section 316 (2) sentence 2 and (3) sentence 1 of the KAGB, the time limit for the marketing notification only begins once the investment terms and conditions and depositary have been authorised by BaFin.

2.2.3. Requirements for the programme of operations

What information must be contained in the programme of operations for marketing notifications pursuant to sections 316, 321 and 331 of the KAGB?

The programme of operations must include – unless the European Securities and Markets Authority (ESMA) specifies otherwise – the name and registered office of the AIF. With a notification pursuant to section 321 or section 331, the programme of operations must also name the home Member State of the AIF notified to BaFin.
As a rule, no further information regarding the AIF notified to BaFin is required in the programme of operations, as BaFin can find such details in the rest of the information and documentation contained in the notification.

2.2.4. Notifications of changes

What is meant by "changes to the information or documentation transmitted pursuant to subsection (1)" under section 316 (4) of the KAGB?

Changes to the information or documentation submitted pursuant to subsection (1) also include changes to the submitted documentation. As a rule, it is sufficient to submit a replacement sheet containing the respective change.

Within the meaning and purpose of this provision, however, only those changes which are relevant for the purpose of the notification procedure are to be notified to BaFin. Changes which are purely editorial and have no material effects (e.g. correction of a spelling mistake) are not relevant for BaFin and are therefore not to be notified to BaFin.

2.3. Marketing notifications pursuant to sections 317 to 320 of the KAGB

2.3.1. Duties of the representative

Which functions must be taken over by the representative?

Since 2 August 2021, it only remains necessary to appoint a representative for marketing notifications by third-country AIFMs (see section 317 (1) no. 4 of the KAGB).

The representative must take over the compliance function pursuant to section 317 (1) no. 4 of the KAGB and the duties named in section 319 of the KAGB.

Unless provisions at a European level state otherwise, the compliance function includes examining whether the AIFM and the management of the AIF by the AIFM conform to the requirements of the KAGB.The representative is to support the AIFM in adhering to the KAGB and must therefore be involved by the AIFM when activities or decisions might have an impact on the conformity with the KAGB.

The representative is to support the AIFM in adhering to the KAGB and must therefore be involved by the AIFM when activities or decisions might have an impact on the conformity with the KAGB.

The representative must therefore be in a position to enable ongoing, confidential communication with the AIFM and have the legal and technical knowledge required for the function in the field of the KAGB.

If the AIFM lacks willingness to cooperate, the representative must withdraw from representation, which means that one of the statutory requirements for the marketing authorisation no longer exists.

2.3.2. Facilities pursuant to section 306a (1) of the KAGB

Are the facilities referred to in section 306a (1) of the KAGB required to be made available in Germany?

Article 92(2) of the UCITS Directive, as amended by Directive (EU) 2019/1160, stipulates that the member states may not require UCITS to have a physical presence in the host member state or appoint a third party. Accordingly, section 306a (2) of the KAGB permits UCITS management companies to assume the responsibilities themselves or to engage for this purpose a third party having its registered office in the home country of the UCITS or its management company. This applies mutatis mutandis to AIFs which are managed by EU AIFMs and market to retail investors (see Article 43a (2) of the AIFM Directive as inserted by Directive (EU) 2019/1160, and section 306a (2) of the KAGB). For AIFs managed by third-country AIFMs, a representative must still be appointed (see section 2.3.1 above).

Which supervisory requirements must facilities pursuant to section 306a (1) of the KAGB satisfy?

The mere processing of subscription, payment, redemption and exchange orders from (potential) investors in fund units does not constitute investment advice or brokerage within the meaning of section 1 (1a) no. 1 or 1a of the KWG or section 2 (2) no. 3 or 4 of the Investment Firm Act (Wertpapierinstitutsgesetz – WpIG) if the order from the (potential) investor was transmitted by another broker to the facility pursuant to 306a (1) no.1 of the KAGB, which subsequently only (technically) processes the order, e.g., enters data for the purpose of systems maintenance, or forwards information to downstream units for further processing (e.g., the depositary's back office). In such case, this is not deemed to be investment advice or brokerage within the meaning of section 1 (1a) no. 1 or 1a of the KWG or section 2 (2) no. 3 or 4 of the WpIG, meaning that no authorisation pursuant to section 15 WpIG or pursuant to section 34f (1) of the GewO is required.

However, if in the context of the processing of orders pursuant to 306a (1) no. 1 of the KAGB, services qualifying as investment advice or brokerage are provided, an authorisation pursuant to section 15 WpIG or pursuant to section 34f (1) of the GewO is required.

Finally, if a third-party is appointed as the facility and is to provide payment services within the meaning of section 1 (1) sentence 2 of the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG), for the avoidance of doubt, it should be  noted that that third party must be a payment services provider that is classified as a privileged payment services provider pursuant to section 1 (1) sentence 1 nos. 2 to 5 of the ZAG or – if section 1 (1) sentence 1 no. 1 of the ZAG applies – must possess an authorisation pursuant to section 10 (1) sentence 1 of the ZAG.

You will find further information on the ZAG in this guidance notice.

 Can multiple different facilities be appointed?

Yes.

 Which document must contain the information specified in section 306a (1) nos. 2 to 5 of the KAGB?

The information specified in nos. 2 and 3 should be provided in the prospectus, i.e., at a minimum in the country-specific annex (Information for investors in the Federal Republic of Germany) to the prospectus.

The information specified in nos. 4 and 5 need not be included in the prospectus.

With respect to no. 5, section 306a (1) no. 5 of the KAGB stipulates that a durable medium is necessary.

The key investor information and annual reports may be provided as separate documents.

2.3.3. Requirements for investment terms and conditions

Will BaFin permit deviations from the requirement of section 317 (1) no. 7 of the KAGB, in particular deviations from the list of assets up to a certain point?

Section 317 (1) no. 7 (c) of the KAGB requires that the investment terms and conditions or the articles of association contain provisions to ensure that the requirements stated therein (including the list of assets which can be acquired) are adhered to. This provision therefore does not leave any scope for deviations.

2.3.4. Analogous application of sections 348 and 349 of the KAGB to EU AIFs

Is it possible to apply sections 348 and 349 of the KAGB analogously to EU AIFs?

The KAGB does not provide for any grandfather provision for EU AIFs under sections 348 and 349 of the KAGB for mixed investment funds and other investment funds. In an interpretation conforming to European law, however, it is to be assumed that this is an unintended legal gap and that the regulatory circumstances are comparable. This means that EU AIFs which were established before 22 July 2013 and were authorised to be marketed to the public within Germany pursuant to section 140 of the InvG and at that time acquired assets in accordance with section 348 sentence 1 of the KAGB or section 349 sentence 1 of the KAGB may also continue to hold these after 21 July 2013.

2.4. Marketing notifications pursuant to section 329 and section 330 of the KAGB

2.4.1. Requirements under Directive 2011/61/EU for the AIFM and the management of the AIF

What does it mean for a third-country AIFM and the management of the AIF by the AIFM to have to meet the requirements of Directive 2011/61/EU when marketing to semi-professional investors (see section 330 (1) sentence 1 no. 2 of the KAGB)?

Under section 330 (1) sentence 1 no. 2 of the KAGB and section 329 (1) sentence 1 no. 2 of the KAGB, a third-country AIFM and the management of the AIF by the AIFM must meet the requirements of Directive 2011/61/EU, which are transposed in the KAGB, when marketing to semi-professional investors. This means that all requirements of Directive 2011/61/EU must be adhered to.

2.4.2. Proof of conformity with Directive 2011/61/EU

In a notification procedure pursuant to section 330 of the KAGB, is the documentation to be submitted pursuant to section 22 nos. 1 to 9 and 13 of the KAGB sufficient to conform with Directive 2011/61/EU for intended marketing to semi-professional investors?

In a notification procedure pursuant to section 330 of the KAGB, it is also necessary to submit, in particular, a programme of operations together with the documentation pursuant to section 22 nos. 1 to 9 and 13 of the KAGB, which must be submitted pursuant to section 330 (2) sentence 3 no. 3 of the KAGB if marketing is also intended to target semi-professional investors. Pursuant to section 22 (1) no. 7 of the KAGB, this must also contain information about how third-country AIFMs intend to fulfil their duties under this law (including their duties under Directive 2011/61/EU).

The programme of operations is to include, among other things, the following information and documentation:

In addition, the documentation named in section 321 (1) sentence 2 of the KAGB is to be submitted.

2.4.3. Registered office of the depositary

Does the institution which performs the functions under Article 21(7) to (9) of Directive 2011/61/EU within the meaning of section 329 (1) sentence 1 no. 1 (b) of the KAGB or section 330 (1) sentence 1 no. 1 (b) of the KAGB also need to have its registered office in the home country of the AIF or the AIFM?

The institution which performs the functions under Article 21(7) to (9) of Directive 2011/61/EU pursuant to section 329 (1) sentence 1 no. 1 (b) of the KAGB or section 330 (1) sentence 1 no. 1 (b) of the KAGB does not need to have its registered office in the home country of the AIF or the AIFM. The provisions require that an institution be named which performs the functions under Article 21(7) to (9). The designation of the registered office of the depositary, on the other hand, is regulated in Article 21(5) of Directive 2011/61/EU (home country of the AIF or the AIFM). However, section 329 (1) sentence 1 no. 1 (b) of the KAGB and section 330 (1) sentence 1 no. 1 (b) of the KAGB do not make reference to this latter point.^[4]

Where the KAGB (e.g. sections 80 et seq. of the KAGB, as well as in conjunction with section 54 (5) of the KAGB for the management of German special AIFs) or the laws implementing Directive 2011/61/EU in other EU Member States or EEA Signatory States contain further provisions relating to the depositary to be named, these provisions are not waived by the minimum requirements for marketing pursuant to section 329 (1) sentence 1 no. 1 (b) of the KAGB and section 330 (1) sentence 1 no. 1 (b) of the KAGB.

2.5. Marketing notification pursuant to section 330a of the KAGB

Is it necessary for a notification to be submitted individually pursuant to section 330a of the KAGB for every AIF that a registered EU AIFM intends to market within Germany to professional and semi-professional investors, or is one notification regarding all AIFs managed by the company sufficient?

Section 330a of the KAGB does not require a notification to be submitted for marketing for each individual AIF managed by a registered EU AIFM. Rather, section 330a of the KAGB can be interpreted such that a registered EU AIFM under section 330a of the KAGB must only notify BaFin that it intends to market the AIFs which it manages within Germany.

Although the wording of section 330a of the KAGB does not differ significantly from the standards of other marketing notification procedures, the following reasons, among others, provide support for this interpretation:

• In a marketing notification pursuant to section 330a of the KAGB, it is not necessary to submit any fund-related documentation.

• Any other interpretation would ultimately mean that the marketing notification would be identical for every AIF, apart from the name and possibly the ISIN of the relevant AIF.

• Pursuant to section 330a (2) no. 3 of the KAGB, BaFin may at any time request that the investment funds which a registered EU AIFM is currently marketing within Germany be disclosed to BaFin.

Please note: in a marketing notification under section 330a of the KAGB, however, a requirement for completeness is that at least one of the AIFs that is intended to be marketed within Germany pursuant to section 330a of the KAGB is specified in the notification.

3. Obligations in the marketing and acquisition of funds

3.1. Addressees of section 297 of the KAGB

To whom do the duties under section 297 of the KAGB apply?

Section 297 of the KAGB is based to a material extent on section 121 of the InvG, regarding which BaFin published for consultation, with the reference number WA 41-Wp 2136-2011/0121, a draft for a circular concerning the issue of the applicability of section 121 (1) to (3) of the InvG to the marketing of investment units under the InvG by third parties (Rundschreiben der Bundesanstalt für Finanzdienstleistungsaufsicht zur Frage der Anwendbarkeit von § 121 Abs. 1 bis Abs. 3 Investmentgesetz auf den Vertrieb von Investmentanteilen nach dem Investmentgesetz durch Dritte – only available in German).

If BaFin's interpretation offered in the draft of the aforementioned circular is carried over to section 297 of the KAGB, the sphere of addressees of section 297 of the KAGB can be outlined as follows:
Insofar as section 297 of the KAGB does not explicitly restrict the obligated party, it is not only asset managers that are to take this into account, but in principle also

The information obligations pursuant to section 297 of the KAGB do not apply to the marketing and acquisition of unit-linked life insurance or financial instruments which represent investment units (e.g. certificates).

Domestic, externally managed AIF investment funds in company form may not market their own units or shares themselves. Units or shares of a domestic, externally managed AIF investment company may therefore only be marketed by the external management company or an intermediary acting on the management company's behalf or independently, which is subject to the obligations under section 297 KAGB.

3.2. Information obligation pursuant to section 297 of the KAGB

In non-advisory transactions, is it absolutely necessary for a client to be provided with the key investor information and sales documentation?

The KAGB does not differentiate between transactions which involve advice and those that do not. The client must be provided with the key investor information and the required sales documentation before they submit a purchase order.

Section 297 of the KAGB does not prohibit a person interested in acquiring a unit or a share in a non-advisory transaction from submitting an order before it was possible for the obligations to them under section 297 of the KAGB to be fulfilled. However, reference is made to section 63 (7) sentence 12 of the WpHG, which at least requires cost transparency immediately after execution of the transaction and prescribes the the conditions on which any such ex post information on costs is permitted. For further details, please also see Sections G and K of the FAQs about the MiFID II conduct of business rules under sections 63 et seq. of the WpHG

Is a client permitted to choose not to have the documentation pursuant to section 297 (1) to (3), (5) and (6) of the KAGB provided to them?

Section 297 (1) to (3), (5) and (6) of the KAGB does not compel the person interested in acquiring a unit or a share to accept and take notice of the sales documentation provided to them. However, they may not waive to have the sales documentation pursuant to section 297 (1) to (3), (5) and (6) of the KAGB provided to them.

Pursuant to section 293 of the KAGB, merely reacting to an investor's order is not usually deemed to be marketing to an interested party. In such cases, is there still an information obligation to the client pursuant to section 297 of the KAGB?

Merely reacting to an investor's order is not deemed to be placement, and is therefore not deemed to be marketing; nevertheless, the investor in this situation "acquires" units or shares in an investment fund.

3.3. Information obligation pursuant to section 297 (2) of the KAGB

What must an investor be informed about pursuant to section 297 (2) sentence 1 of the KAGB for a closed-ended investment fund if the units do not yet have a market price?

If there is no market price then the net asset value of the investment fund is to be stated.

In what situations is there no obligation to provide a person interested in acquiring a unit or a share with the annual report and the half-yearly report pursuant to section 297 (2) sentence 2 of the KAGB?

In the following cases the obligation pursuant to section 297 (2) sentence 2 of the KAGB does not apply:

3.4. Interpretation of the word "provide"

What is meant by the word "provide" in section 297 (1) and (2) sentence 2 of the KAGB?

Section 297 (4) sentence 1 of the KAGB specifies what is meant by the word "provide" in section 297 (1) and (2) sentence 2 of the KAGB: in a durable medium or by means of a website pursuant to Article 38 of Regulation (EU) No 583/2010 and in paper form upon request at any time free of charge. Article 38 of this regulation lists the requirements which must be fulfilled for it to be permitted to use a durable medium other than paper or a website.

3.5. Notice on the discharge of liability of the depositary in section 297 (4) of the KAGB

– deleted –

3.6. Information obligations pursuant to section 300 of the KAGB

When and how should the items listed pursuant to section 300 of the KAGB, in conjunction with section 308 (4) sentence 2 of the KAGB, be reported?

Section 300 (3) of the KAGB refers to Articles 108 and 109 of Commission Delegated Regulation (EU) No 231/2013 (hereinafter "Regulation (EU) No 231/2013"), which governs some details regarding the information obligations stated in section 300 (1) and (2) of the KAGB.

Pursuant to this regulation, the following information in particular is to be provided to investors, as required in accordance with the investment terms and conditions or the articles of association or in accordance with the prospectus or the offering documentation, but as a minimum once per year at the same time as the annual report is made available in accordance with Article 22(1) of Directive 2011/61/EU:

Pursuant to Regulation (EU) No 231/2013, the following information obligations must be fulfilled promptly in particular:

Where the KAGB contains farther-reaching provisions at another point, for instance with regard to German retail AIFs, or of EU AIFs and third-country AIFs authorised for marketing to retail investors, these provisions take precedence in this respect (e.g. information provided in a durable medium without undue delay when redemption is suspended pursuant to section 299 (5) sentence 1 of the KAGB in conjunction with section 298 (2) no. 1 of the KAGB).

Where the KAGB or Regulation (EU) No 231/2013 does not contain farther-reaching provisions, the information is submitted at the times and in the manner specified in the investment terms and conditions and in the prospectus or in the information pursuant to section 307 (1) of the KAGB.

3.7. Publication of information pursuant to section 301 of the KAGB

Is it sufficient for the information pursuant to section 301 of the KAGB to be made accessible to current and potential investors in an access-controlled area on the website of the asset manager? When does the publication duty pursuant to section 301 of the KAGB end?

The information specified in section 301 of the KAGB is to be published on the website of the asset manager. This means that the information is provided to the general public. The purpose of the publication duty is, among other things, to provide the information to any intermediary as well. It is therefore not sufficient to make the information accessible only to the investors.

As such publications outside of the Federal Gazette (Bundesanzeiger) constitute marketing (see section 293 (1) sentence 2 no. 6 of the KAGB), they are no longer permissible after the marketing is discontinued. BaFin must be notified of a discontinuation of marketing by means of a notification of change.

3.8. "Written advertisements" pursuant to section 302 (4) and (6) of the KAGB

What is meant by "written advertisements" pursuant to section 302 (4) and (6) of the KAGB?

The word "written" is not to be understood in the meaning intended in the German Civil Code (Bürgerliches Gesetzbuch – BGB); instead, within the meaning and purpose of the provisions in section 302 of the KAGB, an advertisement using graphic characters is sufficient, regardless of the carrier medium.

Is it also necessary for billboards to contain a reference to the prospectus?

Yes, billboards must also contain such a reference.

4. Registered AIFMs

Do the marketing provisions of the KAGB apply to registered German AIFMs within the meaning of section 2 (4) of the KAGB?

Section 2 (4) of the KAGB lists the provisions which are intended to apply to these German AIFMs. This provision, unlike section 2 (5) of the KAGB, does not make reference to provisions from Chapter 4 of the KAGB.

This means that, pursuant to section 2 (4) of the KAGB, a registered German AIFM may market the special AIFs that it manages to professional and semi-professional investors without first submitting a marketing notification.

Footnotes:

^[1]Change in administrative practice on the basis of the ESMA Q&A "Application of the AIFMD" of 5 April 2016 (ESMA/2016/568), Section II, Question 3, according to which the AIFM does not have to submit a new notification in accordance with Article 31(2) of the AIFMD if investors already invested in the AIF are offered additional units of this AIF.

^[2]The same applies in the case of authorisations under the new section 15 (1) of the WpIG as regards the identical exemption in section 3 (1) no. 11 of the WpIG.

^[3]see also Article 36(1)(a) of Directive 2011/61/EU.