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Lang, Norbert --- "German Alternative Investment Fund Regulation – Wrong Answers to the Wrong Questions?" [2012] ELECD 250; in Athanassiou, Phoebus (ed), "Research Handbook on Hedge Funds, Private Equity and Alternative Investments" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on Hedge Funds, Private Equity and Alternative Investments

Editor(s): Athanassiou, Phoebus

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849802789

Section: Chapter 15

Section Title: German Alternative Investment Fund Regulation – Wrong Answers to the Wrong Questions?

Author(s): Lang, Norbert

Number of pages: 27

Extract:

15. German alternative investment fund
regulation ­ wrong answers to the wrong
questions?
Norbert Lang*


1. THE LEGAL FRAMEWORK FOR ALTERNATIVE
OPEN-ENDED FUND INVESTMENTS

1.1 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 indus-
try 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.
1
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. 20­34
and Directive 2001/108/EC of the ...