Reed Smith Client Alerts

On March 14, 2023, the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)) published two drafts of revised model modules for cost clauses of open-ended funds. One draft refers to cost clauses of open-ended mutual funds and the other to cost clauses of real estate investment funds.

作者: Felicitas Scriba

The drafts resulted from the European Securities and Markets Authority (ESMA) guidelines on performance-based remuneration in UCITS and certain types of AIF (ESMA34-39-992) for better alignment with the German Investment Act (Kapitalanlagesetzbuch (KAGB)).

The proposed building blocks meet the minimum regulatory requirements according to the KAGB; other regulations and formulations will be accepted by BaFin as long as they meet the minimum transparency and appropriateness requirements of the proposed modules.

The model modules are intended to serve as guidelines to enable the classification of cost regulations that are deemed reasonable by BaFin and can therefore be approved. BaFin thus discloses its administrative practice in approving cost regulations in the investment terms and conditions of open-ended public investment funds and pursues the avoidance of impairing investor interests through unreasonable costs, fees, and practices.

The amendments to BaFin’s previous model modules are editorial in nature but also include clarifications of and adaptations to the aforementioned regulations.