Communicating the outsourcing of tasks as a capital management company

As a capital management company (KVG), you can outsource tasks to other companies. You must notify the Federal Financial Supervisory Authority (BaFin) of this.

As a capital management company (KVG), you can outsource tasks to another company - a so-called outsourcing company - under certain conditions.

You can outsource the following tasks, for example:

• Portfolio management
• risk management
• accounting

You must notify the German Federal Financial Supervisory Authority (BaFin) of this for the following 2 reasons:

• BaFin thereby ensures that you as a management company retain control over your business.
• As the supervisory authority, BaFin is obliged to ensure the control of your supervised companies, such as access to important information.

Notification of outsourcing:

• Clear designation of the outsourcing company by stating the name of the legal entity and its registered office
• Description of the outsourced function or activity
• Indication of the investment fund or funds and the asset
• Indication of the date on which the outsourcing takes effect
• Objective reasons for the outsourcing
• Statement that the interests of the outsourcing company do not conflict with those of the capital management company or the investors, unless the outsourcing company
  • separates its portfolio management or risk management tasks functionally and hierarchically from its other potentially conflicting tasks, and
  • properly identifies, manages and monitors the potential conflicts of interest and discloses them to the investors in the investment fund
• when outsourcing portfolio management or risk management to an outsourcing company domiciled abroad:
  • Proof of authorization or registration of the outsourcing company for the purpose of asset management and
  • Proof of supervision stating the license and registration number
• If necessary, you must subsequently submit the outsourcing agreement to BaFin

Application for approval for the outsourcing of portfolio and risk management:

• Provide evidence of the requirements for the application for approval
• Outsourcing agreement
• Documents required to assess the reliability and suitability of the management

• Forms: none
• Online procedure possible: no
• Written form required: yes
• Personal appearance required: no

• Your capital management company must be able to justify the outsourcing on the basis of objective reasons.
• The outsourcing company must have sufficient resources to carry out the tasks assigned to it and the persons who actually manage the business of the outsourcing company must be reliable and have sufficient experience.
• If the outsourcing concerns portfolio management in the case of a UCITS capital management company and portfolio management or risk management in the case of an AIF capital management company, only outsourcing companies that
  • are authorized for the purposes of asset management
  • or are authorized for financial portfolio management
  • or are registered and subject to supervision.
  • Note: If these requirements are not met, you will need additional approval from BaFin.
• If portfolio management or risk management is outsourced to a company based abroad, cooperation between BaFin and the competent foreign supervisory authority must be ensured.
• Outsourcing must not impair the effectiveness of the capital management company's supervision; in particular, it must not prevent the capital management company from acting in the interests of its investors, nor must it prevent the investment fund from being managed in the interests of the investors.
• They must be able to demonstrate that the outsourcing company
  • has the necessary qualifications, taking into account the tasks assigned to it,
  • is in a position to perform the assumed tasks properly and
  • has been carefully selected.
• They must be able to effectively monitor the outsourced tasks at all times.
• In particular, you must contractually secure the necessary powers of instruction and termination rights.
• You continuously review the services provided by the outsourcing company.

§ 36 I KAGB

• Appeal
• Detailed information on how to lodge an objection can be found in the notification of your application.
• Appeal to the administrative court

You can submit the notification or application for approval informally:

• Enclose the required documents.
• Send everything to BaFin via the MVP portal.
• You will receive a response to your application for approval.

You must notify us of any outsourcing before the outsourcing agreement comes into force.

Approval of the outsourcing will be granted within 4 weeks of receipt of the application for approval if the requirements for approval are met. If the requirements for approval are not met, you will receive a notification from BaFin and may have to submit additional documents and information. Once the documents or information have been received, the 4-week period begins again.

The individual reference number is stated in the fee notice. The fee is calculated according to the time spent.