AIF advisory services

The KAGB imposes stringent requirements with respect to the structure and conception of an AIF as well as for the sales prospectuses, or respectively for the information documents, which need to be prepared. We provide potential solutions from a single source in the form of cross-discipline advisory and support services covering all aspects from the initial idea to successful compliance with the BaFin [German Federal Financial Supervisory Authority] sales notification procedure. We are also subsequently able to accompany the marketing phase of your AIF by providing various services. We are particularly able to provide the following individual services:

• Structuring of an AIF (open-end/closed-end, public AIF/special AIF, professional/semi-professional investors, etc.)
• Legal concept, including the structuring of investment conditions and fund-specific contracts
• Taxation concept
• Preparation of a sales prospectus, or respectively of information documents (including significant information for investors, application documents and forecasts)
• Support for the sales notification procedure in accordance with the respective Sections 316 and 321 of the KAGB
• Advisory services during the marketing phase of an AIF, including:
• Set-up of a financial accounting system in accordance with the HGB [German Commercial Code]/ KAGB
• Preparation of reports to the asset management company, providing the basis for mandatory reporting to the German Federal Bank
• Assumption of reporting responsibility with respect to the German Federal Bank
• Preparation of annual financial statements in accordance with the KAGB
• Preparation of extensive annual reports in accordance with the KAGB
• Ongoing tax advisory services including the preparation of tax returns.

Audit of the sales prospectus, significant investor information and all advertising materials

The KAGB imposes stringent requirements relating to sales prospectuses and significant investor information for closed-end public AIFs; less stringent requirements exist for information documents and all advertising materials relating to closed-end special AIFs. Due to the complexity of this marketing information, and the fact that many people are involved in its preparation, it is very difficult to achieve the objective of preparing complete, correct and clear documentation. Even successful compliance with the BaFin sales notification procedure does not offer assurance that the documentation does not contain errors or deficiencies with respect to clarity. In order to reduce the likelihood of resultant liability risks, we can support you in the preparation process by providing the following services:

• Preparing an appraisal of a sales prospectus conforming to IDW S4 (Standard S4 issued by the German Institute of Public Auditors) in accordance with Section 268 of the KAGB (including significant information for investors and possibly forecast information)
• Appraisal of the information document in accordance with Section 307 of the KAGB
• Conformity assessments for all advertising materials in accordance with Section 302 of the KAGB ("Conformity with the WpHG [German Security Trading Act]")

We have performed more than 500 prospectus appraisals for public funds from 1991 onwards.

Annual financial statement audits in accordance with the KAGB

The KAGB - in conjunction with the KARBV [German Capital Investment Accounting and Measurement Directive] and the KAPrüfbV [German Capital Investment Audit Report Directive], which specify accounting and auditing requirements - specifies considerably more stringent statutory annual financial statement audit requirements for alternative investment funds (AIFs) than used to be required, for example, for so-called “fund KGs”. These vary as follows, for example, depending on the various types of AIF:

• For an AIF that has the legal form of a KG [German form of limited partnership], the allocation of profits and losses, as well as deposits and withdrawals are explicitly defined as additional areas subject to audit.
• Additional note disclosures are required in the audit report concerning, amongst other matters, mandatory notification requirements for asset management companies, , remuneration systems and risk management processes etc.
• Compliance with the regulations of the KARBV with respect to the measurements of assets is required; these are in some cases different than those specified in the HGB.
• Compliance with considerably shorter publication deadlines.

We already carried out annual financial statement audits for AIFs for the 2013 reporting period and, thus, we are one of the very few audit firms that were active in this sector from the first year in which the KAGB came into effect; we have consequently gained related experience in this field. Our risk-oriented audit approach is aligned to the individual requirements of our clients. In addition, we offer, amongst other advantages, comprehensive industry sector experience, as well as a cross-discipline advisory and audit approach, which provides for the involvement of our legal and taxation experts in order to find solutions for problematical issues.