The German financial supervisory authority BaFin published an updated circular on the requirements for directors and members of supervisory boards on 4 January 2016, in accordance with the Banking Act (“Kreditwesengesetz”, KWG) and the Investment Code (“Kapitalanlagegesetzbuch”, KAGB). The circular includes requirements on the documentation to be submitted to BaFin and takes into account the recent changes to the legislation and BaFin’s practical experience in the past.
This circular will especially have an impact on managing directors and members of supervisory boards of investment funds and German investment companies (Kapitalverwaltungsgesellschaften). The latter are for the first time subject of such circular by BaFin. In this regard BaFin specifies e.g. the definition of professional knowledge. In particular BaFin underlines that a board member has to be able to identify situations requiring further external advice.
Furthermore BaFin substantiates examples for conflict of interest, e.g. in the event that a board member has a business relationship with the investment company. For BaFin such conflicts may arise in the event that a company of a board member provides credit facilities, financial products or even insurance services to the controlled investment company or its funds.