The Federal Financial Supervisory Authority (BaFin) recently issued new Guidelines with respect to the requirements for the authorisation of investment firms in Germany.
Mandatory Standardised Form
From 3 January 2018 investment firms must comply with the Commission Implementing Regulation (EU) 2017/1945 ("CIR (EU) 2017/1945"), if they apply for authorisation at the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin).
CIR (EU) 2017/1945 replaces Section 32 (1) s. 2 German Banking Act (Kreditwesengesetz, "KWG") in conjunction with Section 14 Regulation on Registration (Anzeigenverordnung, "AnzV").
According to CIR (EU) 2017/1945, the application has to be submitted in standardised forms.
Basically, the conditions for such application forms are laid down in CIR (EU) 2017/1945. With regard to Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments amending Directive 2002/92/EC and Directive 2011/61/EU ("MiFID II") and in particular the third subparagraph of Article 7 (5) thereof, the Commission was of the opinion that it would be appropriate to set out common standard forms, templates and procedures to ensure a uniform mechanism by which each Member States' competent authorities effectively exercise their powers in respect of the authorisation of firms for the provision of investment services, investment activities and, where relevant, of ancillary services.
This has the effect that investment firms which apply for authorisation at the BaFin have to use the new standardised form which is available on BaFin´s webpage from now on.
In addition, Commission Delegated Regulation (EU) 2017/1943 ("CDR (EU) 2017/1943") implements standards on information and requirements for the authorisation of investment firms.
According to Article 1 of CDR (EU) 2017/1943 the applicant that applies for recognition has to submit, inter alia, the following information with its application to the competent authority (in Germany: the BaFin):
Its name, legal structure, address of the head office and (for existing companies) registered office, contact details, its national identification number (where available), as well as (i) for domestic branches: information on where the branches will operate; (ii) for domestic tied agents: details on its intention to use tied agents.
A list of investment services and activities, ancillary services and financial instruments to be provided, and whether clients´ financial instruments and funds will be held (even on a temporary basis) has to be submitted. BaFin emphasizes that the definitions for investment services and activities according to Section 1 (1) s. 2 no. 4, 10 as well as Section 1 (1a) s. 2 no. 1 to 4 and Section 11 KWG are still applicable and have to be used for such a list. The definitions for ancillary services can still be found in Section 2 (9) German Securities Trading Act (Wertpapierhandelsgesetz, "WpHG").
Applicants also have to submit (i) if they are an already existing legal entity: copies of corporate documents and evidence of registration in the commercial register or the register of cooperatives or (ii) if they are a legal entity in incorporation or a business partnership: certified copies of the constitutional documents, of the articles of association or the articles of incorporation as well as the rules of procedure for the directors.
Information on Capital
According to Article 2 CDR (EU) 2017/1943, an applicant seeking authorisation as an investment firm in accordance to Title II of MiFID II has to provide to the BaFin information and, where available, evidence of the sources of capital available to it. In addition to the requirements mentioned in Article 2 CDR (EU) 2017/1943, the applicant has to provide to BaFin a confirmation by a CRR-credit institution (seated within the European Economic Area) that the initial capital has been paid-in, that it is free of rights of third parties and that it is to the free disposal of the directors.
Information on Shareholders
In Germany the German Ownership Control Regulation (Inhaberkontrollverordnung) is not applicable anymore. Instead of the Inhaberkontrollverordnung, Commission Delegated Regulation (EU) 2017/1946 is applicable.
Interesting to note: as long as there are no qualified holdings, the 20 major shareholders have to be named.
Besides that, all such facts have to be named that indicate a tight relationship between the applicant and other natural persons or other companies.
Information on the Management Body and Persons who direct the Business
According to Article 4 CDR (EU) 2017/1943, the applicant has to present information on the management body and persons who direct the business.
Management body is the management board or the directors as well as the (optional) supervisory board. Besides these, persons in "key functions" also have to be understood as persons who direct the business (for example branch managers).
The curriculum vitae that has to be presented for each respective person has to be complete, continuous (gapless) as well as true. It has to be signed personally and has to show the date of signature.
An official certificate within the meaning of Article 4 (a) (v) CDR (EU) 2017/1943 has to be understood as an extract from the German Federal Central Criminal Register (Bundeszentralregister) according to Section 30 (5) or Section 30b Federal Central Criminal Register Code (Bundeszentralregistergesetz). Besides that, an extract according to the Central Business Register (Gewerberegister) within the meaning of Section 150 German Commercial Code (Gewerbeordnung, "GewO") has to be handed in.