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Communicate outsourcing of tasks
Source: Zuständigkeitsfinder Schleswig-Holstein (Linie6PLus)
As a capital management company, you can outsource tasks to another company - a so-called outsourcing company - under certain conditions.
Tasks can be, for example:
- Portfolio management
- Risk management
You must notify the Federal Financial Supervisory Authority (BaFin) of this in writing.
There are 2 reasons for this:
Firstly, with the notification, BaFin ensures that you, as the management company, retain control over your business. Secondly, as a supervisory authority, BaFin is obliged to ensure the control of your supervised companies, i.e. for example access to important information.
- You can submit the notification or the application for approval informally.
- Enclose the required documents.
- Send everything by post to BaFin.
- You will receive a response to your application for approval.
- Your management company must be able to justify the outsourcing on the basis of objective reasons.
- The outsourcing entity must have sufficient resources to carry out the tasks entrusted to it and the persons who effectively direct the business of the outsourcing entity must be reliable and have sufficient experience.
- in so far as the outsourcing concerns portfolio management in the case of a UCITS (Undertaking for Collective Investment in Transferable Securities) management company and portfolio management or risk management in the case of an AIF management company: only outsourcing entities authorised or registered for the purposes of asset management or financial portfolio management and subject to prudential supervision may be used. If this requirement is not met, you would need additional approval from BaFin.
- If portfolio management or risk management is outsourced to a company domiciled in a third country, cooperation between BaFin and the competent supervisory authority of the third country must be ensured.
- Outsourcing must not impair the effectiveness of supervision of the investment management company; in particular, it must not prevent the investment 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 is
- has the necessary qualifications, taking into account the tasks assigned to it,
- is capable of properly performing the tasks it has assumed, and
- is carefully selected.
- They must be able to monitor the outsourced tasks effectively at all times.
- In particular, they must contractually ensure the necessary powers of direction and the rights of termination.
- They shall continuously review the services provided by the outsourcing company.
Which documents are required?
Notification of the outsourcing:
- clear designation of the outsourcing company by naming the legal entity and indicating its registered office
- description of the outsourced function or activity
- Indication of the investment fund(s) as well as of the assets
- indication of the date on which the outsourcing takes effect
- objective reasons for the outsourcing
a 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 is in conflict with the interests of the capital management company.
- functionally and hierarchically separates its portfolio management or risk management tasks from its other potentially conflicting tasks; and
- properly identifies, manages and monitors the potential conflicts of interest and discloses them to the investors of the investment fund.
in the case of outsourcing of portfolio management or risk management to an outsourcing company domiciled abroad:
- Proof of authorisation or registration of the outsourcing company for the purpose of asset management and proof of supervision (indication of authorisation and registration number).
- Outsourcing agreements do not have to be submitted with the notification pursuant to section 36(2) KAGB. However, BaFin reserves the right to request these subsequently.
Application for approval for the outsourcing of portfolio and risk management:
- Presentation of the existence of the prerequisites in a written application for approval.
- Outsourcing agreement
- documents required to assess the reliability and suitability of the management team
What are the fees?
Costs of EUR 3,960 are incurred for the approval of the outsourcing of portfolio management or risk management.
What deadlines do I have to pay attention to?
You must give notice of an outsourcing before the outsourcing agreement becomes effective.
Approval of the outsourcing will be granted to you within a period of 4 weeks after receipt of the application for approval if the requirements for approval are met. If the conditions for approval are not met, you will receive a notification from BaFin and may have to submit additional documents and information. After receipt of the documents or information, the period of 4 weeks starts again.
§ 36 I KAGB
- Detailed information on how to lodge an appeal can be found in the decision on your application.
In the absence of remedy, administrative court action.
Applications / forms
- Forms: none
- Online procedure possible: no
- Written form required: yes
- Personal appearance required: no
Technically approved by
Federal Ministry of Finance