Regulatory job engine: What you need to bring with you if you want to open a fund

The days when closed-end, real estate or private equity funds flew virtually under the radar of regulation are a thing of the past. The magic word in this context is the “Alternative Investment Fund Directive” (AIFMD). Since the directive was transposed into German law last year, companies have had to obtain a so-called KVG license from BaFin, which means that they are subject to a similar flood of regulation as other financial service providers.
This means that these companies have a considerable need for new skills. “This primarily concerns risk management and compliance. The requirements here have increased significantly,” observes headhunter Manuel Rehwald from Rehwald Associates in Munich and Frankfurt. Suddenly, previously unregulated companies are demanding staff with experience in regulation, which is fueling demand on the job market.

The companies must submit an application for approval by July 21. A BaFin information sheet explains what this means in concrete terms. It lists the documents that investment companies must submit in order to obtain the coveted license. According to this, the manager must, for example, provide proof of personal and professional suitability. Personal suitability is primarily about “reliability”. To prove this, the company should submit a “certificate of good conduct”, for example.
The information sheet is clearer when it comes to professional competence. “According to this, professional suitability requires that the persons to be appointed as managing directors have sufficient theoretical and practical knowledge of the relevant business as well as management experience. Professional suitability for the management of a capital management company is generally assumed if three years of management experience at a company of comparable size and type of business can be proven,” it says in the best officialese. Not an easy task, as this means that only those who have already been a manager can become one – which limits the pool of candidates.

However, BaFin provides for a case-by-case assessment. “If an applicant does not meet the requirements of the standard presumption, it is still conceivable that they have acquired their professional suitability in another way,” the information sheet continues. So there is still hope for other candidates.
In addition, the managing directors must also provide evidence of “fund-specific” specialist knowledge. Applicants must therefore be able to prove that they are familiar with the real estate business if they want to offer real estate funds.
The CVs of the managers must also be submitted for KVG approval. BaFin has very precise ideas about what must be included. “Accordingly … managing directors must therefore submit a complete curriculum vitae, signed in their own hand, which must include all first names, maiden name, date of birth, place of birth, private address and nationality, a detailed description of their professional background, the names of all companies for which this person has worked and information on the nature of the respective activity, including secondary activities, with the exception of honorary activities; the nature of the respective activity must include, in particular, the power of representation of this person, his/her internal decision-making authority and the business areas under his/her control within the company. ” It’s a wonder what BaFin manages to fit into a single sentence – but it’s no wonder that many a headhunter has their hands full.

Manuel Rehwald
Managing Director, Rehwald Associates GmbH