Risk management for loan origination by AIF capital management companies; Authorisation to issue statutory instruments

(1) For the purposes of section 29(3), point 4, AIF capital management companies that manage AIFs that grant loans must also implement effective strategies, procedures, and processes for assessing credit risk, and for managing and monitoring their loan portfolio, must keep these strategies, procedures, and processes up to date, must ensure that they remain effective, and must review them regularly, at least once a year. The first sentence also applies where AIFs acquire credit risk through third parties.
(2) The requirements named in subsection (1) and in section 29(3), point 4, do not apply to the granting of shareholder loans, where the nominal value of these loans, in aggregate, does not exceed 150 percent of the capital of the AIF; section 26(2), point 2, remains unaffected.
(3) An AIF capital management company must ensure that, in cases where an AIF it manages grants loans, the nominal value of the loans granted by that AIF to a single borrower does not, in aggregate, exceed 20 percent of the capital of the AIF, where the borrower is one of the following:
1. a financial undertaking within the meaning of Article 13, point 25, of Directive 2009/138/EC,
2. an AIF, or
3. a UCITS. The restriction named in the first sentence applies without prejudice to the thresholds, restrictions, and conditions under Regulations (EU) No 345/2013, (EU) No 346/2013, and (EU) 2015/760.
(4) The investment restriction laid down in subsection (3), first sentence
1. applies from the date named in the investment conditions, the articles of association, the partnership agreement, the sales prospectus, or the information under section 307(1) and (2) of the AIF, whereby the date may not, subject to the second sentence, be more than 24 months after the day of the first subscription of units in the AIF, and this point of application must have regard to the particular characteristics and features of the assets to be invested by the AIF capital management company,
2. ceases to apply as soon as the AIF capital management company begins to dispose of the assets of the AIF in order to be able to redeem the units of its investors as part of the winding-up of the AIF,
3. is temporarily suspended where the capital of the AIF is increased or reduced; the suspension must be limited to the period strictly necessary, having due regard to the interests of the investors of the AIF, and may in no case last longer than twelve months. In exceptional circumstances, the Federal Institute may approve a postponement of the point of application under the first sentence, point 1, of up to twelve months, where the AIF capital management company submits a sufficiently substantiated investment plan.
(5) An AIF capital management company must ensure that the leverage of a loan-originating AIF it manages does not exceed the following value:
1. 175 percent, where it is an open-ended AIF,
2. 300 percent, where it is a closed-ended AIF. The leverage of the loan-originating AIF is expressed as the ratio between the exposure of that AIF, calculated under the commitment method laid down in the delegated acts adopted under Article 4(3) of Directive 2011/61/EU, and its net asset value. Loan arrangements that are fully covered by contractual capital commitments of investors in the loan-originating AIF are not regarded as exposure for the purposes of calculating the ratio named in the second sentence. Without prejudice to the powers of the Federal Institute named in section 215(2), section 263(2), and section 274, the requirements under the first sentence do not apply to a loan-originating AIF whose loan origination consists exclusively of the granting of shareholder loans, provided that the nominal value of these loans, in aggregate, does not exceed 150 percent of the capital of that AIF.
(6) Where a loan-originating AIF infringes the requirements laid down in subsection (5), and the infringement is beyond the control of the AIF capital management company that manages it, the AIF capital management company must, within a reasonable period, take the measures necessary to correct the situation, having due regard to the interests of the investors of the loan-originating AIF.
(7) The AIF capital management company must ensure that an AIF it manages does not grant loans to the following borrowers:
1. the AIF capital management company or its staff,
2. the depositary of the AIF, or the undertakings to which the depositary has delegated functions in respect of the AIF under Article 21 of Directive 2011/61/EU,
3. an undertaking to which the AIF capital management company has delegated functions under section 36, or the staff of that undertaking,
4. an undertaking within the same group, within the meaning of Article 2, point 11, of Directive 2013/34/EU, as the AIF capital management company, unless it is a financial undertaking that finances exclusively borrowers not named in points 1 to 3.
(8) Where an AIF grants loans, the proceeds from the loans, after deduction of any permissible administration fees, are attributed to that AIF in full. All costs and expenses connected with the administration of the loan must be stated under section 165(3), point 3, or section 307(1), second sentence, point 13.
(9) The investment strategy of an AIF may not consist, wholly or in part, of granting loans for the sole purpose of transferring these loans or the risks arising from loan origination to third parties.
(10) The Federal Ministry of Finance is authorised to issue, by statutory instrument not requiring the consent of the Bundesrat, more detailed provisions for capital management companies that manage AIFs that grant loans, on risk management systems and procedures. The Federal Ministry of Finance may transfer this authorisation, by statutory instrument, to the Federal Institute.