Appointment and annual audit; power to issue statutory instruments

(1) The UCITS capital management company must ensure that a depositary within the meaning of subsection (2) is appointed for every UCITS managed by it. The appointment of the depositary must be agreed in an agreement concluded in text form. The agreement governs, among other things, the exchange of information considered necessary to enable the depositary to perform its duties for the UCITS for which it has been appointed as depositary, in accordance with the provisions of this Act and the other relevant laws, regulations, and administrative provisions.
(2) The depositary is a credit institution within the meaning of Article 4(1), point 1, of Regulation (EU) No 575/2013, having its registered seat in the European Union or in another contracting state of the Agreement on the European Economic Area, and authorised under section 32 of the Banking Act or under the provisions applicable in the EU UCITS's home Member State implementing Directive 2013/36/EU.
(3) Where the UCITS capital management company manages domestic UCITS, the depositary must have its seat within the territorial scope of this Act. The depositary for a domestic UCITS must be a CRR credit institution within the meaning of section 1(3d) of the Banking Act, holding authorisation to conduct custody business under section 1(1), second sentence, point 5, of the Banking Act. A branch of a CRR credit institution within the meaning of section 53b(1), first sentence, of the Banking Act, located within the territorial scope of this Act, may also be appointed as depositary for domestic UCITS.
(4) At least one manager of the credit institution to be appointed as depositary must have the experience necessary for the depositary tasks. The credit institution must be willing and able to establish the organisational arrangements necessary to perform the depositary tasks. These include a process enabling staff, while preserving the confidentiality of their identity, to report potential or actual infringements of this Act, or of statutory instruments issued on the basis of this Act, and any criminal acts within the depositary, to suitable bodies within the meaning of section 25a(1), sixth sentence, point 3, of the Banking Act.
(5) The depositary must have initial capital of at least EUR 5 million. Any own funds requirements under the Banking Act remain unaffected by this.
(6) For further details on the minimum content of the agreement under subsection (1), reference is made to Article 2 of Delegated Regulation (EU) 2016/438. The agreement is governed by the law of the UCITS's home Member State.
(7) The proper performance of the statutory or contractual duties as depositary by the credit institution or the branch must be examined once a year by a suitable auditor. Suitable auditors are auditors with sufficient experience with regard to the subject matter of the examination. The depositary must appoint the auditor no later than two months after the end of the calendar year to which the examination relates. The depositary must notify the Federal Institute of the auditor before awarding the audit engagement. The Federal Institute may, within one month of receipt of the notification, require the appointment of a different auditor where this is necessary to achieve the purpose of the examination. As a rule, the appointment of a different auditor is necessary to achieve the purpose of the examination where a depositary that is not a public-interest entity within the meaning of section 316a, second sentence, point 1 or 2, of the Commercial Code has notified the Federal Institute of the same auditor for at least eleven consecutive financial years. The auditor must submit the audit report to the Federal Institute without delay after completion of the examination.
(7a) The examination under subsection (7) must extend, in particular, to the proper performance of the duties named in sections 70 to 79. The organisation maintained for these tasks must be described in outline and assessed for its adequacy. The commissioning capital management companies, and the number of domestic investment funds held in custody for them and the net fund assets, must be stated. A report must be made on material occurrences, in particular in the issue and redemption of units of an investment fund, on conflicts of interest within the meaning of section 70 that have arisen, on the exercise of the oversight functions under section 76, and on the charging of remuneration and reimbursement of expenses to the investment funds under section 79. Where investors have asserted claims against the depositary, or, through the depositary, against a capital management company, under section 78, this must also be reported.
(7b) Without prejudice to the auditor's special duties under subsection (7a), the Federal Institute may also lay down, in relation to the depositary, provisions on the content of the examination to be taken into account by the auditor in the course of the examination. It may in particular determine focal points for the examinations.
(8) The Federal Ministry of Finance is empowered to issue, by statutory instrument not requiring the consent of the Bundesrat, further provisions on the subject matter of the examination under subsection (7), and on the type, scope, and timing of the examination under subsection (7), first sentence, and on the manner of submission of the audit report to the Deutsche Bundesbank and the Federal Institute, insofar as this is necessary for the performance of the Federal Institute's tasks, in particular in order to obtain uniform documentation for assessing activity as a depositary. The Federal Ministry of Finance may transfer the power by statutory instrument to the Federal Institute.