The capital management company (KVG), formerly: capital investment company or fund company, manages certain investment assets. You need a permit to operate such a company.

The KVG has been subject to new regulatory requirements in Germany since July 2013. The meaning of the term was expanded in the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and defined at the same time for open-ended and closed-end investment funds.

With a few exceptions, all KVGs are subject to licensing.

• KVGs that manage funds are not subject to licensing,
  • whose thresholds do not exceed EUR 100 million in general or EUR 500 million, respectively, if these funds have no financing leverage and no unit redemption rights within the first five years, and
  • which are exclusively special funds for institutional investors.

Notice:
These funds must register with the state supervisory authority.

In addition to the management of investment assets, the capital management company may provide the following services and ancillary services:

1. the management of individual assets invested in financial instruments within the meaning of Section 1 (11) of the German Banking Act (Kreditwesengesetz) for others with decision-making powers, including portfolio management of third-party investment assets (individual asset management),
2. the management of individual assets invested in real estate for others, as well as investment advisory services, provided the investment company is authorized to manage real estate investment funds,
3. investment advice, insofar as the permit includes the service in accordance with 1,
4. the custody and management of units issued in accordance with the provisions of this Act or by a foreign investment company for others, insofar as the permit covers the service in accordance with 1,
5. the distribution of units which have been issued in accordance with the provisions of this Act or which may be distributed to the public in accordance with Sections 130 to 140,
6. the conclusion of old-age provision contracts pursuant to Section 1 (1) of the German Old-age Provision Contracts Certification Act (Altersvorsorgeverträge-Zertifizierungsgesetz) and of contracts for the establishment of the investor's own funded old-age provision within the meaning of Section 10 (1) No. 2 (b) of the German Income Tax Act (Einkommensteuergesetz),
   • the issuance of a commitment to the investor that at least a certain or determinable amount will be paid to the investor upon the redemption of units, the termination of the management of units within the meaning of No. 1 and the termination of the custody and management of units within the meaning of No. 4 (minimum payment commitment),
7. other activities directly related to the services and ancillary services referred to in this paragraph.

The permit may be subject to ancillary provisions.

A KVG is either an external KVG or an internal KVG.
An external KVG may only be licensed by BaFin in 3 legal forms:

• the AG,
• the GmbH or
• the GmbH & Co. KG.

Prior to this, the KVG must have been commissioned by the board of directors or managing director of the fund to manage the fund. If the management decides not to appoint an external KVG, the investment fund itself is to be regarded as an internal KVG.

AIF capital management companies are capital management companies that manage or intend to manage at least one alternative investment fund (AIF).
UCITS capital management companies are capital management companies that manage or intend to manage at least one undertaking for collective investment in securities (UCITS).