Germany's Federal Financial Supervisory Authority (BaFin) has issued revised guidance detailing its administrative practice for authorizing alternative investment fund capital management companies under Section 22 of the German Investment Code. Effective upon publication, the circular applies to internal and external companies, including previously registered firms seeking full authorization, and replaces BaFin’s March 2025 guidance following its earlier proposed revisions. It is intended to clarify application requirements and shorten processing times. Applicants must provide detailed evidence covering capital and liquidity, management suitability, qualifying owners and group structures, business plans, governance, outsourcing arrangements and the funds they intend to manage. BaFin expects at least two full-time managing directors, with responsibility for portfolio management and risk management, baseline knowledge across both functions and regulation, and asset-specific expertise where relevant. Business plans must demonstrate three-year financial projections, adequate staffing and controls, and full functional separation of portfolio and risk management through management level. Additional initial capital of EUR 37,500 applies to specified investment services and EUR 150,000 to certain custody and administration services. Previously registered companies cannot use reduced completeness requirements and must submit all documents required for authorization. Outsourcing portfolio or risk management does not remove the need for suitably qualified managers, functional separation and effective oversight, and the company must not become a letterbox entity.

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