The Private Investor Protection Act (Kleinanlegerschutzgesetz) of 3rd July 2015 reinforces private investors protection when they invest in products and instruments outside regulated markets.
The new act
The new act
- widens the scope of information to be included in sales prospectuses (Verkaufsprospekt) for instruments regulated by the German Capital Investment Act (Vermögensanlagegesetz), such as non-securities and non-fund investments,
- introduces a prospectus requirement for the marketing of subordinated loans (Nachrangdarlehen) and profit-participating loans (partiarisches Darlehen) to the public, with an exception made for internet crowd-funding up to a value of €2.5 million,
- introduces a minimum term of an investment product of 24 months,
- sets a maximum validity of the sales prospectus of 12 months,
- creates a much stricter regulation of the (public) advertising of the investments in assets and an obligation of issuers to draft annual financial statements (if not already required by other laws).
- expands BaFin´s power to intervene in market practice through the possibility of "shaming" (ie making public a breach due to marketing an offer without having published a sales prospectus in advance), as well as an extended authorisation for BaFin to examine an offeror´s financial accounting.