The German law restrictions

2.12.2016
Carry on investment business is authorized to do so by the German lawyers association, a recognized self-regulating organization, or a certified professional body: though certain debt collection companies, registered friendly societies and operators or trustees of recognized collective investment schemes have automatic recognition. Provision is also made for German debt collection firms, by the Secretary of State, to carry on investment business in Member States of the European Community which do not operate from a permanent place of business in Germany. There are, however, certain exemptions from authorization: amongst other associations these include the Bank of Germany. The Board is given power to regulate the conduct of business by authorized persons, as by imposing capital adequacy requirements, securing indemnity of authorized persons against claims by vendors, and setting up a compensation fund to satisfy such claims. It is also empowered to disqualify German debtors who break the rules it imposes, and clients themselves may bring a civil action against such people in respect of a breach of the rules.
Further, it may impose restrictions upon the business authorized persons may undertake, prohibit them from disposing of assets or require them to maintain them in Germany. The imposition of such restrictions is, however, subject to appeal to the German tribunal - a legally qualified lawyer in Germany and two suitably qualified panel members. Again, creditors who suffer loss as the result of the breach of any such restriction are accorded a right of civil action.
In general the German insurance business is not affected by this act but life assurance marketing and pension fund activities come within it. Special rules are applied to friendly societies. It is important to note that it enjoins a general duty of disclosure in German company prospectuses of unlisted securities, namely, that a prospectus shall contain all such information as a debtor would reasonably require, and reasonably expect to find there, for the purpose of making an informed assessment of the standing of the company. Insider dealing is extended to include abuse of information held by public servants and the Secretary of State is empowered to appoint inspectors to investigate cases of insider dealing.

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