German Federal Civil Court: Administration Fees for a German Fund
beinformed dated 22 June 2017
The Bundesgerichtshof (German Federal Civil Court) decided on whether a fund manager may ask for an administration fee in addition to the management fee. As far as banks are concerned, this practice by and large has been found to be not in line with German law. The Court now ruled that the same is not true in a fund context. Under German investment law, a fund manager has a right to be reimbursed for reasonable expenses incurred in the best interest of the fund. This right exists side-by-side with the management fee to which a fund manager is entitled. However, the Court's decision makes it clear that reimbursement clauses are only for covering costs and not for providing an additional profit margin to the fund manager.