Chapter 5 — The BaFin Path: Sub-Threshold Registration in Plain English

DRAFT — sample chapter for pre-order credibility. Joshua is the accuracy backstop: every [VERIFY] tag needs his read (or a practitioner friend’s) before this ships anywhere. Statute citations included so readers can check the source themselves. Current as of: July 2026. Keine Rechts- oder Steuerberatung — this is one founder’s field notes, not advice.

The sentence your lawyer said, decoded

At some point early in your formation, counsel will say something like: “You’ll register as a sub-threshold manager under § 2 Abs. 4 KAGB — it’s just a registration, not a license.”

Both halves of that sentence are true, and both are doing a lot of work. Here is what it actually means, what it actually requires, and — the part nobody volunteers — what you’re signing up to keep doing every year afterwards.

What “sub-threshold” means

The KAGB (Kapitalanlagegesetzbuch — Germany’s implementation of the EU AIFM Directive) has a full licensing regime for fund managers. It is heavy: capital requirements, depositary, organizational rules, the works. You do not want it, and for a first fund you almost certainly don’t need it.

§ 2 Abs. 4 KAGB carves out a lighter regime for managers of Spezial-AIF (funds sold only to professional and semi-professional investors) whose assets under management stay under:

• €100M including leverage, or
• €500M if the funds are unleveraged and have no redemption rights for five years (i.e., a normal closed-end VC fund).

A €5–30M first fund is nowhere near either line. You register; you don’t get licensed. BaFin confirms the registration; it does not “approve” your fund the way the word “registered” makes non-Germans imagine. [VERIFY: exact confirmation mechanics + current processing behavior — this drifted with the last KAGB amendment cycle]

Vocabulary note: after registration you are a registrierte Kapitalverwaltungsgesellschaft — a registered (not licensed) KVG. When someone says “the fund is BaFin-registered,” the precise fact is that the manager is registered with BaFin as a sub-threshold AIFM. Precision here is not pedantry; sophisticated LPs notice.

Who registers — and why it’s the ManCo

The registration attaches to the manager, not the fund. In the standard stack (see the entity map, Chapter 1) that’s the ManCo — the management GmbH that holds the management contract. One registration covers the AIFs it manages, which matters when fund II comes along. [VERIFY: current BaFin practice on adding a second AIF under an existing registration]

What the registration actually requires

The filing is under § 44 KAGB. In practice you (or counsel, or increasingly you-with-this-checklist) submit to BaFin:

1. Identification of the manager — the ManCo’s registration details, its Geschäftsführer, ownership.
2. Information on the AIFs managed — investment strategies, per the AIFMD reporting categories.
3. Confirmation you qualify — that you’re under threshold and only managing Spezial-AIF sold to (semi-)professional investors.
4. Fit-and-proper basics on the managing directors — this is lighter than the full-license version, but expect CV-and-reliability territory. [VERIFY: current documentary requirements — Führungszeugnis etc.]

What it does not require (versus a full license): no minimum capital beyond ordinary GmbH capital, no depositary for the sub-threshold regime, no full organizational handbook. This is why counsel calls it “just a registration.”

Realistic timeline: budget weeks, not days — and file early, because you may not market the fund in Germany before the registration is in place. [VERIFY: Joshua's actual elapsed time — this is the paragraph where the field-notes voice earns its money. Put the real number here.]

The part nobody volunteers: ongoing duties

Registration is not a one-time event. As a registered sub-threshold KVG you owe BaFin ongoing reporting — the Annex IV-style reporting on AUM, strategies, principal exposures, delivered on BaFin’s electronic reporting platform, on a cycle set by your size. For a small closed-end manager this is annual. It is genuinely doable without hiring anyone, but the first one will eat a weekend, and missing it is not a parking ticket. [VERIFY: current platform (MVP portal / successor), current frequency thresholds]

You also owe BaFin updates when the facts change: new AIF, changed strategy, new Geschäftsführer.

The tripwires: what pushes you out of sub-threshold

Four things to keep in view for the whole life of the fund:

1. Crossing the AUM threshold — including through leverage. Watch commitments vs. NAV definitions; the calculation is not what a US GP would guess. [VERIFY: calculation basis under AIFMD Art. 2 delegated regulation]
2. Taking non-professional investors. Sub-threshold registration under § 2 Abs. 4 works because it’s a Spezial-AIF. One retail investor and you’re in a different, much worse conversation. “Semi-professional” (≥ €200k commitment plus the assessment procedure) is the drafting workaround your lawyer will propose for smaller angels — it has real paperwork attached.
3. Marketing across borders. The sub-threshold registration does not come with an EU passport. Marketing in France or the Netherlands means their national private placement rules, or stepping up to EuVECA. Which brings us to—
4. The EuVECA alternative. If your fund is venture-shaped, the EuVECA regulation offers an EU-wide marketing label for sub-threshold managers. More upfront work, actual passporting rights. Worth a real conversation with counsel if your LP base is cross-border European. This guide’s take: for a purely DACH LP base, plain § 2 Abs. 4 is usually enough for fund I. [VERIFY: Joshua's actual decision + reasoning — tell the story]

What to ask your lawyer (bring this list)

• “Are we registering the ManCo as the KVG, and does anything about our structure complicate that?”
• “What is our AUM for threshold purposes — commitments or NAV, and how does the bridge facility count?”
• “Which of our LPs need the semi-professional assessment, and who runs that process?”
• “Do we file the registration before or after first closing, and what marketing can we do in the gap?”
• “Given our LP pipeline, should we be talking about EuVECA now or at fund II?”

Every hour of that meeting is now spent on decisions. That’s the point of this book.

Statutes referenced: § 2 Abs. 4 KAGB, § 44 KAGB, § 1 Abs. 19 Nr. 33 KAGB (semi-professional investor), Regulation (EU) No 345/2013 (EuVECA). Read them — they’re shorter than you fear, and your counsel will treat you differently once you have.