Remuneration Policy of AIF Kapitalverwaltungs-AG (Capital Management Company)

The Capital Management Company has established a remuneration scheme for all its employees in accordance with Art. 37 KAGB and Annex II of Directive 2011/61/EU (AIFM Directive), which is compatible with and conducive to a sound and effective risk management system. The remuneration system also applies in particular to the Board of Management, employees whose activities have a significant influence on the risk profile of the Capital Management Company or the managed investment funds (risk bearers), employees with control functions and all employees who receive total remuneration, as a result of which they are in the same income bracket as managers and risk bearers. 

The objective of the remuneration policy of the Capital Management Company is, in addition to meeting regulatory requirements, to promote sustainable and risk-conscious behaviour on the part of employees and to align it with the business model, the long-term success and the risk structure of the Capital Management Company. A further central element of the remuneration policy is the consistent alignment of the remuneration scheme with the ethical principles of the Capital Management Company. 

At the same time, performance should be rewarded and motivated employees should be retained in the company for the long term. However, no incentives are explicitly provided which encourage risk-taking and are not compatible with the risk profile, investment conditions or the Articles of Association of the investment funds under management. Furthermore, no incentives are given which could prevent the Capital Management Company from acting dutifully in the best interests of the investment fund concerned. In this respect, the remuneration policy of the Capital Management Company is in line with the business strategy, objectives, values and interests of the Capital Management Company and the investment funds it manages. 

The remuneration of employees is made up of a fixed salary and a variable component. In individual cases, employees may receive additional bonuses. In detail, the following applies to the individual remuneration components: 

  • The annual fixed salary is paid in twelve equal monthly amounts. The amount of the fixed remuneration is determined by the value of the exercised function and in accordance with market practices. The fixed component is calculated in such a way that employees are not significantly dependent on variable compensation 
  • The variable remuneration, which is calculated on an annual basis, depends on the development of the company and the achievement of personal targets. It may amount to a maximum of 100% of the fixed remuneration. Payment of the variable remuneration is made after the individual degree of target achievement has been determined, the annual financial statements of the Capital Management Company have been approved, and the bonus pool available for payment has been approved by the Supervisory Board. The bonus amount available for distribution is determined within the framework of the budget planning for the following financial year. 
  • In special individual cases, employees may receive additional bonuses over and above the variable remuneration (e.g. if special targets have been achieved); in any case, such fringe benefits and their conditions are subject to a separate agreement, with employees having no general entitlement to such a separate agreement. 

Due to its size, the Capital Management Company has not made use of the facultative option of setting up a remuneration committee. 

Concrete information on the annual remuneration paid to directors and other risk bearers is disclosed in the annual accounts or annual reports of the funds. 

Conflict of Interest Policy

Policy on the avoidance of conflicts of interest and on handling conflicts of interest („COI Policy“)

Content

  1. Aim of COI Policy
  2. Scope of COI Policy
  3. Detection of conflicts of interest
  4. Prevention of conflicts of interest
  5. Organisational provisions
  6. Administrative measures
  7. Officer for the prevention of conflicts of interest
  8. Settlement and observation of conflicts of interest
  9. Disclosure of conflicts of interest
  10. Measures in case of violations of COI Policy
  11. Further development of COI Policy

 

§ 1 Aim of COI Policy

As a capital management company within the meaning of Arts. 20, 22 KAGB, AIF Kapitalverwaltungs-AG, also referred to as AIF Partner KVG (hereinafter “KVG”), is obliged to perform its activities honestly, fairly and with due care and diligence, acting in the best interests of the assets under its management and the Investors of the respective fund, as well as in the interests of the integrity of the market. To the extent that potential or actual conflicts of interest within the meaning of Art. 27 KAGB arise in the management of their funds (hereinafter “AIF” – Alternative Investment Fund), KVG must ensure that these conflicts of interest are managed in a fair manner and in the best interests of Investors and Clients. In order to achieve this, KVG has defined appropriate measures for the identification and handling of conflicts of interest in this COI Policy.

 

§ 2 Scope of COI Policy

  1. Whenever business interests collide, conflicts of interest may arise. This COI Policy refers only to conflicts of interest, which may pose a risk for the Clients or Investors of an AIF managed by KVG (“potential conflict of interest”), or actually pose such a risk (“actual conflict of interest”).
  2. This COI Policy applies directly to the Management as well as for all Staff of KVG.
  3. Furthermore, the Management of KVG shall ensure that the provisions of this COI Policy are adhered to by:
  • Outsourcing Companies, their Management and all Staff involved in the outsourced activities;
  • All other natural or legal Person directly involved in the provision of services to KVG within a delegation agreement to third parties facilitating a joint portfolio management for KVG.

 

§ 3 Detection of conflicts of interest

Parties involved in a conflict of interest

1. In the course of managing AIF’s, conflicts of interest may arise:

  • Between KVG, their Management, Staff or any other Person linked to KVG via direct or indirect control and the AIF managed or the Investors of this AIF;
  • Between an Outsourcing Company assigned by KVG, their Management, Staff or any other Person linked to KVG via direct or indirect control and the AIF managed or the Investors of this AIF;
  • Between the AIF managed by KVG or the Investors of this AIF and a further AIF managed by KVG or the Investors of this AIF;
  • Between the AIF managed by KVG or the Investors of this AIF and a further client of KVG;
  • Between two Clients of KVG.

2. Conflicting interests

A conflict of interest may arise in the following situations:

  • Achievement of a financial advantage for KVG, an Outsourcing Company or any Person referred to in § 2 at the expense of the respective AIF or its Investors;
  • Interest in the outcome of a service provided for an AIF by KVG, an Outsourcing Company or any Person pursuant to § 2, which is not in line with the interest of the Investors of the respective AIF in such an outcome;
  • Avoidance of financial loss by KVG, an Outsourcing Company or any Person named in § 2 to the detriment of the respective AIF or its Investors;
  • The interests of KVG, an Outsourcing Company or any Person referred to in § 2 in the services provided for an AIF are – except for remuneration – not in line with the interests of the respective AIF;
  • Preferential treatment of the interests of a single investor, a group of Investors or a further AIF to the detriment of the respective AIF managed by KVG;
  • The existence of a financial or other incentive with the aim to place the interests of one AIF over the interests of another AIF also managed by KVG;
  • Acceptance of remuneration from a third party in the course of portfolio management.

3. Examples for conflict of interest

The following situations are exemplary for conflicts of interest:

1. a) Conflict of interest between KVG and a Person pursuant to § 2, of the one part, and / or Investors, of the other part

  • KVG assigns an affiliated company or a Person pursuant to § 2 with a service regarding the operative side of an AIF, e.g. the asset management of a property;
  • KVG invests for their AIF in investment products that are owned by a company affiliated with KVG or a Person pursuant to § 2;
  • KVG appoints an investment consultant for the selection of investment opportunities (e.g. for investments in other funds), which is one of the Persons pursuant to § 2 or a company affiliated with KVG;
  • The percentage service fee of KVG is determined by the amount of the collected capital of the AIF (“hard cap on fundraising”);
  • The term of the AIF managed by KVG is extended without any apparent benefit for the Investors, but in order to collect further fees;
  • The AIF invests capital in a target company; this participation is financed by the granting of a loan by one of the Persons mentioned in § 2 or by a Person who stands in a direct or indirect dependent relationship with KVG; KVG has made an investment in a target company and receives on-going remuneration from it;
  • KVG or one of the Persons referred to in § 2 receives gifts or invitations of more than a minor nature, which are likely to influence their conduct in a manner contrary to the interests of the Investors of the managed AIF;
  • One of the Persons referred to in § 2 invests in or conducts business with AIFs managed by KVG on preferential terms.

1. b) Conflicts of interest between various AIF

KVG or an Outsourcing Company launches a further AIF with a comparable strategy before a first AIF is fully placed; as far as investment decisions are to be made, KVG has to decide for which of the two AIF’s the investment is made;

KVG simultaneously manages two AIFs; between them, a business activity is carried out for the benefit of one and to the detriment of the other AIF.

1. c) Conflict of interest between various Investors

KVG grants an individual investor special investment rights to which the other Investors in an AIF are not entitled.

1. d) Conflict of interest between various Clients

KVG facilitates the purchase and sale of shares in AIFs managed by KVG between two Clients and thereby acts for two Clients with conflicting interest.

 

§ 4 Prevention of conflicts of interest

  1. In order to prevent conflicts of interest from arising, Persons referred to in § 2 must adhere to high standards; these include acting lawfully and professionally at all times and observing generally accepted market rules, while always taking the interests of the Investors into account.
  2. The organizational precautions and administrative measures to be taken to prevent conflicts of interest shall be based on the size and organization of KVG and the nature, scope and complexity of its business, and in application of the principle of proportionality. All safeguards to prevent conflicts of interest must be appropriate and effective.
  3. The Management of KVG or of an Outsourcing Company assigned by KVG must ensure that Persons affected by safeguards to prevent conflicts of interest know and are able to handle the procedures required for the due performance of their obligations.

 

§ 5 Organizational precautions

In order to avoid conflicts of interest, it must be ensured that the Persons named in § 2 carry out their business activities independently, while taking into account potential risks for the AIF and its Investors. To this end, the following precautions have been taken:

  • Independence
    KVG or an Outsourcing Company commissioned by KVG shall conduct its business activities independently of the interests of third parties and the instructions of the shareholders; in particular, KVG shall refrain from concluding control agreements with the parent company and shall avoid exerting any other influence on the independent management of KVG within the group;
  • Declaration of independence
    The declaration of independence in the Appendix of this COI Policy is to be signed by the Management of KVG and, if applicable by the Management of an Outsourcing Company;
  • Functional separation
    Functional and spatial separation of the various business units, in particular between Portfolio Management and Compliance, Control Systems and Risk Management, as well as separation of tasks and areas of responsibility in relation to own operational procedures that are to be considered incompatible with each other, or can potentially cause systematic conflicts of interest;
  • Remuneration policy
    Establishment of a Staff remuneration policy in accordance with regulatory requirements, which ensures that the Persons referred to in § 2 see their incentive in the performance of all the AIFs they manage, thereby counteracting any preferential treatment of individual AIFs or Clients;
  • Chinese Walls
    Establishment of confidentiality areas and information barriers with virtual or physical barriers (so-called “Chinese walls”) to restrict the flow of information; this implies especially the implementation of access authorizations;
  • Employee transactions policy
    Implementation of behaviour guidelines and processes for employee transactions;
  • Gift policy
    Implementation of behaviour guidelines and processes regarding the acceptance of gifts and other benefits by KVG or a Person referred to in § 2;
  • Institutionalised COI survey
    Before implementing the relevant measure, the portfolio management shall question the existence of a conflict of interest, namely:
  • Upon creation of a new AIF;
  • Upon acquisition or disposal of assets by an AIF;
  • Upon further investment decisions;
  • Upon administrative measures;
  • Upon activities of one Person for several AIF’s (“multiple activities”).

 

§ 6 Administrative measures

  • In order to prevent conflicts of interest, the Management of KVG or an Outsourcing Company commissioned by KVG shall take the following measures:
  • Establishment of procedures for identifying and resolving conflicts of interest, instruction on their unconditional compliance and monitoring of compliance;
  • Monitoring of compliance with the code of conduct and the procedures for dealing with conflicts of interest via internal audit and the compliance function of KVG;
  • Adequate documentation of the services and activities of KVG, or respectively its Management, Staff and Persons referred to in § 2, whenever a conflict of interest has been identified;
  • In the case of investment opportunities which are eligible for several AIFs with an identical investment strategy, KVG shall offer the investment opportunity on the same terms and conditions to all eligible AIFs managed by KVG, taking into account the principle of equal treatment, and, in the case of investment interest from several AIFs managed by KVG, shall divide the investment opportunity among the interested AIFs or, in the case of indivisibility, shall apply an appropriate allocation procedure (rotation procedure or the random principle / lot procedure) and document this accordingly;
  • As far as the appropriate resolution or monitoring of a conflict of interest requires, the Persons referred to in § 2 may be requested to terminate their work on a specific business activity or their participation in the management for the resolution of a potential conflict of interest;
  • Training of all affected employees of KVG or of an Outsourcing Company commissioned by KVG and of Persons mentioned in § 2.

 

§ 7 Officer for the prevention of conflicts of interest

  1. The Management of KVG has appointed a Conflict of Interest Officer (“COI Officer”), who directly reports to them.
  2. This COI Officer is responsible for receiving and reviewing reports in accordance with § 8 of this COI Policy.
  3. The COI Officer has to ensure that Persons affected by this COI Policy are informed about the basics of the Policy and receive regular training on it.
  4. In addition, the COI Officer is obliged to monitor compliance with this COI Policy regularly.
  5. The COI Officer shall report directly to the Management of KVG on his/her activities regularly, at least once a year.

 

§ 8 Resolution and monitoring of conflicts of interest

  1. Conflicts of interest must be reported immediately, and handled and resolved in a fair manner.
  2. All Persons named in §2 are therefore obliged to notify the COI Officer without delay about any facts that indicate the existence of a conflict of interest situation within the meaning of § 2 Para.1 of this COI Policy.
  3. The COI Officer shall examine whether the facts presented indicate a conflict of interest situation within the meaning of § 2 Para.1 of this COI Policy. Should this be the case, he/she shall immediately inform the Management of KVG on the nature and extent of the conflict of interest and document this accordingly.
  4. The assessment and remediation of such a conflict of interest will be conducted by the Management of KVG.
  5. To the extent that the existing and on-going safeguards are not suitable or sufficient to resolve a conflict of interest, the Management of KVG shall take additional measures, such as:
  • Diligent review of all available measures and implementation of AIF-specific restrictions on information or other additional measures to segregate information;
  • Transfer of the conflict of interest to a higher management level, which is responsible for the business strategy of KVG and is able to adequately assess the potential risks;
  • Termination of the respective activity.

 

§ 9 Disclosure of conflicts of interest

  1. KVG is obliged to inform Investors of any conflicts of interest as soon as it becomes apparent that the organizational measures taken by KVG to identify, prevent, manage and monitor such conflicts of interest are not sufficient in order to reasonably ensure that the risk of impairment of the interests of the Investors and/or the managed AIF is avoided.
  2. This duty of disclosure implies notifying Investors of the general nature as well as the sources of conflicts of interest prior to the execution of the respective activity/measure/ safeguard.
  3. The duty of disclosure applies also to potential conflicts of interest that may arise in connection with the delegation/outsourcing or sub-delegation of business activities.
  4. Disclosure is also required of any business activities between any of the Persons referred to in § 2 or between closely related companies or Persons linked to KVG through a direct or indirect control relationship in connection with a managed AIF.
  5. Disclosure shall be made via the website of KVG or other media accessible for the relevant addressees. To this end, KVG has:
  • To make the address of the website known to Investors and to ensure by appropriate measures that the Investors can also become aware of it;
  • To continuously update the information provided on the website of KVG;
  • To ensure that the information made available on the website of KVG are accessible at all times.

 

§ 10 Measures in case of violation of COI policy

  1. In the event of a violation of this COI Policy, the Management of KVG shall immediately identify and remedy the cause or the flaw in the operational or procedural process that has led to such breach.
  2. A violation of this COI Policy shall be considered a violation of duty and may result in disciplinary action, including termination of employment in severe cases.
  3. In the event of a severe violation of this COI Policy the appropriate Supervisory Authority is to be informed.

 

§ 11 Further development of COI Policy

  1. The management of KVG shall be responsible for the on-going development and maintenance of this COI Policy. In particular, the Management shall decide on and have implemented any necessary and appropriate amendments and/or additions to this COI Policy.
  2. The COI Officer shall be responsible for keeping Staff informed of all amendments and additions to this Policy. He/she shall also bring any necessary updates to this Policy to the attention of the Management of KVG.