VC Fund AIFM License and Fit-and-Proper: What Fund Managers Need to Know
Anyone looking to set up a VC or private equity fund with institutional investors today can no longer avoid AIFM licensing. What was initially seen in 2013, when the AIFM Directive came into force, as an administrative hurdle for larger firms is now, in 2026, the operational minimum standard for any fund operating beyond the very narrow sub-threshold regimes. The substantive benchmark is called "Fit and Proper" — and it applies not only to the formal establishment of the fund, but to the integrity and professional suitability of every key employee throughout the fund’s entire lifecycle.
This article structures the regulatory requirements in Germany, Switzerland, and Austria, outlines the practical documentation obligations, explains the differences between the three regimes, and identifies the areas where supervisory authorities are currently tightening their focus.
The framework: AIFMD and its national implementation
The AIFMD (EU 2011/61/EU) directive — revised in its current version by AIFMD II (Directive EU 2024/927) — forms the European umbrella framework. It is implemented nationally as follows:
Germany: KAGB — The Capital Investment Code transposes the AIFMD into German law. BaFin is the competent supervisory authority.
Austria: AIFMG — The Alternative Investment Fund Manager Act (Federal Law Gazette I No. 135/2013) is Austria’s implementation. The competent authority is the FMA.
Switzerland: CISA — The Collective Investment Schemes Act (SR 951.31) is not an AIFMD implementation law, since Switzerland is not an EU member state. However, it establishes a parallel licensing and supervisory regime that corresponds to the AIFMD in essential respects. The competent authority is FINMA.
Who needs an AIFM authorization?
The AIFMD distinguishes between fully licensed AIFMs ("authorised AIFM") and registered sub-threshold managers ("registered AIFM"). The decisive factor is the threshold under Art. 3 AIFMD, implemented in Sec. 2 KAGB (DE) and Sec. 1 AIFMG (AT):
Threshold | AUM threshold | Regime |
|---|---|---|
Leveraged funds | up to EUR 100 million AUM | Registration required (sub-threshold) |
Unleveraged funds with lock-up > 5 years | up to EUR 500 million AUM | Registration required (sub-threshold) |
Above that | Above the stated thresholds | Full AIFM authorization |
Important: In Germany, sub-threshold managers are also subject to a registration obligation (Sec. 44 KAGB) and must apply for full authorization in good time if they grow beyond the threshold. In practice, most institutional VC funds start with full authorization, because LPs do not invest in sub-threshold structures.
Fit-and-Proper assessment: the core of licensing
The Fit-and-Proper assessment is not merely a formality in the application process, but a permanent regulatory quality commitment by the fund toward the supervisory authority. The assessment is based on two pillars:
"Fit": Professional qualification, work experience, and competence for the specific role.
"Proper": Personal reliability, integrity, and suitability — evidenced by criminal and insolvency registers, PEP checks, references, and adverse media checks.
The national legal bases in detail
Germany — Sec. 119 KAGB: The managing directors of a management company must "be reliable and have the professional qualifications required to manage the management company". Sec. 119 KAGB refers, with respect to supervisory board members, to Sec. 18 KAGB. In addition, the BaFin guidance note on managing directors in the management company sector (current version) specifies the documentation requirements.
Austria — Sec. 4 AIFMG: The managing directors of an AIFM must be "personally and professionally suitable". The FMA has clarified the requirements in its circular on suitability assessments for managing directors and supervisory board members (aligned with the Banking Act).
Switzerland — Art. 14 CISA: Authorization requires that the persons entrusted with administration and management "enjoy a good reputation and offer assurance of proper business conduct". FINMA’s review practice includes full personnel forms, extracts from the criminal, insolvency, and debt enforcement registers, as well as detailed CV documentation.
Which persons must be assessed?
In practice, the group of persons subject to Fit-and-Proper requirements is broader than many fund managers initially assume. At minimum, the following must be assessed:
Managing directors: All persons with sole or joint representation authority for the AIFM entity — usually at least two persons (the "four-eyes principle").
Risk manager: The key employee responsible for the risk management function (Art. 15 AIFMD, Sec. 29 KAGB).
Portfolio manager: The persons responsible for portfolio management (Art. 14 AIFMD).
Compliance officer: The head of the compliance function (Art. 61 of the AIFMD Level 2 Regulation 231/2013).
Internal audit: Head of the internal audit function (unless outsourced in accordance with proportionality).
Supervisory board: All members of the supervisory body of the AIFM entity (Sec. 18 KAGB).
Qualified shareholders: Shareholders or partners with a qualifying holding (from 10% of direct or indirect voting rights or capital).
In the case of outsourcing (e.g. delegated portfolio management), the supervisory authority additionally assesses the suitability of the operationally active persons at the outsourcing recipient.
Documentation requirements in detail
For each person to be assessed, a complete documentation package must be submitted. The minimum requirements in DE/AT/CH are largely overlapping:
Curriculum vitae: A complete professional biography, including role descriptions, scope of position, responsibilities, and concrete activities performed. Gaps longer than three months must be explained.
Criminal record extract: In Germany, the certificate of good conduct for submission to an authority (Sec. 30 para. 5 BZRG), in Austria the criminal record certificate, in Switzerland the criminal record extract — in each case not older than three months.
Insolvency extract: Confirmation that no insolvency proceedings are pending against the person’s assets; in Switzerland supplemented by an extract from the debt enforcement register.
References: Typically two independent professional references, ideally from persons known to the regulator.
Self-disclosure/questionnaire: Standardized questionnaire of the supervisory authority with questions on disciplinary proceedings, prior roles at sanctioned companies, and conflicts of interest.
PEP check: Evidence of whether the person is a politically exposed person within the meaning of the AML regulations.
Sanctions list screening: Matching against the EU sanctions list, OFAC, UK HMT, SECO.
Adverse media check: Documented press scan for reputation-relevant incidents.
EBA-ESMA Joint Guidelines: convergence on managing directors
The Joint Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2021/06 and ESMA35-36-2319) — updated regularly — have largely standardized the suitability assessment for banks, investment firms, and AIFMs in the EU. Even though they originate primarily from the banking/MiFID context, BaFin applies the guidelines by analogy in its review practice for management company managing directors where AIFMD rules are less specific. For VC fund managers, this means in practical terms: suitability is assessed collectively (the management body as a whole) and individually, with a documented gap analysis and a demonstrable training plan.
Ongoing monitoring after licensing
The most common mistake among newly licensed AIFMs: the Fit-and-Proper documentation is filed as a completed package for the application — and not understood as an ongoing obligation. However, the supervisory authority expects:
Notification of every change: Any change in the management board, key personnel, or qualified shareholders must be reported — in Germany under Sec. 19 KAGB, in Austria under Sec. 23 AIFMG, in Switzerland under Art. 15 CISA.
Periodic re-verification: Even without personnel changes, supervisory authorities expect regular updates of the review documents — typically annually.
Ad hoc reporting obligations: New findings (e.g. investigation proceedings, new sanctions list entries) must be reported immediately.
Compliance audit readiness: The full documentation must be available at any time for a supervisory review.
What applies in Switzerland, Austria, and across the EU?
Switzerland
In Switzerland, the Collective Investment Schemes Act (CISA, SR 951.31) forms the primary legal basis. Art. 14 CISA governs the authorization requirements for fund management companies and managers of collective assets — with the central requirement that the responsible persons "enjoy a good reputation and offer assurance of proper business conduct". In addition, the Collective Investment Schemes Ordinance (CISO, SR 951.311) sets out the specific authorization requirements. The Financial Institutions Act (FinIA, SR 954.1) — in force since 2020 — introduced additional licensing regimes for managers of collective assets below certain thresholds; Art. 9 FinIA also sets out assurance requirements. FINMA implements the requirements in review practice through FINMA Circular 2008/21 "Operational Risks" and analogously applicable circulars such as 2017/1 "Corporate Governance – Banks". The Anti-Money Laundering Act (AMLA, SR 955.0) supplements the framework with due diligence obligations for identifying beneficial owners.
Austria
The basis is the Alternative Investment Fund Manager Act (AIFMG, Federal Law Gazette I No. 135/2013) as Austria’s national implementation of the AIFMD. Sec. 4 AIFMG governs the personal and professional suitability of managing directors; Sec. 6 AIFMG the requirements for supervisory board members. In addition, the Banking Act (BWG) is relevant by analogy with respect to qualifying holdings. With its circular on suitability assessments for managing directors and supervisory board members, the FMA has specified the depth of review. The Financial Market Anti-Money Laundering Act (FM-GwG) implements the EU AML requirements and applies directly to AIFMs with regard to KYC and PEP checks.
Across the EU
Across the EU, the requirements are framed by the AIFMD (EU 2011/61/EU) as amended by the AIFMD II (EU 2024/927). AIFMD II introduces, among other things, more detailed requirements for liquidity management and delegation. The second key legal act is the AIFMD Level 2 Regulation (EU) 231/2013, which specifies organizational requirements in Art. 22 et seq. and risk management requirements in Art. 57 et seq. The EBA/ESMA Joint Guidelines on suitability assessment (EBA/GL/2021/06) form the de facto pan-European standard. For fund managers distributing cross-border under Art. 32 AIFMD, the notification procedure applies — operationally implemented through the ESMA convergence guidelines.
From 10 July 2027, the AMLR (EU 2024/1624) will be added: the directly applicable EU-wide Anti-Money Laundering Regulation will tighten KYC requirements uniformly, including for AIFMs. The newly created AMLA, based in Frankfurt, will take on central supervisory and coordination functions from 2028 onward.
Comparison: AIFM authorization in Germany vs. Switzerland vs. Austria
Dimension | Germany (KAGB) | Austria (AIFMG) | Switzerland (CISA/FinIA) |
|---|---|---|---|
Supervision | BaFin | FMA | FINMA |
EU passport | Yes (intra-EU) | Yes (intra-EU) | No — third country |
Typical licensing duration | 12–18 months | 9–15 months | 9–14 months |
Minimum AIFM capital | EUR 125,000 (external AIFM) | EUR 125,000 | CHF 200,000 (CISA manager) |
Distribution reach | EU-wide with notification | EU-wide with notification | Switzerland + third countries; EU distribution only via national private placement regimes |
Fit-and-Proper regime | Sec. 119 KAGB + BaFin guidance note | Sec. 4 AIFMG + FMA circular | Art. 14 CISA + FINMA practice |
The operational reality: Anyone structuring a European VC fund with a clear DACH focus often chooses Luxembourg or Germany as the AIFM domicile — Luxembourg because of the flexibility of the RAIF structure, Germany because of its market proximity and the institutional LP environment. Swiss fund structures are typically suitable for investments from Swiss and third-country LPs; EU distribution runs through national private placement regimes.
Concrete timeline: 12–18 months for a new license
A realistic timeline for full AIFM authorization in Germany:
Months 1–3: Preparation and corporate setup. Establishment of the management company, capitalization, organizational manual, risk management framework, compliance policies.
Months 3–6: Team building and F&P packages. Hiring and documenting key personnel, complete Fit-and-Proper documentation, gathering references.
Months 6–8: Filing the application. Submission of the complete authorization application to BaFin.
Months 8–16: Supervisory dialogue. Follow-up questions, additional submissions, interviews with management, review of the business model.
Months 16–18: Granting and operationalization. Authorization decision, launch of operations, notifications for cross-border distribution.
In our experience, the most common causes of delay are not the regulatory topics themselves, but gaps or inconsistencies in the Fit-and-Proper documentation of key personnel.
CRD VI: implications for fund managers
The CRD VI (Directive EU 2024/1619) — in force since early 2025 — primarily addresses banks, but affects AIFMs indirectly in two respects: first, through the strengthening of suitability assessments on the banking side, which flows into AIFM practice via the EBA-ESMA Joint Guidelines. Second, through the third-country branch rules, which may become relevant for Swiss asset managers with EU activities. As a matter of principle, AIFMD remains the dominant legal framework; CRD VI effects are supervisory context, not direct application.
How Indicium supports fund managers
The operational challenge in the licensing and operating process is rarely about the individual rules, but about audit-proof handling of extensive personal documentation throughout the fund’s entire lifecycle. Indicium provides a GDPR-compliant infrastructure for this, specifically for AIFM managers from the DACH region:
Pre-application screening: Before filing, comprehensive checks of all key persons against sanctions lists, PEP databases, insolvency and commercial registers, and adverse media — with a complete evidence trail for BaFin, FMA, or FINMA.
Ongoing monitoring: Automated re-screenings at freely selectable intervals (monthly, quarterly, annually) with alerts on status changes.
Audit-proof documentation: Every query time-stamped, traceable, and exportable — for regulatory audits as well as ISAE reviews.
GDPR-compliant architecture: Data hosted on EU and Swiss servers, clear deletion periods, and data subject rights natively supported.
Integration into governance reporting: Export templates for LP reporting, ESRS G1, ILPA 3.0, and AIFMD Annex IV requirements.
Actionable recommendations for fund managers in 2026
Decide on the licensing path early: Sub-threshold or fully licensed — institutional fundraising realities usually force the latter.
Treat the Fit-and-Proper package as a living document: Once built, the dataset must be continuously updated — not only when personnel changes occur.
Consolidate screening tooling: Replace fragmented PDF archives with an audit-secure platform. The ROI becomes visible at the latest during the first special audit by BaFin.
Plan for AMLR 2027: Prepare KYC and beneficial owner processes for the new regulation now, not in July 2027.
Keep the EBA-ESMA Joint Guidelines in view: Updates to the guidelines are effectively binding from a supervisory perspective, even if they are formally only guidelines.
AIFM authorization is not a one-time project, but an ongoing capability. Fund managers who structure Fit-and-Proper and governance as a continuous workflow — not as a periodic deadline — build a quality signal to both supervisors and LPs at the same time.
Book a demo and learn how Indicium automates the licensing process and ongoing Fit-and-Proper monitoring for your fund in an audit-proof way.
Further reading — related articles
Nabil El Berr
