Fund Risk Limitation Act introduces new rules for funds

On 16 April 2026, key provisions of the German Fund Risk Limitation Act (FRiG) came into force. Its primary aim is to limit risks arising from investment funds and to transpose the European requirements of the AIFMD II Directive into German law.

The FRiG will significantly tighten regulatory requirements and pose considerable challenges for fund management companies.

The provisions of the AIFMD II Directive regarding risk and liquidity management necessitate the implementation of additional governance processes and control mechanisms. Furthermore, new requirements arise from the regulation of loan granting by funds, extended reporting and transparency obligations, stricter regulations for outsourcing, the introduction of new instruments such as ‘side pockets’, and an overall increase in documentation and governance requirements.

While the new rules on cross-border depositary appointments for AIFs will increase flexibility for market participants, they also impose additional requirements in terms of cross-border supervision and compliance. Furthermore, there are uncertainties regarding their practical implementation due to new and, in some cases, vague legal concepts.

For investment compliance functions, these changes represent a shift from a primarily supervisory role to an integrated, process-oriented role, with increased requirements in terms of resources, IT and coordination.

In particular, the complexity of new risk management, reporting and governance obligations requires specialist expertise and a close integration of legal, procedural and technical skills. Find out how we, as a consultancy specialising in investment compliance, can support you in implementing these requirements. We look forward to hearing from you.