Discretionary Management Agreement Template for Germany

The Discretionary Management Agreement is essential for financial institutions providing investment management services in Germany. It is used when a client delegates investment decision-making authority to a professional manager, allowing the manager to make investment decisions without seeking prior approval for each transaction. The document must comply with stringent German regulatory requirements, including the Banking Act (KWG), Securities Trading Act (WpHG), and MiFID II implementation provisions. It typically includes detailed investment guidelines, risk disclosures, reporting obligations, and fee structures. This agreement is particularly important as it establishes the fiduciary relationship between the manager and client while ensuring compliance with German financial services regulations, consumer protection laws, and data protection requirements.

1. Parties: Identification of the asset manager and the client, including regulatory status and contact details

2. Background: Context of the agreement and confirmation of client classification (retail/professional)

3. Definitions: Key terms used throughout the agreement

4. Appointment and Scope of Authority: Formal appointment of the manager and extent of discretionary authority

5. Investment Objectives and Strategy: Agreed investment objectives, strategy, and any restrictions

6. Investment Guidelines: Specific parameters for investments, including asset classes, geographical restrictions, and risk limits

7. Manager's Obligations: Core obligations including duty of care, compliance with regulations, and specific service commitments

8. Client's Obligations: Client responsibilities including information provision and maintaining account funding

9. Fees and Expenses: Management fees, calculation methods, payment terms, and other applicable charges

10. Reporting and Valuations: Frequency and content of reports, valuation methods

11. Risk Disclosures: Mandatory risk warnings and acknowledgments

12. Conflicts of Interest: Disclosure and management of potential conflicts

13. Term and Termination: Duration, termination rights and procedures

14. Liability and Indemnification: Extent of manager's liability and any indemnification provisions

15. Data Protection: GDPR compliance and data handling procedures

16. Anti-Money Laundering: AML compliance requirements and procedures

17. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction