Irish Funds Advocacy Update: ELTIF 2.0

The European Long Term Investment Fund ("ELTIF") has recently undergone significant enhancements through the coming into force of Regulation 2023/606/EU (the "ELTIF 2.0 Regulation"). Irish Funds believe that these reforms will allow the ELTIF to play a key role in facilitating the raising and channelling of capital towards long-term investments across the EU for the benefit of businesses, investors and the wider economy.

Over the last 12 months, Irish Funds has sought to pro-actively engage with domestic policymakers to ensure the new Irish ELTIF 2.0 regime would meet both member and investor needs. This extensive programme of engagement involved multiple detailed submissions to the Central Bank, the Department of Finance and the Minister of State with responsibility for Financial Services, Jennifer Carroll MacNeill TD. In addition to the submissions, multiple meetings took place during this period with these stakeholders, including a series of policy and authorisation workshops in December and January, during which the key areas of focus and concern of our members were conveyed in order to ensure that ELTIF 2.0 would be delivered successfully in Ireland.

Key Areas of Focus

The key areas of focus for our members included the need for a standalone ELTIF chapter of the AIF Rulebook facilitating the authorisation of ELTIFs in a manner which avoided gold plating, providing certainty around authorisation timeframes, enabling the use of the existing 24 hour authorisation processes for qualifying investor ELTIFs, allowing for the use of umbrella vehicles which could incorporate ELTIF and non-ELTIF sub-funds in the same umbrella and the extension of existing guidance and mechanisms to the ELTIF which are currently limited to qualifying investor closed-ended funds. In addition, Irish Funds was instrumental in advocating for an expedited consultation process to consider these changes (CP155) and this was accommodated by the Central Bank through the running of a short consultation period in late 2023.   

This engagement culminated in a very recent meeting at which the Central Bank confirmed that it would be incorporating all material proposals received in the consultation response to CP155 from Irish Funds. The Central Bank also welcomed the very constructive feedback and engagement with Irish Funds during the process, a sentiment that Irish Funds would also like to echo in terms of the Central Bank's approach to the ELTIF.

Central Bank Meeting Talking Points

At this meeting, the Central Bank outlined its proposed approach for a new Irish ELTIF regime. Irish Funds believes these updates will meet the needs of both investors and managers, making Ireland a very attractive jurisdiction for the establishment of ELTIFs.  

Some of the key elements of the proposed ELTIF chapter of the AIF Rulebook (as confirmed by the Central Bank) include:

• The Central Bank affirmed its intention to avoid any gold-plating of the Irish ELTIF regime;

• Subject to the conclusion of its internal review and approval of the new ELTIF chapter, it has been recommended to permit the use of umbrella structures to establish ELTIF sub-funds, with it being possible to establish ELTIF and non-ELTIF sub-funds in the same umbrella. In this regard, existing or new RIAIF and QIAIF umbrellas would be able to incorporate retail or professional only ELTIFs and non-ELTIF sub-funds subject to certain requirements;

• The QIAIF 24-hour authorisation framework will be available for ELTIFs which are offered to only professional investors as defined in the EU Regulation or those offered to qualifying investors as defined in the AIF Rulebook;

• Where an ELTIF is distributed to qualifying investors as defined in the AIF Rulebook, and that ELTIF is not restricted to professional investors only, the retail requirements as set out in the EU Regulation will be applied in the interests of ensuring appropriate investor protection;

• Various other enhancements to the existing consultation proposals will provide greater flexibility around the adoption or disapplication of certain existing AIF Rulebook requirements;

• The finalised AIF rulebook (with the update ELTIF chapter) is expected to be published early March (with updated ELTIF application forms being published in tandem);

• Following the publication of the updated AIF rulebook and application forms, the Central Bank will be in a position to authorise ELTIFs.   

Going Forward

Irish Funds will continue to engage on behalf of members with the Central Bank to ensure the successful operationalisation of the new Irish ELTIF regime and will keep members updated on progress made.