European Long-Term Investment Funds (“ELTIFs”) are EU alternative investment funds, managed by alternative investment fund managers (“AIFMs”) that invest in long-term investments, such as transport and social infrastructure projects, real estate, and small and medium-sized enterprises. Currently, ELTIFs are the only type of funds dedicated to long-term investments that can be distributed on a cross-border basis to both professional and retail investors
On November 1, 2023, the Central Bank of Ireland (“Central Bank”) commenced an industry-welcomed consultation process on amendments to the regulatory framework for ELTIFs also known as “ELTIF 2.0.”
Consultation Paper 155 – Consultation on ELTIF chapter in the AIF Rulebook (“CP155”) confirms that the Central Bank intends to add a new chapter dedicated to ELTIFs to their Alternative Investment Funds (“AIF”) Rulebook. CP155 outlines the proposed domestic supervisory and reporting framework which will apply to Irish domiciled ELTIFs.
The Central Bank’s AIF Rulebook was introduced in July 2013 to support the implementation of the Alternative Investment Fund Managers Directive (“AIFMD”). The AIF Rulebook consolidated into a single document the conditions, that the Central Bank imposes on authorized AIFs, their managers (AIFMs or AIF management companies) and depositaries. The ELTIF Chapter is proposed to be introduced as Chapter 6 to the AIF Rulebook.
The Central Bank is seeking the views of stakeholders on the proposed chapter and the consultation process will remain open until December 13, 2023. The Central Bank has previously indicated that the final regime applicable to Irish-domiciled ELTIFs will be from the effective date of the revised ELTIF Regulation—ELTIF 2.0—being January 10, 2024.
The process is seen by the funds industry as confirmation that Ireland will very shortly be in a position to offer a fully regulated ELTIF product complying with the revised ELTIF Regulation using a variety of legal structures that will benefit from the same tax treatment currently available to Irish-domiciled regulated funds. ELTIFs will also benefit from a similar supervisory framework to that of Irish-domiciled Qualifying Investor Alternative Investment Funds (QIAIFs).
Some of the key clarifications addressed by CP155 are:
- The Central Bank does not propose any additional product-specific rules on Irish-domiciled ELTIFs. Product-specific rules on eligible assets, portfolio composition, diversification and liquidity as well as other requirements will be those set down in the ELTIF Regulation and its related acts.
- An Irish-domiciled ELTIF can be established using a variety of legal structures, including an ICAV, a PLC, an ILP, a common contractual fund or a unit trust.
- An Irish-domiciled ELTIF can be established as an umbrella fund with segregated liability between sub-funds to facilitate different investment strategies or investor types.
- The Irish-domiciled ELTIF will benefit from the same tax treatment currently applicable to Irish-domiciled regulated funds.
- There are no plans by the Central Bank to impose any additional requirements where an Irish-domiciled ELTIF is marketed to retail investors outside Ireland.
We eagerly await further details from the Central Bank on the authorization process for Irish-domiciled ELTIFs, as well as the outcome of the European Securities and Markets Authority (“ESMA”) regulatory technical standards review (“RTS”) underpinning ELTIF 2.0. The RTS will specify the detailed application of ELTIF 2.0 and it is expected that the final RTS will apply at the same date as ELTIF 2.0.
SS&C enables alternative asset managers and investors to scale and focus on core competencies while streamlining and creating efficiencies across investment and fund operations. We provide global operations services, fund administration and technology to today’s largest funds as well as deep experience supporting new and emerging fund managers. We cover all asset classes including private equity, private credit and real assets and we have industry-leading experience across all key European locations. Whether you’re looking for support with the ELTIF in Ireland or Luxembourg, get in touch with us to discover how we can help.
Written by Adrian Beattie