knowledge 3 November 2023 |

Central Bank consults on ELTIF 2.0

On 1 November 2023, the Central Bank of Ireland (the “Central Bank”) issued its eagerly awaited consultation on amendments to the regulatory framework for European long-term investment funds (“ELTIF”) framework, also known as “ELTIF 2.0” (the “Consultation”) (here). CP155 confirms that the Central Bank intends to add a new chapter dedicated to ELTIFs to the AIF Rulebook. The consultation process will run until 13 December 2023.

Background

ELTIFs are EU alternative investment funds, managed by alternative investment fund managers, that invest in long-term investments, such as social and transport infrastructure projects, real estate and SMEs and 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. However, since the adoption of the ELTIF framework in 2015 only a few ELTIFs have been launched. The European Commission (the “Commission”) launched a public consultation to understand the reasons behind the slow uptake in ELTIFs. Based on this consultation, the Commission noted that fund managers broadly agreed that the key deficiencies of ELTIFs lay in the limited scope of eligible assets and investments, as well as the barriers investors faced in accessing ELTIFs.

On this basis, the Commission proposed revisions to the ELTIF framework in the form of an amending Regulation on 25 November 2021. This amending Regulation entered into force on 9 April 2023 and will apply from 10 January 2024 (here).

In May of this year, the European Securities and Markets Authority also consulted on regulatory technical standards (“RTS”) underpinning ELTIF 2.0 (here). The RTS will specify the detailed application of ELTIF 2.0 and it is expected that the final RTS will apply at the same time as ELTIF 2.0, that is 10 January 2024.

In August 2023, the Central Bank identified the Consultation as one of the steps it is taking in relation to facilitating domestic integration of ELTIF 2.0 to bolster Ireland’s attractiveness as a location for the establishment of ELTIFs (see further our briefing here).

For more information on the key aspects of ELTIF 2.0 please see our briefing (here).

The Consultation

The consultation paper, CP155, entitled ‘Consultation on ELTIF chapter in the AIF Rulebook’ confirms that a new ELTIF chapter will be introduced as Chapter 6 to the AIF Rulebook (a draft of which is included as Annex II to the Consultation).

The new Chapter 6 will comprise:

  1. Part I which sets out:
    1. ELTIF restrictions;
    2. supervisory requirements;
    3. prospectus requirements;
    4. general operational requirements; and
    5. requirements regarding financial reports; and
  2. Part II which deals with requirements related to the marketing of ELTIFs to retail investors.

The Consultation invites feedback on 6 specific questions with respect to the Central Bank’s proposed rules under the new ELTIF chapter.

Next Steps

The Consultation will remain open for 6 weeks from 1 November 2023 to 13 December 2023. It is anticipated that the Central Bank will provide further insight into the authorisation process that will be applicable to ELTIFs in due course.

Should you have any observations or comments you would like reflected in feedback to the Consultation, please contact your usual contact at McCann FitzGerald LLP. Through our membership of Irish Funds’ ELTIF Working Group, we will also be involved in preparing the broader industry response to the Consultation.

Also contributed to by Ailbhe Marsh

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.