On 11 March 2024, the Central Bank of Ireland (the "Central Bank") reached a significant milestone in finalising its framework for authorisations under the revised European Long-Term Investment Funds Regulation (EU) 2023/606 ("ELTIF 2.0"). The Central Bank has published its Feedback Statement and its finalised ELTIF chapter contained in the latest version of the AIF Rulebook, alongside updating its website with details of the authorisation process and the Central Bank authorisation forms for ELTIF applications.
In another significant development the European Commission (the "Commission") published its intention to adopt the draft ELTIF regulatory technical standards containing revised proposals affording significantly more flexibility to managers in terms of liquidity arrangements. The Commission intends to adopt the Level 2 standards once its concerns are taken into account, the necessary modifications are made by ESMA and re-submitted to the Commission, which is sure to be a welcome development for managers and the funds industry.
Following industry engagement, the feedback statement marks a softening of the Central Bank’s original position set out in the consultation paper 155, as had been sign-posted to the funds industry earlier in the year and as discussed on our recent Irish ELTIF 2.0 webinar.
We set out below a summary of the key points contained in the CP155 feedback statement and the ELTIF chapter to the Rulebook.
The Central Bank has provided definitions for three separate categories of Irish ELTIF:
(i) professional investor ELTIFs;
(ii) qualified investor ELTIFs; and
(iii) retail investor ELTIFs.
The Central Bank will permit the authorisation of ELTIF sub-funds under a standalone ELTIF product and under umbrella AIFs, it thereby being possible to establish ELTIF and non-ELTIF sub-funds in the same umbrella. In this regard a Retail Investor AIF umbrella ("RIAIF") may establish a retail investor ELTIF sub-fund and a Qualifying Investor AIF ("QIAIF") umbrella may establish a professional investor ELTIF sub-fund or qualified investor ELTIF sub-fund.
The current QIAIF 24-hour authorisation framework will be available to both professional investor ELTIFs and qualified investor ELTIFs. In the case of qualified investor ELTIFs which are not restricted to professional investors only, the retail requirements and limits as set out in ELTIF 2.0 will be applied in the interests of ensuring appropriate investor protection.
Reflecting the structure and operationalisation of the ELTIF, the Central Bank has incorporated into the ELTIF chapter the Central Bank’s guidance on share class features of closed-ended QIAIFs, thereby allowing for the allocation of the returns of specific assets to an ELTIF share class and/or participation by a share class in the ELTIF other than on a pro rata basis.
The final ELTIF chapter also dispenses with a number of requirements contained in the original CP155 proposals to avoid an overlap with the ELTIF 2.0 or the imposition of duplicative requirements. These deletions include the Central Bank's requirements in relation to investment through subsidiaries, restriction on acquiring shares carrying voting rights as well as certain rules relating to ELTIFs acquiring real estate. The Central Bank has also removed specific requirements relating to marketing to retail investors in Part II of the original ELTIF chapter acknowledging that the cross-border requirements within ELTIF 2.0 already apply.
Walkers' Asset Management and Investment Funds team are digesting the full detail of the Central Bank's ELTIF framework and are preparing a detailed advisory on the content of today's publications.
Next steps
The asset management industry in Ireland is keenly focused on maximising the opportunities presented by the ELTIF 2.0 and the Irish ELTIF framework. Following the publication of the final ELTIF chapter of the updated AIF Rulebook alongside the detail around the authorisation forms and processes under each category of Irish ELTIF, the Central Bank is now in a position to receive submissions from applicants pursuant to ELTIF 2.0.
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