On 1 November 2023, in a welcome development, the Central Bank of Ireland (the "Central Bank") published Consultation Paper 155 on the proposed new European Long-Term Investment Funds ("ELTIF") chapter in the Central Bank's AIF Rulebook (the "Consultation Paper"). The Central Bank also updated its AIFMD Q&A (48th edition) to include a new Q&A on the ability of investment limited partnerships ("ILPs") to avail of an exemption from the European Union (Qualifying Partnerships: Accounting and Auditing) Regulations 2019 (the "Qualifying Partnership Regulation") and to extend an existing Q&A regarding an exemption from the loan origination regime for qualifying investor AIF ("QIAIF") loans to co-investment vehicles.

Consultation Paper 155 on the ELTIF

As previously indicated by the Central Bank, the Irish ELTIF will be a standalone product and therefore, it will not need to be separately authorised as a retail investor AIF ("RIAIF") or as a QIAIF.

The Consultation Paper proposes details of a new ELTIF chapter in the Central Bank's AIF Rulebook to support the establishment ELTIFs in Ireland, with six sections covering the following:

1. ELTIF restrictions and transparency requirements;
2. Supervisory requirements and provisions with respect to an ELTIF's operational policies and processes;
3. Prospectus disclosure requirements for ELTIFs;
4. General operational requirements, which include financial resources, dealing and distribution requirements of an ELTIF;
5. Annual and half-yearly reports disclosure requirements to facilitate investor protection and transparency in respect of financial reporting; and
6. Provisions in respect of marketing of ELTIFs not authorised by the Central Bank to retail investors in Ireland.

The Central Bank has asked, as part of the Consultation Paper, whether stakeholders agree with the proposed rules.

The consultation is open for six weeks until 13 December 2023.

Next steps

The Consultation Paper marks the next step in Ireland's preparation for the revised European Long-Term Investment Funds Regulation (EU) 2023/606 ("ELTIF 2.0") which will apply across the European Union from 10 January 2024. Our previous advisory on the progress towards implementation of the ELTIF 2.0 is available here. The proposed enhancements to the AIF Rulebook to reflect the ELTIF 2.0 framework presents opportunities for Ireland and solidifies Ireland as a location for private asset funds.

Walkers will continue to advise on ELTIF developments as they occur.

Update to the AIFMD Q&A

The Central Bank's AIFMD Q&A has been updated to include a new Q&A under ID 1156. ID 1156 sets out details of an exemption available for ILPs from the provisions of the Qualifying Partnership Regulation, where its sole business of the ILP is the investment of its funds in property with the aim of spreading investment risk and giving its partners the benefit of the management of its assets.

The Central Bank confirms that a general partner of a proposed new ILP wishing to obtain such an exemption should:

1. Ensure that the constitutional document of the ILP provides that its sole business is the investment of its funds in property with the aim of spreading investment risk and giving its partners the benefit of the management of its assets;
2. In its letter of application for authorisation confirm that the constitutional document of the ILP provides for (i) above and specifically seek an exemption from the requirements of the Qualifying Partnership Regulation.
3. In the ILP's letter of application for authorisation, confirm the basis on which financial statements of the ILP will be prepared;
4. Disclose that the exemption has been obtained in its prospectus documentation; and
5. Disclose the basis on which financial statements of the ILP will be prepared in its prospectus documentation.

General partners of existing ILPs wishing to avail of the exemption are advised to contact fundsauthorisation@centralbank.ie.

In addition, the Central Bank has also revised ID 1084. Previously, there had been an exemption in ID 1084 from the loan origination regime ("L-QIAIFs") for QIAIFs granting loans to their wholly-owned subsidiaries. ID 1084 has been revised to extend this exemption to a co-investment vehicle in which the QIAIF has a majority interest in provided that such lending must be ancillary to the QIAIFs predominant investment strategy.

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