Earlier this year, revisions to the European Long-Term Investment Fund (“ELTIF”) framework via Regulation 2023/606/EU (the “ELTIF Regulation”) came into effect across the European Union. The ELTIF Regulation addresses some of the major obstacles that had undermined the attractiveness of the ELTIF product since it was first introduced in 2015, including significantly broadening the scope of the eligible investment universe, reducing certain investment thresholds, and removing unnecessary barriers to participation from retail investors, whilst retaining appropriate protections and diversification rules for investors. This is intended to better position ELTIFs to play their role as part of the Capital Markets Union (“CMU”) and support greater investment in the real economy.

The Central Bank of Ireland (the “Central Bank”) has today, 11 March 2024, published its framework to facilitate the establishment of Irish ELTIFs. Last November, the Central Bank issued a consultation (“CP155”) on a proposed new ELTIF chapter in its AIF Rulebook to support the to support the domestic implementation of the ELTIF Regulation and provide a pathway for ELTIFs seeking authorisation in Ireland. The Central Bank had carried out an assessment of the national framework for ELTIFs and identified the need for a standalone chapter in the Central Bank’s AIF Rulebook that would support its implementation in Ireland.

The Central Bank has now published an updated AIF Rulebook (with a new Chapter 6 on ELTIF Requirements) and the Feedback Statement on CP155. The new AIF Rulebook chapter set outs the specific operational and disclosure requirements that will be applied to ELTIFs as a condition of authorisation. It includes those requirements related to ELTIF-specific restrictions, supervisory, prospectus, and general operational requirements and annual and half-yearly reporting.

Some of the changes made to the ELTIF chapter following the consultation include:-

• Removal of the restriction on acquiring shares carrying voting rights;
• Removal of the proposed rules for ELTIFs that invest in venture capital, development capital and private equity;
• Incorporation of the share class requirements as set out in the Central Bank’s guidance on Share class features of closed-ended QIAIFs;
• Inclusion of provisions to allow the authorisation of ELTIF sub-funds under umbrella AIFs;
• Inclusion of provisions setting out the distinction between closed-ended ELTIFs and those that are open-ended with limited liquidity;
• Removal of the requirements on investment through subsidiaries to ensure there is no overlap with the ELTIF Regulation or duplicative requirements; and
• Extension of the requirements in relation to the establishment of side-pocket share classes for assets that become illiquid or difficult to value, to include assets that may become impaired.

In addition, new application forms and process information to assist applicants applying for authorisation have also been published on the Central Bank’s website.

In a related development, on 6 March 2024 the European Commission issued a Communication on its intention to adopt the draft ELTIF regulatory technical standards (“RTS“) proposed by the European Securities and Markets Authority (“ESMA“) with certain amendments and sent a letter to ESMA on the proposed amendments.  The Commission’s amendments relate to minimum notice period for redemptions, notification of material changes to the redemption policy, liquidity requirements related to standardised notice period requirements, the limitation of liquidity management tools, redemption gates and costs.  We are continuing to track the development of the RTS and wait to see if ESMA amends the draft RTS on the basis of the Commission’s proposed amendments.

For more on ELTIFs, please see our previous briefing here.