In parallel with the well-publicised enhancements to the European Long Term Investment Fund ("ELTIF") regime through Regulation 2023/606/EU (the "ELTIF 2.0 Regulation"), the Central Bank of Ireland (the “Central Bank”) has been working with industry to lay the groundwork for ELTIFs in Ireland, with a view to ensuring that Ireland is an attractive jurisdiction for the establishment of ELTIFs.
To that end the Central Bank published a consultation paper in late 2023 to add a new standalone chapter dedicated to ELTIFs in its AIF Rulebook (the “Consultation”). Dechert, through its membership of the Irish Funds Industry Association ("Irish Funds”), worked with industry to respond to the Consultation and ensure that the new Irish ELTIF 2.0 regime meets both manager and investor needs and expectations.
The key areas of focus included:
- Facilitating the authorisation of ELTIFs in a manner which avoided gold-plating.
- Providing certainty around authorisation timeframes.
- Enabling the use of the existing 24-hour authorisation processes for qualifying investor ELTIFs.
- Allowing for the use of umbrella vehicles which could incorporate ELTIF and non-ELTIF sub-funds in the same umbrella.
- The extension of existing guidance and mechanisms to the ELTIF which are currently limited to qualifying investor closed-ended funds.
Irish Funds published an Industry Update on 29 January 2024, revealing that the Central Bank would be incorporating all material proposals made in Irish Fund’s response to the Consultation in the ELTIF chapter of its AIF Rulebook. Some of the key developments arising from this industry engagement, as confirmed by the Central Bank, include:
- The Central Bank affirmed its intention to avoid any gold-plating of the Irish ELTIF regime. As such, we expect that the existing Central Bank rules around significant influence and subsidiaries that cause some difficulties for certain types of Irish funds, among others, will not apply to ELTIFs.
- That subject to the conclusion of the Central Bank’s internal review, it will permit the use of umbrella structures to establish ELTIF sub-funds with it being possible to establish ELTIF and non-ELTIF sub-funds in the same umbrella.
- The QIAIF 24-hour authorisation framework will be available for ELTIFs that are offered to only professional investors, as defined in the ELTIF 2.0 Regulation, or those offered to qualifying investors, as defined in the AIF Rulebook.1
- Various other enhancements to the Consultation proposals that will provide greater flexibility around the adoption or disapplication of certain existing AIF Rulebook requirements.
The finalised AIF Rulebook, with the updated ELTIF chapter, is expected to be published by early March, with updated ELTIF application forms being published in tandem. Following the publication of the updated AIF Rulebook and the accompanying application forms, the Central Bank will be in a position to authorise the first Irish ELTIFs.
Footnotes
1) Where an ELTIF is distributed to qualifying investors, as defined in the AIF Rulebook, and that ELTIF is not restricted to professional investors only, the retail requirements as set out in the ELTIF 2.0 Regulation will be applied in the interests of ensuring appropriate investor protection.
