Subject matter and objective
1. This Regulation lays down uniform rules on the authorisation, investment policies and operating conditions of EU alternative investment funds (EU AIFs) or compartments of EU AIFs that are marketed in the Union as European long-term investment funds (ELTIFs).
2. The objective of this Regulation is to raise and channel capital towards European long-term investments in the real economy, in line with the Union objective of smart, sustainable and inclusive growth.
3. Member States shall not add any further requirements in the field covered by this Regulation.
Definitions
For the purposes of this Regulation, the following definitions apply:
(1)
‘capital’ means aggregate capital contributions and uncalled committed capital, calculated on the basis of amounts investible after deduction of all fees, charges and expenses that are directly or indirectly borne by investors;
(2)
‘professional investor’ means an investor which is considered to be a professional client, or may, on request, be treated as a professional client in accordance with Annex II to Directive 2014/65/EU;
(3)
‘retail investor’ means an investor who is not a professional investor;
(4)
‘equity’ means ownership interest in a qualifying portfolio undertaking, represented by the shares or other forms of participation in the capital of the qualifying portfolio undertaking issued to its investors;
(5)
‘quasi-equity’ means any type of financing instrument where the return on the instrument is linked to the profit or loss of the qualifying portfolio undertaking and where the repayment of the instrument in the event of default is not fully secured;
(6)
‘real asset’ means an asset that has value due to its substance and properties and may provide returns, including infrastructure and other assets that give rise to economic or social benefit, such as education, counselling, research and development, and including commercial property or housing only where they are integral to, or an ancillary element of, a long-term investment project that contributes to the Union objective of smart, sustainable and inclusive growth;
(7)
‘financial undertaking’ means any of the following:
(a)
a credit institution as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council ( 17 ) ;
(b)
an investment firm as defined in point (1) of Article 4(1) of Directive 2014/65/EU;
(c)
an insurance undertaking as defined in point (1) of Article 13 of Directive 2009/138/EC of the European Parliament and of the Council ( 18 ) ;
(d)
a financial holding company as defined in point (20) of Article 4(1) of Regulation (EU) No 575/2013;
(e)
a mixed-activity holding company as defined in point (22) of Article 4(1) of Regulation (EU) No 575/2013;
(f)
a management company as defined in point (b) of Article 2(1) of Directive 2009/65/EC;
(g)
an AIFM as defined in point (b) of Article 4(1) of Directive 2011/61/EU.
(8)
‘EU AIF’ means EU AIF as defined in point (k) of Article 4(1) of Directive 2011/61/EU;
(9)
‘EU AIFM’ means EU AIFM as defined in point (l) of Article 4(1) of Directive 2011/61/EU;
(10)
‘competent authority of the ELTIF’ means the competent authority of the EU AIF within the meaning of point (h) of Article 4(1) of Directive 2011/61/EU;
(11)
‘home Member State of the ELTIF’ means the Member State where the ELTIF is authorised;
(12)
‘manager of the ELTIF’ means the authorised EU AIFM approved to manage an ELTIF, or the internally managed ELTIF where the legal form of the ELTIF permits internal management and where no external AIFM has been appointed;
(13)
‘competent authority of the manager of the ELTIF’ means the competent authority of the home Member State of the AIFM within the meaning of point (q) of Article 4(1) of Directive 2011/61/EU;
(14)
‘securities lending’ and ‘securities borrowing’ mean any transaction in which a counterparty transfers securities subject to a commitment that the borrower will return equivalent securities at some future date or when requested to do so by the transferor, that transaction being considered as securities lending for the counterparty transferring the securities and being considered as securities borrowing for the counterparty to which they are transferred;
(15)
‘repurchase transaction’ means a repurchase transaction as defined in point (83) of Article 4(1) of Regulation (EU) No 575/2013;
(16)
‘financial instrument’ means a financial instrument as specified in Section C of Annex I to Directive 2014/65/EU;
(17)
‘short selling’ means an activity as defined in point (b) of Article 2(1) of Regulation (EU) No 236/2012 of the European Parliament and of the Council ( 19 ) ;
(18)
‘regulated market’ means a regulated market as defined in point (21) of Article 4(1) of Directive 2014/65/EU;
(19)
‘multilateral trading facility’ means a multilateral trading facility as defined in point (22) of Article 4(1) of Directive 2014/65/EU.
Authorisation and central public register
1. An ELTIF may only be marketed in the Union when it has been authorised in accordance with this Regulation. Authorisation as an ELTIF shall be valid for all Member States.
2. Only EU AIFs shall be eligible to apply for and to be granted authorisation as an ELTIF.
3. The competent authorities of the ELTIFs shall, on a quarterly basis, inform ESMA of authorisations granted or withdrawn pursuant to this Regulation.
ESMA shall keep a central public register identifying each ELTIF authorised under this Regulation, the manager of the ELTIF and the competent authority of the ELTIF. The register shall be made available in electronic format.
Designation and prohibition on transformation
1. The designation ‘ELTIF’ or ‘European long-term investment fund’ in relation to a collective investment undertaking, or the units or shares it issues, may only be used where the collective investment undertaking has been authorised in accordance with this Regulation.
2. ELTIFs shall be prohibited from transforming themselves into collective investment undertakings that are not covered by this Regulation.
Application for authorisation as an ELTIF
1. An application for authorisation as an ELTIF shall be made to the competent authority of the ELTIF.
The application for authorisation as an ELTIF shall include the following:
(a)
the fund rules or instruments of incorporation;
(b)
information on the identity of the proposed manager of the ELTIF and its current and previous fund management experience and history;
(c)
information on the identity of the depositary;
(d)
a description of the information to be made available to investors, including a description of the arrangements for dealing with complaints submitted by retail investors.
The competent authority of the ELTIF may request clarification and information as regards the documentation and information provided under the second subparagraph.
2. Only an EU AIFM authorised under Directive 2011/61/EU may apply to the competent authority of the ELTIF for approval to manage an ELTIF for which authorisation is requested in accordance with paragraph 1. In the event that the competent authority of the ELTIF is the same as the competent authority of the EU AIFM, such an application for approval shall refer to the documentation submitted for authorisation under Directive 2011/61/EU.
An application for approval to manage an ELTIF shall include the following:
(a)
the written agreement with the depositary;
(b)
information on delegation arrangements regarding portfolio and risk management and administration with regard to the ELTIF;
(c)
information about the investment strategies, the risk profile and other characteristics of AIFs that the EU AIFM is authorised to manage.
The competent authority of the ELTIF may ask the competent authority of the EU AIFM for clarification and information as regards the documentation referred to in the second subparagraph or an attestation as to whether ELTIFs fall within the scope of the EU AIFM's authorisation to manage AIFs. The competent authority of the EU AIFM shall provide an answer within 10 working days from the date on which it received the request submitted by the competent authority of the ELTIF.
3. Applicants shall be informed within two months from the date of submission of a complete application whether authorisation as an ELTIF, including approval for the EU AIFM to manage the ELTIF, has been granted.
4. Any subsequent modifications to the documentation referred to in paragraphs 1 and 2 shall be immediately notified to the competent authority of the ELTIF.
5. By way of derogation from paragraphs 1 and 2, an EU AIF the legal form of which permits internal management and the governing body of which chooses not to appoint an external AIFM shall apply simultaneously for authorisation as an ELTIF under this Regulation and as an AIFM under Directive 2011/61/EU.
Without prejudice to Article 7 of Directive 2011/61/EU, the application for authorisation as an internally managed ELTIF shall include the following:
(a)
the fund rules or instruments of incorporation;
(b)
a description of the information to be made available to investors, including a description of the arrangements for dealing with complaints submitted by retail investors.
By way of derogation from paragraph 3, an internally managed EU AIF shall be informed within three months from the date of submission of a complete application whether authorisation as an ELTIF has been granted.
Conditions for granting authorisation as an ELTIF
1. An EU AIF shall be authorised as an ELTIF only where its competent authority:
(a)
is satisfied that the EU AIF is able to meet all the requirements of this Regulation;
(b)
has approved the application of an EU AIFM authorised in accordance with Directive 2011/61/EU to manage the ELTIF, the fund rules or instruments of incorporation, and the choice of the depositary.
2. In the event that an EU AIF makes an application pursuant to Article 5(5) of this Regulation, the competent authority shall authorise the EU AIF only where it is satisfied that the EU AIF complies with both the requirements of this Regulation and of Directive 2011/61/EU regarding the authorisation of an EU AIFM.
3. The competent authority of the ELTIF may refuse to approve the application of an EU AIFM to manage an ELTIF only where the EU AIFM:
(a)
does not comply with this Regulation;
(b)
does not comply with Directive 2011/61/EU;
(c)
is not authorised by its competent authority to manage AIFs that follow investment strategies of the type covered by this Regulation; or
(d)
has not provided the documentation referred to in Article 5(2), or any clarification or information requested thereunder.
Before refusing to approve an application, the competent authority of the ELTIF shall consult the competent authority of the EU AIFM.
4. The competent authority of the ELTIF shall not grant authorisation as an ELTIF to the EU AIF that has made an application for authorisation if it is legally prevented from marketing its units or shares in its home Member State.
5. The competent authority of the ELTIF shall communicate to the EU AIF the reason for its refusal to grant authorisation as an ELTIF.
6. An application which has been rejected under this Chapter shall not be resubmitted to the competent authorities of other Member States.
7. Authorisation as an ELTIF shall not be subject to a requirement that the ELTIF be managed by an EU AIFM authorised in the home Member State of the ELTIF or that the EU AIFM pursue or delegate any activities in the home Member State of the ELTIF.
Applicable rules and liability
1. An ELTIF shall comply at all times with the provisions of this Regulation.
2. An ELTIF and the manager of the ELTIF shall comply at all times with Directive 2011/61/EU.
3. The manager of the ELTIF shall be responsible for ensuring compliance with this Regulation and shall also be liable in accordance with Directive 2011/61/EU for any infringements of this Regulation. The manager of the ELTIF shall also be liable for losses or damages resulting from non-compliance with this Regulation.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
