Legal provisions of COM(2021)722 - Amendment of Regulation (EU) 2015/760 as regards fund rules and requirements pertaining to i.a. the authorisation, investment policies of European long-term investment funds

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dossier COM(2021)722 - Amendment of Regulation (EU) 2015/760 as regards fund rules and requirements pertaining to i.a. the authorisation, ...
document COM(2021)722 EN
date March 15, 2023

Contents

Article 1

Regulation (EU) 2015/760 is amended as follows:

(1) in Article 1, paragraph 2 is replaced by the following:

‘2.    The objective of this Regulation is to facilitate the raising and channelling of capital towards long-term investments in the real economy, in line with the Union objective of smart, sustainable and inclusive growth.’;

(2) Article 2 is amended as follows:

(a)point (6) is replaced by the following:

‘(6)    ‘real asset’ means an asset that has an intrinsic value due to its substance and properties;’; 

(b)the following point (14a) is inserted:

 ‘(14a)    ‘simple, transparent and standardised securitisation’ means a securitisation that complies with the conditions set out in Article 18 of Regulation (EU) 2017/2402 of the European Parliament and of the Council*1’;

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*1Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, p. 35).’;

(c)the following point (14b) is inserted:

‘(6)    ‘group’ means a group as defined in Article 2(11) of Directive 2013/34/EU of the European Parliament and the Council*2’;

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*2Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings (OJ L 182, 29.6.2013, p.19).’;

(d)the following points (20) and (21) are added:

‘(20)    ‘feeder ELTIF’ means an ELTIF, or an investment compartment thereof, which has been approved to invest at least 85 % of its assets in units of another ELTIF or investment compartment of an ELTIF;

(21) ‘master ELTIF’ means an ELTIF, or an investment compartment thereof, in which another ELTIF invests at least 85 % of its assets in units of another ELTIF or investment compartment of an ELTIF.’

(3) in Article 3, paragraph 3 is replaced by the following:

‘3.    The competent authorities of the ELTIFs shall, on a monthly basis, inform ESMA of authorisations granted or withdrawn pursuant to this Regulation and of any changes to the information about an ELTIF that is set out in the central public register referred to in the second subparagraph. 

ESMA shall keep an up-to-date central public register identifying for each ELTIF authorised under this Regulation:

(a)the Legal Entity Identifier (LEI) and national code identifier of that ELTIF, where available;

(b)the name of the manager of the ELTIF, and the address and the LEI of that manager;

(c)the ISIN codes of the ELTIF and each separate share or unit class, where available;

(d)the LEI of the master fund, where available;

(e)the LEI of the feeder funds, where available;

(f)the competent authority of the ELTIF and the home Member State of that ELTIF;

(g)the Member States where the ELTIF is marketed;

(h)whether the ELTIF can be marketed to retail investors or can solely be marketed to professional investors;

(i)the date of the authorisation of the ELTIF;

(j)the date on which the marketing of the ELTIF has commenced;

(k)up-to-date links to the ELTIF documentation, including to the rules or instruments of incorporation of the ELTIF, the annual reports, the prospectus and, where available, the Key Information Document;

(l)the date of the last update by ESMA of the information about the ELTIF.

The central public register shall be made available in electronic format.’;

(4) Article 5 is amended as follows:

(a)in paragraph 1, the second subparagraph is replaced by the following:

‘The application for authorisation as an ELTIF shall contain all of the following:

(a)the fund rules or instruments of incorporation;

(b)the name of the proposed manager of the ELTIF;

(c)the name of the depositary and, where requested by the competent authority for ELTIF’s marketed to retail investors, the written agreement with the depositary;

(d)where the ELTIF is intended to be marketed to retail investors, 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;

(e)where applicable, the following information on the master-feeder structure of the ELTIF:

(i)a declaration that the feeder ELTIF is a feeder of the master ELTIF;

(ii)the fund rules or instruments of incorporation of the master ELTIF and the agreement between the feeder and the master ELTIF referred or the internal rules on the conduct of business referred to in Article 29(6);

(iii)where the master ELTIF and the feeder ELTIF have different depositaries, the information-sharing agreement referred to in Article 29(7), ;

(iv)where the feeder ELTIF is established in a Member State other than the home Member State of the master ELTIF, an attestation by the competent authorities of the home Member State of the master ELTIF that the master ELTIF is an ELTIF provided by the feeder ELTIF.’;

(b)paragraph 3 is replaced by the following:

‘3.    Applicants shall be informed within two months from the date of submission of a complete application whether authorisation as an ELTIF has been granted. Authorisation shall not be subject either to a requirement that the ELTIF be managed by an AIFM having its registered office in the ELTIF home Member State or that the AIFM pursue or delegate any activities in the ELTIF home Member State.’;

(c)in paragraph 5, point (b) is replaced by the following:

‘(b)    where the ELTIF is intended to be marketed to retail investors, 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.’;

(5) Article 10 is replaced by the following:

‘Article 10

Eligible investment assets

1. An asset as referred to in Article 9(1), point (a), shall only be eligible for investment by an ELTIF where it falls into one of the following categories: 

(a)equity or quasi-equity instruments which have been:

(i)issued by a qualifying portfolio undertaking as referred to in Article 11(1) and acquired by the ELTIF from that qualifying portfolio undertaking or from a third party via the secondary market;

(ii)issued by a qualifying portfolio undertaking as referred to in Article 11(1) in exchange for an equity or quasi-equity instrument previously acquired by the ELTIF from that qualifying portfolio undertaking or from a third party via the secondary market;

(iii)issued by an undertaking in which a qualifying portfolio undertaking as referred to in Article 11(1) holds a capital participation in exchange for an equity or quasi-equity instrument acquired by the ELTIF in accordance with points (i) or (ii) of this paragraph;

(b)debt instruments issued by a qualifying portfolio undertaking as referred to in Article 11(1);

(c)loans granted by the ELTIF to a qualifying portfolio undertaking as referred to in Article 11(1) with a maturity that does not exceed the life of the ELTIF;

(d)units or shares of one or several other ELTIFs, EuVECAs, EuSEFs, UCITS and EU AIFs managed by EU AIFM provided that those ELTIFs, EuVECAs, EuSEFs¸ UCITS and EU AIFs invest in eligible investments as referred to in Article 9(1) and (2) and have not themselves invested more than 10% of their assets in any other collective investment undertaking.

(e)real assets with a value of at least EUR 1 000 000 or its equivalent in the currency in which, and at the time when, the expenditure is incurred;

(f)simple, transparent and standardised securitisations where the underlying exposures correspond to one of the following categories:

(i)assets listed in Article 1, points (a)(i), (ii) or (iv), of Commission Delegated Regulation 2019/1851*3;

(ii)assets listed in Article 1, points (a),(vii) and (viii), of Delegated Regulation 2019/1851, provided that the proceeds from the securitisation bonds are used for financing or refinancing long-term investments.

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*3Commission Delegated Regulation (EU) 2019/1851 of 28 May 2019 supplementing Regulation (EU) 2017/2402 of the European Parliament and of the Council with regard to regulatory technical standards on the homogeneity of the underlying exposures in securitisation (OJ L 285, 6.11.2019, p. 1).’;

2. Where an ELTIF has invested in shares or units of other ELTIFs, EuVECAs, EuSEFs, UCITS and EU AIFs managed by EU AIFMs in accordance with paragraph 1, point (d), the assets of the respective ELTIF and other collective investment undertakings are to be combined for the purposes of determining the compliance with limits laid down in Article 13 and Article 16(1).’

(6) Article 11(1) is amended as follows:

(a)the introductory sentence is replaced by the following:

‘A qualifying portfolio undertaking referred to in Article 10 shall be an undertaking that fulfils the following requirements:’;

(b)in point (b), point (ii) is replaced by the following:

‘(ii)    is admitted to trading on a regulated market or on a multilateral trading facility and has a market capitalisation of no more than EUR 1 000 000 000 at the time of the initial investment;’;

(7) Article 12 is replaced by the following:

‘Article 12

Conflict of interest

1. An ELTIF shall not invest in an eligible investment asset in which the manager of the ELTIF has or takes a direct or indirect interest, other than by holding units or shares of the ELTIFs, EuSEFs, EuVECAs, UCITS or EU AIFs that it manages. 

2. The AIFM managing an ELTIF and undertakings that belong to the same group with an AIFM managing an ELTIF, and their staff may co-invest in that ELTIF and co-invest with the ELTIF in the same asset, provided that the ELTIF manager has put in place organisational and administrative arrangements designed to identify, prevent, manage and monitor conflicts of interest and provided that such conflicts of interest are adequately disclosed.’;

(8) Article 13 is amended as follows:

(a)paragraphs 1, 2 and 3 are replaced by the following:

‘1.    An ELTIF shall invest at least 60 % of its capital in eligible investment assets.

2. An ELTIF shall invest no more than:

(a)20 % of its capital in instruments issued by, or loans granted to, any single qualifying portfolio undertaking;

(b)20 % of its capital directly or indirectly in a single real asset;

(c)20 % of its capital in units or shares of any single ELTIF, EuVECA, EuSEF, UCITS or EU AIF managed by an EU AIFM; 

(d)10 % of its capital in assets as referred to in Article 9(1), point (b), where those assets have been issued by any single body.

3. The aggregate value of units or shares of ELTIFs, EuvECAs, EuSEFs, UCITS and of EU AIFs managed by EU AIFM in an ELTIF portfolio shall not exceed 40 % of the value of the capital of the ELTIF.’; 

(b)the following paragraph 3a is inserted:

‘3a.    The aggregate value of simple, transparent and standardised securitisations in an ELTIF portfolio shall not exceed 20% of the value of the capital of the ELTIF.’;

(c)paragraph 4 is replaced by the following:

‘4.    The aggregate risk exposure to a counterparty of the ELTIF stemming from OTC derivative transactions, repurchase agreements, or reverse repurchase agreements shall not exceed 10 % of the value of the capital of the ELTIF.’; 

(d)paragraph 5 is deleted;

(e)in paragraph 6, the first sentence is replaced by the following:

‘By way of derogation from paragraph 2, point (d), an ELTIF may raise the 10 % limit referred to in that point to 25 % where bonds are issued by a credit institution which has its registered office in a Member State and is subject by law to special public supervision designed to protect bond-holders.’;

(f)the following paragraph 8 is added:

‘8.    The investment thresholds set out in paragraphs 2 to 4 shall not apply where ELTIFs are marketed solely to professional investors.’; 

(9) Article 15 is amended as follows:

(a)paragraph 1 is replaced by the following:

‘1.    An ELTIF may acquire no more than 30 % of the units or shares of a single ELTIF, EuVECA, EuSEF, UCITS or of an EU AIF managed by an EU AIFM. That limit shall not apply where ELTIFs are marketed solely to professional investors.’; 

(b)in paragraph 2, the following subparagraph is added:

‘Those concentration limits shall not apply where ELTIFs are marketed solely to professional investors.’;

(10) Article 16 is amended as follows:

(a)paragraph 1 is amended as follows:

(i)points (a), (b) and (c) are replaced by the following:

‘(a)    it represents no more than 50 % of the value of the capital of the ELTIF, and no more than 100 % of the value of the capital of the ELTIF for ELTIFs marketed solely to professional investors;

(b)    it serves the purpose of making investments or providing liquidity, including to pay costs and expenses, except for loans as referred to in Article 10, point (c), provided that the holdings in cash or cash equivalents of the ELTIF are not sufficient to make the investment concerned;

(c)    it is contracted in the same currency as the assets to be acquired with the borrowed cash or in another currency where currency exposure has been hedged or where it can be otherwise demonstrated that the borrowing in another currency does not expose the ELTIF to material currency risks.’;

(ii)point (e) is replaced by the following:

‘(e)    it encumbers assets to implement the borrowing strategy of the ELTIF concerned.’;

(b)the following paragraph 1a is inserted:

‘1a.    Borrowing arrangements which are fully covered by investors’ capital commitments shall not be considered to constitute borrowing for the purposes of paragraph 1.’;

(c)paragraph 2 is replaced by the following:

‘2.    The manager of the ELTIF shall specify in the prospectus of the ELTIF whether or not the ELTIF intends to borrow cash as part of the ELTIF’s investment strategy and shall provide a detailed presentation of the ELTIF borrowing strategy and limits. In particular, the manager of the ELTIF shall indicate how borrowing will help implement the ELTIF strategy and mitigate borrowing, currency and duration risks.’;

(11) in Article 18, paragraph 4 is deleted;

(12) in Article 18, paragraph 7 is replaced by the following:

‘7.    ESMA shall develop draft regulatory technical standards specifying the circumstances in which the life of an ELTIF is considered sufficient in length to cover the life-cycle of each of the individual assets of the ELTIF, as referred to in paragraph 3.

ESMA shall develop draft regulatory technical standards specifying the minimum information to be provided to competent authorities under Article 18(2), point (b), and the criteria to assess the percentage referred to in Article 18(2), point (d), taking into account the ELTIF’s expected cash flows and liabilities.’;

(13) Article 19 is amended as follows:

(i)the following paragraph 2a is inserted:

‘2a.    Rules or instruments of incorporation of the ELTIF may provide for the possibility of full or partial matching, before the end of the life of the ELTIF, of transfer requests of units or shares of the ELTIF by exiting ELTIF investors with transfer requests by potential investors, provided that all of the following conditions are fulfilled:

(a)the manager of the ELTIF has set out a policy for matching requests which clearly sets out all of the following:

(i)the transfer process for both exiting and potential investors;

(ii)the role of the fund manager or the fund administrator in conducting transfers, and the matching of respective requests;

(iii)the periods of time during which existing and potential investors may request transfer of shares or units of the ELTIF;

(iv)the execution price;

(v)the pro-ration conditions;

(vi)the timing and the nature of the disclosure of information with respect to the transfer process;

(vii)the fees, costs and charge, if any, related to the transfer process;

(b)the policy and procedures for matching requests of the ELTIF exiting potential investors ensures that investors are treated fairly and that matching is carried out on a pro rata basis where there is a mismatch between existing and potential investors; 

(c)the matching of requests allows the ELTIF manager to monitor the liquidity risk of the ELTIF and is compatible with the long-term investment strategy of the ELTIF.’; 

(ii)the following paragraph 5 is added:

‘5. ESMA shall develop draft regulatory technical standards specifying the circumstances in which Article 19(2a) shall be applied, including the information that ELTIFs need to disclose to investors.

ESMA shall submit those draft regulatory technical standards to the Commission by […].

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.’;

(14) in Article 21, paragraph 1 is replaced by the following:

‘1.    An ELTIF shall inform its competent authority about the orderly disposal of its assets in order to redeem investors' units or shares after the end of life of the ELTIF at the latest one year before the date of the end of life of the ELTIF. Upon the request of the competent authority of the ELTIF, the ELTIF shall submit to its competent authority an itemised schedule for the orderly disposal of those assets.’;

(15) Article 23 is amended as follows:

(a)the following paragraph 3a is inserted:

‘3a.    The prospectus of the feeder ELTIF shall contain the following information:

(a)    a declaration that the feeder ELTIF is a feeder of a particular master ELTIF and as such permanently invests 85% or more of its assets in units of that master ELTIF;

(b)    the investment objective and policy, including the risk profile and whether the performance of the feeder and the master ELTIF are identical, or to what extent and for which reasons they differ;

(c)    a brief description of the master ELTIF, its organisation, its investment objective and policy, including the risk profile, and an indication of how the prospectus of the master ELTIF may be obtained;

(d)     a summary of the agreement entered into between the feeder ELTIF and the master ELTIF or of the internal rules on the conduct of business referred to in Article 29(6));

(e)    how the unit-holders may obtain further information on the master ELTIF and the agreement entered into between the feeder ELTIF and the master ELTIF referred to in Article 29(6);

(f)    a description of all remuneration or reimbursement of costs payable by the feeder ELTIF by virtue of its investment in units of the master ELTIF, as well as of the aggregate charges of the feeder ELTIF and the master ELTIF;

(g)    a description of the tax implications for the feeder ELTIF of the investment into the master ELTIF.’;

(b)in paragraph 5, the following subparagraph is added:

‘Where the ELTIF is marketed to retail investors, the manager of the ELTIF shall include in the annual report of the feeder ELTIF a statement on the aggregate charges of the feeder ELTIF and the master ELTIF. The annual report of the feeder ELTIF shall indicate how the annual report or reports of the master ELTIF can be obtained’.

(16) in Article 25, paragraph 2 is replaced by the following:

‘2.    The prospectus shall disclose an overall cost ratio of the ELTIF.’; 

(17) Article 26 is deleted.

(18) Article 28 is deleted.

(19) in Article 29, the following paragraphs 6 and 7 are added:

‘6.    In case of a master-feeder structure, the master ELTIF shall provide the feeder ELTIF with all documents and information necessary for the latter to meet the requirements laid down in this Regulation. For that purpose, the feeder ELTIF shall enter into an agreement with the master ELTIF. 

That agreement shall be made available, on request and free of charge, to all unit-holders. In the event that both master and feeder ELTIF are managed by the same management company, the agreement may be replaced by internal rules on the conduct of business ensuring compliance with the requirements set out in this paragraph.

7. Where the master and the feeder ELTIF have different depositaries, those depositaries shall enter into an information-sharing agreement in order to ensure the fulfilment of the duties of both depositaries. The feeder ELTIF shall not invest in units of the master ELTIF until such agreement has become effective.

Where they comply with the requirements laid down in this paragraph, neither the depositary of the master ELTIF nor that of the feeder ELTIF shall be found to be in breach of any rules that restrict the disclosure of information or relate to data protection where such rules are provided for in a contract or in a law, regulation or administrative provision. Such compliance shall not give rise to any liability on the part of such depositary or any person acting on its behalf.

The feeder ELTIF or, where applicable, the management company of the feeder ELTIF, shall be in charge of communicating to the depositary of the feeder ELTIF any information about the master ELTIF which is required for the completion of the duties of the depositary of the feeder ELTIF. The depositary of the master ELTIF shall immediately inform the competent authorities of the master ELTIF home Member State, the feeder ELTIF or, where applicable, the management company and the depositary of the feeder ELTIF about any irregularities it detects with regard to the master ELTIF which are deemed to have a negative impact on the feeder ELTIF.’;

(20) Article 30 is replaced by the following:

‘Article 30

Specific requirements concerning the distribution and marketing of ELTIFs to retail investors

1. The units or shares of an ELTIF may only be marketed to a retail investor where an assessment of suitability in accordance with Article 25, paragraphs 1, 2 and 5, Article 25(6), second and third subparagraph, and Article 25(7) of Directive 2014/65/EU has been carried out with respect to that investor.

2. Where the life of an ELTIF that is offered or placed to retail investors exceeds 10 years, the manager of the ELTIF or the distributor shall issue a clear written alert that the ELTIF product may not be suitable for retail investors that are unable to sustain such a long-term and illiquid commitment.

3. Paragraphs 1 and 2 shall not apply where the retail investor is a member of senior staff, portfolio manager, director, officer, agent or employee of the manager or of an affiliate of the manager and has sufficient knowledge about the ELTIF concerned.

4. In case of a master-feeder structure, the prospectus of the feeder ELTIF shall contain all of the following information:

(a)a declaration that the feeder ELTIF is a feeder of the master ELTIF;

(b)the investment objective and policy, including the risk profile and whether the performance of the feeder and of the master ELTIF are identical, or to what extent and for which reasons they differ;

(c)a brief description of the master ELTIF, its organisation, its investment objective and policy, including the risk profile, and information on how the prospectus of the master ELTIF can be obtained;

(d)a description of all remuneration or reimbursement of costs payable by the feeder ELTIF by virtue of its investment in units of the master ELTIF, as well as of the aggregate charges of the feeder ELTIF and the master ELTIF;

(e)a description of the tax implications for the feeder ELTIF of the investment into the master ELTIF .

5. A feeder ELTIF shall disclose in any marketing communications that it permanently invests 85 % or more of its assets in units of the master ELTIF.

6. The rules or instruments of incorporation of an ELTIF marketed to retail investors in the relevant class of units or shares shall provide that all investors benefit from equal treatment and that no preferential treatment or specific economic benefits shall be granted to individual investors or groups of investors within the relevant class or classes.

7. The legal form of an ELTIF marketed to retail investors shall not lead to any further liability for the retail investor or require any additional commitments on behalf of such an investor, apart from the original capital commitment.

8. Retail investors shall be able, during the subscription period and at least two weeks after the effective date of the commitment or subscription agreement of the units or shares of the ELTIF, to cancel their subscription and have the money returned without penalty. 

9. The manager of an ELTIF marketed to retail investors shall establish appropriate procedures and arrangements to deal with retail investor complaints, which shall allow retail investors to file complaints in the official language or one of the official languages of their Member State.’;

(21) in Article 37, paragraph 1 is replaced by the following: 

‘1.    No later than [date of the entry into force + 5 years], the Commission shall start a review of the application of this Regulation. The review shall analyse, in particular:

(a)the application of Article 18 and the impact of that application on the redemption policy and life of ELTIFs;

(b)the application of provisions on the authorisation of ELTIFs, as set out in Articles 3 to 6;

(c)whether the provisions on the central public register of ELTIFs as laid down in Article 3 should be updated;

(d)the impact of the application of the minimum thresholds of eligible investment assets laid down in Article 13(1) on asset diversification;

(e)the extent to which ELTIFs are marketed in the Union, including whether AIFMs as referred to in Article 3(2) of Directive 2011/61/EU might have an interest in marketing ELTIFs;

(f)whether the list of eligible assets and investments, the diversification rules, the rules on portfolio composition, concentration rules and limits regarding the borrowing of cash should be updated;

(g)whether the provisions concerning conflicts of interest as laid down in Article 12 should be updated;

(h)whether the transparency requirements laid down in Chapter IV are appropriate;

(i)whether the provisions concerning the marketing of units or shares of ELTIFs laid down in Chapter V are appropriate and ensure an effective protection of investors, including retail investors.’.

Article 2

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from [entry into force + 6 months].

This Regulation shall be binding in its entirety and directly applicable in all Member States.