Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on European Long-term Investment Funds
Date: 2013-06-26
Institutions: European Commission
Subjects: impact study, investment, long-term forecast, money-market liquidity, public consultation

EUROPEAN 
COMMISSION 

Brussels, 26.6.2013  
COM(2013) 462  final 

2013/0214 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on European Long-term Investment Funds 

(Text with EEA relevance) 

{SWD(2013) 230 final} 
{SWD(2013) 231 final}

EN 

   EN 

 
 
 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Long-term investment is the provision of long-lived capital in order to finance tangible assets 
(such as energy, transport and communication infrastructures, industrial and service facilities, 
housing  and  climate  change  and  eco-innovation  technologies)  as  well  as  intangible  assets 
(such as education and research and development) that boost innovation and competitiveness. 
Many of these investments have wider public benefits, since they generate greater returns for 
society  as  a  whole  by  supporting  essential  services  and  improving  living  standards.  This 
proposal  intends  to  help  increase  the  pool  of  capital  available  for  long  term  investment  in 
tomorrow’s  economy  of  the  European  Union  with  a  view  to  finance  transition  to  the  smart, 
sustainable and inclusive growth. This will be done by creating a new form of fund vehicle, 
EU Long Term Investment Funds or ELTIFs. ELTIFs, by virtue of the asset classes that they 
are  allowed  to  invest  in,  are  expected  to be  able to  provide  investors with long term, stable 
returns. Eligible assets would be qualified as forming part of ‘alternative investments’ – asset 
classes that fall outside the traditional definition of listed shares and bonds. While alternative 
investments  comprise  real  estate,  venture  capital,  private  equity,  hedge  funds,  non-listed 
companies,  distressed  securities  and  commodities,  ELTIFs  would  only  focus  on  alternative 
investments  that  fall  within  a  defined  category  of  long-term  asset  classes  whose  successful 
development  requires  investors’  long-term  commitment.  Therefore,  real  estate,  unlisted 
companies or infrastructure projects would be eligible while commodities would not be. 

There  is  a  clear  need  therefore  to  ensure  that  barriers  to  investment  with  a  long  term 
perspective  are  tackled  at  the  European  Union  level.  This  is  particularly  the  case  for  assets 
such as infrastructure projects that depend on long term commitments. These assets depend, in 
part, on what is often called 'patient capital'. This kind of investment may not be able to be 
redeemed for a number of years but are invested in such a way as to be able to provide stable 
and  predictable  returns.  Infrastructure  projects,  investments  in  human  capital,  or  operating 
concessions  would  fit  this  description.  Capital  invested  in  this  long  term,  'patient'  manner 
benefits  the  real  economy  by  providing  predictable  and  sustained  flows  of  finance  to  firms 
and creates employment. 

Investors  such  as  insurance  companies  and  pension  funds  with  long  term  liabilities  have 
expressed  an  appetite  for  investing  in  longer-term  investment  assets.  At  the  same  time  they 
have  pointed  to  the  absence  of  readily  available  pooling  mechanisms,  such  as  investment 
funds,  to  facilitate  access  to  these  types  of  investments.  As  a  result  such  investment 
opportunities  are  restricted  to  a  few  very  large  investors,  such  as  large  pension  funds  or 
insurance  undertakings,  able  to  raise  and  commit  sufficient  capital  by  virtue  of  their  own 
resources.  This,  in  turn,  acts  as  a  barrier  to  smaller  investors  such  as  local  pension  plans, 
municipalities, the pension schemes run by the liberal professions or corporate pension plans 
who  might  otherwise  benefit  from  diversifying  their  investments  into  such  assets.  The 
absence  of  these  investor  groups,  in  turn,  deprives  the  real  economy  from  accessing  deeper 
pools  of  capital-backed  financing.  Last,  but  not  least,  also  individual  retail  investors  faced 
with  a  future  liability  (home  purchases,  education  or  the  financing  of  major  renovations) 
might benefit from the yield or regular returns offered by long-term investment funds. 

The  large-scale  and  long-term  capital  commitments  required  for  operating  efficient 
investment  pools  for  long-term  assets  have  hitherto  been  hampered  by  regulatory 
fragmentation among Member States. Where funds and incentives do exist on a national level 
they are not coherent with comparable initiatives in other Member States. This prevents the 
scale of pooling of capital and investment expertise that creates economies of scale for funds 

EN 

2 

   EN 

and therefore benefits  investors.  On  the other hand,  the majority of  Member States  have  no 
fund models or equivalent incentives that address long-term asset classes. In the absence of a 
cross-border fund vehicle, investors in these markets are excluded from investing in long-term 
asset classes. 

The end result is that there is no readily available mechanism to channel funds that are to be 
committed for long periods of time to real economy projects in need of such financing. This 
acts  as  a  brake  on  the  development  of  long  term  investing.  Expertise  amongst  investment 
professionals is not developed because of lack of demand. Economies of scale that lead to a 
reduction of the costs of operating a long-term investment fund fail to materialise. 

In  addition,  large-scale  infrastructure  or  industrial  engineering  projects  may  require  having 
access to capital pools that are not always available when capital is raised in a single Member 
State only. Large-scale projects also may  involve businesses  based in a number of different 
Member States. Any funding mechanism has to deal with this problem of fragmentation and 
facilitate investors and projects in a variety of European Union countries. 

There  is,  therefore,  the  need  to  facilitate  a  funding  vehicle  that  is  designed  specifically  to 
address these problems. To maximise the efficiency of any funding mechanism it needs to be 
able to have access to investors across the Union. The importance of tackling these issues was 
set out already in the Single Market Act II (SMA II).1 One of its twelve key objectives is to 
boost  long-term  investment  in  the  real  economy.  In  order  to  achieve  this  goal,  the  SMA  II 
proposed  developing  a  new  set  of  EU  rules  facilitating  cross-border  capital  raising  of  the 
capital necessary to operate cost-efficient investment funds that target long term investments 
opportunities. 

The wider context of this work has been set out in the European Commission's Green Paper, 
the  Long-Term  Financing  of  the  European  Economy,2  outlining  supply  and  demand-side 
issues across all financing structures. The Green Paper also confirmed the need for measures 
on investment funds, as outlined in this proposal, whilst concentrating on the context of the 
wider  need  to  revive  funding  of  the  real  economy  by  improving  the  mixture  and  overall 
resilience  of  different  funding  sources.  In  this  the  new  ELTIF  can  contribute  to  increasing 
non-bank finance available to businesses, to complement access to bank financing. 

Currently, EU investment fund markets are dominated by funds operating under the UCITS 
(Undertakings in Collective Investments in Transferable Securities) Directive, first introduced 
in  1985.  UCITS  assets  under  management  have  now  reached  €6,697  billion. 3  The  UCITS 
Directive contains a set of product rules which are used by investment funds available to retail 
investors,  but  is  focused  on  transferable  securities  for  the  purposes  of  ensuring  adequate 
liquidity is available to support redemptions on demand. As a result, UCITS are not able to 
contribute to the funding of patient capital commitments to infrastructure and other projects. 
While  the  UCITS  initiative  does  not  necessarily  mean  the  creation  of  ELTIF  will  attract 
similar levels of investor interest, given the value that highly liquid funds have for many retail 
investors, its success show that EU-wide initiatives can have a strong impact in developing a 
market and building investor confidence.  

The  creation  of  the  European  Venture  Capital  Funds  (EuVECA)  and  the  European  Social 
Entrepreneurship Funds (EuSEF) will, along the ELTIFs, help to contribute to the financing 
of the European economy. But the EuVECA and EuSEF schemes target a very specific niche 

1 
2 
3 

See hhttp://ec.euopea.eu/internal_market/smact/docs/single-market-act2_en.pdf 
See hhttp://ec.euopea.eu/internal_market/finances/financing-growth/long-term/index_en.htm 
EFAMA Investment Fund Industry Factsheet, March 2013 

EN 

3 

   EN 

                                                 
of  the  EU  economy:  start  ups  financed  by  venture  capital  and  businesses  specialising  in 
achieving social impact.  

The proposal on ELTIFs follows a broader approach than EuVECA and EuSEF. It intends to 
target a broad range of long-term asset classes and it intends to create an investment fund that 
can  also  be  sold  to  retail  investors.  This  raises  the  need  for  three  core  features:  (1)  specific 
product  rules  covering  eligible  assets  and  their  diversification;  (2)  a  high  degree  of 
competence  for  those  who  are  allowed  to  manage  and  market  ELTIFs  and  (3)  alignment 
between the ELTIFs investment horizon and the redemption expectations of its investors. 

The need for product rules 

The aim is that the new ELTIF framework is to create a 'second retail passport' that follows 
the  tried-and-tested  UCITS  approach  on  product  specifications  and  risk  spreading.  There  is 
considerable investor interest in having an opportunity to invest in long-term asset classes that 
either appreciate over their life cycle (small or midsized companies) or that produce regular 
income throughout the holding period (infrastructure assets). Especially pension plans run by 
municipalities,  boroughs,  small  and  large  companies  or  the  liberal  professions  want  such  a 
vehicle. Due to the fact that such a long-term asset funds do not exist in many Member States, 
investors  in  those  States  are  shut  out  from  this  investment  opportunity.  A  cross-border 
passport will remedy that situation.  

To accommodate these investor needs, the ELTIF will be able to invest in all kind of assets 
that are not traded on regulated markets. These assets are illiquid and, for that reason alone, 
require a fund to make a long term commitment when purchasing them. The same is true for 
those who invest in such a fund. Assets that are not traded on a secondary market and whose 
owners would require considerable time in finding a purchaser would comprise the following: 
(1)  Investments  in  infrastructure  projects,  such  as  in  the  field  of  transport,  energy  or 
education; (2) Investments in unlisted companies, in practice mainly SMEs; (3) investments 
in real estate assets, such as buildings or direct purchase of an infrastructure asset  

Therefore, the mere fact that an asset is not traded on a regulated market will qualify it as a 
long-term asset. These assets are illiquid simply on account of the fact that, without a public 
trading venue, you will not find readily available buyers for your asset. Also, these assets are 
often quite idiosyncratic and will only be attractive for buyers who can conduct their own due 
diligence  and  are  specialist  in  the  relevant  field.  For  example,  once  an  ELTIF  invest  in  a 
project  company,  it  anticipates  that  there  will  be  no  immediately  identifiable  buyer  of  this 
stake for a considerable period of time.  

In light of their intrinsic lack of liquidity, the ELTIF proposal refrains from prescribing pre-
determined holding periods. In light of the high level of due diligence that an investment in a 
long-term  asset  requires,  it  does  not  appear  prudent  policy  to  prescribe  minimum  holding 
periods. This is because each investment decision will be different and the ELTIF managers 
are  best  placed  to  decide  how  long  they  want  to  remain  invested  in  the  asset  in  order  to 
generate  the  promised  return.  This  is  a  big  difference  for  UCITS  managers  who  follow 
macroeconomic developments or the daily fluctuations on a stock exchange.  

It also appears necessary to provide for managerial flexibility with respect to the precise time 
frame in which a portfolio of long-term assets has to be assembled. This is why the proposal 
allows  for  a  five  year  period  in  which  the  long-term  asset  portfolio  can  be  build  up.  In 
addition, the proposal allows the manager to invest up to 30% of the ELTIF's capital in liquid 
securities.  This  liquidity  buffer  has  been  conceived  to  allow  the  ELTIF  to  manage  the  cash 
flow that arises while the long-term portfolio is being constituted. It also allows the manager 

EN 

4 

   EN 

to place surplus cash that is achieved 'between investments' – that is when a long-term asset is 
sold in order to be replaced by another.  

To create investor trust and legal certainty, especially but not only for retail investors targeted 
by ELTIFs, the proposed scheme requires a set of robust yet flexible product rules. Product 
rules  represent  the  most  appropriate  way  of  helping  to  meet  the  long  term  funding  needs 
identified and to provide ELTIFs with a predictable product profile. Once authorised, ELTIFs 
will  be  available  to  be  marketed  to  professional  as  well  as  retail  investors  in  other  Member 
States. 

ELTIF provide opportunities for investors to diversify their investment portfolios. The assets 
the proposed ELTIF may invest in are alternative investments and therefore very different in 
nature to the more traditional listed shares and securities held by many investors. While the 
strict  diversification  rules  contained  in  the  UCITS  framework  might  make  it  costly  or  even 
impossible to operate an ELTIF, the latter would still benefit from a reasonable level of asset 
diversification. 

This  diversification  benefit  applies  equally  to  retail  as  well  as  it  does  to  institutional  or 
'sophisticated' investors such as high net worth individuals. The strong product rules proposed 
and  the  investor  protection  they  create  are  designed  to  make  ELTIF  suitable  for  retail 
investors. 

The need for a high level of managerial competence 

Due to their lack of liquidity and due to the fact that participations in long term asset classes 
targeted by an ELTIF are not listed on a regulated market, all long-term assets that an ELTIF 
is allowed to invest in fall within the category of ‘alternative investments’ (see the description 
of alternative investments above). It is therefore necessary that ELTIFs will be managed by 
undertakings  that  are  duly  authorised  under  the  AIFMD  to  manage  and  market  alternative 
investments.  

Therefore, the proposed ELTIF framework will build on the managerial authorisation in the 
AIFM Directive4, which lays down the general rules for alternative investment fund managers 
who  manage  and  market  their  funds  to  professional  investors.  Specific  LTIF  product  rules 
will be added so that ELTIFs can be easily identified by both professional and retail investors 
who  are  interested  in  the  yield  and  return  profiles  associated  with  investments  in  long-term 
assets.  

The proposed ELTIF framework builds on the cross-border provisions in the AIFMD, adding 
to  the  "European"  passport  for  marketing  professional  investors  a  "European"  passport  for 
marketing to retail investors across the EU with regard to ELTIFs. As ELTIFs can be sold to 
retail  consumers,  there  is  an  increased  consumer  protection  need,  for  example  the  stricter 
ELTIF  rules  prohibiting  investment  in  assets  that  may  create  a  conflict  of  interest, 
transparency  rules  requiring  the  publication  of  a  key  information  document  and  specific 
marketing conditions. 

In light of the above, for an ELTIF to be authorised its manager must also be authorised under 
the AIFMD. The majority of assets an ELTIF invests in must be by definition be assets that 
need to be held for a long duration. Over-concentration in a single asset or undertaking creates 
risks  for  investors  that  can  prove  to  be  very  difficult  to  manage.  To  mitigate  this  risk  an 
ELTIF will have to comply with diversification rules. Moreover, limits are proposed on the 
use of derivatives in relation to ELTIF assets as well as a cap on borrowing. 

The need to align investment and redemption horizons 

4 

Directive 2011/61/EU 

EN 

5 

   EN 

                                                 
The assets an ELTIF invests in will by their very nature be illiquid. That is to say, they will 
not be available to be bought and sold very easily. There may be no reliable secondary market 
for  long-term  assets,  a  fact  which  could  render  their  valuation  and  sale  more  difficult.  The 
illiquid nature of the assets is not of itself a problem and the ELTIF proposal is designed to 
create  a  funding  vehicle  suited  to  this  kind  of  assets.  The  requirements  of  the  AIFMD  also 
address these issues, for example, in relation to valuation and the requirement that managers 
have appropriate valuation policies and mechanisms in place. 

The  illiquid  nature  of  the  assets  could  make  it  difficult  for  funds  to  meet  a  redemption 
requests  made  by  investors  before  an  asset  or  project  invested  in  reaches  its  expected 
maturity.  A  need  to  maintain  liquid  assets  to  meet  redemption  requests  would  also  divert 
money  away  from  the  primary  purpose  of  ELTIFs  -  to  invest  in  long-term  assets.  Further, 
options to redeem early, i.e., before the end of the fund’s investment lifecycle, would raise the 
need  to  dispose  of  assets  to  meet  early  redemption  requests.  There  is  a  danger  these  assets 
may have  to  be  sold at 'fire  sale' prices well  below  what  the  fund  manager  may  believe  the 
asset should be worth in an un-forced sale. Such a sale could also reduce any income steam 
being  paid  to  other  investors  who  remain  invested  in  the  ELTIF.  ELTIFs  will  therefore  not 
offer  early  redemption  to  investors.  This  approach  will  remove  the  potential  conflicts  of 
interests between exiting and remaining investors. 

The  ELTIF  combined  with  the  AIFMD  will  provide  a  strong  management  and  product 
framework  designed  to  give  investors  the  confidence  that  their  investments  are  being 
prudently, competently and honestly managed. The fact that redemptions will not be allowed 
during the life of the investments selected will have to be clearly indicated as to avoid mis-
placed expectations about the liquidity of the fund.  Widening ELTIF to retail  investors will 
also ensure that the widest possible capital pool is made available. 

In  addition,  the  illiquidity  premium  associated  with  an  investment  in  a  long-term  asset  can 
only be reaped if the manager of an ELTIF is at liberty to engage in projects for a significant 
period  of  time  without  facing  constant  redemption  pressure.  As  pointed  out  in  the  impact 
assessment, the illiquidity premium inherent in investing in long term assets requires holding 
periods of between 10 and 20 years. For example, the annualised real estate performance of 
12.71% beat the S&P 500 (equity index) at 10.94% and the typical bond index at 7.70% when 
assessed over a period of 14 years. Likewise, the favourable performance of venture capital 
funds  in  the  US  -  annualised  returns  of  16.5%  vs.  the  S&P  500  at  11.2%  -  can  only  be 
achieved when choosing an investment horizon of 20 years.  

The positive returns of an investment in long-term assets should also be assessed against the 
risks that they carry. As with traditional investments in stocks and bonds, the risk to lose the 
entire  capital  is  naturally  present.  But  what  distinguishes  the  long-term  assets  from 
transferable  securities  dealt  with  on  a  regulated  market  is  their  illiquidity  risk.  Contrary  to 
stocks and bonds which can normally be easily sold on a regulated market, long-term assets 
do not benefit from liquid secondary markets and it often requires months or years to be able 
to  sell  such  an  asset. This  is  why  the  draft  proposal  requires  that  the  chosen  lifecycle  of  an 
ELTIF  has  to  be  sufficiently  long  to  accommodate  the  diligent  choice  and  long-term 
engagement with a chosen project, company or real asset. 

In these circumstances, the future fund passport has to be accompanied by a sufficient degree 
of managerial flexibility in choosing assets and determining the timeframe in which they are 
held  prior  to  divestiture.  This  explains  why  the  approach  in  the  draft  proposal  does  not 
prescribe  fixed  time  periods  for  holding  investment  assets  or  for  the  duration  of  the  ELTIF 
itself.  

EN 

6 

   EN 

The  new  ELTIF  should  therefore  be  flexible  in  its  investment  policies  and  holding  periods. 
The aim is to attract a critical mass of managers who will offer the vehicle across borders thus 
attracting a critical mass of assets and investors. Therefore, the lifecycle of the fund  should 
match the particular profile of the assets in which it will invest. This has implications on the 
redemption opportunities that such a fund can realistically offer. Experience with open-ended 
long-term  funds  in  national  markets  shows  that  a  fund  cannot  offer  redemptions  while  it 
remains invested in long-term assets targeted by the proposal. Matching the lifecycle of the 
fund  with  that  of  its  investment  assets  is  the  best  possible  approach  to  ensure  that  the 
managers  have  scope  to  invest  in  assets  that  require  long-term  commitments  and  thereby 
finance  the  economy.  Offering  redemption  possibilities  at  an  earlier  stage  invariably  dilutes 
the long-term outlook of the fund; this would reduce its attractiveness for most of the pension 
plan investors who want a long-term and steady income instead of early redemption facilities. 

This does not, however, imply that investors cannot redeem their investments prior to the end 
of  the  ELTIF's  lifecycle.  Many  of  the  successful  long-term  funds  that  the  Commission's 
impact assessment found at national level have been structured as listed entities. That allows 
investors  to  trade  their  shares  or  units  in  the  fund  on  a  secondary  market.  If  long-term 
investing  is  really  supposed  to  become  attractive  for  smaller-scale  investors  or  the  retail 
community at large, secondary markets will be the principal venue in which you can buy into 
or leave the long term fund.  

ELTIF  will  be  investment  products  within  the  meaning  of  the  Markets  in  Financial 
Instruments Directive (MiFID)5 and therefore subject to all the requirements of that directive 
in relation to marketing, selling and disclosure. 

The  proposed  new  ELTIF  will  be  available  for  marketing  to  investors  across  the  European 
Union. It is therefore important that investors have the confidence of knowing that the level of 
protection they will receive will be the same regardless of the origin of the fund manager.. For 
this  reason,  the  legal  instrument  proposed  is  a  Regulation  since  this  is  the  most  appropriate 
way of achieving consistent, clear and directly applicable rules throughout the Union.  

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

2.1. 

Consultation with interested parties 

Since  mid-2012  the  European  Commission  has  engaged  in  extensive  consultations  with 
representatives from a wide range of organisations. The consultations has taken the form of 
bilateral and multilateral meetings, a written public consultation on asset management issues6 
including  long  term  investment  (LTI)  and  a  follow  up  questionnaire  which  was  circulated 
among interested parties. The Commission services received 65 responses relating to the LTI 
section.  The  follow  up  questionnaire  resulted  in  50  responses.  Further  bilateral  discussions 
were  held  with  fund  managers  operating  in  the  infrastructure  and  long  term  markets,  fund 
management associations and retail as well as institutional investor representatives. 

2.2. 

Impact assessment 

In line with its policy on 'better regulation' the Commission conducted an impact assessment 
of  policy  alternatives.  These  alternatives  contained  a  wide  range  of  policy  options,  ranging 
from taking no action, integrating long-term asset classes into the existing UCITS framework, 
to  creating  a  fund  vehicle  for  professional  investors  only,  or  a  fund  vehicle  open  to  all 
investors, with or without redemption facilities. 

5 
6 

Directive 2004/39/EC 
See http://ec.europa.eu/internal_market/consultations/docs/2012/ucits/ucits_consultation_en.pdf 

EN 

7 

   EN 

                                                 
All  of  these  options  were  analysed  against  the  general  principles  of  increasing  the  capital 
flows  available  to  long  term  financing  for  the  European  real  economy  and  increasing  the 
coherence  of  the  single  market.  However,  any  new  funding  mechanism  also  needs  to  be 
framed with in such a way that the objective of creating economies of scale for fund managers 
and  increase  choice  does  not  conflict  with  the  need  to  inform  and  provide  appropriate 
protection for all investor categories.  

The selected option is to create a long-term investment fund vehicle open to both professional 
and retail investors. In line with the illiquid properties of long-term asset classes, there would 
be no redemption rights prior to the termination of the fund’s lifecycle. The characteristics of 
the proposed ELTIF would be to allow the widest range of investors to access ELTIFs. In this 
way,  the  potential  pool  of  capital  available  to make  such  investments  would  be  maximised. 
The  ELTIFs  would  be  subject  to  product  rules  designed  to  ensure  sufficient  diversification, 
address potential conflicts of interest, increase transparency as regards costs and limit the use 
of derivatives and leverage. These features are in place to provide investor protection for retail 
investors.  By  not  providing  redemption  rights  during  the  lifespan  of  the  fund,  more  of  its 
capital  can  be  invested  in  assets  that  are  illiquid.  This  absence  of  a  redemption  right  also 
signals strongly to retail and professional investors the long term nature of the commitment. 

The comments by the Impact Assessment Board set out in their opinion of 31 May 2013 have 
been taken into account. The problem description has been strengthened to give greater clarity 
on  the  size  of  the  problem  being  addressed  as  well  as  the  timing  of  the  proposal.  The 
description of the options has also been improved as has the analysis of the effectiveness of 
the preferred option. The Impact Assessment now also clarifies in greater detail the reasons 
why the proposal deviates from some of the views expressed by certain stakeholders during 
the  consultation  process.  In  particular,  the  reasoning  was  strengthened  around  the  choice  to 
exclude  redemption  rights,  both  from  the  perspective  of  investor  protection,  and  from  the 
perspective  of  the  expected  take-up  of  the  new  option  by  investors.  While  some  retail 
investors may be less likely to invest in a fund without rights of redemption on demand, the 
risks  attached  to  offering  such  rights  could  undermine  the  fund  model,  while  the  reduced 
efficiency  of  investments  to  ensure  additional  liquidity  would  reduce  the  impact  of  any 
additional retail demand. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis and choice of the legal form 

Article  114(1)  TFEU  serves  as  the  legal  basis  for  a  Regulation  creating  uniform  provisions 
aimed at the functioning of the internal market. Prudential product rules establish the limits of 
the risks linked to investment funds that are targeting long-term assets. As such, they do not 
regulate access to asset management activities but govern the way such activities are carried 
out,  in  order  to  ensure  investor  protection  and  financial  stability.  They  underpin  the  correct 
functioning of the internal market. 

In  pursuit  of  the  objective  of  the  internal  market  integrity  the  proposed  legislative  measure 
will  create  a  regulatory  framework  for  ELTIFs,  with  a  view  to  ensure  that  such  funds  are 
subject  to  consistent  rules  across  the  EU  and  that  they  are  identifiable  as  such  by  investors 
throughout the EU. The target of the proposed Regulation is to create a robust, yet flexible, set 
of  rules  that  specifically  correspond  to  the  long-term  nature  of  the  investments  in  question. 
The  proposed  rules  should  also  ensure  a  level  playing  field  between  different  long  term 
investment  fund  managers.  This  legislative  proposal,  therefore,  harmonises  the  operating 
conditions  for  all  relevant  players  in  the  investment  fund  market,  for  the  benefit  of  all 
investors and for the smooth functioning of the single market in financial services. 

EN 

8 

   EN 

A Regulation is considered to be the most appropriate legal instrument to introduce uniform 
requirements  that  will  deal,  amongst  others,  with  the  scope  of  eligible  assets,  the  portfolio 
composition,  diversification  rules,  redemption  policy,  as  well  as  rules  regarding  the 
authorisation  of  the  funds  intending  to  engage  in  long-term  investments.  The  objective  of 
these product rules is to ensure the ELTIFs work in a more efficient way. The taking up of 
activities as manager of an ELTIF is regulated by the AIFM Directive. The activities of the 
managers  will  continue  to  be  subject  to  AIFMD,  but  the  long-term  investment  products  are 
governed by the proposed Regulation, in addition to the rules of the AIFM-D. 

3.2. 

Subsidiarity and proportionality 

National  regulatory  approaches  are  inherently  limited  to  the  Member  State  in  question. 
Regulating the product profile of an ELTIF only at national level entails the risk of different 
investment  funds  with  different 
investment  products  all  being  sold  as 
characteristics.  This  would  create  investor confusion  and  would  impede  the  emergence  of  a 
Union-wide level playing field for those managers who offer ELTIFs to professional and/or 
retail investors.  

long-term 

As  the  asset  management  sector  is  essentially  cross-border  in  nature,  the  current 
fragmentation of the ELTIF market has led this sector to operate below the efficient level. The 
proposed harmonised and sustainable framework covering ELTIF will act as a source of long-
term financing for the European economy. The new framework will ensure the financing of 
various projects and sectors and will provide stable sources of return for long-term investors. 
Therefore, a pan-European ELTIF market is needed and the proposed legislative measure is 
consistent with the subsidiarity principle set out in Article 5(3) TEU and the Second Protocol 
on the Application of the Principles of Subsidiarity and Proportionality. 

As regards  proportionality, set out in Article 5(4) TEU, the Proposal strikes  the appropriate 
balance  between  the  public  interest  at  stake  and  the  cost-efficiency  of  the  measure.  The 
proposed  rules  seek  to  create  a  common  product  label  for  which  there  is  a  strong  public 
interest and which would lay down a foundation for a common, competitive and cost-efficient 
market  for  ELTIF  across  the  Union.  The  requirements  imposed  on  the  different  parties 
concerned have been carefully calibrated. Whenever possible, requirements have been crafted 
as  minimum  standards  (e.g.  issuer  diversification  limits,)  and  regulatory  requirements  have 
been  tailored  so  as  not  to  unnecessarily  disrupt  existing  business  models.  In  particular,  the 
proposed Regulation has combined parameters suitable for long-term investments and specific 
investor groups, by taking into full account the safety and trust considerations relating to any 
ELTIFs designation. The Proposal therefore does not go beyond what is necessary to achieve 
a  common  legal  framework  for  ELTIF,  while  at  the  same  time  it  addresses  the  regulatory 
issues which would affect the reliability of the label. 

3.3. 

Detailed explanations of the proposal 

The  proposal  for  a  Regulation  on  European  Long-Term  Investment  Funds  (ELTIF)  is 
structured in seven chapters.  

3.3.1.  Chapter I –General provisions (Articles 1-6) 

Chapter I contains general rules, such  as  the subject  matter  and scope of the proposed fund 
framework,  definitions,  the  procedure  for  authorisation  of  ELTIFs  (at  fund  level),  and  the 
interplay  of  the  proposed  Regulation  with  existing  rules  governing  the  authorisation  of 
managers of alternative investment funds, as set out in Directive 2011/61/EU (AIFMD). 

Article  1  specifies  the  subject  matter  and  delineates  the  scope  of  the  Regulation.  It  makes 
clear that the requirements contained in the Regulation are exhaustive, thus leaving no scope 
for  'gold-plating'  at  national  level.  Article  2  contains  essential  definitions  necessary  for  the 

EN 

9 

   EN 

uniform application of the proposed Regulation. Article 3 requires EU AIFs to be authorised 
in  accordance  with  the  proposed  Regulation  in  order  to  be  marketed  or  managed  across  the 
Union as ELTIFs. The designation 'European Long-term Investment Funds' (ELTIFs) shall be 
reserved  to  those  EU  AIFs  that  comply  with  the  proposed  Regulation.  This  implies  that  a 
manager of alternative asset classes that wants to manage or market funds focused on long-
term assets without using the proposed designation is not obliged to comply with the proposed 
Regulation. 

Article 4 provides a harmonised procedure for the authorisation of ELTIFs whereas article 5 
lays down the conditions for such an authorization. Article 6 describes the interaction between 
the existing AIFMD rules and the proposed Regulation, essentially specifying that compliance 
with the Regulation shall be ensured by the manager of the ELTIF. 

3.3.2.  Chapter II – Obligations concerning the investment policies of  ELTIFs (Articles 7-

15) 

Chapter II contains the rules on permissible investment policies to be pursued by an ELTIF, 
such  as  rules  relating  to  eligible  investments,  portfolio  composition  and  diversification, 
conflict of interest, concentration and cash borrowing. 

Article 7 provides that, where applicable, each investment compartment of an ELTIF shall be 
regarded as a separate ELTIF for the purposes of Chapter II. 

Article 8 describes two categories of financial assets that an ELTIF can invest in: long-term 
assets  and  assets  listed  in  Article  50(1)  of  Directive  2009/65/EC  (UCITS  Directive). 
However, an ELTIF shall not engage in short selling of assets, gain exposure to commodities, 
enter  into  securities  lending  or  securities  borrowing  agreements,  enter  into  repurchase 
agreements  or  use  financial  derivative  instruments  unless  these  instruments  are  used  for 
hedging purposes. 

Article  9  elaborates  on  the  eligibility  conditions  for  long-term  assets,  such  as  the  different 
categories  of  instruments  used  to  gain  access  to  qualified  portfolio  undertakings,  the 
investment  in  units  or  shares  of  other  ELTIFs  and  participations  in  real  assets,  such  as  real 
estate,  ships  or  aircrafts.  Article  10  sets  out  the  conditions  for  an  undertaking  to  become  a 
qualified  portfolio  undertaking.  The  qualified  portfolio  undertaking  should  be  unlisted, 
domiciled in the EU and have the purpose of financing infrastructure projects, companies or 
real  estate,  ships  and  aircrafts.  It  should  not  take  the  form  of  a  collective  investment 
undertaking, 

Article  11  contains  a  general  rule  on  the  treatment  of  conflicts  of  interest  by  the  ELTIF 
manager. The manager may not have any personal interest in a long-term asset in which the 
ELTIF is invested. 

Article  12  provides  detailed  rules  on  the  portfolio  composition  characterising  an  ELTIF.  It 
also covers the diversification rules that each ELTIF has to respect in the context of eligible 
investment assets, such as rules on the maximum risk exposure that an ELTIF can have vis-à-
vis a single counterparty. Article 13 stipulates the maximum limits that an ELTIF can hold in 
a single issuer (concentration limits). Article 14 provides for the conditions under which the 
ELTIF  may  borrow  cash.  Article  15  contains  provisions  on  the  application  of  the  portfolio 
composition  and  the  diversification  rules,  taking  into  account  the  different  stages  in  the 
ELTIF fund life. 

EN 

10 

   EN 

3.3.3.  Chapter  III  –  Redemption,  trading  and  issue  of  ELTIF  shares  or  units  and 

distribution of income (Articles 16-20) 

Chapter  III  deals  with  the  redemption  policy  of  ELTIFs,  the  possibility  of  trading  units  or 
shares of ELTIF on a secondary market, the issuance of new shares or units, the disposal of 
ELTIF assets and the distribution of income to the investors of an ELTIF. 

Article 16 precludes an ELTIF from offering a redemption right to its investors before the end 
of the life-cycle of the ELTIF. The life-cycle is defined in the ELTIF rules and corresponds to 
the life-cycle of the individual assets of the ELTIF and its long-term investment objectives. 

Article  17  provides  for  the  trading  of  units  or  shares  of  an  ELTIF  on  regulated  markets,  as 
well as the free transfer of units or shares of an ELTIF to third parties. Article 18 contains the 
conditions for the issuance of new shares or units by the ELTIF, such as the prior offering to 
existing investors when the issuance price is below the NAV of the ELTIF. Article 19 deals 
with the procedure that each ELTIF shall adopt for the disposal of its assets. Article 20 lays 
down  the  applicable  rules  for  the  distribution  of  the  income  generated  by  the  assets  of  the 
ELTIF and requires an ELTIF to set out its distribution policy in its fund rules. 

3.3.4.  Chapter IV – Transparency requirements (Articles 21-22) 

Chapter IV contains transparency rules where ELTIFs are being advertised to investors. 

Article  21  requires  the  prior  publication  of  a  key  information  document  and  a  prospectus 
before  the  ELTIF  is  marketed  to  retail  investors.  The  prospectus  and  any  other  marketing 
document shall inform the investors about the special nature of the long-term investment into 
an  ELTIF.  Article  22  requires  the  ELTIF  manager  to  disclose  in  a  detailed  way  to  the 
investors all costs attached to the fund. 

3.3.5.  Chapter V – Marketing (Articles 23-25)  

Chapter V contains the rules applicable to an EU AIFM for marketing units or shares of an 
ELTIF to professional and retail investors. 

Article  23  requires  managers  of  ELTIFs  to  have  facilities  in  place  in  each  Member  State 
where  they  intend  to  market  their  ELTIFs.  Article  24  provides  the  additional  requirements 
that managers have to comply with in order to market to retail investors. Article 25 builds on 
the notification procedures contained in the AIFM Directive for authorising the managers of 
ELTIFs to market the units or shares of their ELTIFs to investors both in their home and in 
potential host Member States. 

3.3.6.  Chapter VI – Supervision (Articles 26-29) 

Chapter VI sets out the applicable rules on supervision of ELTIFs. 

Article 26 clarifies the respective roles of the competent authorities of the ELTIF and of the 
manager  of  the  ELTIF.  Article  27  states  that  the  powers  of  the  competent  authorities  under 
UCITS  and  AIFM  Directives  should  be  exercised  also  with  respect  to  the  proposed 
Regulation.  Article  28  refers  to  the  power  of  ESMA,  whereas  Article  29  provides  for  the 
cooperation between supervisory authorities. 

3.3.7.  Chapter VII – Final Provisions (Articles 30-31) 

Chapter  VII  contains  rules  on  a  review  of  the  functioning  of  the  envisaged  rules  to  be 
prepared  by  the  Commission  as  well  as  provisions  on  the  entry  into  force  of  the  proposed 
Regulation. 

EN 

11 

   EN 

4. 

BUDGETARY IMPLICATIONS 

The  budgetary  impact  of  the  ELTIF  regulation  is  as  indicated  in  the  Legislative  Financial 
Statement attached to the proposal. 

EN 

12 

   EN 

2013/0214 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on European Long-term Investment Funds 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 
Having regard to the opinion of the European Economic and Social Committee7,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Long-term  finance  is  a  crucial  enabling  tool  for  putting  the  European  economy  on  a 
path of sustainable, smart and inclusive growth and for building tomorrow's economy 
in a way that is less prone to systemic risks and is more resilient. European long-term 
investment  funds  (ELTIFs)  provide  finance  to  various  infrastructure  projects  or 
unlisted companies of lasting duration that issue equity or debt instruments for which 
there is no  readily  identifiable buyer. By providing  finance to such projects, ELTIFs 
contribute to the financing of the Union economies.  

On  the  demand  side,  ELTIFs  can  provide  a  steady  income  stream  for  pension 
administrators, insurance companies and other entities that face regular and recurrent 
liabilities.  While  providing  less  liquidiy  than  investments  in  transferable  securities, 
ELTIFs  can  provide  a steady  income stream for individual investors that rely on the 
regular  cash  flow  that  an  ELTIF  can  produce.  ELTIFs  can  also  offer  good 
opportunities  for  capital  appreciation  over  time  for  those  investors  not  receiving  a 
steady income stream. 

Financing  for  projects,  regarding 
infrastructure,  sustainable  energy 
transport 
generation or distribution, social infrastructure (housing or hospitals), roll-out of new 
technologies and systems that reduce use of resources and energy or the further growth 
of  SMEs,  can  be  scarce.  As  the  financial  crisis  has  shown,  complementing  bank 
financing with a wider variety of financing sources that better mobilise capital markets 
could help tackle financing gaps. ELTIFs can play a crucial role in this respect.  

(4)  While  individual  investors  may  be  interested  in  investing  in  an  ELTIF,  the  illiquid 
nature  of  most  investments  in  long-term  projects  precludes  an  ELTIF  from  offering 
regular redemptions to its investors. The commitment of the individual investor to an 

7 

OJ C , , p. . 

EN 

13 

   EN 

 
                                                 
(5) 

(6) 

(7) 

(8) 

investment  in  such  assets  is  by  its  nature  made  to  the  full  term  of  the  investment. 
ELTIFs  should,  consequently,  be  structured  so  as  not  to  offer  regular  redemptions 
before  the  end  of  life  of  the  ELTIF.  A  report,  three  years  after  the  adoption  of  this 
Regulation, shall investigate whether this rule will have achieved the expected results 
in  terms  of  ELTIF  distribution  or  whether  the  introduction,  in  a  limited  number  of 
cases, of the possibility, for some individual retail investors, to redeem their units or 
shares  before  the  end  of  the  ELTIF,  may  contribute  to  increase  the  distribution  of 
ELTIF among the individual retail investors. 

Long-term asset classes within the meaning of this Regulation should comprise non-
listed undertakings that issue equity or debt instruments for which there is no readily 
identifiable  buyer.  This  Regulation  should  also  covers  real  assets  that  require 
significant up-front capital expenditure.  

In the absence of a Regulation setting out rules on ELTIFs, diverging measures might 
be  adopted  at  national  level,  which  are  likely  to  cause  distortions  of  competition 
resulting from differences in investment protection measures. Diverging requirements 
on  portfolio  composition,  diversification  and  eligible  assets,  in  particular  the 
investment  in  commodities,  create  obstacles  to  the  cross-border  marketing  of  funds 
that  focus  on  non-listed  undertakings  and  real  assets  because  investors  cannot  easily 
compare  the  different  investment  propositions  offered  to  them.  Divergent  national 
requirements also lead to different levels of investor protection. Furthermore, different 
national requirements pertaining to investment techniques, such as the permitted levels 
of borrowing, use of derivative financial instruments, rules applicable to short selling 
or  securities  financing  transactions  lead  to  discrepancies  in  the  level  of  investor 
protection.  In  addition,  different  requirements  on  redemption  and/or  holding  periods 
impede  the  cross-border  selling  of  funds  investing  in  non-listed  assets.  Those 
divergences can undermine the confidence of investors when considering investments 
in such funds, and reduce the scope for investors to choose effectively between various 
long-term investment opportunities. Consequently, the appropriate legal basis for this 
Regulation  is  Article  114  of  the  Treaty,  as  interpreted  by  consistent  case  law  of  the 
Court of Justice of the European Union.  

Uniform rules across the Union are necessary to ensure that ELTIFs display a coherent 
product  profile  across  the  Union.  In  order  to  ensure  the  smooth  functioning  of  the 
internal  market  and  a  high  level  of  investor  protection,  it  is  necessary  to  establish 
uniform rules regarding the operation of ELTIFs, in particular on the composition of 
the portfolio of ELTIFs and the investment instruments that they are allowed to use in 
order to gain exposure to non-listed undertakings and real assets. Uniform rules on the 
portfolio  of  an  ELTIF  are  also  required  to  ensure  that  ELTIFs  that  aim  to  generate 
regular  income  maintain  a  diversified  portfolio  of  investment  assets  suitable  to 
maintain the regular cash flow. 

It is essential to ensure that the definition of the operation of ELTIFs, in particular on 
the  composition  of  the  portfolio  of  ELTIFs  and  the  investment  instruments  that  they 
are  allowed  to  use  be  directly  applicable  to  the  managers  of  ELTIFs  and  therefore 
these  new  rules  need  to  be  adopted  as  a  Regulation.  This  also  ensures  uniform 
conditions  for  the  use  of  the  designation  ELTIF  by  preventing  diverging  national 
requirements. Managers of ELTIFs should follow the same rules across the Union, in 
order  to  also  enhance  the  confidence  of  investors  in  ELTIFs  and  ensure  sustainable 
trustworthiness  of  the  designation.  At  the  same  time,  by  adopting  uniform  rules,  the 
complexity of the regulatory requirements applicable to ELTIFs is reduced. By means 
of  uniform  rules,  the  managers'  cost  of  compliance  with  divergent  national  rules 

EN 

14 

   EN 

(9) 

governing  funds  that  invest  in  non-listed  undertakings  and  comparable  real  asset 
classes is also reduced. This is especially true for managers that wish to raise capital 
on a cross-border basis. It also contributes to eliminate competitive distortions. 

The new rules on ELTIFs are closely linked to Directive 2011/61/EU of the European 
Parliament  and  of  the  Council  of  8  June  2011  on  Alternative  Investment  Fund 
Managers  and  amending  Directives  2003/41/EC  and  2009/65/EC  and  Regulations 
(EC)  No 1060/2009  and  (EU)  No 1095/20108  since  that  Directive  forms  the  legal 
framework governing the management and marketing of alternative investment funds 
(AIFs)  in  the  Union.  By  definition  ELTIFs  are  EU  AIFs  that  are  managed  by 
alternative  investment  fund  managers  (AIFMs)  authorised  in  accordance  with 
Directive 2011/61/EU. 

(10)  Whereas Directive 2011/61/EU also foresees a staged third country regime governing 
non-EU  AIFMs  and  non-EU  AIFs,  the  new  rules  on  ELTIFs  have  a  more  limited 
scope emphasising the European dimension of the new long term investment product. 
Hence, only an EU AIF as defined in Directive 2011/61/EU is eligible to become an 
authorised ELTIF and only if it is managed by an EU AIFM that has been authorised 
in accordance with Directive 2011/61/EU.  

(11)  The new rules applicable to ELTIFs should build on the existing regulatory framework 
established through Directive 2011/61/EU and the acts adopted for its implementation. 
Therefore, the product rules concerning ELTIFs should apply in addition to the rules 
laid  down  in  the  existing  Union  legislation.  Particularly,  the  management  and 
marketing rules laid down in Directive 2011/61/EU should apply to ELTIFs. Equally, 
the rules on the cross-border provision of services and freedom of establishment laid 
down in Directive 2011/61/EU should apply accordingly to the cross-border activities 
of ELTIFs. These should be supplemented by the specific marketing rules designed for 
the cross-border marketing of ELTIFs to both retail and professional investors across 
the Union. 

(12)  Uniform  rules  should  apply  to  all  those  EU  AIFs  that  wish  to  market  themselves  as 
ELTIFs.  EU  AIFs  that  do  not  wish  to  market  themselves  as  ELTIFs  should  not  be 
bound by these rules, thereby also consenting not to benefit from the advantages that 
ensue.  On  the  other  hand,  Undertakings  for  collective  investment  in  transferable 
securities (UCITS) and non-EU AIFs would not be eligible for marketing as ELTIFs. 

(13) 

In order to ensure the compliance of ELTIFs with the harmonised rules governing the 
activity of these funds, it is  necessary to require that competent authorities authorise 
ELTIFs.  The  harmonised  authorisation  and  supervision  procedures  for  AIFMs  under 
Directive  2011/61/EU  should  therefore  be  supplemented  with  a  special  authorisation 
procedure  for  ELTIFs.  Procedures  should  be  established  to  ensure  that  only  EU 
AIFMs authorised in accordance with Directive 2011/61/EU and capable of managing 
an  ELTIF  may  manage  ELTIFs.  All  appropriate  steps  are  taken  to  ensure  that  the 
ELTIF  shall  be  able  to  comply  with  the  harmonised  rules  governing  the  activity  of 
these funds. 

(14)  Given that EU AIFs may take different legal forms that do not necessarily endow them 
with  legal  personality,  the  provisions  requiring  ELTIFs  to  take  action  should  be 
understood  to  refer  to  the  manager  of  the  ELTIF  in  cases  where  the  ELTIF  is 
constituted as an EU AIF that is not in a position to act by itself because it has no legal 
personality of its own. 

8 

OJ L 174, 1.7.2011, p. 1. 

EN 

15 

   EN 

                                                 
(15) 

In order to ensure that ELTIFs target long-term investments, rules on the portfolio of 
ELTIFs should require a clear identification of the categories of assets that should be 
eligible for investment by ELTIFs and of the conditions under which they should be 
eligible.  An  ELTIF  should  invest  at  least  70%  of  its  capital  in  eligible  investment 
assets. To ensure the integrity of ELTIFs it is also desirable to prohibit an ELTIF from 
engaging in certain financial transactions that might endanger its investment strategy 
and objectives by raising additional risks different to those that might be expected for 
a fund targeting long-term investments. In order to ensure a clear focus on long term 
investments,  as  may  be  useful  for  retail  investors  unfamiliar  with  less  conventional 
investment strategies, an ELTIF should not be allowed to invest in financial derivative 
instruments other than for the purpose of hedging the duration and currency risk of the 
other  assets.  Given  the  liquid  nature  of  commodities  and  financial  derivative 
instruments that give an indirect exposure to them, investments in commodities do not 
require  a  long-term  investor  commitment  and  therefore  should  be  excluded.  This 
rationale  does  not  apply  to  investments  in  infrastructure  or  companies  related  to 
commodities  or  whose  performance  is  linked  indirectly  to  the  performance  of 
commodities, such as farms in the case of agricultural commodities or power plants in 
the case of energy commodities. 

(16)  The  definition  of  what  constitutes  a  long-term  investment  is  broad.  Without 
necessarily  requiring  long-term  holding  periods  for  the  ELTIF  manager,  eligible 
investment  assets  are  generally  illiquid,  require  commitments  for  a  certain  period  of 
time, and have an economic profile of a long-term nature. Eligible investment assets 
are  non-transferable  securities  and  therefore  do  not  have  access  to  the  liquidity  of 
secondary  markets.  They  often  require  fixed  term  commitments  which  restrict  their 
marketability. The economic cycle of the investment sought by ELTIFs is essentially 
of  a  long-term  nature  due  to  the  high  capital  commitments  and  the  length  of  time 
required  to  produce  returns.  As  a  result  such  assets  do  not  suit  investments  with 
redemption rights. 

(17)  An ELTIF should be allowed to invest in assets other than eligible investment assets, 
as  may  be  necessary  to  efficiently  manage  its  cash  flow,  but  only  so  long  as  this  is 
consistent with the ELTIF’s long term investment strategy. 

(18)  Eligible investment assets must be understood to include participations, such as equity 
or quasi-equity instruments, debt instruments in qualifying portfolio undertakings and 
loans provided to them. They should also include participation in other funds that are 
focused on assets such as investments in non-listed undertakings that issue equity or 
debt  instruments  for  which  there  is  not  always  a  readily  identifiable  buyer.  Direct 
holdings of real assets, unless they are securitised, should also form a class of eligible 
assets. 

(19)  Quasi-equity  instruments  must  be  understood  to  comprise  a  type  of  financing 
instrument,  which  is  a  combination  of  equity  and  debt,  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. 
Such  instruments  include  a  variety  of  financing  instruments  such  as  subordinated 
loans,  silent  participations,  participating  loans,  profit  participating  rights,  convertible 
bonds and bonds with warrants.  

(20)  To  reflect  existing  business  practices,  an  ELTIF  should  be  allowed  to  buy  existing 
shares  of  a  qualifying  portfolio  undertaking  from  existing  shareholders  of  that 
undertaking.  Also,  for  the  purposes  of  ensuring  the  widest  possible  opportunities  for 

EN 

16 

   EN 

fundraising, investments into other ELTIFs should be permitted. To prevent dilution of 
the  investments  into  qualifying  portfolio  undertakings,  ELTIFs  should  only  be 
permitted to invest in other ELTIFs, provided that those ELTIFs have not themselves 
invested more than 10 % of their capital in other ELTIFs. 

(21)  The use of financial undertakings can be necessary in order to pool and organise the 
contributions  of  different  investors,  including  investments  of  a  public  nature,  into 
infrastructure  projects.  ELTIFs  should  therefore  be  permitted  to  invest  in  eligible 
investment  assets  by  means  of  financial  undertakings,  so  long  as  these  undertakings 
are dedicated to financing long-term projects. 

(22) 

In order to provide investors with the assurance that ELTIFs contribute directly to the 
development  of  long-term  investments,  ELTIFs  should  be  limited  to  investments  in 
undertakings  that  have  not  been  listed.  Therefore  qualifying  portfolio  undertakings 
should  not  be  listed  on  regulated  markets.  Qualifying  portfolio  undertakings  include 
infrastructure  projects,  investment  in  unlisted  companies  seeking  growth  and 
investments  in  real  estate  or  other  real  assets  that  could  be  suitable  for  long  term 
investment purposes. 

(23)  Due to the scale of infrastructure projects, these require large amounts of capital that 
have to remain invested for long periods of time. Such infrastructure projects include 
infrastructure  such  as  schools,  hospitals  or  prisons,  social 
public  building 
infrastructure  such  as  social  housing,  transport  infrastructure  such  as  roads,  mass 
transit  systems  or  airports,  energy  infrastructure  such  as  energy  grids,  climate 
adaptation  and  mitigation  projects,  power  plants  or  pipelines,  water  management 
irrigation  systems, 
infrastructure  such  as  water  supply  systems,  sewage  or 
communication infrastructure such as networks and waste management infrastructure 
such as recycling or collection systems.  

(24)  Unlisted  undertakings  can  face  difficulties  accessing  capital  markets  and  financing 
further  growth  and  expansion.  Private  financing  through  equity  stakes  or  loans  are 
typical ways of raising financing. Because such instruments are by their nature long-
term investments they require patient capital that ELTIFs can provide. 

(25) 

Investments in real assets require patient capital due to the absence of liquid secondary 
markets.  Investment  funds  represent  an  essential  source  of  financing  for  assets  that 
require large capital expenditure. For these assets, capital pooling is often necessary to 
achieve  the  desired  level  of  funding.  Such  investments  require  long  periods  of  time 
due  to  the  generally  long  economic  cycle  attached  to  these  assets.  It  generally  takes 
several years to amortize the investment in large real assets. In order to facilitate the 
development  of  such  large  assets,  ELTIFs  should  be  able  to  invest  directly  in  real 
assets with a value of more than €10 million.  In practice this would include assets such 
as  infrastructure,  real  estate,  ships,  aircraft  or  rolling  stock.  For  these  reasons  it  is 
necessary to treat direct holdings in real assets and investments in qualifying portfolio 
undertakings in like manner. 

(26)  Where  the  manager  holds  a  stake  in  a  portfolio  undertaking,  there  is  a  risk  that  the 
manager puts its interests ahead of the interests of investors in the fund. To avoid such 
conflict  of  interests,  the  ELTIF  should  only  invest  in  assets  that  are  unrelated  to  the 
manager. 

(27) 

In order to allow managers of ELTIFs a certain degree of flexibility in the investment 
of their funds, trading in assets other than long-term investments should be permitted 
up to a maximum threshold of 30 % of their capital. 

EN 

17 

   EN 

(28) 

(29) 

(30) 

In  order  to  limit  risk-taking  by  ELTIFs  it  is  essential  to  reduce  counterparty  risk  by 
subjecting the portfolio of ELTIFs  to clear diversification requirements. All over-the 
counter (OTC) derivatives should be subject to Regulation (EU) No 648/2012 of the 
European  Parliament  and  of  the  Council  of  4  July  2012  on  OTC  derivatives,  central 
counterparties and trade repositories9. 

In order to prevent the exercise of significant influence by an investing ELTIF over the 
management of another ELTIF or of an issuing body, it is necessary to avoid excessive 
concentration by an ELTIF in the same investment. 

In order to allow ELTIF managers to raise further capital during the life of the fund, 
they should be permitted to borrow cash amounting to up to 30% of the capital of the 
fund.  This  should  serve  to  provide  additional  return  to  the  investors.  In  order  to 
eliminate  the  risk  of  currency  mismatches,  the  ELTIF  should  only  borrow  in  the 
currency the manager expects to acquire the asset in.  

(31)  Due to the long-term and illiquid nature of the investments of an ELTIF, the managers 
should  have  sufficient  time  to  apply  the  investment  limits.  The  time  required  to 
implement these limits should take account of the peculiarities and characteristics of 
the investments but should not exceed five years. 

(32)  Notwithstanding the fact that ELTIFs do not offer redemption rights before the end of 
life of the ELTIF, nothing should prevent an ELTIF from seeking admission of these 
shares  or  units  to  a  regulated  market  as  defined  in  Article  4(14)  of  Directive 
2004/39/EC  of  the  European  Parliament  and  of  the  Council  of  21  April  2004  on 
markets  in  financial  instruments,10  to  a  multilateral  trading  facility  as  defined  in 
Article 4(15) of Directive 2004/39/EC, or to an organised trading facility as defined in 
point (…) of Regulation (…), thus providing investors with an opportunity to sell their 
units  or  shares  before  the  end  of  life  of  the  ELTIF.  The  rules  or  instruments  of 
incorporation  of  an  ELTIF  should  therefore  not  prevent  units  or  shares  from  being 
admitted to or from being dealt in regulated markets, nor should they prevent investors 
from  freely  transferring  their  shares  or  units  to  third  parties  who  wish  to  purchase 
those shares or units. 

(33) 

In order for investors to effectively redeem their units or shares at the end of the fund's 
life, the manager should start to sell the portfolio of assets of the ELTIF in good time 
to  ensure  the  value  is  properly  realised.  In  determining  an  orderly  disinvestment 
schedule, the ELTIF manager should take into account the different maturity profiles 
of  the  investments  and  the  length  of  time  necessary  to  find  a  buyer  for  the  assets  in 
which the ELTIF is invested. Due to the impracticality of maintaining the investment 
limits during this liquidation period, they should cease to apply when the liquidation 
period starts. 

(34)  The assets in which an ELTIF is invested may obtain a listing on a regulated market 
during the life of the fund. Where this happens, the asset would no longer comply with 
the non-listing requirement of this Regulation. In order to allow managers to disinvest 
from such an asset in an orderly manner, this asset could continue to count towards the 
70% limit of eligible investment assets for up to three years. 

(35)  Given  the  specific  characteristics  of  ELTIFs,  as  well  as  the  targeted  retail  and 
professional  investors  it  is  important  that  solid  transparency  requirements  be  put  in 
place  that  are  capable  of  allowing  prospective  investors  to  make  an  informed 

9 
10 

OJ L 201. 27.7.2012. p.1 
OJ L 145, 30.4.2004, p.1. 

EN 

18 

   EN 

                                                 
judgement  and  be  fully  aware  of  the  risks  implied.  In  addition  to  the  transparency 
requirements contained in Directive 2011/61/EU, ELTIFs should publish a prospectus 
the  content  of  which  should  necessarily  include  all  information  required  to  be 
disclosed by collective investment undertakings of the closed-end type in accordance 
with  Directive  2003/71/EC  of  the  European  Parliament  and  of  the  Council11  and 
Commission Regulation (EC) No 809/2004.12 For the marketing of an ELTIF to retail 
investors  it  should  be  mandatory  to  publish  a  key  information  document  (KID)  in 
accordance  with  Regulation  No  […]  of  […]  of  the  European  Parliament  and  the 
Council.  Furthermore,  any  marketing  documents  should  explicitly  draw  attention  to 
the risk profile of the ELTIF.  

(36)  As  ELTIFs  target  both  professional  and  retail  investors  across  the  Union,  it  is 
necessary that certain requirements be added to the marketing requirements laid down 
in  Directive  2011/61/EU  in  order  to  ensure  an  appropriate  degree  of  investor 
protection. Thus, facilities should be made available for making subscriptions, making 
payments  to  unit-  or  shareholders,  repurchasing  or  redeeming  units  or  shares  and 
making  available  the  information  which  the  ELTIF  and  its  managers  are  required  to 
provide. Moreover, in order to ensure that retail investors are not disadvantaged with 
respect to experienced professional investors certain safeguards have to be put in place 
when ELTIFs are marketed to retail investors.  

(37)  The  competent  authority  of  the  ELTIF  should  verify  whether  an  ELTIF  is  able  to 
comply  with  this  Regulation  on  an  on-going  basis.  As  the  competent  authorities  are 
already  provided  with  extensive  powers  under  Directive  2011/61/EU,  it  is  necessary 
that such powers be extended in order to be exercised by reference to the new common 
rules on ELTIFs.  

(38)  ESMA  should  be  able  to  exercise  all  the  powers  conferred  under  Directive 

2011/61/EU with respect to this Regulation. 

(39)  The  European  Securities  and  Markets  Authority  (ESMA),  established  by  Regulation 
(EU) No 1095/2010 of the European Parliament and of the Council of 24 November 
2010 establishing a European Supervisory Authority (ESMA), amending Decision No 
716/2009/EC and repealing Commission Decision 2009/77/EC,13 should play a central 
role  in  the  application  of  the  rules  concerning  ELTIFs  by  ensuring  consistent 
application  of  Union  rules  by  national  competent  authorities.  As  a  body  with  highly 
specialised  expertise  regarding  securities  and  securities  markets,  it  is  efficient  and 
appropriate  to  entrust  ESMA  with  the  elaboration  of  draft  regulatory  technical 
standards which do not involve policy choices, for submission to the Commission, in 
respect of the circumstances in which the life of an ELTIF will be sufficient in length 
to cover the life-cycle of each of the individual assets of the ELTIF, the features of the 
schedule  for  the  orderly  disposal  of  ELTIF  assets,  the  definitions,  calculation 
methodologies  and  presentation  of  cost  disclosures,  and  the  characteristics  of  the 
facilities to be set up by ELTIFs in each Member  State where they intend  to market 
units or shares. 

(40)  The  new  uniform  rules  on  ELTIFs  should  comply  with  the  provisions  of  Directive 
95/46/EC of the European Parliament and of the Council of 24 October 1995 on the 
protection of individuals with regard to the processing of personal data and on the free 

11 
12 
13 

OJ L 345, 31.12.2003, p.64. 
OJ L 149, 30.4.2004, p.1. 
OJ L 331, 15.12.2010, p.84. 

EN 

19 

   EN 

                                                 
movement  of  such  data14  and  with  Regulation  (EC)  No  45/2001  of  the  European 
Parliament and of the Council of 18 December 2000 on the protection of individuals 
with  regard  to  the  processing  of  personal  data  by  the  Community  institutions  and 
bodies and of the free movement of such data15. 

(41)  Since the objectives of this Regulation, namely to ensure uniform requirements on the 
investments and operating conditions for ELTIFs throughout the Union, while taking 
full account of the need to balance safety and reliability of ELTIFs with the efficient 
operation  of  the  market  for  long-term  financing  and  the  cost  for  its  various 
stakeholders, cannot be sufficiently achieved by the Member States and can therefore, 
by  reason  of  its  scale  and  effects,  be  better  achieved  at  Union  level,  the  Union  may 
adopt measures in accordance with the principle of subsidiarity as set out in Article 5 
of the Treaty on European Union. In accordance with the principle of proportionality, 
as set out in that Article, this Regulation does not go beyond what is necessary in order 
to achieve those objectives. 

(42)  The  new  uniform  rules  on  ELTIFs  respect  the  fundamental  rights  and  observe  the 
principles  recognised  in  particular  by  the  Charter  of  Fundamental  Rights  of  the 
European Union and notably consumer protection, the freedom to conduct a business, 
the  right  to  remedy  and  to  a  fair  trial,  and  the  protection  of  personal  data.  The  new 
uniform  rules  on  ELTIFs  should  be  applied  in  accordance  with  those  rights  and 
principles, 

HAVE ADOPTED THIS REGULATION: 

Chapter I 
General provisions 

Article 1 
Subject matter 

1. 

2. 

This  Regulation  lays  down  uniform  rules  on  the  authorisation,  investment  policies 
and operating conditions of EU alternative investment funds (AIFs) that are marketed 
in the Union as European long-term investment funds (ELTIFs). 

Member States shall not add any additional requirements in the field covered by this 
Regulation. 

Article 2 
Definitions 

For the purposes of this Regulation the following definitions apply: 

(1) 

(2) 

‘capital’  means  aggregate  capital  contributions  and  uncalled  committed  capital, 
calculated on the basis of amounts investible after deduction of all fees, charges and 
expenses which are directly or indirectly borne by investors; 

'equity'  means  ownership  interest  in  an  undertaking,  represented  by  the  shares  or 
other  forms  of  participation  in  the  capital  of  the  qualifying  portfolio  undertaking 
issued to its investors; 

14 
15 

OJ L 281, 23.11.1995, p. 31–50 
OJ L 8, 12.1.2001, p. 1–22 

EN 

20 

   EN 

                                                 
(3) 

'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; 

(4) 

‘financial undertaking’ means any of the following: 

(a) 

(b) 

(c) 

(d) 

(e) 

a credit institution as defined in point (1) of Article 4 of Directive 2006/48/EC 
of the European Parliament and of the Council16; 

an  investment  firm  as  defined  in  point  (1)  of  Article  4(1)  of  Directive 
2004/39/EC; 

an  insurance  undertaking  as  defined  in  point  (1)  of  Article  13  of  Directive 
2009/138/EC of the European Parliament and of the Council17; 

a financial holding company as defined in point (19) of Article 4 of Directive 
2006/48/EC; 

a  mixed-activity  holding  company  as  defined  in  point  (20)  of  Article  4  of 
Directive 2006/48/EC; 

‘competent  authority  of  the  ELTIF’  means  the  competent  authority  of  the  home 
Member State of the EU AIF as defined in Article 4(1)(p) of Directive 2011/61/EU; 

‘ELTIF  home  Member  State’  means  the  Member  State  where  the  ELTIF  is 
authorised. 

Article 3 
Authorisation and use of designation 

Only EU AIFs shall be eligible for authorisation as an ELTIF. 

An  ELTIF  shall  only  be  marketed  in  the  Union  where  it  has  been  authorised  in 
accordance with this Regulation.  

The authorisation as an ELTIF shall be valid for all Member States. 

A collective investment undertaking shall only use the designation 'ELTIF' or 'long-
term investment fund' in relation to itself or the units or shares it issues where it has 
been authorised in accordance with this Regulation. 

The competent authorities of the ELTIF 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, its manager and the competent authority of the ELTIF. The register 
shall be made available in electronic format. 

(5) 

(6) 

1. 

2. 

3. 

4. 

Article 4 
Application for authorisation as ELTIF  

1. 

An ELTIF shall apply for authorisation to its competent authority. 

The application for authorisation as an ELTIF shall include the following: 

(a) 

the fund rules or instruments of incorporation; 

16 
17 

OJ L 177, 30.6.2006, p.1. 
OJ L 335, 17.12.2009, p.1. 

EN 

21 

   EN 

                                                 
(b) 

(c) 

(d) 

(e) 

information on the identity of the manager; 

information on the identity of the depositary; 

a description of the information to be made available to investors; 

any other information or document requested by the competent authority of the 
ELTIF to verify compliance with the requirements of this Regulation. 

2. 

An  EU  alternative  investment  fund  manager  (AIFM)  authorised  under  Directive 
2011/61/EU  shall  apply  to  the  competent  authority  of  the  ELTIF  for  approval  to 
manage an ELTIF that has submitted an application for authorisation in accordance 
with paragraph 1. 

The application for managing the ELTIF shall include the following: 

(a) 

(b) 

(c) 

the written agreement with the depositary; 

information  on  delegation  arrangements  regarding  portfolio  and  risk 
management and administration with regard to the ELTIF; 

 information  about  the  investment  strategies,  the  risk  profile  and  other 
characteristics of AIFs that the 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 it received the 
request submitted by the competent authority of the ELTIF.  

The ELTIF and the EU AIFM shall be informed within two months from the date of 
submission  of  a  complete  application  whether  authorisation  of  the  ELTIF  has  been 
granted.  

Any subsequent modifications of the documentation referred to in paragraphs 1 and 2 
shall be immediately notified to the competent authority of the ELTIF.  

3. 

4. 

Article 5 
Conditions for granting the authorisation 

1. 

An applicant ELTIF shall be authorised only where its competent authority: 

(a) 

is satisfied that the applicant ELTIF 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 and the choice of 
the depositary. 

2. 

The competent authority of the ELTIF may refuse the application of the EU AIFM to 
manage the ELTIF only where: 

(a) 

(b) 

(c) 

the EU AIFM does not comply with this Regulation; 

the EU AIFM does not comply with Directive 2011/61/EU; 

the EU AIFM is not authorised by its competent authority to manage AIFs that 
include funds of the type covered in this Regulation; 

(d) 

the EU AIFM has not provided the documentation referred to in Article 4(2). 

EN 

22 

   EN 

 
3. 

4. 

1. 

2. 

3. 

Before refusing an application the competent authority of the ELTIF shall consult the 
competent authority of the EU AIFM. 

The  competent  authority  shall  not  grant  authorisation  as  an  ELTIF  if  the  applicant 
ELTIF  is  legally  prevented  from  marketing  its  units  or  shares  in  its  home  Member 
State. 

Authorisation  as  an ELTIF shall not be subject to a requirement that  the ELTIF be 
managed by an EU AIFM authorised in the ELTIF home Member State or that the 
EU AIFM pursue or delegate any activities in the ELTIF home Member State 

Article 6 
Applicable rules and liability 

An ELTIF shall comply at all times with the provisions of this Regulation.  

An  ELTIF  and  its  manager  shall  comply  at  all  times  with  the  requirements  of 
Directive 2011/61/EU.  

The  manager  of  the  ELTIF  shall  be  responsible  for  ensuring  compliance  with  this 
Regulation. The manager shall be liable for any loss or damage resulting from non-
compliance with this Regulation. 

Chapter II 
Obligations concerning the investment policies of ELTIFs 

SECTION 1 
GENERAL RULES AND ELIGIBLE ASSETS 

Article 7 
Investment compartments 

Where an ELTIF comprises more than one investment compartment, each compartment shall 
be regarded as a separate ELTIF for the purposes of this Chapter.  

Article 8 
Eligible investments 

1. 

An ELTIF shall only invest in the following categories of assets and only under the 
conditions specified in this Regulation: 

(a) 

(b) 

eligible investment assets; 

assets  referred  to  in  Article  50(1)  of  Directive  2009/65/EC  of  the  European 
Parliament and of the Council.18 

2. 

An ELTIF shall not undertake any of the following activities: 

(a) 

(b) 

short-selling of assets; 

taking  direct  or  indirect  exposure  to  commodities,  including  via  derivatives, 
certificates  representing  them,  indices  based  on  them  or  any  other  means  or 
instrument that would give an exposure to them; 

18 

OJ L 302, 17.11.2009, p. 32. 

EN 

23 

   EN 

                                                 
(c) 

entering  into  securities  lending  agreements,  securities  borrowing  agreements, 
and  repurchase  agreements  or  any  other  agreement  that  would  encumber  the 
assets of the ELTIF;  

(d)  using financial derivative instruments, except where the underlying instrument 
consists  of  interest  rates  or  currencies  and  it  solely  serves  the  purpose  of 
hedging  the  duration  and  exchange  risks  inherent  to  other  investments  of  the 
ELTIF. 

Article 9 
Eligible investment assets 

An asset referred to in Article 8(1)(a) shall be eligible for investment by an ELTIF only where 
it falls into one of the following categories: 

(a) 

equity or quasi-equity instruments which have been: 

(b) 

(c) 

(d) 

(e) 

1. 

(i) 

(ii) 

(iii) 

issued by a qualifying portfolio undertaking and acquired directly by the 
ELTIF from the qualifying portfolio undertaking; 

issued  by  a  qualifying  portfolio  undertaking  in  exchange  for  an  equity 
instrument previously acquired directly by the ELTIF from the qualifying 
portfolio undertaking; 

issued by an undertaking of which the qualifying portfolio undertaking is 
a  majority-owned  subsidiary,  in  exchange  for  an  equity  instrument 
acquired  in  accordance  with  points  (i)  or  (ii)  by  the  ELTIF  from  the 
qualifying portfolio undertaking; 

debt instruments issued by a qualifying portfolio undertaking; 

loans granted by the ELTIF to a qualifying portfolio undertaking; 

units  or  shares  of  one  or  several  other  ELTIFs,  European  Venture  Capital  Funds 
(EuVECAs)  and  European  Social  Entrepreneurship  Funds  (EuSEFs)  provided  that 
those ELTIFs, EuVECAs and EuSEFs have not themselves invested more than 10% 
of their capital in ELTIFs; 

direct holdings of individual real assets that require up-front capital expenditure of at 
least EUR 10 million or its equivalent in the currency, and at the time, in which the 
expenditure is incurred.  

Article 10 
Qualifying portfolio undertaking 

A  qualifying  portfolio  undertaking  referred  to  in  Article  9(1)  shall  be  a  portfolio 
undertaking  other  than  a  collective  investment  undertaking,  that  fulfils  all  of  the 
following requirements: 

(a) 

(b) 

it is not a financial undertaking; 

it is not admitted to trading: 

(i) 

on  a  regulated  market  as  defined  in  Article  4(14)  of  Directive 
2004/39/EC;  

(ii)  on a multilateral trading facility as defined in Article 4(15) of Directive 

2004/39/EC; 

EN 

24 

   EN 

(iii)  on organised trading facilities as defined in point […] of Regulation […]; 

(c) 

it shall be established in a Member State, or in a third country provided that the 
third country: 

(i) 

is  not  a  high-risk  and  non-cooperative  jurisdictions  identified  by  the 
Financial Action Task Force (FATF); 

(ii)  has signed an agreement with the home Member State of the manager of 
the  ELTIF  and  with  every  other  Member  State  in  which  the  units  or 
shares of the ELTIF are intended to be marketed to ensure that the third 
country fully complies with the standards laid down in Article 26 of the 
OECD Model Tax Convention on Income and on Capital and ensures an 
effective  exchange  of  information  in  tax  matters,  including  any 
multilateral tax agreements. 

2. 

By  way  of  derogation  from  paragraph  1(a)  of  this  Article,  a  qualifying  portfolio 
undertaking  may  be  a  financial  undertaking  that  exclusively  finances  qualifying 
portfolio undertakings referred to in paragraph 1 of this Article or real assets referred 
to in Article 9.  

Article 11 
Conflict of interest 

An ELTIF shall not invest in an eligible investment asset in which the manager has or takes a 
direct or indirect interest, other than by holding units or shares of the ELTIF it manages. 

SECTION 2 
PROVISIONS ON INVESTMENT POLICIES 

Article 12 
Portfolio composition and diversification 

1. 

2. 

3. 

4. 

5. 

An ELTIF shall invest at least 70% of its capital in eligible investment assets. 

An ELTIF shall invest no more than: 

(a)  10%  of  its  capital  in  assets  issued  by  any  single  qualifying  portfolio 

undertaking; 

(b)  10% of its capital in an individual real asset; 

(c)  10% of its capital in units or shares of any single ELTIF, EuVECA or EuSEF;  

(d)  5% of its capital in assets referred to in Article 8(1)(b) where those assets have 

been issued by any single body. 

The  aggregate  value  of  units  or  shares  of  ELTIFs,  EuvECAs  and  EuSEFs  in  an 
ELTIF portfolio shall not exceed 20% of the value of its capital. 

The aggregate risk exposure to a counterparty of the ELTIF stemming from over the 
counter  (OTC)  derivative  transactions  or  reverse  repurchase  agreements  shall  not 
exceed 5% of its capital. 

By way of derogation from paragraph 2(a) and 2(b), the ELTIF may raise the 10% 
limit referred to therein to 20%, provided that the aggregate value of the assets held 
by  the  ELTIF  in  qualifying  portfolio  undertakings  and  in  individual  real  assets  in 

EN 

25 

   EN 

which it invests more than 10% of its capital does not exceed 40% of the value of its 
capital. 

Companies  which  are  included  in  the  same  group  for  the  purposes  of  consolidated 
accounts, as regulated by Seventh Council Directive 83/349/EEC19 or in accordance 
with  recognised  international  accounting  rules,  shall  be  regarded  as  a  single 
qualifying portfolio undertaking or a single body for the purpose of calculating the 
limits referred to in paragraphs 1 to 5. 

Article 13 
Concentration 

An ELTIF may acquire no more than 25% of the units or shares of a single ELTIF, 
EuVECA or EuSEF. 

The  concentration  limits  laid  down  in  Article  56(2)  of  Directive  2009/65/EC  shall 
apply to investments in the assets referred to in Article 8(1)(b) of this Regulation. 

6. 

1. 

2. 

Article 14 
Borrowing of cash 

An  ELTIF  may  borrow  cash  provided  that  such  borrowing  fulfils  all  of  the  following 
conditions: 

(a) 

(b) 

(c) 

(d) 

(e) 

it represents no more than 30% of the capital of the ELTIF; 

it serves the purpose of acquiring a participation in eligible investment assets;  

it is contracted in the same currency as the assets to be acquired with the borrowed 
cash; 

it does not hinder the realisation of any asset held in the portfolio of the ELTIF;  

it does not encumber the assets held in the portfolio of the ELTIF. 

Article 15 
Application of portfolio composition and diversification rules 

1. 

The investment limits laid down in Article 12(1) shall: 

(a) 

apply by the date specified in the ELTIF rules or instruments of incorporation, 
where this date shall take account of the peculiarities and characteristics of the 
assets to be invested by the ELTIF and shall not be later than five years after 
the  authorisation  of  the  ELTIF.  In  exceptional  circumstances,  the  competent 
authority  of  the  ELTIF,  upon  submission  of  a  duly  justified  investment  plan, 
may  approve  an  extension  of  this  time  limit  by  no  more  than  one  additional 
year; 

(b) 

cease  to  apply  once  the  ELTIF  starts  to  sell  assets  in  accordance  with  its 
redemption policy as set out in Article 16; 

(c)  be temporarily suspended where the ELTIF raises additional capital, so long as 

such a suspension lasts no longer than 12 months. 

Where a long-term asset in which the ELTIF has invested is issued by a qualifying 
portfolio  undertaking  that  no  longer  complies  with  Article  10(1)(b),  the  long-term 

OJ L 193, 18.7.1983, p. 1. 

26 

   EN 

2. 

19 

EN 

                                                 
asset may continue to be counted for the purpose of calculating the 70% referred to 
in  Article  12(1)  for  a  maximum  of  three  years  as  of  the  date  when  the  portfolio 
undertaking no longer fulfils the requirements in Article 10.  

Chapter III 
Redemption, trading and issue of ELTIF shares or units and 
distributions of income 

Article 16 
Redemption policy 

1. 

Investors shall  not  be  able  to  ask for redemption  of  their units or shares before the 
end  of  life  of  the  ELTIF.  Redemption  to  investors  shall  be  possible  as  of  the  day 
following the date defining the end of life of the ELTIF.  

The end of life of the ELTIF shall be clearly indicated as a specific date in the ELTIF 
rules or instruments of incorporation and disclosed to investors. 

The  ELTIF  rules  or  instruments  of  incorporation  and  disclosures  to  investors  shall 
lay down the procedures for redemption and disposal of assets and state clearly that 
redemption to investors shall commence on the day following the date defining the 
end of life of the ELTIF. 

The life of the ELTIF shall be sufficient in length to cover the life-cycle of each of 
the individual assets of the ELTIF, measured according to the illiquidity profile and 
economic life-cycle of the asset, and the stated investment objective of the ELTIF. 

Investors  may request the  winding  down of the ELTIF if their redemption requests 
have not been satisfied within one year after the end of life of the ELTIF. 

Investors shall always have the option to be repaid in cash.  

Repayment in kind out of the ELTIF’s assets shall be possible only where all of the 
following conditions are met: 

(a) 

(b) 

the ELTIF rules or instrument of incorporation foresees this possibility, under 
the condition that all investors receive fair treatment; 

the  investor  asks  in  writing  to  be  repaid  through  a  share  of  the  assets  of  the 
fund;  

(c)  no specific rules restrict the transfer of those assets. 

the 
ESMA  shall  develop  draft 
circumstances in which the life of an ELTIF is sufficient in length to cover the life-
cycle of each of the individual assets of the ELTIF. 

technical  standards  specifying 

regulatory 

2. 

3. 

4. 

5. 

6. 

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. 

EN 

27 

   EN 

1. 

2. 

1. 

2. 

1. 

2. 

Article 17 
Secondary market 

The ELTIF rules or instrument of incorporation shall not prevent units or shares of 
an ELTIF from being admitted to trading on a regulated market as defined in Article 
4(14)  of  Directive  2004/39/EC  or  on  a  multilateral  trading  facility  as  defined  in 
Article 4(15) of Directive 2004/39/EC or on an organised trading facility as defined 
in point (…) of Regulation (…). 

The  ELTIF  rules  or  instrument  of  incorporation  shall  not  prevent  investors  from 
freely transferring their shares or units to third parties. 

Article 18 
Issuance of new shares or units 

An ELTIF may offer new issues of shares or units in accordance with its fund rules 
or instruments of incorporation. 

An  ELTIF  shall  not  issue  new  shares  or  units  at  a  price  below  its  net  asset  value 
without a prior offering of those shares or units at that price to existing investors. 

Article 19 
Disposal of ELTIF assets 

Each ELTIF shall adopt an itemised schedule for the orderly disposal of its assets in 
order to redeem investors after the end of life of the ELTIF.  

The schedule referred to in paragraph 1 shall include:  

(a) 

(b) 

(c) 

(d) 

an assessment of the market for potential buyers;  

an assessment and comparison of potential sales prices;  

a valuation for the assets to be divested; 

a precise timeframe for the disposal schedule.  

3. 

ESMA shall develop draft regulatory technical standards specifying the criteria to be 
used for the assessments in point (a) and valuation in point (c) of paragraph 2. 

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. 

Article 20 
Distribution of income 

1. 

An  ELTIF  may  regularly  distribute  to  investors  the income  generated by the  assets 
contained in the portfolio. This income shall be composed of: 

(a) 

(b) 

any income that the assets are regularly producing; 

the capital appreciation realized after the disposal of an asset, but excluding the 
original capital commitments made. 

EN 

28 

   EN 

2. 

3. 

The  income  shall  not  be  distributed  to  the  extent  that  it  is  required  for  future 
commitments of the ELTIF. 

The  ELTIF  shall  state  in  its  fund  rules  or  instruments  of  incorporation  the 
distribution policy that it will adopt during the life of the fund.  

Chapter IV 
Transparency requirements 

Article 21 
Transparency 

1. 

The  units  or  shares  of  an  authorised  ELTIF  shall  not  be  marketed  in  the  Union 
without prior publication of a prospectus. 

The units or shares of an authorised ELTIF shall not be marketed to retail investors 
in  the  Union  without  prior  publication  of  a  key  information  document  (KID)  in 
accordance  with  Regulation  No[…]  of  […]  of  the  European  Parliament  and  the 
Council.20 

2. 

The  prospectus  shall  include  the  information  necessary  for  investors  to  be  able  to 
make  an  informed  judgement  regarding  the  investment  proposed  to  them,  and,  in 
particular, the risks attached thereto.  

3. 

The prospectus shall contain at least the following: 

(a) 

(b) 

a statement setting out how the ELTIF's investment objectives and strategy for 
achieving these objectives qualify the fund as long term in nature; 

information  to  be  disclosed  by  collective  investment  undertakings  of  the 
closed-end  type  in  accordance  with  Directive  2003/71/EC  of  the  European 
Parliament  and  of  the  Council21  and  Commission  Regulation  (EC)  No 
809/200422;  

(c) 

information  to  be  disclosed  to  investors  pursuant  to  Article  23  of  Directive 
2011/61/EU, if it is not already covered under point(b) of this paragraph; 

(d)  prominent  indication  of  the  categories  of  assets  the  ELTIF  is  authorised  to 

invest in; 

(e) 

any  other  information  considered  by  the  competent  authorities  to  be  relevant 
for the purpose of paragraph 2. 

4. 

The  prospectus,  the  KID  and  any  other  marketing  documents  shall  prominently 
notify investors about the illiquid nature of the fund.  

In  particular,  the  prospectus,  the  KID,  and  any  other  marketing  documents  shall 
clearly: 

(a) 

(b) 

(c) 

inform investors about the long-term nature of the ELTIF’s investments; 

inform investors about the end of life of the ELTIF;  

state whether the ELTIF is intended to be marketed to retail investors; 

20 
21 
22 

OJ Reference. 
OJ L 345, 31.12.2003, p.64. 
OJ L 149, 30.4.2004, p. 1. 

EN 

29 

   EN 

                                                 
(d) 

(e) 

(f) 

state that investors shall have no right to redeem their investment until the end 
of the life of the ELTIF;  

state  the  frequency  and  the  timing  of  any  income  payments,  if  any,  to  the 
investors during the life of the fund; 

advise  investors  that  only  a  small  proportion  of  their  overall  investment 
portfolio should be invested in an ELTIF. 

Article 22 
Cost disclosure 

1. 

The  prospectus  shall  prominently  inform  investors  as  to  the  level  of  the  different 
costs borne directly or indirectly by the investor. The different costs shall be grouped 
according to the following headings: 

(a) 

(b) 

costs of setting-up the ELTIF; 

the costs related to the acquisition of assets; 

(c)  management costs; 

(d)  distribution costs; 

2. 

3. 

4. 

(e)  other costs, including administrative, regulatory, custodial, and audit costs. 

The prospectus shall disclose an overall ratio of the costs to the capital of the ELTIF. 

The key information document shall reflect all of the costs outlined in the prospectus 
within its expression of total costs in monetary and percentage terms. 

ESMA shall develop draft regulatory technical standards to specify: 

(a) 

the common definitions, calculation methodologies and presentation formats of 
the  costs  referred  to  in  paragraph  1  and  the  overall  ratio  referred  to  in 
paragraph 2; 

(b) 

the common definition, calculation methodology and presentation format of the 
expression of total costs in paragraph 3. 

When  developing  these  draft  regulatory  technical  standards,  ESMA  shall  take  into 
account  the  draft  regulatory  standards  referred  to  in  point  (…)  of  Regulation  (…) 
[PRIPS]. 

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. 

Chapter V 
Marketing of units or shares of ELTIFs 

Article 23 
Facilities available to investors 

1. 

The  manager  of  an  ELTIF  shall,  in  each  Member  State  where  it  intends  to  market 
units  or  shares  of  that  ELTIF,  put  in  place  facilities  available  for  making 

EN 

30 

   EN 

subscriptions, making payments to unit- or shareholders, repurchasing or redeeming 
units  or  shares  and  making  available  the  information  which  the  ELTIF  and  its 
managers are required to provide. 

2. 

ESMA  shall  develop  draft  regulatory  technical  standards  to  specify  the  types  and 
characteristics  of  the  facilities,  their  technical  infrastructure  and  of  the  content  of 
their tasks in respect of ELTIF investors referred to in paragraph 1. 

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. 

Article 24 
Additional requirements for marketing to retail investors 

The manager of an ELTIF shall be able to market the units or shares of that ELTIF to retail 
investors provided that all of the following additional requirements are fulfilled: 

(f) 

(g) 

(h) 

1. 

2. 

3. 

4. 

the  ELTIF's  rules  or  instruments  of  incorporation  provide  that  all  investors  benefit 
from equal treatment and no preferential treatment or specific economic benefits are 
granted to individual investors or groups of investors; 

the ELTIF is not structured as a partnership; 

retail  investors  may,  during  the  subscription  period  and  at  least  two  weeks  after 
subscription of units or shares of the ELTIF, cancel their subscription and have the 
money returned without penalty. 

Article 25 
Marketing of units or shares of ELTIFs  

The  manager  of  an  ELTIF  shall  be  able  to  market  the  units  or  shares  of  that 
authorised ELTIF to professional and retail investors in its home Member State upon 
notification in accordance with Article 31 of Directive 2011/61/EU. 

The  manager  of  an  ELTIF  shall  be  able  to  market  the  units  or  shares  of  that 
authorised ELTIF to professional and retail investors in Member States other than in 
the home Member State of the ELTIF manager upon notification in accordance with 
Article 32 of Directive 2011/61/EU. 

The manager of the ELTIF shall in respect of each ELTIF specify to its competent 
authority whether or not it intends to market it to retail investors. 

In  addition  to  the  documentation  and  information  required  pursuant  to  Articles  31 
and  32  of  Directive  2011/61/EU  the  manager  of  the  ELTIF  shall  provide  to  its 
competent authority all of the following: 

(a) 

(b) 

the prospectus of the ELTIF; 

the  key  information  document  of  the  ELTIF  in  case  of  marketing  to  retail 
investors; 

(c) 

information on the facilities referred to in Article 22. 

EN 

31 

   EN 

5. 

6. 

7. 

1. 

2. 

3. 

4. 

5. 

1. 

2. 

The competences and powers of the the competent authorities pursuant to Articles 31 
and 32 of Directive 2011/61/EU shall be understood to also refer to the marketing of 
ELTIFs to retail invetsors and to cover the additional requirments laid down in this 
Regulation.  

In addition to its powers in accordance with Article 31(3) first paragraph of Directive 
2011/61/EU,  the  competent  authority  of  the  home  Member  State  of  the  ELTIF 
manager  shall  also  prevent  the  marketing  of  an  authorised  ELTIF  if  the  ELTIF 
manager does not or will not comply with this Regulation. 

In addition to its powers in accordance with Article 32(3) first paragraph of Directive 
2011/61/EU,  the  competent  authority  of  the  home  Member  State  of  the  ELTIF 
manager  shall  also  refuse  the  transmission  of  a  complete  notification  file  to  the 
competent  authorities  of  the  Member  State  where  the  ELTIF  is  intended  to  be 
marketed, if the ELTIF manager does not or will not comply with this Regulation.  

Chapter VI 
Supervision 

Article 26 
Supervision by the competent authorities 

The competent authorities shall supervise compliance with this Regulation on an on-
going basis. 

The  competent  authority  of  the  ELTIF  shall  be  responsible  for  supervising 
compliance with the rules laid down in Chapters II, III and IV. 

The  competent  authority  of  the  ELTIF  shall  be  responsible  for  supervising 
compliance  with  the  obligations  set  out  in  the  fund  rules  or  in  the  instruments  of 
incorporation, and the obligations set out in the prospectus, which shall be consistent 
with this Regulation. 

The  competent  authority  of  the  manager  of  the  ELTIF  shall  be  responsible  for 
supervising  the  adequacy  of  the  arrangements  and  organisation  of  the  manager  so 
that  the  manager  of  the  ELTIF  is  in  a  position  to  comply  with  the  obligations  and 
rules which relate to the constitution and functioning of all the ELTIFs it manages. 

The  competent  authority  of  the  manager  shall  be  responsible  for  supervising 
compliance of the ELTIFs manager with this Regulation. 

Competent  authorities  shall  monitor  collective  investment  undertakings  established 
or marketed in their territories to verify that they do not use the ELTIF designation or 
suggest  that  they  are  an  ELTIF  unless  they  are  authorised  and  comply  with  this 
Regulation. 

Article 27 
Powers of competent authorities 

Competent  authorities  shall  have  all  supervisory  and  investigatory  powers  that  are 
necessary for the exercise of their functions pursuant to this Regulation.  

The  powers  conferred  on  competent  authorities  in  accordance  with  Directive 
2011/61/EU shall be exercised also with respect to this Regulation. 

EN 

32 

   EN 

1. 

2. 

3. 

1. 

2. 

3. 

Article 28 
Powers and competences of ESMA 

ESMA shall have the powers necessary to carry out the tasks attributed to it by this 
Regulation. 

ESMA’s  powers  in  accordance  with  Directive  2011/61/EU  shall  be  exercised  also 
with respect to this Regulation and in compliance with Regulation (EC) No 45/2001.  

For the purposes of Regulation (EU) No 1095/2010, this Regulation shall be included 
under any further legally binding Union act which confers tasks on the Authority as 
referred to in Article 1(2) of Regulation (EU) 1095/2010. 

Article 29 
Cooperation between authorities 

The competent authority of the ELTIF and the competent authority of the manager, if 
different, shall cooperate with each other and exchange information for the purpose 
of carrying out their duties under this Regulation. 

Competent authorities and ESMA shall cooperate with each other for the purpose of 
carrying  out  their  respective  duties  under  this  Regulation  in  accordance  with 
Regulation (EU) No 1095/2010. 

Competent authorities and ESMA shall exchange all information and documentation 
necessary  to  carry  out  their  respective  duties  under  this  Regulation  in  accordance 
with Regulation (EU) No 1095/2010, in particular to identify and remedy breaches of 
this Regulation.  

Chapter VII 
Final provisions 

Article 30 
Review 

No later than three years after the entry into force of this Regulation, the Commission shall 
start a review of the application of this Regulation. The review shall analyse in particular: 

(a) 

(b) 

the  impact  of  the  provision  in  Article  16(1)  that  excludes  investors  from 
redeeming their units or shares before the end of life of the ELTIF. The review, 
taking into account ELTIF’s distribution to different investor categories, shall 
also assess whether exempting a limited number  of individual retail  investors 
from  such  a  rule  would  have  the  effect  of  increasing  demand  for  ELTIF 
amongst retail investors; 

the impact on asset diversification of the application of the minimum threshold 
of 70% of eligible investment assets laid down in Article 12(1), in particular to 
assess  whether  increased  measures  on  liquidity  would  be  necessary  should  a 
limited number of individual retail investors be exempted from the prohibition 
on redeeming their units before the end of life of the ELTIF; 

(c) 

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

EN 

33 

   EN 

The results of this review shall be communicated to the European Parliament and the Council 
accompanied, where necessary, by appropriate proposals for amendments. 

Article 31 
Entry into force 

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

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

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

EN 

34 

   EN 

LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative  

1.2.  Policy area(s) concerned in the ABM/ABB structure 

1.3.  Nature of the proposal/initiative  

1.4.  Objective(s)  

1.5.  Grounds for the proposal/initiative  

1.6.  Duration and financial impact  

1.7.  Management mode(s) envisaged  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

2.2.  Management and control system  

2.3.  Measures to prevent fraud and irregularities  

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1.  Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

3.2.  Estimated impact on expenditure  

3.2.1. Summary of estimated impact on expenditure  

3.2.2. Estimated impact on operational appropriations  

3.2.3. Estimated impact on appropriations of an administrative nature 

3.2.4. Compatibility with the current multiannual financial framework 

3.2.5. Third-party contributions  

3.3.  Estimated impact on revenue 

EN 

35 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Regulation of the European Parliament and of the Council on Long-term Investment 
Funds 
Policy area(s) concerned in the ABM/ABB structure23  

1.2. 

Internal Market – Financial markets 

1.3. 

Nature of the proposal/initiative  

x The proposal/initiative relates to a new action  

(cid:133)  The  proposal/initiative  relates  to  a  new  action  following  a  pilot  project/preparatory 
action24  

(cid:133) The proposal/initiative relates to the extension of an existing action  

(cid:133) The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objective(s) 

1.4.1.  The  Commission's  multiannual 

strategic  objective(s) 

targeted  by 

the 

proposal/initiative  

Increase  the  safety  and  the  efficiency  of  the  financial  markets;  boost  the  internal 
market for financial services 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Act as a source  for long-term  financing for the European economy; ensure a level-
playing  field  between  long-term  investment  fund  managers;  increase  the  non-bank 
finance available to businesses; ensure investor protection and financial stability 

23 
24 

ABM: activity-based management – ABB: activity-based budgeting. 
As referred to in Article 54(2)(a) or (b) of the Financial Regulation. 

EN 

36 

   EN 

                                                 
1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The proposal aims at: enhancing the cross-border marketing of European long-term 
investment  funds  (ELTIFS)  to  both  retail  and  professional  investors  across  the 
Union;  providing  for  a  harmonised  procedure  for  the  authorisation  of  long-term 
investment  funds;  identifying  the  permissible  investment  policies  to  be  pursued  by 
long-term 
interest;  setting  solid 
transparency requirements and specific marketing conditions 

investment  funds;  preventing  conflicts  of 

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

Reports should be prepared on: 

developments  on  cross-border  marketing  of  ELTIFs;  impact  of  the  proposed 
Regulation  on 
in  achieving  undistorted 
competition;  impact  of  the  proposed  measures  on  the  pool  of  capital  available  for 
long-term  investments  (e.g.  investments  on  infrastructure  projects,  real  estate  and 
unlisted companies) 

investor  protection;  progress  made 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

As a result of the adoption of the proposed Regulation: 

• 

Increased cross–border marketing of long-term investment funds is predicted; 

• 
The authorisation of the long-term investment funds by the national competent 
authorities  would  be  harmonised  and  the  coordination  between  the  national 
supervisors would be improved; 

Further  development  of 

• 
the 
harmonisation of  the  operating conditions for all relevant players in  the  investment 
fund  market  will  ensure  the  efficiency  of  long-term  investment  funds,  as  well  as  it 
will enable the emergency of economies of scale; 

investing  across 

the  Union: 

long-term 

• 
Institutional investors, such as insurance companies and pension funds, as well 
as  individual  retail  investors  will  benefit  from  yield  of  regular  returns  offered  by 
long-term investment funds; 

• 

Increased investor choice and quality of service received; 

Improved transparency will boost investor confidence and it is likely to lead to 

• 
better competition; 

• 
The long-term financing of the European economy would be enhanced, with a 
special  view  to  infrastructure  projects  and  the  financing  of  small  and  medium 
enterprises (SMEA); 

1.5.2.  Added value of EU involvement Besoin(s) à satisfaire à court ou à long terme  

1)  The  regulatory  fragmentation  prevents  investors  from  gaining  exposure  to  long-
term  assets  and  thus  it  prevents  the  increase  of  pooling  of  capital  and  investment 
expertise that creates economies of scale for long-term investment funds; 

EN 

37 

   EN 

2) A lack of action at EU level would result in investor confusion and would impede 
the  emergence  of  a  Union-wide  level  playing  field  between  long-term  investment 
fund managers; 

1.5.3.  Lessons learned from similar experiences in the past  

The  UCITS  (Undertakings  in  Collective  Investments  for  Transferable  Securities) 
Directive has first introduced a robust set of product rules used by investment funds 
available  to  retail  investors.  UCITS  assets  under  management  have  now  reached 
€6,697  billion  .  While  the  UCITS  initiative  does  not  necessarily  mean  that  the 
creation of ELTIF will attract similar levels of investor interest, but it does indicate 
the success such EU-wide initiatives can have. 

1.5.4.  Compatibility  and  possible  synergy  with  other  appropriate  instruments  Besoin(s)  à 

satisfaire à court ou à long terme  

The  proposed  rules  build  on  the  existing  regulatory  framework  established  through 
Directive 2011/61/EU (Alternative Investment Fund Managers Directive – AIFMD) 
and  the  acts  adopted  for  its  implementation.  The  harmonised  authorisation  and 
supervision  procedures  for  AIFMs  under  the  AIFMD  are  supplemented  with  an 
authorisation procedure for ELTIFs. Moreover, the product rules concerning ELTIFs 
apply in addition to the rules laid down in the existing Union legislation, unless they 
are  explicitly  dis-applied.  Particularly,  the  management  and  marketing  rules  laid 
down in the existing framework, as well as the rules on the cross-border provision of 
services and the freedom of establishment included in AIFMD will apply accordingly 
to ELTIFs. 

EN 

38 

   EN 

1.6. 

Duration and financial impact  

(cid:133) Proposal/initiative of limited duration  

–  (cid:133)  Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–  (cid:133)  Financial impact from YYYY to YYYY  

x Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from 2015 to 2020, 

–  followed by full-scale operation. 
1.7.  Management mode(s) planned25  

(cid:133) Centralised direct management by the Commission  

(cid:133)  Centralised  indirect  management  with  the  delegation  of  implementation  tasks 
to: 

–  (cid:133)  executive agencies  
–  x  bodies set up by the Communities26  

–  (cid:133)  national public-sector bodies/bodies with public-service mission  

–  (cid:133)  persons entrusted with the implementation of specific actions pursuant to Title 
V of the Treaty on European Union and identified in the relevant basic act within 
the meaning of Article 49 of the Financial Regulation  

(cid:133) Shared management with the Member States  

(cid:133) Decentralised management with third countries  

(cid:133) Joint management with international organisations (to be specified) 

– 

If more than one management mode is indicated, please provide details in the "Comments" section. 

25 

26 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the 
BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 
As referred to in Article 185 of the Financial Regulation. 

EN 

39 

   EN 

                                                 
2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. Besoin(s) à satisfaire à court ou à long terme  

Article  81  of  the  Regulation  establishing  the  European  Securities  and  Markets 
Pension Authority (ESMA) provides for the evaluation of the experience acquired at 
a  result  of  the  operation  of  ESMA  within  three  years  from  the  effective  start  of  its 
operation.  To  this  end,  the  Commission  will  publish  a  general  report  that  will  be 
forwarded to the European Parliament and to the Council. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified Besoin(s) à satisfaire à court ou à long terme  

The  additional  resource  to  ESMA  foreseen  as  a  result  of  the  current  proposal  is 
needed in order to allow ESMA to carry out its competences and notably its role in: 

Ensuring harmonisation and coordination of rules of the ELITF Regulation by 

• 
drafting regulatory standards; 

Reinforcing and ensuring consistent application of national regulatory powers 

• 
by issuing guidelines and by drafting implementing technical standards; 

Collecting  and  publishing  the  necessary  information  concerning  long-term 

• 
financial market participants; 

The lack of this resource could not ensure a timely and efficient fulfilment of the role 
of ESMA. 

2.2.2. 

Information  concerning  the  internal  control  system  set  up  Besoin(s)  à  satisfaire  à 
court ou à long terme  

Management and control systems as provided for in the ESMA Regulation will apply 
also with regard to the role of ESMA according to the present proposal. 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

For  the  purposes  of  combating  fraud,  corruption  and  any  other  illegal  activity,  the 
provisions of Regulation (EC) No 1073/1999 of the European Parliament and of the 
Council of 25 May 1999 concerning investigations conducted by the European Anti-
Fraud Office (OLAF) shall apply to the ESMA without any restriction, as stipulated 
in Article 66(1) of the ESMA Regulation. 

ESMA shall accede to the Inter-institutional Agreement of 25 May 1999 between the 
European Parliament, the Council of the European Union and the Commission of the 
European  Communities  concerning  internal  investigations  by  the  European  Anti-
Fraud  Office  (OLAF)  and  shall  immediately  adopt  appropriate  provisions  for  all 
ESMA staff, as provided for in Article 66(2) of the ESMA Regulation. 

EN 

40 

   EN 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

•  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Heading of 
multiannual 
financial 
framework 

Number  
[…][Heading…………………………
……………...……….] 

Type of  
expenditure

Diff./non-
diff. 
(27) 

Contribution  

from 
EFTA 
countries
28 

from 
candidate 
countries29 

from third 
countries 

within the 
meaning of Article 
21(2)(b) of the 
Financial 
Regulation  

[12.03.04][ESMA] 

1.a 

Diff. 

YES 

YES 

NO 

NO 

•  New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Heading of 
multiannual 
financial 
framework 

Budget line 

Type of 
expenditure

Contribution  

Number  
[…][Heading…………………………
……………...……….] 

Diff./non-
diff. 

from 
EFTA 
countries 

from 
candidate 
countries 

from third 
countries 

within the 
meaning of Article 
21(2)(b) of the 
Financial 
Regulation  

27 
28 
29 

Diff. = Differentiated appropriations / Non-Diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 

EN 

41 

   EN 

 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2. 

Estimated impact on expenditure  

The only impact on expenditures relates to the hiring of 2 additional temporary agents for an unlimited period of time. The new tasks 
will  be  carried  out  with  the  human  resources  available  within  the  annual  budgetary  allocation  procedure,  in  the  light  of  budgetary 
constraints, which are applicable to all EU bodies and in line with the financial programming for agencies. 

3.2.1. 

Summary of estimated impact on expenditure  

EUR million (to three decimal places) 

Heading of multiannual financial  
framework  

1.a 

Competitiveness for Growth and jobs 

DG: MARKT 

(cid:121) Operational appropriations  

12.03.04 ESMA 

Number of budget line 

Commitments 

Payments 

Commitments 

Payments 

(1) 

(2) 

(1a) 

(2a) 

Appropriations  of  an  administrative  nature  financed  from  the 
envelope of specific programmes30  
Number of budget line 

(3) 

TOTAL appropriations 
for DG MARKT 

Commitments 

Payments 

=1+1a 
+3 

=2+2a 

+3 

2015 

2016 

2017 

2018 

2019 

2020 

TOTAL 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

0.788 

0.788 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

0.788 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

0.788 

30 

EN 

Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former "BA" lines), indirect research, 
direct research. 

42 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
(cid:121) TOTAL operational appropriations  

Commitments 

Payments 

(cid:121)  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(4) 

(5) 

(6) 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

TOTAL appropriations  
for HEADING 1.a 
of the multiannual financial framework 

Commitments 

=4+ 6 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

Payments 

=5+ 6 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

0.788 

0.788 

0.788 

0.788 

If more than one heading is affected by the proposal / initiative: 

(cid:121) TOTAL operational appropriations  

Commitments 
Payments 

(cid:121)  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADINGS 1 to 4 
of the multiannual financial framework 
(Reference amount) 

Commitments 

=4+ 6 

Payments 

=5+ 6 

Comment: this takes into account only 40% of the total costs, the other 60% are financed by Member States 

EN 

43 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heading of multiannual financial  
framework  

5 

" Administrative expenditure " 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6)  

TOTAL 

EUR million (to three decimal places) 

DG: <…….> 

(cid:121) Human resources  
(cid:121) Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

TOTAL appropriations 
for HEADING 5 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

Payments 

0.140 

0.130 

0.130 

0.130 

0.130 

0.130 

0.788 

0.788 

2015 

2016 

2017 

2018 

2019 

2020 

TOTAL 

EUR million (to three decimal places) 

EN 

44 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on operational appropriations  

–  (cid:133)  The proposal/initiative does not require the use of operational appropriations  

–  (cid:59)  The proposal/initiative requires the use of operational appropriations, as explained below: 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

OUTPUTS 

Commitment appropriations in EUR million (to three decimal places) 

o
N

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

No 
total 

Total 
cost 

Comment: 

See above. 

Indicate 
objectives and 
outputs  

(cid:216) 

Type31 

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 132 ... 

- Output 

- Output 

- Output 

Subtotal for specific objective No 1 

SPECIFIC OBJECTIVE NO 2 ... 

- Output 

Subtotal for specific objective No 2 

31 
32 

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’  

EN 

45 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
TOTAL COST 

EN 

46 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–  (cid:59)  The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

–  (cid:133)  The proposal/initiative requires the use of appropriations of an administrative 

nature, as explained below: 

EUR million (to three decimal places) 

Year 
N33 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

HEADING 5 
of the multiannual 
financial framework 

Human resources  

Other 
expenditure  

administrative 

Subtotal HEADING 5 
of the multiannual 
financial framework  

Outside HEADING 534 of 
the multiannual financial 
framework  

Human resources  

Other 
of 
an 
nature 

expenditure  
administrative 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

TOTAL 

The  human  resources  appropriations  required  will  be  met  by  appropriations  from  the  DG  that  are  already  assigned  to 
management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation 
which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints. 

33 
34 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former "BA" lines), indirect research, direct research. 

EN 

47 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.2.   Estimated requirements of human resources  

–  (cid:59)  The proposal/initiative does not require the use of human resources.  

–  (cid:133)  The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

Comment: 

–  No additional human and administrative resources will be needed in DG MARKT 
as a result of the proposal. 2 additional temporary agents will be hired at ESMA 
for an unlimited period. 

Estimate to be expressed in full time equivalent units 

Year 
N 

Year 
N+1 

Year N+2 

Ye
ar 
N+
3 

Enter 
as 
many 
years 
as 
necessa
ry to 
show 
the 
duratio
n of the 
impact 
(see 
point 
1.6) 

(cid:121) Establishment plan posts (officials and temporary staff) 

XX 01 01 01 (Headquarters and Commission’s 
Representation Offices) 
XX 01 01 02 (Delegations) 
XX 01 05 01 (Indirect research) 
10 01 05 01 (Direct research) 

(cid:121) External staff (in Full Time Equivalent unit: FTE)35 

XX 01 02 01 (CA, SNE, INT from the "global 
envelope") 
XX 01 02 02 (CA, LA, SNE, INT and JED in the 
delegations) 

XX 01 04 yy36 

- at Headquarters 

- Delegations  

XX 01 05 02 (CA, SNE, INT - Indirect research) 
10 01 05 02 (CA, INT, SNE - Direct research) 
Other budget lines (specify) 
TOTAL 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to management of the 
action  and/or  have  been  redeployed  within  the  DG,  together  if  necessary  with  any  additional  allocation  which 
may  be  granted  to  the  managing  DG  under  the  annual  allocation  procedure  and  in  the  light  of  budgetary 
constraints. 

Description of tasks to be carried out: 

35 

36 

CA=  Contract  Staff;  LA  =  Local  Staff;  SNE=  Seconded  National  Expert;  INT  =  agency  staff;  JED= 
Junior Experts in Delegations).  
Sub-ceiling for external staff covered by operational appropriations (former "BA" lines). 

EN 

48 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Officials and temporary staff 

External staff 

EN 

49 

   EN 

 
 
 
3.2.4.  Compatibility with the current multiannual financial framework  

–  (cid:59)  Proposal/initiative is compatible the current multiannual financial framework. 

–  (cid:133)  Proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework. 

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding amounts. 
–  (cid:133)  Proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework37. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts. 

3.2.5.  Third-party contributions  

–  The proposal/initiative does not provide for co-financing by third parties.  

–  (cid:59) The proposal/initiative provides for the co-financing estimated below: 

Member  States  via  EU 
national supervisors * 

TOTAL 
cofinanced  

appropriations 

2015 

2016 

2017 

2018 

2019 

2020 

TOTAL 

0.210 

0.194 

0.194 

0.194 

0.194 

0.194 

1.181 

0.210 

0.194 

0.194 

0.194 

0.194 

0.194 

1.181 

Appropriations in EUR million (to 3 decimal places) 

* 

Estimation 

based 

on 

current 

financing 

mechanism 

in 

ESMA 

regulation 

(Member 

States 

60%, 

Community 

40%) 

37 

See points 19 and 24 of the Interinstitutional Agreement (for the period 2007-2013). 

EN 

50 

EN 

 
  
 
 
                                                 
3.3. 

Estimated impact on revenue  

–  (cid:59)  Proposal/initiative has no financial impact on revenue. 

–  (cid:133)  Proposal/initiative has the following financial impact: 

(cid:133) 

(cid:133) 

on own resources  

on miscellaneous revenue  

Appropriation
s available for 
the current 
financial year 

Budget revenue line: 

Article …………. 

Impact of the proposal/initiative38 

EUR million (to three decimal places) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected. 

Specify the method for calculating the impact on revenue. 

38 

EN 

As  regards  traditional  own  resources  (customs  duties,  sugar  levies),  the  amounts  indicated  must  be  net  amounts,  i.e.  gross  amounts  after  deduction  of  25%  for 
collection costs. 

51 

EN 

 
  
 
 
 
 
 
 
 
 
 
                                                 
Annex to the Legislative Financial Statement for a proposal for Regulation of the European Parliament and of the Council on European 
Long-Term Investment Funds (ELTIF) 

This proposal intends to help increase the pool of capital available for long term investment in the European Union's real economy. It will do this 
by creating a new form of fund vehicle, EU Long Term Investment Funds or ELTIFs. ELTIFs, by virtue of the asset classes that they are allowed 
to  invest  in,  are  expected  to  be  able  to  provide  investors  with  long  term,  stable  returns.  Eligible  assets  would  be  qualified  as  forming  part  of 
‘alternative  investments’  –  asset  classes  that  fall  outside  the  traditional  definition  of  listed  shares  and  bonds.  While  alternative  investments 
comprise  real  estate,  venture  capital,  private  equity,  hedge  funds,  non-listed  companies,  distressed  securities  and  commodities,  ELTIFs  would 
only focus on alternative investments that fall within a defined category of long-term asset classes whose successful development requires a long-
term commitment from investors.  

There  is  a  clear  need  to  refocus  investors'  approach  away  from  only  investing  with  a  short-term  outlook  or  in  assets  requiring  short-term 
commitments. One way of achieving this is to reduce barriers to making longer-term commitments to assets such as infrastructure projects, by 
providing what is often called 'patient capital'. This kind of investment may not be able to be redeemed for a number of years but are invested in 
such  a  way  as  to  be  able  to  provide  stable  and  predictable  returns.  Infrastructure  projects  or  operating  concessions  would  fit  this  description. 
Capital invested in this long term, 'patient' manner benefits the real economy by providing predictable and sustained flows of finance to firms and 
creates employment. 

To  ensure  the  effective  removal  of  barriers  to  a  pan-European  market  for  ELTIFs  and  the  trust  of  investors  in  these  funds,  it  is  necessary  to 
ensure the highest level of supervisory convergence and proportionate oversight. The role of ESMA therefore will be of great importance, both in 
terms of the development of detailed regulatory requirements to achieve convergence and uniformity in the market, and in supporting ongoing 
supervisory oversight. 

The costs related to tasks to be carried out by ESMA have been estimated for staff expenditure (Title 1), in conformity with the cost classification 
in  the  ESMA  draft  budget.  The  proposal  of  the  Commission  includes  provisions  for  ESMA  to  develop  4  regulatory  technical  standards.  In 
addition, ESMA will have to keep a central register on all authorized ELTIFs. ESMA will also have the opportunity to develop guidelines on the 
fields  covered  by  this  Regulation.  ESMA  will  also  have  a  role  in  relation  to  ensuring  smooth  cooperation  and  coordination  of  supervision  of 
ELTIFs by the competent authorities of Member States. 

It has been assumed that the Regulation will enter into force in early 2015, and therefore the additional ESMA resources are required from 2015. 
Additional staff has been estimated for the technical standards, advice and register to be produced by ESMA; and for other permanent tasks that 
accompany the function of ESMA in enhancing cooperation with the competent authorities and convergence in supervisory practices. As regards 
the  nature  of  positions,  the  successful  and  timely  delivery  of  new  technical  standards  will  require,  in  particular,  additional  policy,  legal  and 
impact assessment officers. 

The following assumptions were applied to assess the impact on number of FTEs required to develop technical standards, guidelines and reports: 

EN 

52 

EN 

 
  
•  One policy officer can draft on average 1,5 technical standards a year. All this work requires preparatory work such as: 
•  Bilateral and multilateral meetings with stakeholders 
•  Analysis and assessment of options and drafting of consultation documents 
•  Public consultation of stakeholders 
•  Setting up and management of standing expert groups composed of supervisors from Member States 
•  Setting up and management of ad hoc expert groups composed of market participants and representatives of investors 
•  Analysis of the responses to consultations 
•  Drafting of cost/benefit analysis 
•  Drafting of the legal text 

A central register would need to be developed (IT project specified, tenders assessed, project managed). This register would then be subject to 
ongoing maintenance, in view of ensuring its accuracy and completeness.  

In addition, other work will be necessary on an ongoing basis, including coordination of the action of Member State supervisors, work to identify 
supervisory practices and drive convergence in these, dispute resolution and mediation processes, and market monitoring and assessment work to 
identify trends in the European market of long-term investments and clarify any emerging risks for investors or barriers to the smooth functioning 
of the single market for such funds. 

This means an additional 2 FTEs are needed from 2015. It was assumed that this increase in FTEs will be maintained in 2016 to 2020 since the 
standards will most likely be finalised only in 2016-2017 and implementation will be required till 2020, while ongoing tasks as outlined above 
would increase for ESMA following the implementation work. 

Other assumptions: 

•  Based on the distribution of FTEs as from 2015, the additional 2 FTEs are assumed to be comprised of 2 temporary agents  

•  Average annual salary costs for different categories of personnel are based on DG BUDG guidance; 

•  Salary weighting coefficient for Paris of 1,16; 

•  Mission costs assumed at €10,000 per year 

•  Recruiting-related costs (travel, hotel, medical examinations, installation and other allowances, removal costs, etc) estimated at €12,700,  

•  The  method  of  calculating  the  increase  in  the  required  budget  for  the  6  years  is  presented  in  more  detail  in  table  below.  The  calculation 

reflects the fact that that the Community budget funds 40% of the costs. 

EN 

53 

EN 

 
  
Cost types 

Calculations 

Amount (in thousands) 

2015 

2016 

… 

2020 

Title 1: Staff expenditure: 

11 Salaries and allowances  

- of which temporary agents 

=2*131*1,16 

304 

304 

304 

304 

- of SNEs 

- of which contract agents 

12  Expenditure 
recruitment 

related 

to 

=2*12.7 

=2*10 

13 Mission expenses 

Total 
title 
expenditure 

1 

: 

Staff 

which 
Of 
contribution (40%) 

Community 

Of  which  Member  State 
contribution (60%) 

25 

20 

349 

140 

210 

20 

20 

324 

130 

324 

130 

194 

194 

20 

324 

130 

194 

The following table presents the proposed establishment plan for the 2 temporary agent positions: 

Posts 

Function group and grade 
AD16 
AD15 
AD14 
AD13 
AD12 
AD11 
AD10 

EN 

54 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
AD9 
AD8 
AD7 
AD6 
AD5 

AD Total 

1 
1 

2 

EN 

55 

EN