Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) 2015/760 as regards the scope of eligible assets and investments, the portfolio composition and diversification requirements, the borrowing of cash and other fund rules and as regards requirements pertaining to the authorisation, investment policies and operating conditions of European long-term investment funds
Date: 2021-11-25
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: European Investment Fund, investment company, investment project, investment promotion, investment protection, long-term financing, regulation of investments

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   EUROPEAN COMMISSION  Brussels, 25.11.2021  COM(2021) 722 final 2021/0377 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) 2015/760 as regards the scope of eligible assets and investments, the portfolio composition and diversification requirements, the borrowing of cash and other fund rules and as regards requirements pertaining to the authorisation, investment policies and operating conditions of European long-term investment funds (Text with EEA relevance) {SEC(2021) 571 final} - {SWD(2021) 342 final} - {SWD(2021) 343 final}  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on 
European long-term investment funds (the ‘ELTIF Regulation’) is a European framework for 
alternative investment  funds (AIFs) that invest in long-term investments,  such as social  and 
transport  infrastructure  projects,  real  estate  and  SMEs.  The  ELTIF  Regulation  establishes 
uniform  rules  on  the  authorisation,  investment  policies  and  operating  conditions  and 
marketing of ELTIFs.  

The  ELTIF  regulatory  framework  is  intended  to  facilitate  long-term  investments  in  these 
types of assets by institutional and retail investors and provide an alternative, non-bank source 
of finance to  the real  economy. Such long-term  finance  can support the  development  of the 
European Union’s economy along the path of smart, sustainable and inclusive growth.  

Since the publication of the first Capital Markets Union (CMU) action plan in 2015, a number 
of  actions  have  been  taken  to  develop  more  long-term  sources  of  funding  in  the  EU1. 
However, it has become apparent that further policy interventions are necessary to ensure that 
more investments are channelled to businesses in need of capital and to long-term investment 
projects, particularly during the recovery from the COVID-19 pandemic.  

This  review  aims  to  increase  the  uptake  of  ELTIFs  across  the  EU  for  the  benefit  of  the 
European economy and investors. This, in turn, would support the continued development of 
the  Capital  Markets  Union  (CMU),  which  also  aims  to  facilitate  EU  companies’  access  to 
more stable, sustainable and diverse long-term financing.  

Europe needs to promote more smart, sustainable and inclusive growth that creates jobs and 
enhance its global competitiveness. This priority was further supported by the Commission’s 
Mid-Term Review of the CMU action plan2, which determined that the EU has been suffering 
from  a  chronic  lack  of  long-term  financing  for  SMEs  when  compared  to  other  major 
economies.  Furthermore,  the  Commission’s  revised  CMU  action  plan3  explicitly  recognised 
the need to further support investment vehicles that channel financing to long-term investment 
projects4. In the action plan, the Commission committed to review the legislative framework 
for ELTIFs5. 

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a 

on 

plan 

building 

Commission.  Action 

Capital  Markets  Union. 

European 
Source: 
https://ec.europa.eu/info/publications/2015-action-plan-building-capital-markets-union_en  (Available:  8  February 
2021).  In  connection  with  this,  it  needs  to  be  noted  that  tackling  the  climate  crisis  and  managing  the  energy 
transition  to  a  low-carbon  economy,  as  well  as  other  environmental  and  social  challenges,  requires  a  long-term 
horizon  and  associated  longer-term  investments.  The  success  of  these  investments  in  new  technologies  and 
infrastructures requires effective regulatory frameworks and robust and cost-effective financial structures. 
European Commission. COM(2017) 292 final.  Source: https://ec.europa.eu/info/sites/default/files/communication-
cmu-mid-term-review-june2017_en.pdf (2 May 2021). 
Communication from the European Commission. A Capital Markets Union for people and businesses-new action 
plan. COM(2020) 590 final. 24 September 2020. Source: https://ec.europa.eu/info/law/better-regulation/have-your-
say/initiatives/12498-A-Capital-Markets-Union-for-people-and-businesses-new-action-plan (8 February 2021).  
The  action  plan  looks  at  how  possible  ‘changes  to  the  legislative  framework  and  increased  incentives  to  use  the 
ELTIF fund structure could promote the introduction of pan-European long-term investment funds and ultimately 
channel more funding, including from retail investors, into the EU's real economy’. Ibid, page 8. 
Ibid, page 8 (Action 3). 

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This  action  to  develop  ELTIFs  is  also  consistent  with  the  ambition  set  out  in  the  European 
Green Deal and more specifically in the sustainable finance strategy6
, to address sustainability 
goals and climate neutrality objectives through the contribution of all economic stakeholders, 
particularly those having a role in the long-term financing strategies. This initiative is also an 
opportunity to ensure that ELTIFs’ investment strategies and reporting activities are aligned 
with the EU’s climate and environmental goals7. 

Since the adoption of the original ELTIF legal framework in April 2015, only 57 ELTIFs (as 
of  October  2021)  have  been  launched  with  a  relatively  small  amount  of  net  assets  under 
management (total assets under management are estimated at approximately EUR 2.4 billion 
in  2021). Such authorised ELTIFs  are domiciled  in  only four Member States (Luxembourg, 
France, Italy and Spain), and the other Member States had no domestic ELTIFs. 

While the ELTIF is still a relatively new framework, the available market data indicates that 
the market’s development has not scaled up as expected, particularly given the Commission’s 
objective of promoting long-term finance in the Union.  

Certain  characteristics  of  the  above  description  of  the  ELTIF  market  (i.e.  low  number  of 
funds,  small  net  asset  size,  few  jurisdictions  in  which  ELTIFs  are  domiciled,  portfolio 
composition  largely skewed towards a  certain  eligible investment  category) demonstrate the 
concentrated nature of the market both geographically and in terms of investment type. 

Compared  to  alternative  investment  funds  (AIF),  the  ELTIF  framework  has  certain 
advantages. First, it is a fully harmonised European label for financial products, which allows 
for  an  EU-wide,  passport-based  distribution  to  both  professional  and  retail  investors.  In 
comparison, AIFs under Directive 2011/61/EU on Alternative Investment Fund Managers (the 
AIFMD) can only be marketed to professional investors, while the marketing of AIFs to retail 
investors is subject to national rules. The ELTIF rules can also provide the capacity, in some 
instances,  to  withstand  market  volatility  due  to  their  closed-ended  nature  and  long-term 
orientation,  and  in  certain  cases  may  imply  preferential  national  tax  treatments  for  ELTIF 
investors  depending  on  the  applicable  national  tax  laws.  ELTIFs  can  also  represent  a  safer 
pathway for investors interested in private equity investments but present a lower risk profile 
than pure private equity funds.  

Based  on  the  evaluation  of  the  functioning  of  the  ELTIF  legal  framework  and  stakeholder 
feedback, the advantages of ELTIFs are diminished by the restrictive fund rules and barriers 
to entry for retail investors, the combined effect of which reduce the utility, effectiveness and 
attractiveness  of  the  ELTIF  legal  framework  for  managers  and  investors.  These  restrictions 
are  the  key  drivers  of  the  ELTIFs’  failure  to  scale  up  significantly  and  reach  their  full 
potential to channel investments to the real economy.  

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European  Commission  communication  on  a  Strategy  for  financing  the  transition  to  a  sustainable 
economy. COM(2021) 390 final. 
As  per  EU  rules  on  the  taxonomy  of  sustainable  activities  (Regulation  2020/852  of  the  European 
Parliament  and  of  the  Council  of  18  June  2020  on  the  establishment  of  a  framework  to  facilitate 
sustainable  investment,  and  amending  Regulation  2019/2088,  OJ  L  198,  22.6.2020),  and  the  EU’s 
disclosure  framework  for  non-financial  and  financial  companies  (Proposal  for  a  Directive  amending 
Directive  2013/34/EU,  Directive  2004/109/EC,  Directive  2006/43/EC  and  Regulation  (EU)  No 
537/2014,  as  regards  sustainable  corporate  reporting  by  certain  undertakings,  COM  (2021)  189  final, 
21.4.2021; Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 
2019 on sustainability‐related disclosures in the financial services sector, OJ L 317, 9.12.2019, p. 1. 

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In  this  connection,  the  review  of  the  ELTIF  regulatory  framework  seeks  to  accelerate  the 
acceptance and improve the attractiveness of ELTIFs as a ‘go to’ fund structure for long-term 
investments.  To  make  this  framework  more  appealing,  the  forthcoming  proposal  will  make 
targeted  changes  in  the  fund  rules.  This  especially  means  broadening  the  scope  of  eligible 
assets and investments, allowing more flexible fund rules that include the facilitation of fund-
of-fund  strategies,  and  reducing  the  unjustified  barriers  preventing  retail  investors  from 
accessing  ELTIFs,  in  particular  the  EUR 10 000  initial  investment  requirement  and  the 
maximum  10 %  aggregate  threshold  requirement  for  those  retail  investors  whose  financial 
portfolios are below EUR 500 000.  

Furthermore,  the  proposal  aims  to  make  the  ELTIF  structure  more  attractive  by  easing 
selected fund rules for ELTIFs distributed solely to professional investors. The review of the 
ELTIF legal framework also introduces an optional liquidity window mechanism to provide 
extra  liquidity  to  ELTIF  investors  and  newly  subscribing  investors  without  requiring  a 
drawdown from the capital of ELTIFs. The proposal also seeks to ensure appropriate investor 
protection safeguards are in place. 

• 

Consistency with existing policy provisions in the policy area 

The  Commission’s  revised  CMU  action  plan  explicitly  recognised  the  need  to  support 
investment  vehicles  that  channel  financing  to  long-term  investment  projects.  In  the  action 
plan, the Commission committed to review the legal framework for ELTIFs. 

The ELTIF legal framework is also closely linked to the AIFMD since the AIFMD 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  the AIFMD. As  a result, 
the rules applicable to ELTIF managers are set out in and governed by the AIFMD. Given the 
inter-linkages  of  the  ELTIF  Regulation  with  the  AIFMD  framework,  it  is  also  important  to 
note  that  in  addition  to  this  ELTIF  review,  the  Commission  is  also  reviewing  the  AIFMD. 
Both proposals have been adopted on the same date. 

• 

Consistency with other Union policies 

The  review  of  the  ELTIF  framework  has  strong  links  with  the  CMU,  the  European  Green 
Deal,  the  European  Energy  Union,  the  Digital  Single  Market  and  other  Union  policy 
initiatives.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

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 internal market integrity, the proposed legislative measure will 
create a regulatory framework for ELTIFs 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 

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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. 

The  legal  basis  for  the  review  of  Regulation  (EU)  2015/760  is  laid  down  in  Article  37.  It 
stipulates  that  once  the  review  referred  to  in  Article  37(1)  evaluating  the  functioning  of  the 
ELTIF  regulatory  framework  has  been  completed  and  after  ESMA  has  been  consulted,  the 
Commission  is  required  to  submit  to  the  European  Parliament  and  to  the  Council  a  report 
assessing the contribution of this Regulation and of ELTIFs to the completion of the Capital 
Markets Union and to the achievement of the objectives set out in the ELTIF Regulation. The 
report is to be accompanied, where appropriate, by a legislative proposal. 

• 

Subsidiarity 

In accordance with the ELTIF Regulation, ELTIFs are explicitly recognised as a conduit for 
supporting and completing the CMU by providing a source of long-term funding for the real 
economy that is accessible to retail investors. The objectives of the ELTIF Regulation, namely 
to  ensure  uniform  requirements  on  the  investments  and  operating  conditions  for  ELTIFs, 
while  taking  full  account  of  the  safety  and  reliability  of  ELTIFs  for  ELTIF  managers, 
investors  and  various  stakeholders,  cannot  be  sufficiently  achieved  by  the  Member  States 
acting alone.  

As a result, the objectives of the ELTIF Regulation can be better achieved at Union level due 
to their scale and effects. The Union has the right to adopt measures in accordance with the 
principle of subsidiarity. In accordance with the principle of proportionality in Article 5 of the 
Treaty on European Union, the ELTIF Regulation  does not  go beyond  what  is  necessary to 
achieve those objectives. 

• 

Proportionality 

As  regards  proportionality,  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 strong public interest and which would lay down a 
foundation for a common, competitive and cost-efficient market for ELTIFs across the Union. 
The requirements imposed on the different parties concerned have been carefully calibrated. 
Whenever  possible,  requirements  have  been  crafted  as  minimum  standards  and  regulatory 
requirements  have  been  tailored  to  avoid  unnecessarily  disrupting  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 designation of ELTIFs.  

The  proposal  therefore  does  not  go  beyond  what  is  necessary  to  achieve  a  common  legal 
framework for ELTIFs. But at the same time it addresses the regulatory issues which would 
affect the label’s reliability. 

• 

Choice of the instrument 

The  current  proposal  is  an  amendment  of  the  existing  EU  Regulation.  A  regulation  is 
considered the most appropriate legal instrument to introduce uniform requirements that will 
deal, among others, with the scope of eligible assets, the portfolio composition, diversification 
rules, redemption policy, as well as rules on 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.  

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3. 

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RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EVALUATIONS, 

POST 

OF 

EX 

STAKEHOLDER 

Ex post evaluations/fitness checks of existing legislation 

As of October 2021, only 57 ELTIFs were authorised. For that reason, it is important that the 
ELTIF  review  addresses  the  range  of  issues  identified  by  stakeholders  to  encourage  greater 
market take-up of these funds. 

The current sub-scale nature of the ELTIF market also exhibits significant unlocked potential 
in  the  legal  framework  with  a  view  to  effectively  contributing  to  the  real  economy  and  the 
development of the CMU.  

More  information  on  the  problems  identified  in  the  proposal  is  provided  in  the  impact 
assessment on the functioning of the ELTIF framework annexed to this proposal. 

• 

Stakeholder consultations 

In June 2020, the High Level Forum (HLF) on the Capital Markets Union (CMU) published 
its final report8 with 17 recommendations on removing barriers in the EU’s capital markets, 
including a recommendation on reviewing the ELTIF Regulation. According to the report, a 
review  of  the  ELTIF  regulatory  framework  with  targeted  amendments  could  accelerate  the 
uptake by investors with a long-term investment horizon and increase the flow of long-term 
financing to the real economy9.  

To  understand  the  main  reasons  behind  the  slow  uptake  in  ELTIFs  across  the  Union  and 
gather  stakeholder  suggestions  for  an  improved  functioning  of  the  ELTIF  regulatory 
framework,  the  Commission  collected  and  analysed  available  evidence  from  a  public 
consultation,  bilateral  engagement with a wide range of stakeholders  and  obtained feedback 
and a review of industry research papers. Overall, the ELTIF public consultation attracted 54 
formal responses.  

In addition, the impact assessment has incorporated and taken into account the feedback from 
different  stakeholder  groups,  including  fund  managers,  investor  representatives,  national 
competent authorities and the wider public (including citizens). 

Based  on  industry  consultations,  fund  managers  seem  to  broadly  agree  (there  are  slight 
differences depending on the specialisation,  jurisdiction  of domicile and specific investment 
strategy pursued) that the key deficiencies of ELTIFs lie in the limited scope of eligible assets 
and investments, as well as the tangible barriers investors face in accessing ELTIFs.  

There is broad consensus among the national competent authorities (NCAs) on the key topics 
that need to be revised (i.e. eligible assets, numeric thresholds, conflict of interest provisions, 
etc.). This  consensus  has been reflected in  the  European Securities and Markets  Authority’s 
(ESMA) technical  advice, which very closely  coincides with  the policy  proposals  set  out  in 
the  impact  assessment.  NCAs  have  so  far  broadly  supported  the  objective  of  ensuring 
consistency between the frameworks by eliminating gaps, overlaps and inconsistencies. 

Selected representatives of investors (e.g. representatives of retail investors, representatives of 
institutional investors acting in real assets space and representatives of insurance and pension 
funds associations) have advocated similar targeted improvements to the ELTIF framework. 

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Final report of the High Level Forum on the Capital Markets Union - A new vision for Europe’s capital markets. 10 
June 2020. Source: https://ec.europa.eu/info/files/200610-cmu-high-level-forum-final-report_en (8 February 2021). 
Ibid, page 12. 

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Several  responses  to  the  open  public  consultation  were  provided  outside  the  formal 
submission  channels,  and  some  submissions  were  made  after  the  deadline.  Several  of  these 
submissions (or ex post consultations) were made by representatives of ELTIF managers. 

More  information  on  the  stakeholder  consultation  is  provided  in  Annex  2  of  the  impact 
assessment on the functioning of the ELTIF framework, which is annexed to this proposal. 

• 

Collection and use of expertise 

The  open  public  consultation  on  the  ELTIF  review  was  an  opportunity  for  all  stakeholders 
(the  general  public,  Member  States,  ESMA,  NCAs,  financial  institutions,  asset  managers, 
investors, etc.) to give their views on the risks and opportunities related to the review of the 
ELTIF framework and the need for action. It also presented a range of possible solutions to 
address the issues raised by stakeholders.  

This  impact  assessment  is  based  primarily  on  stakeholder  consultations  and  additional  desk 
research  by  the  Commission.  In  line  with  the  general  principles  of  the  Better  Regulation 
guidelines  on  the  need  for  evidence-based  impact  assessments,  the  Commission  collected 
evidence through several sources. 

long-term 

In  addition  to  the  sources  mentioned  above,  the  Commission  has  undertaken  a  series  of 
consultations  with:  (i)  the  Expert  Group  of  the  European  Securities  Committee  (EGESC) 
on 27  November  2020  and  19  July  2021;  (ii)  the  ESMA  Investment  Management  Standing 
Committee,  along  with  continued  liaising  with  NCAs;  (iii)  the  stakeholder  colloquium  on 
European 
investment  funds  (ELTIFs)  entitled  ‘ELTIF  -  Challenges  and 
Opportunities in  2020’ held  on 4 February 2020; (iv) an ELTIF workshop organised by the 
French  Asset  Management  Association  on  7  December  2020;  (v)  an  ELTIF  workshop 
organised by the Alternative Investment Management Association on 2 February 2021 on the 
regulatory experience of the functioning of U.S.  business development corporations (BDCs) 
and their similarities with  ELTIFs;  and  (vi) an ELTIF workshop organised by EuropeInvest 
with representatives of the private equity industry on 27 May 2021. 

• 

Impact assessment 

The draft impact assessment report was submitted to the Regulatory Scrutiny Board (RSB) on 
11 June 2021. The RSB hearing was held on 7 July 2021. Based on the additional information 
provided ahead of the hearing, the RSB issued a positive opinion, subject to recommendations 
on  better  defining  and  analysing  the  options  and  performing  additional  analysis  on  the  data 
and  closer  monitoring.  In  order  to  address  the  Board’s  comments,  the  Commission 
incorporated into the impact assessment additional information and analysis, including on the 
recent uptake of ELTIFs.  

The summary sheet of the impact assessment and the RSB’s positive opinion are attached to 
this proposal. 

• 

Regulatory fitness and simplification 

The  initiative  aims,  in  part,  to  reduce  regulatory  costs  for  ELTIF  managers  and  ELTIFs 
associated  with  restrictive  fund  rules  and  to  remove  the  hurdles  investors  face  in  accessing 
ELTIFs. 

Overall,  the  proposed  amendments  to  the  ELTIF  Regulation  are  expected  to  introduce 
additional flexibility and alleviate the burden on fund managers who provide products tailored 
to the needs of professional clients. At the same time, removing the hurdles investors face in 
accessing  ELTIFs  (while  maintaining  current  protections  for  investors)  will  reduce 

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administrative  burdens  and  make  ELTIFs  more  attractive  for  asset  managers  and  investors 
alike. 

However,  precisely  quantifying  how  much  the  preferred  options  would  reduce  regulatory 
costs  would  prove  challenging  due  to  several  factors.  Given  the  limited  size  of  the  ELTIF 
universe  and  the  confidential  nature  of  data  on  fund-related  costs,  the  Commission  would 
have to make a set of assumptions and extrapolate the possible effects the proposed measures 
would have on cost reductions by relying on a set of quantitative and qualitative assessments 
of the proposed measures.  

Also, the ELTIF is a voluntary framework. Asset managers have no obligation to choose the 
ELTIF as  a fund structure. Instead, asset managers can choose to ‘opt in’ in establishing an 
ELTIF.  They  are  free  to  establish  the  fund  as  a  standard  AIF  under  the  AIFMD  or  any 
alternative national fund structure, or they can structure their long-term investments through 
other means (such as private equity investments). Given those substitution and distributional 
effects, it would prove challenging to authoritatively substantiate any potential or implied cost 
savings of preferred policy options with a sufficient level of robustness. 

Finally,  in  the open public consultation  the Commission  explicitly  asked  stakeholders about 
the costs and burdens of certain provisions and requirements of the ELTIF legal framework. 
Nevertheless,  despite  various  attempts  to  collect  numeric  information  on  the  costs  and  cost 
savings  of  certain  policy  choices,  little  information  was  provided.  This  could  partially  be 
explained by the inherent limitations of the ELTIF legal framework mentioned above (limited 
fund sample, opaqueness of the sector, confidentiality constraints and the voluntary nature of 
the  ELTIF  framework).  This,  however,  implicitly  indicates  that  cost  of  compliance  with 
ELTIF rules is not such a pain point for relevant stakeholders as their restrictive nature. 

• 

Fundamental rights 

The  ELTIF  Regulation  respects  the  fundamental  rights  and  observes  the  principles  of  the 
Charter  of  Fundamental  Rights  of  the  European  Union.  The  ELTIF  framework  would  be 
applied  in  accordance  with  those  rights  and  principles,  and  the  targeted  amendments  to  the 
ELTIF  Regulation  would  not  have  any  consequences  or  adverse  effects  on  the  exercise  of 
fundamental rights. 

4. 

BUDGETARY IMPLICATIONS 

The proposal does not have a budgetary impact for the Commission 

5. 

• 

OTHER ELEMENTS 

Detailed explanation of the specific provisions of the proposal 

Article 1(2) reiterates the objective of the ELTIF legal framework to raise and channel capital 
towards  long-term  projects.  The  adherence  of  this  framework  to  the  Union’s  objective  of 
smart, sustainable and inclusive growth remains intact. However, the newly proposed wording 
of Article 1(2) no longer includes the reference to European long-term projects to strengthen 
the broader scope of eligible assets, which do not necessarily need to be located in the Union. 
Given the fact that the ELTIF framework explicitly allows the eligible assets and investments 
to  be  located  in  third  countries,  under  the  conditions  set  out  in  the  ELTIF  Regulation,  it  is 
important to ensure that ELTIF investment strategies can pursue a global investment mandate. 
This  clarification  would  also  ensure  more  clarity  and  legal  certainty  on  the  flexibility  of 
ELTIFs  in  the  geographic  investment  allocation.  Such  ‘thematic’  allocation  strategies  may 
include investments in environmental preservation or sustainability projects in third countries, 

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research  and  development  facilities  or  energy  infrastructure,  which  have  the  potential  of 
benefiting ELTIF investors and EU long-term growth and contribute to ELTIF’s objectives.  

Article 2, point 6 includes a definition of ‘real asset’ that has been revised to mean any assets 
that have intrinsic value due to their substance and properties. The purpose of this revision is 
to broaden the scope of the real asset investment strategies that ELTIF managers can pursue. 
Such real assets may, but do not necessarily need to, provide cash flows or investment returns, 
such  as  social,  communication,  environment,  energy  or  transport  infrastructure,  as  well  as 
education,  health,  welfare  support  or  industrial  facilities  or  installations.  This  simplified 
definition  of  ‘real  assets’  also  ensures  that  the  broader  scope  of  assets  may  include  those 
assets that cannot be easily quantified, for instance, those based on a discounted cash flow or 
comparison valuation method. Furthermore, the broadened definition of ‘real assets’ implies 
that  such  assets  include  infrastructure,  intellectual  property,  vessels,  equipment,  machinery, 
aircraft  or  rolling  stock,  and  immovable  property,  including  rights  attached  to  or  associated 
with  real  assets,  such  as  water,  forest  and  mineral  rights.  The  enlarged  scope  of  the  ‘real 
assets’ definition also comprises investments in commercial property, education, counselling, 
research,  sports  or  development  facilities,  or  housing,  such  as  senior  residents  or  social 
housing. The scale of infrastructure projects may require that large amounts of capital remain 
invested  for  long  periods  of  time.  Such  infrastructure  projects  may  include  public  building 
infrastructure  such  as  schools,  hospitals  or  prisons,  social  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  infrastructure  such  as  water  supply  systems,  sewage  or 
irrigation  systems,  communication  infrastructure  such  as  networks,  and  waste  management 
infrastructure such as recycling or collection systems. 

Article 2, point 14a provides a definition of simple, transparent and standardised securitisation 
by  cross-reference  to  Article  2,  point  1  of  Regulation  (EU)  2017/2402  of  the  European 
Parliament  and  of  the  Council  of  12  December  2017  laying  down  a  general  framework  for 
securitisation  and  creating  a  specific  framework  for  simple,  transparent  and  standardised 
securitisation.  

Article  3(3)  of  the  ELTIF  Regulation  is  revised  to  ensure  that  the  information  on 
authorisations granted or withdrawn and any changes to the information about the ELTIFs is 
communicated  by  the  competent  authorities  to  ESMA  on  a  monthly  basis,  rather  than  on  a 
quarterly  basis.  In  addition,  subparagraph  2  of  Article  3(3)  specifies  a  more  granular 
composition  of  the  ELTIF  public  register,  and  should  include  additional  data  fields  beyond 
the  names  of  authorised  ELTIFs,  the  ELTIF  managers  and  the  competent  authorities  of  the 
ELTIFs. The purpose of this electronic central ELTIF register is to ensure a better visibility of 
the  entire  ELTIF  investment  universe  and  allow  investors,  in  particular  retail  investors,  to 
obtain  and  evaluate  relevant  information  on  the  investment  opportunities  available  in  the 
Member State of those investors.  

Article  5(1)  and  (3)  of  the  ELTIF  Regulation  sets  out  a  few  changes  that  facilitate  the 
authorisation of the ELTIF and streamline the separation of those provisions that address the 
authorisation of the ELTIF and that of the AIF manager (AIFM). In particular, Article 5(3) of 
the ELTIF Regulation is amended to clarify that the national competent authority responsible 
for authorising the ELTIF is  solely responsible for the authorisation of an ELTIF and is  not 
involved in the additional authorisation or ‘approval’ of the EU AIFM. In addition, it has been 
clarified that the authorisation of an ELTIF should not be subject either to a requirement that 

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the ELTIF be managed by an AIFM having its registered office in the ELTIF home Member 
State or that the AIFM pursues or delegates any activities in the ELTIF home Member State. 

Article  10(1)  of  the  ELTIF  Regulation  is  amended  in  several  respects.  First,  point  (iii)  of 
Article  10(1)(a)  is  amended  to  ensure  that  ELTIFs  may  make  minority  co-investments  in 
investment opportunities, which could attract more modest promotors of investment projects, 
rather than be required to invest via or in ‘majority owned’ subsidiaries. Point (d) is amended 
to  facilitate  the  possibility  of  ELTIFs  pursuing  fund-of-funds  investment  strategies  and 
investing  in  EU  AIFs  -  in  addition  to  ELTIFs,  EuVECAs  and  EuSEFs  -  managed  by  EU 
AIFMs, provided those ELTIFs, EuVECAs, EuSEFs¸ UCITS and EU AIFs invest in eligible 
investments.  This  look-through  approach  should  ensure  prudence  in  fund-of-fund  strategies 
while the assets of the respective ELTIF and other collective investment undertakings are to 
be combined for the purposes of the limits laid down in Articles 13 and 16(1). 

Article  10(1)(e)  of  the  ELTIF  Regulation  allows  investments  in  real  assets  and  ensures  that 
such ELTIF’s investments are not solely limited to the forms of ownership via direct holdings 
or indirect holdings via qualifying portfolio undertakings of individual real assets. Under the 
revised provisions, ELTIFs can invest in real assets if the minimum investment value of such 
assets  is  at  least  EUR 1 000 000,  and  it  is  no  longer  required  that  real  assets  are  owned 
directly  or  via  ‘indirect  holding  via  qualifying  portfolio  undertakings’.  This  change  would 
make  it  possible  to  capture  a  broad  range  of  potential  real  assets  investment  strategies. 
Lowering the threshold would also contribute to the flexibility of ELTIF managers, since it is 
a standard market practice for individual real assets of a large portfolio to have a value of far 
less  than  EUR 10 000 000.  Portfolios  which  have  been  operational  for  some  time  would 
otherwise  be  particularly  affected,  given  that  the  value  of  certain  assets  in  the  renewable 
energy space (such as solar panels or wind turbine blades) normally decreases over the time of 
its life span. Lowering the minimum value of individual real assets also seeks to ensure that 
asset  managers  are  provided  access  to  large  portfolios  irrespective  of  the  values  of  the 
individual  real  assets  forming  these  large  portfolios  and  that  a  portfolio  is  more  diversified 
and consequently has fewer risks. 

Article  10(1)(f)  has  been  amended  to  specify  the  scope  of  eligible  securitisations,  which 
comprise securitisations of four categories: residential loans that are either secured by one or 
more  mortgages  on  residential  immovable  property  (i.e.  a  residential  mortgage-backed 
security);  commercial  loans  that  are  secured  by  one  or  more  mortgages  on  commercial 
immovable  property;  corporate  loans  (including  loans  granted  to  small  and  medium 
enterprises); and trade receivables or other underlying exposures that the originator considers 
to  form  a  distinct  asset  type,  provided  that  the  proceeds  from  securitising  these  trade 
receivables  or  other  underlying  exposures  are  used  for  financing  or  refinancing  long-term 
investments. These provisions would allow the size and scope of eligible assets for ELTIFs to 
be broadened, and, in turn, make the ELTIF regulatory framework more appealing for asset 
managers and investors.  

Article  11(1)  is  amended  to  streamline  the  notion  of  a  ‘qualifying  portfolio  undertaking’. 
Article  11(1)(b)  is  also  amended  to  raise  the  market  capitalisation  threshold  for  listed 
qualifying portfolio undertakings from EUR 500 million to EUR 1 billion and ensure that the 
market capitalisation threshold is solely applied at the time of the initial investment. 

Article  12  is  amended  in  two  respects.  First,  the  scope  of  conflict  of  interest  provisions  in 
paragraph 1 includes the references to EU AIFs that can be managed by the ELTIF manager. 
Paragraph 2, in  turn, explicitly seeks to  ensure that  the ELTIF managers  and their affiliated 
entities  that  belong  to  the  same  group,  and  their  staff  may  invest  in  that  ELTIF  and  in  the 

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same  asset.  Such  co-investments  may  be  a  necessary  part  of  the  co-investment  strategies 
pursued  by  AIF  managers  and  in  some  cases  can  represent  a  standard  industry  practice. 
Article 12(2) allows the co-investments by the manager and its affiliated entities that belong 
to  the  same  group  with  that  ELTIF  manager,  and  their  staff  only  in  so  far  as  the  ELTIF 
manager has put in place organisational and administrative arrangements to identify, prevent, 
manage  and  monitor  conflicts  of  interest  and  provided  that  such  conflicts  of  interest  are 
adequately  disclosed.  These  additional  requirements  seek  to  provide  necessary  investor 
protection and market integrity safeguards. 

Currently,  Article  13  sets  out  that  a  minimum  threshold  for  eligible  assets  and  investments 
should  be  70%.  Furthermore,  Article  13  sets  out  portfolio  composition  and  diversification 
requirements.  ELTIF  diversification  requirements  are  very  granular  and  a  default  10% 
investment requirement is put in place for investments in loans, for any single real asset, for 
other  investment  funds.  To  promote  the  attractiveness  of  ELTIFs  to  asset  managers,  the 
modification to Article 13(1) lowers the threshold for eligible investment assets of ELTIFs to 
60%.  Lowering  this  threshold  would  improve  the  liquidity  profile  of  ELTIFs’  underlying 
portfolios  and  promote  the  flexibility  of  asset  managers  in  executing  their  investment 
strategies.  

Article  13(2)  points  (a)  to  (c)  increases  to  20%  the  maximum  retail  ELTIF  exposures  to 
instruments  issued  by,  or  loans  granted  to,  any  single  qualifying  portfolio  undertaking. 
Furthermore,  the  20%  threshold  has  also  been  established  for  those  ELTIFs  that  can  be 
marketed  to  retail  investors  for  investments  in  any  single  ELTIF,  EuVECA,  EuSEF,  or  EU 
AIF  managed  by  an  EU  AIFM  that  are  eligible  for  investment  under  Article  10(1)  of  the 
ELTIF Regulation. For those assets referred to in Article 9(1) point (b) that have been issued 
by any single body, the threshold has been doubled to 10%.  

To  cater  for  the  calibration  of  the  exposures  of  retail  ELTIFs  to  simple,  transparent  and 
standardised securitisations, a new paragraph 3a sets out that the aggregate value of simple, 
transparent and standardised securitisations may not exceed 20% of the value of the capital of 
the ELTIF. The aggregate risk exposure to a counterparty of the ELTIF stemming from OTC 
derivative transactions, repurchase agreements, or reverse repurchase agreements should not 
exceed  10%  of  the  value  of  the  capital  of  the  ELTIF.  Article  13(5)  is  deleted,  given  the 
increased  exposure  limits  of  retail  ELTIFs.  Importantly,  a  new  paragraph  8  of  Article  13 
specifies  that  the  investment  thresholds  set  in  paragraphs  2  to  4  should  not  apply  where 
ELTIFs are marketed solely to professional investors. 

Article 15(1) specifies that an ELTIF may acquire no more than 30% of the units or shares of 
a single ELTIF, EuVECA, EuSEF, or of an EU AIF managed by an EU AIFM eligible under 
Article  10(1)(d).  Paragraph  2  specifies  that  the  concentration  limits  may  not  apply  where 
ELTIFs are marketed solely to professional investors. 

Article  16  seeks  to  enable  ELTIFs  that  can  be  marketed  to  retail  investors  to  increase  their 
borrowing  of  cash  up  to  50%  of  the  ELTIF  threshold.  By  contrast,  those  ELTIFs  marketed 
solely to professional investors would be permitted to leverage up to 100% of the value of the 
capital of the ELTIF. The proposal also seeks to provide additional flexibility in the currency-
related  rules  and  extends  the  possibility  of  ELTIFs  to  contract  in  a  currency  other  than  the 
base currency where such currency exposures have been hedged or where it can be otherwise 
demonstrated that the borrowing in  another currency does not expose the ELTIF to material 
currency risks. The 30% encumbrance requirement in Article 16(1) point (e) is deleted, and it 
is  clarified  that  the  encumbering  of  assets  is  permitted  where  it  is  sought  to  implement  the 

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borrowing  strategy.  A  new  paragraph  1a  of  Article  16  introduces  a  clarification  that  those 
borrowing  arrangements  fully  covered  by  investors’  capital  commitments  would  not  be 
considered  to  constitute  borrowing.  This  provision  would  provide  additional  flexibility  to 
asset managers in employing leverage. To cater for higher investor protection safeguards, the 
revised paragraph 2 of Article 16 requires ELTIF managers to provide a detailed presentation 
of  the  ELTIF  borrowing  strategy  and  limits.  This  requirement  also  seeks  to  oblige  ELTIF 
managers to outline how exactly the borrowing would help implement the ELTIF strategy and 
mitigate borrowing, currency and duration risks. 

The redemptions-related rules in Article 18(7) are amended to allow ESMA to develop draft 
regulatory technical standards which would further specify the circumstances for redemptions 
under limited circumstance in paragraph 2. Such redemptions could comprise cases where the 
minimum information to be provided to the competent authorities and the redemptions criteria 
and percentage for redemptions  would enable ELTIFs to  provide limited redemptions  based 
on  ELTIF’s  expected  cash  flows  and  liabilities.  In  addition,  ESMA  would  be  required  to 
develop  draft regulatory  technical  standards specifying the information  that  ELTIFs need to 
disclose to investors. 

Article  19  would  enable,  but  not  require,  the  ELTIF  managers  to  include  in  the  rules  or 
instruments  of  incorporation  of  the  ELTIF  the  possibility  for  an  optional  liquidity  window 
mechanism. This secondary market liquidity mechanism is aimed at providing, before the end 
of  the  ELTIF’s  life,  full  or  partial  matching  of  transfer  requests  of  units  or  shares  of  the 
ELTIF by exiting ELTIF investors with subscription requests by new investors. The matching 
of transfer and subscription requests can be done, provided several cumulative conditions are 
fulfilled.  In  particular,  the  manager  of  the  ELTIF  would  have  to  have  a  defined  policy  for 
such an optional liquidity mechanism and specify in that policy the following information: the 
transfer process for both exiting and subscribing investors, the roles of the fund manager or 
the fund administrator, the applicable time window, the execution price, the conditions for the 
pro-ration, disclosure requirements and the applicable fees, costs and charges. It is critical that 
such an optional liquidity mechanism ensure fair treatment of investors and provide sufficient 
opportunity for the ELTIF manager to monitor the liquidity risk of the ELTIFs. 

Article  21(1)  modifies  the  provisions  on  disposing  of  ELTIF  assets  by  requiring  the  ELTIF 
manager to  inform  the competent  national  authority of the orderly disposal  of the assets for 
the  redemption  of  investors.  A  separate  request  by  the  competent  authority  of  the  ELTIF 
would trigger an obligation for the ELTIF to  submit  to  the competent  authority an itemised 
schedule for the orderly disposal of the assets. 

Article  26  requires  that  the  manager  of  an  ELTIF  whose  units  or  shares  are  intended  to  be 
marketed  to  retail  investors  put  in  place,  in  each  Member  State  where  ELTIFs  are  being 
marketed,  facilities  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  manager  are  required  to  provide.  These  provisions  on  investor  facilities  are 
deleted  to  facilitate  the  marketing  of  ELTIFs,  in  particular  cross-border  marketing,  in  a 
manner compliant with the EU acquis. The deletion of Article 26 also seeks to ensure that the 
marketing of ELTIFs can take place without subjecting ELTIF managers to the requirement to 
put  in  place ‘facilities’, which are at  times construed to  imply physical  facilities or separate 
IT, personnel-related or administrative arrangements or requirements. 

Article  28(1)  seeks  to  remove  the  partial  duplication  of  suitability  assessment  referred  to  in 
the ELTIF Regulation and in  the Directive on Markets in  Financial  Instruments (MiFID II). 

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To that end, Article 28(1) and Article 30(1) cross-refer to the obligation of ELTIF managers 
and  distributors,  when  directly  offering  or  placing  ELTIFs,  to  carry  out  the  suitability 
assessment in line with the MiFID II provisions. This alignment of the ELTIF suitability test 
with  that  of  MiFID  II  is  important  in  the  context  of  the  proposed  deletion  of  the  first 
subparagraph  of  Article  30(3)  which  contains  the  EUR 10 000  initial  minimum  investment 
requirement  and  the  10%  aggregate  threshold  for  the  financial  portfolios  of  retail  investors. 
The proposal seeks to remove these requirements, i.e. the minimum EUR 10 000 investment 
(the  ‘entry  ticket’)  and  the  10%  exposure  threshold  for  retail  investors  whose  financial 
portfolios  are  below  EUR 500 000.  This  is  due  to  the  fact  that  such  requirements  constitute 
unjustified  barriers  preventing  retail  investors  from  having  access  to  ELTIFs  and  that  such 
thresholds have proven, in most instances, to be burdensome, dissuasive and ineffective.  

Article 30(4) seeks to clarify the application of the equal treatment principle, as applied within 
the  relevant  class  or  classes  of  ELTIFs.  Article  30(6)  seeks  to  ensure  that  the  two-week 
withdrawal  period  solely  applies  to  retail  investors  and  can  only  be  effective  during  the  2 
weeks following the effective date of the commitment or subscription agreement. 

Article 37(1) is modified to expand the conditions of the new review of the ELTIF regulatory 
framework. Such a review could start within 5 years from the ELTIF Regulation’s entry into 
force and should cover a more comprehensive set of fund rules than those initially set out in 
Article  37.  Comprehensive  evaluation  of  the  functioning  of  this  Regulation  will  be 
conducted 5 years after it begins applying. The scope of the revised review clause is extended 
to cover the operation and application of the main fund rules and the impact these rules have 
on ELTIF managers and investors. The review of the ELTIF legal framework would require 
consultation of ESMA. 

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2021/0377 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) 2015/760 as regards the scope of eligible assets and 
investments, the portfolio composition and diversification requirements, the borrowing 
of cash and other fund rules and as regards requirements pertaining to the 
authorisation, investment policies and operating conditions of 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 Committee10, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Since  the  adoption  of  Regulation  (EU)  2015/760  of  the  European  Parliament  and  of 
the Council11, only  a  few  European long-term  investment  funds (ELTIFs) have been 
authorised.  The  aggregate  size  of  net  assets  of  those  funds  was  estimated  at 
approximately EUR 2 400 000 000 in 2021. 

The available market data indicate that the development of the ELTIF segment has not 
scaled  up  as  expected,  despite  the  Union’s  focus  on  promoting  long-term  finance  in 
the Union.  

Certain  characteristics  of  the  ELTIF  market,  including  the  low  number  of  funds,  the 
small net asset size, the low number of jurisdictions in which ELTIFs are domiciled, 
and  a  portfolio  composition  that  is  skewed  towards  certain  eligible  investment 
categories,  demonstrate  the  concentrated  nature  of  that  market,  both  geographically 
and in terms of investment type. It is therefore necessary to review the functioning of 
the  ELTIF  legal  framework  to  ensure  that  more  investments  are  channelled  to 
businesses in need of capital and to long-term investment projects.  

(4) 

ELTIFs have a potential to facilitate long-term investments in the real economy. Long- 
term  investments  in  projects,  undertakings,  and  infrastructure  projects  in  third 

10 
11 

OJ C , , p. . 
Regulation  (EU)  2015/760  of  the  European  Parliament  and  of  the  Council  of  29  April  2015  on 
European long-term investment funds (OJ L 123, 19.5.2015, p. 98). 

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countries can bring capital to ELTIFs and thereby benefit the economy of the Union. 
Such  benefits  can  originate  in  multiple  ways,  including  through  investments  that 
promote  the  development  of  border  regions,  enhance  commercial,  financial  and 
technological cooperation and facilitate investments in environmental and sustainable 
energy  projects.  Investments  in  third  country  qualifying  undertakings  and  eligible 
assets  may  bring  substantial  benefits  to  investors  and  ELTIF  managers  and  to  the 
economies,  infrastructure,  climate  and  environmental  sustainability  and  citizens  of 
such third countries. It should therefore be allowed that the majority of such assets and 
investments  or  the  main  revenue  or  profit  generation  of  such  assets  and  investments 
are located in a third country. 

The  rules  for  ELTIFs  are  almost  identical  for  both  professional  and  retail  investors, 
including rules on the use of leverage, on the diversification of assets and composition 
of  the  portfolios,  on  concentration  limits  and  on  limits  on  the  eligible  assets  and 
investments.  Both  types  of  investors,  however,  have  different  time  horizons,  risk 
tolerances  and  investment  needs.  Because  of  those  almost  identical  rules  and  the 
consequential high administrative burden and associated costs for ELTIFs destined for 
professional investors, asset managers have been reluctant to offer tailored products to 
such investors. Professional investors have a higher risk tolerance than retail investors 
and  may  have,  due  to  their  nature  and  activities,  different  time  horizon  and  return 
objectives. It is therefore appropriate to provide for specific rules for ELTIFs that are 
destined  to  be  marketed  to  professional  investors,  in  particular  with  regard  to  the 
diversification and composition of the portfolio concerned, the minimum threshold for 
eligible assets, the concentration limits, and the borrowing of cash. 

It  is  necessary  to  enhance  the  flexibility  of  asset  managers  in  investing  in  a  broad 
categories of real assets. Direct or indirect holdings of real assets should therefore be 
deemed to form a category of eligible assets, provided that those real assets have value 
due  to  their  nature  or  substance.  Such  real  assets  comprise  immovable  property, 
communication, environment, energy or transport infrastructure, social infrastructure, 
including retirement homes or hospitals, as well as infrastructure for education, health 
and  welfare  support  or  industrial  facilities,  installations,  and  other  assets,  including 
intellectual  property,  vessels,  equipment,  machinery,  aircraft  or  rolling  stock,  and 
immovable property.  

Investments  in  commercial  property,  in  facilities  or  installations  for  education, 
research, sports or development, or in housing, including in senior residents or social 
housing, should also be deemed to be eligible assets due to the capacity of such assets 
to  contribute  to  the  objectives  of  smart,  sustainable  and  inclusive  growth.  To  enable 
real  investment  strategies  in  areas  where  direct  investments  in  real  assets  are  not 
possible  or  uneconomical,  eligible  investments  in  real  assets  should  also  comprise 
investments in water rights, forest rights, building rights and mineral rights. 

To  promote  accountability  of  investments  and  provide  adequate  disclosure  on  the 
impact  of  the  investment  strategy,  investments  in  immovable  property  should  be 
documented,  including  the  extent  to  which  real  assets  are  integral  to,  or  an  ancillary 
element of, a long-term investment project that contributes to the Union’s objective of 
smart, sustainable and inclusive growth. 

It is necessary to increase the attractiveness of ELTIFs for asset managers and broaden 
the range of investment strategies available to ELTIF managers and thus to avoid the 
undue  limitation  of  the  scope  of  the  eligibility  of  assets  and  investment  activities  of 
ELTIFs. The eligibility of real assets should not depend on their nature and objective 

(5) 

(6) 

(7) 

(8) 

(9) 

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(10) 

(11) 

or upon environmental, sustainability or social and governance related disclosures and 
conditions, which are already covered by Regulation (EU) 2019/2088 of the European 
Parliament  and  of  the  Council12  and  by  Regulation  (EU)  2020/852  of  the  European 
Parliament and of the Council13.  

It  is  necessary  to  extend  the  scope  of  eligible  assets  and  promote  the  investments  of 
ELTIFs in securitised assets. It should therefore be clarified that, where the underlying 
assets  consist  of  long-term  exposures,  eligible  investment  assets  should  also  include 
simple, transparent and standardised (STS) securitisations as referred to in Article 18 
of Regulation (EU) 2017/2402 of the European Parliament and of the Council14. Those 
long-term  exposures  comprise  securitisations  of  residential  loans  that  are  secured  by 
one  or  more  mortgages  on  residential  immovable  property  (residential  mortgage 
backed  securities  (RMBS)),  commercial  loans  that  are  secured  by  one  or  more 
mortgages on commercial immovable property, corporate loans, including loans which 
are  granted  to  small  and  medium  enterprises  (SMEs),  and  trade  receivables  or  other 
underlying  exposures  that  the  originator  considers  to  form  a  distinct  asset  type, 
provided  that  the  proceeds  from  securitising  those  trade  receivables  or  other 
underlying exposures are used for financing or refinancing long-term investments. 

In order to improve access of investors to more up-to-date and complete information 
on the ELTIF market, it is necessary to increase the granularity and the timeliness of 
the  central  public  register  referred  to  in  Article 3(3),  second  subparagraph,  of 
Regulation  (EU)  2015/760  (‘ELTIF  register’).  The  ELTIF  register  should  therefore 
contain  additional  information  to  the  information  that  that  register  contains  already, 
including,  where  available,  the  Legal  Entity  Identifier  (‘LEI’)  and  the  national  code 
identifier  of  the  ELTIF,  the  name,  address  and  the  LEI  of  the  ELTIF  manager,  the 
International  Securities  Identification  Numbers  (‘ISIN’)  codes  of  the  ELTIF  and  of 
each separate share or unit class, the competent authority of the ELTIF and the home 
Member  State  of  that  ELTIF,  the  Member  States  where  the  ELTIF  is  marketed, 
whether  the  ELTIF  can  be  marketed  to  retail  investors  or  can  solely  be  marketed  to 
professional  investors,  the  date  of  the  authorisation  of  the  ELTIF,  and  the  date  on 
which  the  marketing  of  the  ELTIF  has  commenced.  In  addition,  to  enable  ELTIF 
investors to analyse and compare existing ELTIFs, the ELTIF register should contain 
up-to-date links to the ELTIF documentation, including to the rules or instruments of 
incorporation of the ELTIF  concerned, the annual reports, the prospectus and, where 
available,  the  Key  Information  Document  drawn  up  in  accordance  with  Regulation 
(EU) No 1286/2014 of the European Parliament and of the Council15. To ensure an up-
to-date status of the ELTIF register, it is appropriate to require competent authorities 
to  communicate  to  ESMA  any  changes  to  the  information  on  an  ELTIF,  including 
authorisations and withdrawals of such authorisations, on a monthly basis. 

12 

13 

14 

15 

Regulation (EU) 2019/2088 of the European  Parliament and of the Council of 27 November 2019 on 
sustainability‐related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1). 
Regulation  (EU)  2020/852  of  the  European  Parliament  and  of  the  Council  of  18  June  2020  on  the 
establishment  of  a  framework  to  facilitate  sustainable  investment,  and  amending  Regulation  (EU) 
2019/2088 (OJ L 198, 22.6.2020, p. 13). 
Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying 
down a general framework for securitisation and creating a specific framework for simple, transparent 
and  standardised  securitisation,  and  amending  Directives  2009/65/EC,  2009/138/EC  and  2011/61/EU 
and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, p. 35). 
Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 
on  key  information  documents  for  packaged  retail  and  insurance-based  investment  products  (PRIIPs) 
(OJ L 352, 9.12.2014, p. 1). 

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(12)  Certain  investments  by  ELTIFs  can  be  conducted  through  the  participation  of 
intermediary  entities,  including  special  purpose  vehicles  and  securitisation  or 
aggregator  vehicles  or  holding  companies.  Regulation  (EU)  2015/760  currently 
requires  that  investments  in  equity  or  quasi-equity  instruments  of  the  qualifying 
portfolio  undertaking  can  only  take  place  where  those  undertakings  are  majority 
owned subsidiaries, which substantially limits the scope of the potential scope of the 
eligible asset base.  ELTIFs  should  therefore  have the possibility to  conduct  minority 
co-investment  in  investment  opportunities.  That  possibility  should  enable  ELTIFs  to 
obtain  additional  flexibility  in  implementing  their  investment  strategies,  to  attract 
more promotors of investment  projects  and to  increase the range of possible eligible 
target  assets,  all  of  which  is  essential  for  the  implementation  of  indirect  investment 
strategies. 

(13)  Due to concerns that fund-of-funds strategies can give rise to investments that would 
not  fall  within  the  scope  of  eligible  investment  assets,  Regulation  (EU)  2015/760 
currently  contains  restrictions  on  investments  in  other  funds  throughout  the  ELTIF’s 
life.  Fund-of-fund  strategies  are,  however,  a  common  and  very  effective  way  of 
obtaining rapid exposure to illiquid assets, in particular in respect of real estate and in 
the context of fully paid-in capital structures. It is therefore necessary to give ELTIFs 
the possibility to invest in other funds, because that would enable ELTIFs to ensure a 
faster deployment of capital. Facilitating fund-of-fund investments by ELTIFs would 
also allow reinvestment of excess cash into funds as different investments with distinct 
maturities may lower the cash drag of the ELTIF. It is therefore necessary to expand 
the eligibility of funds-of-funds strategies for ELTIF managers beyond investments in 
European venture capital funds (EuVECAs) or European social entrepreneurship funds 
(EuSEFs).  The  scope  of  collective  investment  undertakings  in  which  ELTIFs  can 
invest  should  thus  be  broadened  to  undertakings  for  collective  investment  in 
transferable  securities  (UCITS)  and  to  EU  alternative  investment  funds  (EU  AIFs) 
managed  by  EU  AIF  managers.  However,  in  order  to  ensure  effective  investor 
protection, it is also necessary to set out that where an ELTIF invests in other ELTIFs, 
in  European  venture  capital  funds  (EuVECAs),  in  European  social  entrepreneurship 
funds  (EuSEFs),  in  UCITS  and  EU  AIFs  managed  by  EU  AIFMs,  those  collective 
investment  undertakings  should  also  invest  in  eligible  investments  and  have  not 
themselves invested more than 10 % of their capital in any other collective investment 
undertaking.  

(14) 

In  order  to  better  use  the  expertise  of  the  ELTIF  managers  and  because  of 
diversification benefits, in certain cases it can be beneficial for ELTIFs to invest all or 
almost  all  of  their  assets  into  the  diversified  portfolio  of  the  master  ELTIF.  ELTIFs 
should  therefore  be  allowed  to  pool  their  assets  and  make  use  of  master-feeder 
structures by investing in master ELTIFs. 

(15)  The diversification requirements laid down in the current version of Regulation (EU) 
2015/760  were  introduced  to  ensure  that  ELTIFs  can  withstand  adverse  market 
circumstances.  Those  diversification  thresholds  imply,  however,  that  ELTIFs  are,  on 
average, required to make ten distinct investments. In relation to investment in projects 
or infrastructures  of large scale, the requirement  to  make ten investments  per ELTIF 
may  be  difficult  to  achieve,  and  costly  in  terms  of  transactional  costs  and  capital 
allocation.  To  reduce  transaction  and  administrative  costs  for  ELTIFs  and  ultimately 
their  investors,  ELTIFs  should  therefore  be  able  to  pursue  more  concentrated 
investment  strategies  and  thus  to  be  exposed  to  fewer  eligible  assets.  It  is  therefore 
necessary  to  adjust  the  diversification  requirements  for  ELTIFs’  exposures  to  single 

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real  assets,  collective 

qualifying  portfolio  undertakings,  single 
investment 
undertakings  and  certain  other  eligible  investment  assets,  contracts  and  financial 
instruments. That additional flexibility in the portfolio composition of ELTIFs and the 
reduction in the diversification requirements should not materially affect the capacity 
of ELTIFs to withstand market volatility, since ELTIFs typically invest in assets that 
often  do  not  have  a  readily  available  market  quotation,  may  be  highly  illiquid,  and 
frequently have long-term maturity or time horizon. 

(16)  Unlike  retail  investors,  professional  investors  may,  in  certain  circumstances,  have  a 
longer  time  horizon,  distinct  financial  returns  objectives,  more  expertise,  possess 
higher  risk  tolerance  to  adverse  market  conditions  and  higher  capacity  to  absorb 
losses.  Such  professional  thus  require  less  investor  protection  measure  than  retail 
investors.  It  is  therefore  appropriate  to  remove  the  diversification  requirements  for 
ELTIFs that are solely marketed to professional investors. 

(17)  Article 28 and 30 of Regulation (EU) 2015/760 currently require ELTIF managers or 
distributors to carry out a suitability assessment. That requirement is already laid down 
in  Article  25  of  Directive  2014/65/EU  of  the  European  Parliament  and  of  the 
Council.16  That  duplicative 
layer  of 
administrative  burdens  leading  to  higher  costs  for  retail  investors  and  is  a  strong 
disincentive  for  ELTIF  managers  to  offer  new  ELTIFs  to  retail  investors.  It  is 
therefore  necessary  to  remove  that  duplicate  requirement  from  Regulation  (EU) 
2015/760. 

requirement  constitutes  an  additional 

(18)  Article 30 of Regulation (EU) 2015/760 also requires ELTIF managers or distributors 
to provide  appropriate investment advice when marketing ELTIFs to retail investors. 
The lack of precision in what constitutes appropriate investment advice in Regulation 
(EU)  2015/760  and  the  lack  of  a  cross-reference  to  Directive  2014/65/EU,  which 
contains  a  definition  of  investment  advice,  have  led  to  a  lack  of  legal  certainty  and 
confusion  among  ELTIF  managers  and  distributors.  In  addition,  the  obligation  to 
provide investment  advice would  require external  distributors to  be authorised under 
Directive 2014/65/EU when marketing ELTIFs to retail  investors. That  would create 
unnecessary  impediments  to  the  marketing  of  ELTIFs  to  those  investors.  The 
distribution  and  marketing  of  ELTIFs  should  not  be  subject  to  stricter  requirements 
than  the  distribution  of other  complex  financial products,  including  the  requirements 
for  securitisations  laid  down  in  Regulation  (EU)  2017/2402  of  the  European 
Parliament and of the Council17  and  for subordinated eligible liabilities laid down in 
Directive 2014/59 of the European Parliament and of the Council18. The obligation to 
perform  a  suitability  test  is  sufficient  to  provide  retail  investors  with  the  necessary 
protection  and  is  in  line  with  the  existing  obligations  laid  down  Regulation  (EU) 
2017/2402 and Directive 2014/59. It is therefore not necessary to require distributors 
and managers of ELTIFs to provide retail investors with that investment advice. 

16 

17 

18 

Directive  2014/65/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014 on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU  (OJ  L  173, 
12.6.2014, p. 349). 
Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying 
down a general framework for securitisation and creating a specific framework for simple, transparent 
and  standardised  securitisation,  and  amending  Directives  2009/65/EC,  2009/138/EC  and  2011/61/EU 
and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, p. 35). 
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 1095/2010 (OJ L 174, 1.7.2011, p. 1). 

EN 

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(19)  Article  30(3)  of  Regulation  (EU)  2015/760  currently  requires,  for  potential  retail 
investors  whose  financial  instrument  portfolio  does  not  exceed  EUR 500 000,  an 
initial minimum investment in one or more ELTIFs of EUR 10 000, and requires that 
such  investors  do  not  invest  an  aggregate  amount  exceeding  10 %  of  that  their 
financial  instrument  portfolio  in  ELTIFs.  When  applied  together,  the  EUR  10 000 
minimum  initial  investment  participation  and  the  10 %  limitation  on  aggregate 
investment  create  a  significant  obstacle  for  the  retail  investor  to  invest  in  ELTIFs, 
which conflicts with the goal of an ELTIF to establish a retail  alternative investment 
fund  product.  It  is  therefore  necessary  to  remove  that  EUR  10  000  initial  minimum 
investment requirement and the 10 % limitation on aggregate investment. 

(20)  Article  10,  point (e),  of  Regulation  (EU)  2015/760  currently  requires  that  eligible 
investment assets, where those assets are individual real assets, have a value of at least 
EUR 10 000 000. Real assets portfolios, however, are often composed of a number of 
individual real assets which have a value of less than EUR 10 000 000. The value of 
individual real  asset  should  therefore be reduced  to  EUR 1 000 000.  That  amount is 
based on the estimated value of individual real assets which may typically form large 
real assets portfolios, and may thus contribute to the diversification of an investment 
portfolio. 

(21)  Article  11(1),  point (b)(ii)  of  Regulation  (EU)  2015/760  currently  requires  that 
qualifying portfolio undertakings, where those qualifying undertakings are admitted to 
trading  on  a  regulated  market  or  on  a  multilateral  trading  facility,  have  a  market 
capitalisation  of  no  more  than  EUR 500 000 000.  Many  listed  companies  with  a  low 
market  capitalisation,  however,  have  a  limited  liquidity  which  prevents  ELTIF 
managers from building, within a reasonable time, a sufficient position in such listed 
companies, which narrows down the range of available investment targets. In order to 
provide  ELTIFs  with  a  better  liquidity  profile,  the  market  capitalisation  of  the  listed 
qualifying  undertakings  in  which  ELTIFs  can  invest  should  therefore  be  increased 
from  maximum  EUR 500 000 000  to  maximum  EUR  1 000 000 000.  To  avoid 
potential changes to the eligibility of such investments due to currency fluctuations or 
other factors, the determination of the market  capitalisation threshold should only be 
made at the time of the initial investment. 

(22)  Managers of ELTIFs that hold a stake in a portfolio undertaking may place their own 
interests ahead of the interests of investors in the ELTIF. To avoid such a conflict of 
interests, and to ensure sound corporate governance, the current version of Regulation 
(EU) 2015/760 requires that an ELTIF only invests in assets that are unrelated to the 
manager of the ELTIF, unless the ELTIF invests in units or shares of other collective 
investment  undertakings  that  are  managed  by  the  manager  of  the  ELTIF.  It  is, 
however, an established market practice that one or several investment vehicles of the 
asset  manager  co-invest  alongside  another  fund  that  has  a  similar  objective  and 
strategy  as  that  ELTIF.  Such  co-investments  by  the  AIF  manager  and  other  affiliate 
entities that belong to the same group allow for the attraction of larger pools of capital 
for  investments  in  large-scale  projects.  For  that  purpose,  asset  managers  typically 
invest  in  parallel  with  the  ELTIF  in  a  target  entity  and  structure  their  investments 
through  co-investment  vehicles.  As  part  of  the  asset  management  mandate,  portfolio 
managers  and  senior  personnel  of  the  asset  managers  are  typically  required  or 
expected to co-invest in the same fund that they manage. It is therefore appropriate to 
specify  that  the  provisions  on  conflict  of  interest  should  not  prevent  an  ELTIF 
manager or an undertaking that belongs to that group from co-investing in that ELTIF 
and co-investing with  that ELTIF in  the same  asset.  In order to  ensure that effective 

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investor  protection  safeguards  are  in  place,  where  such  co-investments  take  place, 
ELTIF  managers  should  put  in  place  organisational  and  administrative  arrangements 
designed to identify, prevent, manage and monitor conflicts of interest and ensure that 
such conflicts of interest are adequately disclosed. 

(23)  To  prevent  conflicts  of  interests,  avoid  transactions  that  do  not  take  place  on 
commercial  terms  and  to  ensure  sound  corporate  governance,  the  current  version  of 
Regulation  (EU)  2015/760  does  not  allow  the  staff  of  the  ELTIF  manager  and  of 
undertakings that belong to the same group with the ELTIF manager to invest in that 
ELTIF or to co-invest with the ELTIF in the same asset. It is, however, an established 
market practice that the staff of the ELTIF manager and of other affiliate entities that 
belong  to  the  same  group,  which  co-invest  alongside  the  ELTIF  manager,  including 
the  portfolio  managers  and  senior  personnel  responsible  for  the  key  financial  and 
operational decisions of the ELTIF manager, are often required or expected due to the 
nature  of  the  asset  management  mandate  to  co-invest  in  the  same  fund  or  the  same 
asset  in  order  to  promote  the  alignment  of  financial  incentives  of  that  staff  and  the 
investors.  It  is  therefore  appropriate  to  specify  that  the  provisions  on  conflict  of 
interest  should  not  prevent  the  staff  of  the  ELTIF  manager  or  of  undertakings  that 
belong  to  that  group  from  co-investing  in  their  personal  capacity  in  that  ELTIF  and 
from co-investing with that ELTIF in the same asset. In order to ensure that effective 
investor  protection  safeguards  are  in  place,  where  such  co-investments  by  the  staff 
take  place,  ELTIF  managers  should  put  in  place  organisational  and  administrative 
arrangements  designed  to  identify,  prevent,  manage  and  monitor  conflicts  of  interest 
and ensure that such conflicts of interest are adequately disclosed. 

(24)  Article  13(1)  of  Regulation  (EU)  2015/760  currently  requires  that  ELTIFs  invest  at 
least  70  %  of  their  capital  in  eligible  investment  assets.  This  high  threshold  for  the 
composition  of  eligible  investment  assets  in  ELTIFs’  portfolios  was  initially 
established  in  view  of  the  focus  of  ELTIFs  on  long-term  investments  and  the 
contribution such investments would make to the financing of a sustainable growth of 
the  Union’s  economy.  Given  the  illiquid  and  idiosyncratic  nature  of  certain  eligible 
investment  assets  within  ELTIFs’  portfolios,  however,  it  may  prove  difficult  and 
costly  for  ELTIF  managers  to  manage  the  liquidity  of  ELTIFs,  honour  redemption 
requests,  enter  into  borrowing  arrangements,  and  execute  other  elements  of  ELTIFs’ 
investment strategies pertaining to the transfer, valuation and pledging of such eligible 
investment  assets.  Lowering  the  eligible  investment  assets  threshold  would  enable 
ELTIF managers to better manage the liquidity of ELTIFs.  

(25)  Leverage  is  frequently  used  to  enable  the  day-to-day  operation  of  an  ELTIF  and  to 
carry  out  a  specific  investment  strategy.  Moderate  amounts  of  leverage  can  amplify 
returns, and, where controlled adequately, without incurring or exacerbating excessive 
risks. In addition, leverage can frequently be used by a variety of collective investment 
undertakings to gain additional efficiencies or operational results. Since the borrowing 
of  cash  threshold  is  currently  limited  to  30%  of  the  capital  of  the  ELTIF,  ELTIF 
managers  may  be  unable  to  successfully  pursue  certain  investment  strategies, 
including  in  the  case  of  investments  in  real  assets,  where  using  higher  levels  of 
leverage is an industry norm or is otherwise required to achieve attractive risk-adjusted 
returns. It is therefore appropriate to increase the flexibility of managers of ELTIFs to 
raise  further  capital  during  the  life  of  the  ELTIF.  In  view  of  the  possible  risks  that 
leverage can entail, ELTIFs marketed to retail investors should be permitted to borrow 
cash  amounting  to  up  to  50 %  of  the  value  of  the  capital  of  the  ELTIF.  The  50  % 
threshold is appropriate given the overall borrowing of cash limits common for funds 

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investing in real assets with a similar liquidity and redemption profile. As for ELTIFs 
marketed  to  professional  investors,  however,  a  higher  leverage  threshold  should  be 
permitted,  because  professional  investors  have  a  higher  risk-tolerance  than  retail 
investors.  The  borrowing  of  cash  threshold  for  ELTIFs  that  are  marketed  to 
professional  investors  only  should  therefore  be  extended  to  100 %  of  the  ELTIF 
capital.  

(26)  To  provide  ELTIFs  with  wider  investment  opportunities,  ELTIFs  should  be  able  to 
borrow  in  the  currency  in  which  the  manager  of  the  ELTIF  expects  to  acquire  the 
asset. It is, however, necessary to mitigate the risk of currency mismatches and thus to 
limit the currency risk for the investment portfolio. ELTIFs should therefore either put 
in  place  adequate  hedges  of  the  currency  exposure,  or  should  borrow  in  another 
currency  where  foreign  currency  exposures  do  not  bring  about  significant  currency 
risks. 

(27)  ELTIFs should be able to encumber their assets to implement their borrowing strategy. 
To  address  concerns  about  shadow  banking  activities,  however,  cash  borrowed  by 
ELTIFs  should  not  be  used  to  grant  loans  to  qualifying  portfolio  undertakings. 
However, to increase the flexibility of ELTIFs in executing their borrowing strategy, 
the  borrowing  arrangements  should  not  count  as  borrowing  where  that  borrowing  is 
fully covered by investors’ capital commitments. 

(28)  Given the increase of the maximum thresholds for borrowing cash by ELTIFs and the 
removal of certain limitations on the borrowing of cash in foreign currencies, investors 
should  have  more  comprehensive  information  on  the  borrowing  strategy  and  limits 
employed  by  the  ELTIF.  It  is  therefore  appropriate  to  require  ELTIF  managers  to 
explicitly  disclose  in  the  prospectus  of  the  ELTIF  concerned  the  borrowing  strategy 
and the borrowing limits and to provide information on how leverage will contribute 
to the ELTIF strategy and how currency and duration risks will be mitigated. 

(29)  Article  18(4)  of  Regulation  (EU)  2015/760  currently  requires  that  investors  in  an 
ELTIF may request the winding down of that ELTIF where their redemption requests, 
made  in  accordance  with  the  ELTIF’s  redemption  policy,  have  not  been  satisfied 
within  one  year  from  the  date  on  which  those  requests  were  made.  Given  the  long-
term  orientation  of  ELTIFs  and  the  often  idiosyncratic  and  illiquid  asset  profile  of 
ELTIFs’ portfolios, the entitlement of any investor or a group of investors to request 
the  winding  down  of  an  ELTIF  can  be  disproportionate  and  detrimental  to  both  the 
successful  execution  of  the  ELTIF  investment  strategy  and  the  interests  of  other 
investors or groups of investors. It is therefore appropriate to delete the possibility for 
investors  to  require  the  winding  down  of  an  ELTIF  where  that  ELTIF  is  unable  to 
satisfy redemption requests. 

(30)  The current version of Regulation (EU) 2015/760 is unclear about the criteria to assess 
the redemption percentage in a period of time, and about the minimum information to 
be  provided  to  competent  authorities  about  the  possibility  of  redemptions.  Given 
ESMA’s central role in the application of Regulation (EU) 2015/760 and its expertise 
about  securities  and  securities  markets,  it  is  appropriate  to  entrust  ESMA  with  the 
drawing  up  of  draft  regulatory  technical  standards  specifying  those  criteria  and  that 
information. 

(31)  Article  19(1)  of  the  current  version  of  Regulation  (EU)  2015/760  requires  that  the 
rules or instruments of incorporation of an ELTIF do not prevent units or shares of the 
ELTIF  from  being  admitted  to  trading  on  a  regulated  market  or  on  a  multilateral 
trading  facility.  Despite  that  possibility,  ELTIF  managers,  investors  and  market 

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participants  have hardly  used the secondary trading mechanism  by  for the trading of 
shares or units of ELTIFs. To promote the secondary trading of ELTIF units or shares, 
it is appropriate to allow ELTIF managers to put in place a possibility for an early exit 
of ELTIF investors, before the end of the ELTIF’s life. In order to ensure an effective 
functioning  of  such  a  secondary  trading  mechanism,  such  an  early  exit  should  be 
possible only where the manager of the ELTIF has put in place a policy for matching 
potential  investors  and  exit  requests.  That  policy  should,  among  others,  specify  the 
transfer  process,  the  role  of  the  ELTIF  manager  and  the  ELTIF  administrator,  the 
duration of the liquidity window during which the units or shares of the ELTIF could 
be  exchanged,  the  execution  price,  pro-ration  conditions,  disclosure  requirements, 
fees,  costs  and  charges  and  other  conditions  pertaining  to  such  a  liquidity  window 
mechanism. 

(32)  Article  26  of  the  current  version  of  Regulation  (EU)  2015/760  requires  that  ELTIF 
managers  set  up  local  facilities  in  each  Member  State  where  they  intend  to  market 
ELTIFs.  The  requirement  to  set  up  local  facilities  has,  however,  been  removed  by 
Directive (EU) 2019/1160 of the European Parliament and of the Council of 20 June 
201919 as regards UCITS and alternative investment funds marketed to retail investors, 
since  such  local  facilities  create  additional  costs  and  friction  to  the  cross-border 
marketing of ELTIFs. In addition, the preferred method of contact with investors has 
shifted  from  physical  meetings  at  local  facilities  to  direct  interaction  between  fund 
managers  or  distributors  and  investors  by  virtue  of  electronic  means.  Removing  this 
obligation  from  the  ELTIF  Regulation  for  all  ELTIF  investors  would  hence  be 
consistent with Directive (EU) 2019/1160 and the contemporary methods of marketing 
of  financial  products,  and  could  promote  the  attractiveness  of  ELTIFs  for  asset 
managers  who  would  no  longer  be  required  to  incur  costs  stemming  from  operating 
local facilities. Article 26 should therefore be deleted. 

(33)  The current version of Article 21(1) of Regulation (EU) 2015/760 requires ELTIFs to 
adopt an itemised schedule for the orderly disposal of their assets to redeem investors' 
units  or  shares  after  the  end  of  the  life  of  the  ELTIF.  That  provision  also  requires 
ELTIFs  to  disclose  that  itemised  schedule  to  the  competent  authorities.  Those 
requirements  subject  ELTIF  managers  to  substantial  administrative  and  compliance 
burdens, without bringing a corresponding increase in investor protection. In order to 
alleviate  those  burdens  without  diminishing  investors  protection,  ELTIFs  should  be 
required  inform  the  competent  authority  of  the  ELTIF  about  the  orderly  disposal  of 
their assets to redeem investors' units or shares after the end of the ELTIF’s life, and 
only provide the  competent  authority of the ELTIF with  an itemised schedule  where 
they are explicitly asked by the competent authority of the ELTIF to do so. 

(34)  Adequate disclosure of fees and charges is critically important for the evaluation of the 
ELTIFs as a potential investment target by investors. Such disclosure is also important 
where the ELTIF is marketed to retail investors in the case of master-feeder structures. 
It is therefore appropriate to require the ELTIF manager to include in the annual report 
of the feeder ELTIF a statement on the aggregate charges of the feeder ELTIF and the 
master ELTIF. 

(35)  Regulation  (EU)  2015/760  requires  ELTIF  managers  to  disclose  in  the  ELTIF 
prospectus information about fees related to investing in that ELTIF. Regulation (EU) 

19 

Directive (EU) 2019/1160 of the European Parliament and  of the Council of 20 June 2019 amending 
Directives  2009/65/EC  and  2011/61/EU  with  regard  to  cross-border  distribution  of  collective 
investment undertakings (OJ L 188, 12.7.2019, p. 106). 

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  EN 

                                                 
No 1286/2014  of  the  European  Parliament  and  of  the  Council20,  however,  also 
contains  requirements  concerning  the  disclosure  of  fees.  In  order  to  increase 
transparency  on  the  fee  structure,  the  requirement  laid  down  in  Regulation  (EU) 
2015/760  should  be  aligned  with  the  requirement  laid  down  in  Regulation  (EU) 
No 1286/2014. 

(36) 

It  is  an established market  practice that the portfolio manager or senior personnel  of 
the  ELTIF  manager  are  required  or  expected  to  invest  in  ELTIFs  managed  by  that 
ELTIF manager. Such persons are presumed to be financially sophisticated and well-
informed  about  the  ELTIF  concerned.  In  those  circumstances,  it  is  superfluous  to 
require those individuals to undergo a suitability assessment test for investments in the 
ELTIF. It is therefore appropriate not to require ELTIF managers or the distributors to 
carry out a suitability assessment for such individuals. 

(37)  The  prospectus  of  the  feeder  ELTIF  may  contain  highly  relevant  information  for 
investors,  which  enables  investors  to  better  assess  potential  risks  and  benefits  of  an 
investment.  It  is  therefore  appropriate  to  require  that  in  case  of  a  master-feeder 
structure the prospectus of the feeder ELTIF contains disclosures on the master-feeder 
structure, the feeder ELTIF and the master ELTIF, a description of all remuneration or 
reimbursement  of  costs  payable  by  the  feeder  ELTIF  and  a  description  of  the  tax 
implications of the investment into the master ELTIF for the feeder ELTIF. 

(38)  Article 30(7) of Regulation (EU) 2015/760 currently requires that investors are treated 
equally  and  prohibits  preferential  treatment  of  individual  investors  or  groups  of 
investor, or the granting of specific economic benefits to those investors. ELTIFs may, 
however, have several classes of shares or units with slightly or substantially distinct 
conditions as regards the fees, legal structure, marketing rules and other requirements. 
In  order  to  take  those  differences  into  account.  It  should  be  specified  that  those 
requirements  should  only  apply  to  individual  investors  or  groups  of  investors  that 
invest into the same class or classes of ELTIFs. 

(39)  Regulation (EU) 2015/760 should therefore be amended accordingly. 

(40) 

In  order  to  give  ELTIF  managers  sufficient  time  to  adapt  to  the  new  requirements, 
including  the  requirements  pertaining  to  the  marketing  of  ELTIFs  to  investors,  this 
Regulation should start to apply six months after its entry into force, 

HAVE ADOPTED THIS REGULATION: 

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

(1) 

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

Article 1 

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

(2) 

Article 2 is amended as follows: 

(a) 

point (6) is replaced by the following: 

20 

Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 
on  key  information  documents  for  packaged  retail  and  insurance-based  investment  products  (PRIIPs) 
(OJ L 352, 9.12.2014, p. 1). 

EN 

22 

  EN 

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

and properties;’;  

(b) 

the following point (14a) is inserted: 

 ‘(14a)  

‘simple, 

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

____________________________________ 
*1 

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

(c) 

the following point (14b) is inserted: 

‘(6)  ‘group’ means a group as defined in Article 2(11) of Directive 2013/34/EU 

of the European Parliament and the Council*2’;  

____________________________________ 
*2 

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

(d) 

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

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

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

(3) 

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

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

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

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

the name of the manager of the ELTIF, and the address and the LEI of that manager; 

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

the LEI of the master fund, where available; 

the LEI of the feeder funds, where available; 

the competent authority of the ELTIF and the home Member State of that ELTIF; 

the Member States where the ELTIF is marketed; 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

EN 

23 

  EN 

(h) 

(i) 

(j) 

(k) 

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

the date of the authorisation of the ELTIF; 

the date on which the marketing of the ELTIF has commenced; 

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

(l) 

the date of the last update by ESMA of the information about the ELTIF. 

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

(4) 

Article 5 is amended as follows: 

(a) 

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

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

(a) 

the fund rules or instruments of incorporation; 

(b) 

the name of the proposed manager of the ELTIF; 

(c) 

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

(d)  where  the  ELTIF  is  intended  to  be  marketed  to  retail  investors,  a 
description  of  the  information  to  be  made  available  to  investors, 
including a description of the arrangements  for dealing  with  complaints 
submitted by retail investors; 

(e)  where  applicable,  the  following  information  on  the  master-feeder 

structure of the ELTIF: 

(i) 

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

(ii) 

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

(iii)  where  the  master  ELTIF  and  the  feeder  ELTIF  have  different 
in 

information-sharing  agreement  referred 

the 

to 

depositaries, 
Article 29(7), ; 

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

(b)  paragraph 3 is replaced by the following: 

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

EN 

24 

  EN 

ELTIF  home  Member  State  or  that  the  AIFM  pursue  or  delegate  any 
activities in the ELTIF home Member State.’; 

(c) 

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

‘(b)  where  the  ELTIF  is  intended  to  be  marketed  to  retail  investors,  a 
description  of  the  information  to  be  made  available  to  investors, 
including  a  description  of  the  arrangements  for  dealing  with 
complaints submitted by retail investors.’; 

(5) 

Article 10 is replaced by the following: 

‘Article 10 

Eligible investment assets 

1. 

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

(a) 

equity or quasi-equity instruments which have been: 

(i) 

(ii) 

(iii) 

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

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

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

(b)  debt instruments issued by a qualifying portfolio undertaking as referred to in 

Article 11(1); 

(c) 

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

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

(e) 

(f) 

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

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

(i) 

(ii) 

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

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

EN 

25 

  EN 

___________ 

*3 

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

2. 

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

(6) 

Article 11(1) is amended as follows: 

(a) 

the introductory sentence is replaced by the following: 

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

(b) 

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

‘(ii) 

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

(7) 

Article 12 is replaced by the following: 

‘Article 12 

Conflict of interest  

1. 

2. 

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

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

(8) 

Article 13 is amended as follows: 

(a) 

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

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

2.  An ELTIF shall invest no more than: 

(a) 

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

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

(c) 

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

EN 

26 

  EN 

(d)  10 % of its capital in assets as referred to in Article 9(1), point (b), where 

those assets have been issued by any single body. 

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

(b) 

the following paragraph 3a is inserted: 

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

(c) 

paragraph 4 is replaced by the following: 

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

(d)  paragraph 5 is deleted; 

(e) 

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

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

(f) 

the following paragraph 8 is added: 

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

(9) 

Article 15 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

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

(b) 

in paragraph 2, the following subparagraph is added: 

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

(10) 

Article 16 is amended as follows: 

(a) 

paragraph 1 is amended as follows: 

(i) 

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

‘(a) 

(b) 

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

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

EN 

27 

  EN 

(c) 

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

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

‘(e) 

it encumbers assets to implement the borrowing strategy of  the 
ELTIF concerned.’; 

(b) 

the following paragraph 1a is inserted: 

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

(c) 

paragraph 2 is replaced by the following: 

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

(11) 

(12) 

in Article 18, paragraph 4 is deleted; 

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

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

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

(13) 

Article 19 is amended as follows: 

(i) 

the following paragraph 2a is inserted: 

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

(a) 

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

(i) 

the transfer process for both exiting and potential investors; 

(ii) 

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

(iii) 

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

EN 

28 

  EN 

(iv) 

the execution price; 

(v) 

the pro-ration conditions; 

(vi) 

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

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

(b) 

(c) 

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

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

(ii) 

the following paragraph 5 is added: 

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

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

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

(14) 

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

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

(15) 

Article 23 is amended as follows: 

(a) 

the following paragraph 3a is inserted: 

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

(a) 

(b) 

(c) 

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

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

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

EN 

29 

  EN 

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

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

(f) 

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

(g) 

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

(b) 

in paragraph 5, the following subparagraph is added: 

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

(16) 

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

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

(17) 

(18) 

(19) 

Article 26 is deleted. 

Article 28 is deleted.  

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

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

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

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

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

The feeder ELTIF or,  where  applicable, the management company  of the feeder 
ELTIF, shall be in charge of communicating to the depositary of the feeder ELTIF 

EN 

30 

  EN 

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

(20) 

Article 30 is replaced by the following: 

1. 

2. 

3. 

4. 

5. 

6. 

‘Article 30 

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

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

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

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

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

(a) 

(b) 

(c) 

(d) 

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

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

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

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

(e) 

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

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

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

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7. 

8. 

9. 

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

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

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

(21) 

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

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

(a) 

(b) 

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

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

(c)  whether the provisions on the central public register of ELTIFs as laid down in 

Article 3 should be updated; 

(d) 

(e) 

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

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

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

(g)  whether the provisions concerning conflicts of interest as laid down in Article 

12 should be updated; 

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

appropriate; 

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

Article 2 

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

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

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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 

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