EUROPEAN
COMMISSION

Brussels, XXX
COM(2013) 462 /2
2013/0214 (COD)

Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on European Long-term Investment Funds

(Text with EEA relevance)
{SWD(2013) 230}
{SWD(2013) 231}

EN

EN

EXPLANATORY MEMORANDUM
1.

CONTEXT OF THE PROPOSAL

Long-term investment is the provision of long-lived capital in order to finance tangible assets
(such as energy, transport and communication infrastructures, industrial and service facilities,
housing and climate change and eco-innovation technologies) as well as intangible assets
(such as education and research and development) that boost innovation and competitiveness.
Many of these investments have wider public benefits, since they generate greater returns for
society as a whole by supporting essential services and improving living standards. This
proposal intends to help increase the pool of capital available for long term investment in
tomorrow’s economy of the European Union with a view to finance transition to the smart,
sustainable and inclusive growth. This will be done by creating a new form of fund vehicle,
EU Long Term Investment Funds or ELTIFs. ELTIFs, by virtue of the asset classes that they
are allowed to invest in, are expected to be able to provide investors with long term, stable
returns. Eligible assets would be qualified as forming part of ‘alternative investments’ – asset
classes that fall outside the traditional definition of listed shares and bonds. While alternative
investments comprise real estate, venture capital, private equity, hedge funds, non-listed
companies, distressed securities and commodities, ELTIFs would only focus on alternative
investments that fall within a defined category of long-term asset classes whose successful
development requires investors’ long-term commitment. Therefore, real estate, unlisted
companies or infrastructure projects would be eligible while commodities would not be.
There is a clear need therefore to ensure that barriers to investment with a long term
perspective are tackled at the European Union level. This is particularly the case for assets
such as infrastructure projects that depend on long term commitments. These assets depend, in
part, on what is often called 'patient capital'. This kind of investment may not be able to be
redeemed for a number of years but are invested in such a way as to be able to provide stable
and predictable returns. Infrastructure projects, investments in human capital, or operating
concessions would fit this description. Capital invested in this long term, 'patient' manner
benefits the real economy by providing predictable and sustained flows of finance to firms
and creates employment.
Investors such as insurance companies and pension funds with long term liabilities have
expressed an appetite for investing in longer-term investment assets. At the same time they
have pointed to the absence of readily available pooling mechanisms, such as investment
funds, to facilitate access to these types of investments. As a result such investment
opportunities are restricted to a few very large investors, such as large pension funds or
insurance undertakings, able to raise and commit sufficient capital by virtue of their own
resources. This, in turn, acts as a barrier to smaller investors such as local pension plans,
municipalities, the pension schemes run by the liberal professions or corporate pension plans
who might otherwise benefit from diversifying their investments into such assets. The
absence of these investor groups, in turn, deprives the real economy from accessing deeper
pools of capital-backed financing. Last, but not least, also individual retail investors faced
with a future liability (home purchases, education or the financing of major renovations)
might benefit from the yield or regular returns offered by long-term investment funds.
The large-scale and long-term capital commitments required for operating efficient
investment pools for long-term assets have hitherto been hampered by regulatory
fragmentation among Member States. Where funds and incentives do exist on a national level
they are not coherent with comparable initiatives in other Member States. This prevents the
scale of pooling of capital and investment expertise that creates economies of scale for funds

EN

2

EN

and therefore benefits investors. On the other hand, the majority of Member States have no
fund models or equivalent incentives that address long-term asset classes. In the absence of a
cross-border fund vehicle, investors in these markets are excluded from investing in long-term
asset classes.
The end result is that there is no readily available mechanism to channel funds that are to be
committed for long periods of time to real economy projects in need of such financing. This
acts as a brake on the development of long term investing. Expertise amongst investment
professionals is not developed because of lack of demand. Economies of scale that lead to a
reduction of the costs of operating a long-term investment fund fail to materialise.
In addition, large-scale infrastructure or industrial engineering projects may require having
access to capital pools that are not always available when capital is raised in a single Member
State only. Large-scale projects also may involve businesses based in a number of different
Member States. Any funding mechanism has to deal with this problem of fragmentation and
facilitate investors and projects in a variety of European Union countries.
There is, therefore, the need to facilitate a funding vehicle that is designed specifically to
address these problems. To maximise the efficiency of any funding mechanism it needs to be
able to have access to investors across the Union. The importance of tackling these issues was
set out already in the Single Market Act II (SMA II). 1 One of its twelve key objectives is to
boost long-term investment in the real economy. In order to achieve this goal, the SMA II
proposed developing a new set of EU rules facilitating cross-border capital raising of the
capital necessary to operate cost-efficient investment funds that target long term investments
opportunities.
The wider context of this work has been set out in the European Commission's Green Paper,
the Long-Term Financing of the European Economy, 2 outlining supply and demand-side
issues across all financing structures. The Green Paper also confirmed the need for measures
on investment funds, as outlined in this proposal, whilst concentrating on the context of the
wider need to revive funding of the real economy by improving the mixture and overall
resilience of different funding sources. In this the new ELTIF can contribute to increasing
non-bank finance available to businesses, to compliment access to bank financing.
Currently, EU investment fund markets are dominated by funds operating under the UCITS
(Undertakings in Collective Investments in Transferable Securities) Directive, first introduced
in 1985. UCITS assets under management have now reached €6,697 billion. 3 The UCITS
Directive contains a set of product rules which are used by investment funds available to retail
investors, but is focused on transferable securities for the purposes of ensuring adequate
liquidity is available to support redemptions on demand. As a result, UCITS are not able to
contribute to the funding of patient capital commitments to infrastructure and other projects.
While the UCITS initiative does not necessarily mean the creation of ELTIF will attract
similar levels of investor interest, given the value that highly liquid funds have for many retail
investors, its success show that EU-wide initiatives can have a strong impact in developing a
market and building investor confidence.
The creation of the European Venture Capital Funds (EuVECA) and the European Social
Entrepreneurship Funds (EuSEF) will, along the ELTIFs, help to contribute to the financing
of the European economy. But the EuVECA and EuSEF schemes target a very specific niche

1
2
3

EN

See hhttp://ec.euopea.eu/internal_market/smact/docs/single-market-act2_en.pdf
See hhttp://ec.euopea.eu/internal_market/finances/financing-growth/long-term/index_en.htm
EFAMA Investment Fund Industry Factsheet, March 2013

3

EN

of the EU economy: start ups financed by venture capital and businesses specialising in
achieving social impact.
The proposal on ELTIFs follows a broader approach than EuVECA and EuSEF. It intends to
target a broad range of long-term asset classes and it intends to create an investment fund that
can also be sold to retail investors. This raises the need for three core features: (1) specific
product rules covering eligible assets and their diversification; (2) a high degree of
competence for those who are allowed to manage and market ELTIFs and (3) alignment
between the ELTIFs investment horizon and the redemption expectations of its investors.
The need for product rules
The aim is that the new ELTIF framework is to create a 'second retail passport' that follows
the tried-and-tested UCITS approach on product specifications and risk spreading. There is
considerable investor interest in having an opportunity to invest in long-term asset classes that
either appreciate over their life cycle (small or midsized companies) or that produce regular
income throughout the holding period (infrastructure assets). Especially pension plans run by
municipalities, boroughs, small and large companies or the liberal professions want such a
vehicle. Due to the fact that such a long-term asset funds do not exist in many Member States,
investors in those States are shut out from this investment opportunity. A cross-border
passport will remedy that situation.
To accommodate these investor needs, the ELTIF will be able to invest in all kind of assets
that are not traded on regulated markets. These assets are illiquid and, for that reason alone,
require a fund to make a long term commitment when purchasing them. The same is true for
those who invest in such a fund. Assets that are not traded on a secondary market and whose
owners would require considerable time in finding a purchaser would comprise the following:
(1) Investments in infrastructure projects, such as in the field of transport, energy or
education; (2) Investments in unlisted companies, in practice mainly SMEs; (3) investments
in real estate assets, such as buildings or direct purchase of an infrastructure asset
Therefore, the mere fact that an asset is not traded on a regulated market will qualify it as a
long-term asset. These assets are illiquid simply on account of the fact that, without a public
trading venue, you will not find readily available buyers for your asset. Also, these assets are
often quite idiosyncratic and will only be attractive for buyers who can conduct their own due
diligence and are specialist in the relevant field. For example, once an ELTIF invest in a
project company, it anticipates that there will be no immediately identifiable buyer of this
stake for a considerable period of time.
In light of their intrinsic lack of liquidity, the ELTIF proposal refrains from prescribing predetermined holding periods. In light of the high level of due diligence that an investment in a
long-term asset requires, it does not appear prudent policy to prescribe minimum holding
periods. This is because each investment decision will be different and the ELTIF managers
are best placed to decide how long they want to remain invested in the asset in order to
generate the promised return. This is a big difference for UCITS managers who follow
macroeconomic developments or the daily fluctuations on a stock exchange.
It also appears necessary to provide for managerial flexibility with respect to the precise time
frame in which a portfolio of long-term assets has to be assembled. This is why the proposal
allows for a five year period in which the long-term asset portfolio can be build up. In
addition, the proposal allows the manager to invest up to 30% of the ELTIF's capital in liquid
securities. This liquidity buffer has been conceived to allow the ELTIF to manage the cash
flow that arises while the long-term portfolio is being constituted. It also allows the manager

EN

4

EN

to place surplus cash that is achieved 'between investments' – that is when a long-term asset is
sold in order to be replaced by another.
To create investor trust and legal certainty, especially but not only for retail investors targeted
by ELTIFs, the proposed scheme requires a set of robust yet flexible product rules. Product
rules represent the most appropriate way of helping to meet the long term funding needs
identified and to provide ELTIFs with a predictable product profile. Once authorised, ELTIFs
will be available to be marketed to professional as well as retail investors in other Member
States.
ELTIF provide opportunities for investors to diversify their investment portfolios. The assets
the proposed ELTIF may invest in are alternative investments and therefore very different in
nature to the more traditional listed shares and securities held by many investors. While the
strict diversification rules contained in the UCITS framework might make it costly or even
impossible to operate an ELTIF, the latter would still benefit from a reasonable level of asset
diversification.
This diversification benefit applies equally to retail as well as it does to institutional or
'sophisticated' investors such as high net worth individuals. The strong product rules proposed
and the investor protection they create are designed to make ELTIF suitable for retail
investors.
The need for a high level of managerial competence
Due to their lack of liquidity and due to the fact that participations in long term asset classes
targeted by an ELTIF are not listed on a regulated market, all long-term assets that an ELTIF
is allowed to invest in fall within the category of ‘alternative investments’ (see the description
of alternative investments above). It is therefore necessary that ELTIFs will be managed by
undertakings that are duly authorised under the AIFMD to manage and market alternative
investments.
Therefore, the proposed ELTIF framework will build on the managerial authorisation in the
AIFM Directive 4, which lays down the general rules for alternative investment fund managers
who manage and market their funds to professional investors. Specific LTIF product rules
will be added so that ELTIFs can be easily identified by both professional and retail investors
who are interested in the yield and return profiles associated with investments in long-term
assets.
The proposed ELTIF framework builds on the cross-border provisions in the AIFMD, adding
to the "European" passport for marketing professional investors a "European" passport for
marketing to retail investors across the EU with regard to ELTIFs. As ELTIFs can be sold to
retail consumers, there is an increased consumer protection need, for example the stricter
ELTIF rules prohibiting investment in assets that may create a conflict of interest,
transparency rules requiring the publication of a key investor document and specific
marketing conditions.
In light of the above, for an ELTIF to be authorised its manager must also be authorised under
the AIFMD. The majority of assets an ELTIF invests in must be by definition be assets that
need to be held for a long duration. Over-concentration in a single asset or undertaking creates
risks for investors that can prove to be very difficult to manage. To mitigate this risk an
ELTIF will have to comply with diversification rules. Moreover, limits are proposed on the
use of derivatives in relation to ELTIF assets as well as a cap on borrowing.
The need to align investment and redemption horizons
4

EN

Directive 2011/61/EU

5

EN

The assets an ELTIF invests in will by their very nature be illiquid. That is to say, they will
not be available to be bought and sold very easily. There may be no reliable secondary market
for long-term assets, a fact which could render their valuation and sale more difficult. The
illiquid nature of the assets is not of itself a problem and the ELTIF proposal is designed to
create a funding vehicle suited to this kind of assets. The requirements of the AIFMD also
address these issues, for example, in relation to valuation and the requirement that managers
have appropriate valuation policies and mechanisms in place.
The illiquid nature of the assets could make it difficult for funds to meet a redemption
requests made by investors before an asset or project invested in reaches its expected
maturity. A need to maintain liquid assets to meet redemption requests would also divert
money away from the primary purpose of ELTIFs - to invest in long-term assets. Further,
options to redeem early, i.e., before the end of the fund’s investment lifecycle, would raise the
need to dispose of assets to meet early redemption requests. There is a danger these assets
may have to be sold at 'fire sale' prices well below what the fund manager may believe the
asset should be worth in an un-forced sale. Such a sale could also reduce any income steam
being paid to other investors who remain invested in the ELTIF. ELTIFs will therefore not
offer early redemption to investors. This approach will remove the potential conflicts of
interests between exiting and remaining investors.
The ELTIF combined with the AIFMD will provide a strong management and product
framework designed to give investors the confidence that their investments are being
prudently, competently and honestly managed. The fact that redemptions will not be allowed
during the life of the investments selected will have to be clearly indicated as to avoid misplaced expectations about the liquidity of the fund. Widening ELTIF to retail investors will
also ensure that the widest possible capital pool is made available.
In addition, the illiquidity premium associated with an investment in a long-term asset can
only be reaped if the manager of an ELTIF is at liberty to engage in projects for a significant
period of time without facing constant redemption pressure. As pointed out in the impact
assessment, the illiquidity premium inherent in investing in long term assets requires holding
periods of between 10 and 20 years. For example, the annualised real estate performance of
12.71% beat the S&P 500 (equity index) at 10.94% and the typical bond index at 7.70% when
assessed over a period of 14 years. Likewise, the favourable performance of venture capital
funds in the US - annualised returns of 16.5% vs. the S&P 500 at 11.2% - can only be
achieved when choosing an investment horizon of 20 years.
The positive returns of an investment in long-term assets should also be assessed against the
risks that they carry. As with traditional investments in stocks and bonds, the risk to lose the
entire capital is naturally present. But what distinguishes the long-term assets from
transferable securities dealt with on a regulated market is their illiquidity risk. Contrary to
stocks and bonds which can normally be easily sold on a regulated market, long-term assets
do not benefit from liquid secondary markets and it often requires months or years to be able
to sell such an asset. This is why the draft proposal requires that the chosen lifecycle of an
ELTIF has to be sufficiently long to accommodate the diligent choice and long-term
engagement with a chosen project, company or real asset.
In these circumstances, the future fund passport has to be accompanied by a sufficient degree
of managerial flexibility in choosing assets and determining the timeframe in which they are
held prior to divestiture. This explains why the approach in the draft proposal does not
prescribe fixed time periods for holding investment assets or for the duration of the ELTIF
itself.

EN

6

EN

The new ELTIF should therefore be flexible in its investment policies and holding periods.
The aim is to attract a critical mass of managers who will offer the vehicle across borders thus
attracting a critical mass of assets and investors. Therefore, the lifecycle of the fund should
match the particular profile of the assets in which it will invest. This has implications on the
redemption opportunities that such a fund can realistically offer. Experience with open-ended
long-term funds in national markets shows that a fund cannot offer redemptions while it
remains invested in long-term assets targeted by the proposal. Matching the lifecycle of the
fund with that of its investment assets is the best possible approach to ensure that the
managers have scope to invest in assets that require long-term commitments and thereby
finance the economy. Offering redemption possibilities at an earlier stage invariably dilutes
the long-term outlook of the fund; this would reduce its attractiveness for most of the pension
plan investors who want a long-term and steady income instead of early redemption facilities.
This does not, however, imply that investors cannot redeem their investments prior to the end
of the ELTIF's lifecycle. Many of the successful long-term funds that the Commission's
impact assessment found at national level have been structured as listed entities. That allows
investors to trade their shares or units in the fund on a secondary market. If long-term
investing is really supposed to become attractive for smaller-scale investors or the retail
community at large, secondary markets will be the principal venue in which you can buy into
or leave the long term fund.
ELTIF will be investment products within the meaning of the Markets in Financial
Instruments Directive (MiFID) 5 and therefore subject to all the requirements of that directive
in relation to marketing, selling and disclosure.
The proposed new ELTIF will be available for marketing to investors across the European
Union. It is therefore important that investors have the confidence of knowing that the level of
protection they will receive will be the same regardless of the origin of the fund manager.. For
this reason, the legal instrument proposed is a Regulation since this is the most appropriate
way of achieving consistent, clear and directly applicable rules throughout the Union.
2.

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND
IMPACT ASSESSMENTS

2.1.

Consultation with interested parties

Since mid-2012 the European Commission has engaged in extensive consultations with
representatives from a wide range of organisations. The consultations has taken the form of
bilateral and multilateral meetings, a written public consultation on asset management issues 6
including long term investment (LTI) and a follow up questionnaire which was circulated
among interested parties. The Commission services received 65 responses relating to the LTI
section. The follow up questionnaire resulted in 50 responses. Further bilateral discussions
were held with fund managers operating in the infrastructure and long term markets, fund
management associations and retail as well as institutional investor representatives.
2.2.

Impact assessment

In line with its policy on 'better regulation' the Commission conducted an impact assessment
of policy alternatives. These alternatives contained a wide range of policy options, ranging
from taking no action, integrating long-term asset classes into the existing UCITS framework,
to creating a fund vehicle for professional investors only, or a fund vehicle open to all
investors, with or without redemption facilities.
5
6

EN

Directive 2004/39/EC
See http://ec.europa.eu/internal_market/consultations/docs/2012/ucits/ucits_consultation_en.pdf

7

EN

All of these options were analysed against the general principles of increasing the capital
flows available to long term financing for the European real economy and increasing the
coherence of the single market. However, any new funding mechanism also needs to be
framed with in such a way that the objective of creating economies of scale for fund managers
and increase choice does not conflict with the need to inform and provide appropriate
protection for all investor categories.
The selected option is to create a long-term investment fund vehicle open to both professional
and retail investors. In line with the illiquid properties of long-term asset classes, there would
be no redemption rights prior to the termination of the fund’s lifecycle. The characteristics of
the proposed ELTIF would be to allow the widest range of investors to access ELTIFs. In this
way, the potential pool of capital available to make such investments would be maximised.
The ELTIFs would be subject to product rules designed to ensure sufficient diversification,
address potential conflicts of interest, increase transparency as regards costs and limit the use
of derivatives and leverage. These features are in place to provide investor protection for retail
investors. By not providing redemption rights during the lifespan of the fund, more of its
capital can be invested in assets that are illiquid. This absence of a redemption right also
signals strongly to retail and professional investors the long term nature of the commitment.
The comments by the Impact Assessment Board set out in their opinion of 31 May 2013 have
been taken into account. The problem description has been strengthened to give greater clarity
on the size of the problem being addressed as well as the timing of the proposal. The
description of the options has also been improved as has the analysis of the effectiveness of
the preferred option. The Impact Assessment now also clarifies in greater detail the reasons
why the proposal deviates from some of the views expressed by certain stakeholders during
the consultation process. In particular, the reasoning was strengthened around the choice to
exclude redemption rights, both from the perspective of investor protection, and from the
perspective of the expected take-up of the new option by investors. While some retail
investors may be less likely to invest in a fund without rights of redemption on demand, the
risks attached to offering such rights could undermine the fund model, while the reduced
efficiency of investments to ensure additional liquidity would reduce the impact of any
additional retail demand.
3.

LEGAL ELEMENTS OF THE PROPOSAL

3.1.

Legal basis and choice of the legal form

Article 114(1) TFEU serves as the legal basis for a Regulation creating uniform provisions
aimed at the functioning of the internal market. Prudential product rules establish the limits of
the risks linked to investment funds that are targeting long-term assets. As such, they do not
regulate access to asset management activities but govern the way such activities are carried
out, in order to ensure investor protection and financial stability. They underpin the correct
functioning of the internal market.
In pursuit of the objective of the internal market integrity the proposed legislative measure
will create a regulatory framework for ELTIFs, with a view to ensure that such funds are
subject to consistent rules across the EU and that they are identifiable as such by investors
throughout the EU. The target of the proposed Regulation is to create a robust, yet flexible, set
of rules that specifically correspond to the long-term nature of the investments in question.
The proposed rules should also ensure a level playing field between different long term
investment fund managers. This legislative proposal, therefore, harmonises the operating
conditions for all relevant players in the investment fund market, for the benefit of all
investors and for the smooth functioning of the single market in financial services.

EN

8

EN

A Regulation is considered to be the most appropriate legal instrument to introduce uniform
requirements that will deal, amongst others, with the scope of eligible assets, the portfolio
composition, diversification rules, redemption policy, as well as rules regarding the
authorisation of the funds intending to engage in long-term investments. The objective of
these product rules is to ensure the ELTIFs work in a more efficient way. The taking up of
activities as manager of an ELTIF is regulated by the AIFM Directive. The activities of the
managers will continue to be subject to AIFMD, but the long-term investment products are
governed by the proposed Regulation, in addition to the rules of the AIFM-D.
3.2.

Subsidiarity and proportionality

National regulatory approaches are inherently limited to the Member State in question.
Regulating the product profile of an ELTIF only at national level entails the risk of different
investment products all being sold as long-term investment funds with different
characteristics. This would create investor confusion and would impede the emergence of a
Union-wide level playing field for those managers who offer ELTIFs to professional and/or
retail investors.
As the asset management sector is essentially cross-border in nature, the current
fragmentation of the ELTIF market has led this sector to operate below the efficient level. The
proposed harmonised and sustainable framework covering ELTIF will act as a source of longterm financing for the European economy. The new framework will ensure the financing of
various projects and sectors and will provide stable sources of return for long-term investors.
Therefore, a pan-European ELTIF market is needed and the proposed legislative measure is
consistent with the subsidiarity principle set out in Article 5(3) TEU and the Second Protocol
on the Application of the Principles of Subsidiarity and Proportionality.
As regards proportionality, set out in Article 5(4) TEU, the Proposal strikes the appropriate
balance between the public interest at stake and the cost-efficiency of the measure. The
proposed rules seek to create a common product label for which there is a strong public
interest and which would lay down a foundation for a common, competitive and cost-efficient
market for ELTIF across the Union. The requirements imposed on the different parties
concerned have been carefully calibrated. Whenever possible, requirements have been crafted
as minimum standards (e.g. issuer diversification limits,) and regulatory requirements have
been tailored so as not to unnecessarily disrupt existing business models. In particular, the
proposed Regulation has combined parameters suitable for long-term investments and specific
investor groups, by taking into full account the safety and trust considerations relating to any
ELTIFs designation. The Proposal therefore does not go beyond what is necessary to achieve
a common legal framework for ELTIF, while at the same time it addresses the regulatory
issues which would affect the reliability of the label.
3.3.

Detailed explanations of the proposal

The proposal for a Regulation on European Long-Term Investment Funds (ELTIF) is
structured in seven chapters.
3.3.1.

Chapter I –General provisions (Articles 1-5)

Chapter I contains general rules, such as the subject matter and scope of the proposed fund
framework, definitions, the procedure for authorisation of ELTIFs (at fund level), and the
interplay of the proposed Regulation with existing rules governing the authorisation of
managers of alternative investment funds, as set out in Directive 2011/61/EU (AIFMD).
Article 1 specifies the subject matter and delineates the scope of the Regulation. It makes
clear that the requirements contained in the Regulation are exhaustive, thus leaving no scope
for 'gold-plating' at national level. Article 2 contains essential definitions necessary for the

EN

9

EN

uniform application of the proposed Regulation. Article 3 requires EU AIFs to be authorised
in accordance with the proposed Regulation in order to be marketed or managed across the
Union as ELTIFs. The designation 'European Long-term Investment Funds' (ELTIFs) shall be
reserved to those EU AIFs that comply with the proposed Regulation. This implies that a
manager of alternative asset classes that wants to manage or market funds focused on longterm assets without using the proposed designation is not obliged to comply with the proposed
Regulation.
Article 4 provides a harmonised procedure for the authorisation of ELTIFs whereas article 5
lays down the conditions for such an authorization. Article 6 describes the interaction between
the existing AIFMD rules and the proposed Regulation, essentially specifying that compliance
with the Regulation shall be ensured by the manager of the ELTIF.
3.3.2.

Chapter II – Obligations concerning the investment policies of ELTIFs (Articles 715)

Chapter II contains the rules on permissible investment policies to be pursued by an ELTIF,
such as rules relating to eligible investments, portfolio composition and diversification,
conflict of interest, concentration and cash borrowing.
Article 7 provides that, where applicable, each investment compartment of an ELTIF shall be
regarded as a separate ELTIF for the purposes of Chapter II.
Article 8 describes two categories of financial assets that an ELTIF can invest in: long-term
assets and assets listed in Article 50(1) of Directive 2009/65/EC (UCITS Directive).
However, an ELTIF shall not engage in short selling of assets, gain exposure to commodities,
enter into securities lending or securities borrowing agreements, enter into repurchase
agreements or use financial derivative instruments unless these instruments are used for
hedging purposes.
Article 9 elaborates on the eligibility conditions for long-term assets, such as the different
categories of instruments used to gain access to qualified portfolio undertakings, the
investment in units or shares of other ELTIFs and participations in real assets, such as real
estate, ships or aircrafts. Article 10 sets out the conditions for an undertaking to become a
qualified portfolio undertaking. The qualified portfolio undertaking should be unlisted,
domiciled in the EU and have the purpose of financing infrastructure projects, companies or
real estate, ships and aircrafts. It should not take the form of a collective investment
undertaking,
Article 11 contains a general rule on the treatment of conflicts of interest by the ELTIF
manager. The manager may not have any personal interest in a long-term asset in which the
ELTIF is invested.
Article 12 provides detailed rules on the portfolio composition characterising an ELTIF. It
also covers the diversification rules that each ELTIF has to respect in the context of eligible
investment assets, such as rules on the maximum risk exposure that an ELTIF can have vis-àvis a single counterparty. Article 13 stipulates the maximum limits that an ELTIF can hold in
a single issuer (concentration limits). Article 14 provides for the conditions under which the
ELTIF may borrow cash. Article 15 contains provisions on the application of the portfolio
composition and the diversification rules, taking into account the different stages in the
ELTIF fund life.

EN

10

EN

3.3.3.

Chapter III – Redemption, trading and issue of ELTIF shares or units and
distribution of income

Chapter III deals with the redemption policy of ELTIFs, the possibility of trading units or
shares of ELTIF on a secondary market, the issuance of new shares or units, the disposal of
ELTIF assets and the distribution of income to the investors of an ELTIF.
Article 16 precludes an ELTIF from offering a redemption right to its investors before the end
of the life-cycle of the ELTIF. The life-cycle is defined in the ELTIF rules and corresponds to
the life-cycle of the individual assets of the ELTIF and its long-term investment objectives.
Article 17 provides for the trading of units or shares of an ELTIF on regulated markets, as
well as the free transfer of units or shares of an ELTIF to third parties. Article 18 contains the
conditions for the issuance of new shares or units by the ELTIF, such as the prior offering to
existing investors when the issuance price is below the NAV of the ELTIF. Article 19 deals
with the procedure that each ELTIF shall adopt for the disposal of its assets. Article 20 lays
down the applicable rules for the distribution of the income generated by the assets of the
ELTIF and requires an ELTIF to set out its distribution policy in its fund rules.
3.3.4.

Chapter IV – Transparency requirements (Article 21)

Chapter IV contains transparency rules where ELTIFs are being advertised to investors.
Article 21 requires the prior publication of a key information document and a prospectus
before the ELTIF is marketed to retail investors. The prospectus and any other marketing
document shall inform the investors about the special nature of the long-term investment into
an ELTIF. Article 22 requires the ELTIF manager to disclose in a detailed way to the
investors all costs attached to the fund.
3.3.5.

Chapter V – Marketing (Articles 23-25)

Chapter V contains the rules applicable to an EU AIFM for marketing units or shares of an
ELTIF to professional and retail investors.
Article 23 requires managers of ELTIFs to have facilities in place in each Member State
where they intend to market their ELTIFs. Article 24 provides the additional requirements
that managers have to comply with in order to market to retail investors. Article 25 builds on
the notification procedures contained in the AIFM Directive for authorising the managers of
ELTIFs to market the units or shares of their ELTIFs to investors both in their home and in
potential host Member States.
3.3.6.

Chapter VI – Supervision (Articles 26-29)

Chapter VI sets out the applicable rules on supervision of ELTIFs.
Article 26 clarifies the respective roles of the competent authorities of the ELTIF and of the
manager of the ELTIF. Article 27 states that the powers of the competent authorities under
UCITS and AIFM Directives should be exercised also with respect to the proposed
Regulation. Article 28 refers to the power of ESMA, whereas Article 29 provides for the
cooperation between supervisory authorities.
3.3.7.

Chapter VII – Final Provisions (Articles 30-31)

Chapter VII contains rules on a review of the functioning of the envisaged rules to be
prepared by the Commission as well as provisions on the entry into force of the proposed
Regulation.

EN

11

EN

4.

BUDGETARY IMPLICATIONS

The budgetary impact of the ELTIF regulation is as indicated in the Legislative Financial
Statement attached to the proposal.

EN

12

EN

2013/0214 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on European Long-term Investment Funds
(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular
Article 114 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national Parliaments,
Having regard to the opinion of the European Economic and Social Committee 7,
Acting in accordance with the ordinary legislative procedure,
Whereas:

EN

(1)

Long-term finance is a crucial enabling tool for putting the European economy on a
path of sustainable, smart and inclusive growth and for building tomorrow's economy
in a way that is less prone to systemic risks and is more resilient. European long-term
investment funds (ELTIFs) provide finance to various infrastructure projects or
unlisted companies of lasting duration that issue equity or debt instruments for which
there is no readily identifiable buyer. By providing finance to such projects, ELTIFs
contribute to the financing of the Union economies.

(2)

On the demand side, ELTIFs can provide a steady income stream for pension
administrators, insurance companies and other entities that face regular and recurrent
liabilities. While providing less liquidiy than investments in transferable securities,
ELTIFs can provide a steady income stream for individual investors that rely on the
regular cash flow that an ELTIF can produce. ELTIFs can also offer good
opportunities for capital appreciation over time for those investors not receiving a
steady income stream.

(3)

Financing for projects, regarding transport infrastructure, sustainable energy
generation or distribution, social infrastructure (housing or hospitals), roll-out of new
technologies and systems that reduce use of resources and energy or the further growth
of SMEs, can be scarce. As the financial crisis has shown, complementing bank
financing with a wider variety of financing sources that better mobilise capital markets
could help tackle financing gaps. ELTIFs can play a crucial role in this respect.

(4)

While individual investors may be interested in investing in an ELTIF, the illiquid
nature of most investments in long-term projects precludes an ELTIF from offering
regular redemptions to its investors. The commitment of the individual investor to an

7

OJ C , , p. .

13

EN

investment in such assets is by its nature made to the full term of the investment.
ELTIFs should, consequently, be structured so as not to offer regular redemptions
before the end of life of the ELTIF. A report, three years after the adoption of this
Regulation, shall investigate whether this rule will have achieved the expected results
in terms of ELTIF distribution or whether the introduction, in a limited number of
cases, of the possibility, for some individual retail investors, to redeem their units or
shares before the end of the ELTIF, may contribute to increase the distribution of
ELTIF among the individual retail investors.

EN

(5)

Long-term asset classes within the meaning of this Regulation should comprise nonlisted undertakings that issue equity or debt instruments for which there is no readily
identifiable buyer. This Regulation should also covers real asserts that require
significant up-front capital expenditure.

(6)

In the absence of a Regulation setting out rules on ELTIFs, diverging measures might
be adopted at national level, which are likely to cause distortions of competition
resulting from differences in investment protection measures. Diverging requirements
on portfolio composition, diversification and eligible assets, in particular the
investment in commodities, create obstacles to the cross-border marketing of funds
that focus on non-listed undertakings and real assets because investors cannot easily
compare the different investment propositions offered to them. Divergent national
requirements also lead to different levels of investor protection. Furthermore, different
national requirements pertaining to investment techniques, such as the permitted levels
of borrowing, use of derivative financial instruments, rules applicable to short selling
or securities financing transactions lead to discrepancies in the level of investor
protection. In addition, different requirements on redemption and/or holding periods
impede the cross-border selling of funds investing in non-listed assets. Those
divergences can undermine the confidence of investors when considering investments
in such funds, and reduce the scope for investors to choose effectively between various
long-term investment opportunities. Consequently, the appropriate legal basis for this
Regulation is Article 114 of the Treaty, as interpreted by consistent case law of the
Court of Justice of the European Union.

(7)

Uniform rules across the Union are necessary to ensure that ELTIFs display a coherent
product profile across the Union. In order to ensure the smooth functioning of the
internal market and a high level of investor protection, it is necessary to establish
uniform rules regarding the operation of ELTIFs, in particular on the composition of
the portfolio of ELTIFs and the investment instruments that they are allowed to use in
order to gain exposure to non-listed undertakings and real assets. Uniform rules on the
portfolio of an ELTIF are also required to ensure that ELTIFs that aim to generate
regular income maintain a diversified portfolio of investment assets suitable to
maintain the regular cash flow.

(8)

It is essential to ensure that the definition of the operation of ELTIFs, in particular on
the composition of the portfolio of ELTIFs and the investment instruments that they
are allowed to use be directly applicable to the managers of ELTIFs and therefore
these new rules need to be adopted as a Regulation. This also ensures uniform
conditions for the use of the designation ELTIF by preventing diverging national
requirements. Managers of ELTIFs should follow the same rules across the Union, in
order to also enhance the confidence of investors in ELTIFs and ensure sustainable
trustworthiness of the designation. At the same time, by adopting uniform rules, the
complexity of the regulatory requirements applicable to ELTIFs is reduced. By means
of uniform rules, the managers' cost of compliance with divergent national rules

14

EN

governing funds that invest in non-listed undertakings and comparable real asset
classes is also reduced. This is especially true for managers that wish to raise capital
on a cross-border basis. It also contributes to eliminate competitive distortions.

EN

(9)

The new rules on ELTIFs are closely linked to Directive 2011/61/EU of the European
Parliament and of the Council of 8 June 2011 on Alternative Investment Fund
Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations
(EC) No 1060/2009 and (EU) No 1095/2010 8 since that Directive forms the legal
framework governing the management and marketing of alternative investment funds
(AIFs) in the Union. By definition ELTIFs are EU AIFs that are managed by
alternative investment fund managers (AIFMs) authorised in accordance with
Directive 2011/61/EU.

(10)

Whereas Directive 2011/61/EU also foresees a staged third country regime governing
non-EU AIFMs and non-EU AIFs, the new rules on ELTIFs have a more limited
scope emphasising the European dimension of the new long term investment product.
Hence, only an EU AIF as defined in Directive 2011/61/EU is eligible to become an
authorised ELTIF and only if it is managed by an EU AIFM that has been authorised
in accordance with Directive 2011/61/EU.

(11)

The new rules applicable to ELTIFs should build on the existing regulatory framework
established through Directive 2011/61/EU and the acts adopted for its implementation.
Therefore, the product rules concerning ELTIFs should apply in addition to the rules
laid down in the existing Union legislation. Particularly, the management and
marketing rules laid down in Directive 2011/61/EU should apply to ELTIFs. Equally,
the rules on the cross-border provision of services and freedom of establishment laid
down in Directive 2011/61/EU should apply accordingly to the cross-border activities
of ELTIFs. These should be supplemented by the specific marketing rules designed for
the cross-border marketing of ELTIFs to both retail and professional investors across
the Union.

(12)

Uniform rules should apply to all those EU AIFs that wish to market themselves as
ELTIFs. EU AIFs that do not wish to market themselves as ELTIFs should not be
bound by these rules, thereby also consenting not to benefit from the advantages that
ensue. On the other hand, Undertakings for collective investment in transferable
securities (UCITS) and non-EU AIFs would not be eligible for marketing as ELTIFs.

(13)

In order to ensure the compliance of ELTIFs with the harmonised rules governing the
activity of these funds, it is necessary to require that competent authorities authorise
ELTIFs. The harmonised authorisation and supervision procedures for AIFMs under
Directive 2011/61/EU should therefore be supplemented with a special authorisation
procedure for ELTIFs. Procedures should be established to ensure that only EU
AIFMs authorised in accordance with Directive 2011/61/EU and capable of managing
an ELTIF may manage ELTIFs. All appropriate steps are taken to ensure that the
ELTIF shall be able to comply with the harmonised rules governing the activity of
these funds.

(14)

Given that EU AIFs may take different legal forms that do not necessarily endow them
with legal personality, the provisions requiring ELTIFs to take action should be
understood to refer to the manager of the ELTIF in cases where the ELTIF is
constituted as an EU AIF that is not in a position to act by itself because it has no legal
personality of its own.

8

OJ L 174, 1.7.2011, p. 1.

15

EN

EN

(15)

In order to ensure that ELTIFs target long-term investments, rules on the portfolio of
ELTIFs should require a clear identification of the categories of assets that should be
eligible for investment by ELTIFs and of the conditions under which they should be
eligible. An ELTIF should invest at least 70% of its capital in eligible investment
assets. To ensure the integrity of ELTIFs it is also desirable to prohibit an ELTIF from
engaging in certain financial transactions that might endanger its investment strategy
and objectives by raising additional risks different to those that might be expected for
a fund targeting long-term investments. In order to ensure a clear focus on long term
investments, as may be useful for retail investors unfamiliar with less conventional
investment strategies, an ELTIF should not be allowed to invest in financial derivative
instruments other than for the purpose of hedging the duration and currency risk of the
other assets. Given the liquid nature of commodities and financial derivative
instruments that give an indirect exposure to them, investments in commodities do not
require a long-term investor commitment and therefore should be excluded. This
rationale does not apply to investments in infrastructure or companies related to
commodities or whose performance is linked indirectly to the performance of
commodities, such as farms in the case of agricultural commodities or power plants in
the case of energy commodities.

(16)

The definition of what constitutes a long-term investment is broad. Without
necessarily requiring long-term holding periods for the ELTIF manager, eligible
investment assets are generally illiquid, require commitments for a certain period of
time, and have an economic profile of a long-term nature. Eligible investment assets
are non-transferable securities and therefore do not have access to the liquidity of
secondary markets. They often require fixed term commitments which restrict their
marketability. The economic cycle of the investment sought by ELTIFs is essentially
of a long-term nature due to the high capital commitments and the length of time
required to produce returns. As a result such assets do not suit investments with
redemption rights.

(17)

An ELTIF should be allowed to invest in assets other than eligible investment assets,
as may be necessary to efficiently manage its cash flow, but only so long as this is
consistent with the ELTIF’s long term investment strategy.

(18)

Eligible investment assets must be understood to include participations, such as equity
or quasi-equity instruments, debt instruments in qualifying portfolio undertakings and
loans provided to them. They should also include participation in other funds that are
focused on assets such as investments in non-listed undertakings that issue equity or
debt instruments for which there is not always a readily identifiable buyer. Direct
holdings of real assets, unless they are securitised, should also form a class of eligible
assets.

(19)

Quasi-equity instruments must be understood to comprise a type of financing
instrument, which is a combination of equity and debt, where the return on the
instrument is linked to the profit or loss of the qualifying portfolio undertaking, and
where the repayment of the instrument in the event of default is not fully secured.
Such instruments include a variety of financing instruments such as subordinated
loans, silent participations, participating loans, profit participating rights, convertible
bonds and bonds with warrants.

(20)

To reflect existing business practices, an ELTIF should be allowed to buy existing
shares of a qualifying portfolio undertaking from existing shareholders of that
undertaking. Also, for the purposes of ensuring the widest possible opportunities for

16

EN

fundraising, investments into other ELTIFs should be permitted. To prevent dilution of
the investments into qualifying portfolio undertakings, ELTIFs should only be
permitted to invest in other ELTIFs, provided that those ELTIFs have not themselves
invested more than 10 % of their capital in other ELTIFs.

EN

(21)

The use of financial undertakings can be necessary in order to pool and organise the
contributions of different investors, including investments of a public nature, into
infrastructure projects. ELTIFs should therefore be permitted to invest in eligible
investment assets by means of financial undertakings, so long as these undertakings
are dedicated to financing long-term projects.

(22)

In order to provide investors with the assurance that ELTIFs contribute directly to the
development of long-term investments, ELTIFs should be limited to investments in
undertakings that have not been listed. Therefore qualifying portfolio undertakings
should not be listed on regulated markets. Qualifying portfolio undertakings include
infrastructure projects, investment in unlisted companies seeking growth and
investments in real estate or other real assets that could be suitable for long term
investment purposes.

(23)

Due to the scale of infrastructure projects, these require large amounts of capital that
have to remain invested for long periods of time. Such infrastructure projects include
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.

(24)

Unlisted undertakings can face difficulties accessing capital markets and financing
further growth and expansion. Private financing through equity stakes or loans are
typical ways of raising financing. Because such instruments are by their nature longterm investments they require patient capital that ELTIFs can provide.

(25)

Investments in real assets require patient capital due to the absence of liquid secondary
markets. Investment funds represent an essential source of financing for assets that
require large capital expenditure. For these assets, capital pooling is often necessary to
achieve the desired level of funding. Such investments require long periods of time
due to the generally long economic cycle attached to these assets. It generally takes
several years to amortize the investment in large real assets. In order to facilitate the
development of such large assets, ELTIFs should be able to invest directly in real
assets with a value of more than €10 million. In practice this would include assets such
as infrastructure, real estate, ships, aircraft or rolling stock. For these reasons it is
necessary to treat direct holdings in real assets and investments in qualifying portfolio
undertakings in like manner.

(26)

Where the manager holds a stake in a portfolio undertaking, there is a risk that the
manager puts its interests ahead of the interests of investors in the fund. To avoid such
conflict of interests, the ELTIF should only invest in assets that are unrelated to the
manager.

(27)

In order to allow managers of ELTIFs a certain degree of flexibility in the investment
of their funds, trading in assets other than long-term investments should be permitted
up to a maximum threshold of 30 % of their capital.

17

EN

(28)

In order to limit risk-taking by ELTIFs it is essential to reduce counterparty risk by
subjecting the portfolio of ELTIFs to clear diversification requirements. All over-the
counter (OTC) derivatives should be subject to Regulation (EU) No 648/2012 of the
European Parliament and of the Council of 4 July 2012 on OTC derivatives, central
counterparties and trade repositories 9.

(29)

In order to prevent the exercise of significant influence by an investing ELTIF over the
management of another ELTIF or of an issuing body, it is necessary to avoid excessive
concentration by an ELTIF in the same investment.

(30)

In order to allow ELTIF managers to raise further capital during the life of the fund,
they should be permitted to borrow cash amounting to up to 30% of the capital of the
fund. This should serve to provide additional return to the investors. In order to
eliminate the risk of currency mismatches, the ELTIF should only borrow in the
currency the manager expects to acquire the asset in.

(31)

Due to the long-term and illiquid nature of the investments of an ELTIF, the managers
should have sufficient time to apply the investment limits. The time required to
implement these limits should take account of the peculiarities and characteristics of
the investments but should not exceed five years.

(32)

Notwithstanding the fact that ELTIFs do not offer redemption rights before the end of
life of the ELTIF, nothing should prevent an ELTIF from seeking admission of these
shares or units to a regulated market as defined in Article 4(14) of Directive
2004/39/EC of the European Parliament and of the Council of 21 April 2004 on
markets in financial instruments, 10 to a multilateral trading facility as defined in
Article 4(15) of Directive 2004/39/EC, or to an organised trading facility as defined in
point (…) of Regulation (…), thus providing investors with an opportunity to sell their
units or shares before the end of life of the ELTIF. The rules or instruments of
incorporation of an ELTIF should therefore not prevent units or shares from being
admitted to or from being dealt in regulated markets, nor should they prevent investors
from freely transferring their shares or units to third parties who wish to purchase
those shares or units.

(33)

In order for investors to effectively redeem their units or shares at the end of the fund's
life, the manager should start to sell the portfolio of assets of the ELTIF in good time
to ensure the value is properly realised. In determining an orderly disinvestment
schedule, the ELTIF manager should take into account the different maturity profiles
of the investments and the length of time necessary to find a buyer for the assets in
which the ELTIF is invested. Due to the impracticality of maintaining the investment
limits during this liquidation period, they should cease to apply when the liquidation
period starts.

(34)

The assets in which an ELTIF is invested may obtain a listing on a regulated market
during the life of the fund. Where this happens, the asset would no longer comply with
the non-listing requirement of this Regulation. In order to allow managers to disinvest
from such an asset in an orderly manner, this asset could continue to count towards the
70% limit of eligible investment assets for up to three years.

(35)

Given the specific characteristics of ELTIFs, as well as the targeted retail and
professional investors it is important that solid transparency requirements be put in
place that are capable of allowing prospective investors to make an informed

9

OJ L 201. 27.7.2012. p.1
OJ L 145, 30.4.2004, p.1.

10

EN

18

EN

judgement and be fully aware of the risks implied. In addition to the transparency
requirements contained in Directive 2011/61/EU, ELTIFs should publish a prospectus
the content of which should necessarily include all information required to be
disclosed by collective investment undertakings of the closed-end type in accordance
with Directive 2003/71/EC of the European Parliament and of the Council 11 and
Commission Regulation (EC) No 908/2004. 12 For the marketing of an ELTIF to retail
investors it should be mandatory to publish a key information document (KID) in
accordance with Regulation No […] of […] of the European Parliament and the
Council. Furthermore, any marketing documents should explicitly draw attention to
the risk profile of the ELTIF.
(36)

As ELTIFs target both professional and retail investors across the Union, it is
necessary that certain requirements be added to the marketing requirements laid down
in Directive 2011/61/EU in order to ensure an appropriate degree of investor
protection. Thus, facilities should be made available for making subscriptions, making
payments to unit- or shareholders, repurchasing or redeeming units or shares and
making available the information which the ELTIF and its managers are required to
provide. Moreover, in order to ensure that retail investors are not disadvantaged with
respect to experienced professional investors certain safeguards have to be put in place
when ELTIFs are marketed to retail investors.

(37)

The competent authority of the ELTIF should verify whether an ELTIF is able to
comply with this Regulation on an on-going basis. As the competent authorities are
already provided with extensive powers under Directive 2011/61/EU, it is necessary
that such powers be extended in order to be exercised by reference to the new common
rules on ELTIFs.

(38)

ESMA should be able to exercise all the powers conferred under Directive
2011/61/EU with respect to this Regulation.

(39)

The European Securities and Markets Authority (ESMA), established by Regulation
(EU) No 1095/2010 of the European Parliament and of the Council of 24 November
2010 establishing a European Supervisory Authority (ESMA), amending Decision No
716/2009/EC and repealing Commission Decision 2009/77/EC,13 should play a central
role in the application of the rules concerning ELTIFs by ensuring consistent
application of Union rules by national competent authorities. As a body with highly
specialised expertise regarding securities and securities markets, it is efficient and
appropriate to entrust ESMA with the elaboration of draft regulatory technical
standards which do not involve policy choices, for submission to the Commission, in
respect of the circumstances in which the life of an ELTIF will be sufficient in length
to cover the life-cycle of each of the individual assets of the ELTIF, the features of the
schedule for the orderly disposal of ELTIF assets, the definitions, calculation
methodologies and presentation of cost disclosures, and the characteristics of the
facilities to be set up by ELTIFs in each Member State where they intend to market
units or shares.

(40)

The new uniform rules on ELTIFs should comply with the provisions of Directive
95/46/EC of the European Parliament and of the Council of 24 October 1995 on the
protection of individuals with regard to the processing of personal data and on the free

11

OJ L 345, 31.12.2003, p.64.
OJ L 149, 30.4.2004, p.1.
OJ L 331, 15.12.2010, p.84.

12
13

EN

19

EN

movement of such data 14 and with Regulation (EC) No 45/2001 of the European
Parliament and of the Council of 18 December 2000 on the protection of individuals
with regard to the processing of personal data by the Community institutions and
bodies and of the free movement of such data 15.
(41)

Since the objectives of this Regulation, namely to ensure uniform requirements on the
investments and operating conditions for ELTIFs throughout the Union, while taking
full account of the need to balance safety and reliability of ELTIFs with the efficient
operation of the market for long-term financing and the cost for its various
stakeholders, cannot be sufficiently achieved by the Member States and can therefore,
by reason of its scale and effects, be better achieved at Union level, the Union may
adopt measures in accordance with the principle of subsidiarity as set out in Article 5
of the Treaty on European Union. In accordance with the principle of proportionality,
as set out in that Article, this Regulation does not go beyond what is necessary in order
to achieve those objectives.

(42)

The new uniform rules on ELTIFs respect the fundamental rights and observe the
principles recognised in particular by the Charter of Fundamental Rights of the
European Union and notably consumer protection, the freedom to conduct a business,
the right to remedy and to a fair trial, and the protection of personal data. The new
uniform rules on ELTIFs should be applied in accordance with those rights and
principles,

HAVE ADOPTED THIS REGULATION:

Chapter I
General provisions
Article 1
Subject matter
1.

This Regulation lays down uniform rules on the authorisation, investment policies
and operating conditions of EU alternative investment funds (AIFs) that are marketed
in the Union as European long-term investment funds (ELTIFs).

2.

Member States shall not add any additional requirements in the field covered by this
Regulation.
Article 2
Definitions

For the purposes of this Regulation the following definitions apply:

EN

(1)

‘capital’ means aggregate capital contributions and uncalled committed capital,
calculated on the basis of amounts investible after deduction of all fees, charges and
expenses which are directly or indirectly borne by investors;

(2)

'equity' means ownership interest in an undertaking, represented by the shares or
other forms of participation in the capital of the qualifying portfolio undertaking
issued to its investors;

14

OJ L 281, 23.11.1995, p. 31–50

15

OJ L 8, 12.1.2001, p. 1–22

20

EN

(3)

'quasi-equity' means any type of financing instrument where the return on the
instrument is linked to the profit or loss of the qualifying portfolio undertaking and
where the repayment of the instrument in the event of default is not fully secured;

(4)

‘financial undertaking’ means any of the following:
(a)

a credit institution as defined in point (1) of Article 4 of Directive 2006/48/EC
of the European Parliament and of the Council 16;

(b)

an investment firm as defined in point (1) of Article 4(1) of Directive
2004/39/EC;

(c)

an insurance undertaking as defined in point (1) of Article 13 of Directive
2009/138/EC of the European Parliament and of the Council 17;

(d)

a financial holding company as defined in point (19) of Article 4 of Directive
2006/48/EC;

(e)

a mixed-activity holding company as defined in point (20) of Article 4 of
Directive 2006/48/EC;

(5)

‘competent authority of the ELTIF’ means the competent authority of the home
Member State of the EU AIF as defined in Article 4(1)(p) of Directive 2011/61/EU;

(6)

‘ELTIF home Member State’ means the Member State where the ELTIF is
authorised.
Article 3
Authorisation and use of designation

1.

Only EU AIFs shall be eligible for authorisation as an ELTIF.

2.

An ELTIF shall only be marketed in the Union where it has been authorised in
accordance with this Regulation.
The authorisation as an ELTIF shall be valid for all Member States.

3.

A collective investment undertaking shall only use the designation 'ELTIF' or 'longterm investment fund' in relation to itself or the units or shares it issues where it has
been authorised in accordance with this Regulation.

4.

The competent authorities of the ELTIF shall, on a quarterly basis, inform ESMA of
authorisations granted or withdrawn pursuant to this Regulation.
ESMA shall keep a central public register identifying each ELTIF authorised under
this Regulation, its manager and the competent authority of the ELTIF. The register
shall be made available in electronic format.
Article 4
Application for authorisation as ELTIF

1.

An ELTIF shall apply for authorisation to its competent authority.
The application for authorisation as an ELTIF shall include the following:
(a)

16
17

EN

the fund rules or instruments of incorporation;

OJ L 177, 30.6.2006, p.1.
OJ L 335, 17.12.2009, p.1.

21

EN

2.

(b)

information on the identity of the manager;

(c)

information on the identity of the depositary;

(d)

a description of the information to be made available to investors;

(e)

any other information or document requested by the competent authority of the
ELTIF to verify compliance with the requirements of this Regulation.

An EU alternative investment fund manager (AIFM) authorised under Directive
2011/61/EU shall apply to the competent authority of the ELTIF for approval to
manage an ELTIF that has submitted an application for authorisation in accordance
with paragraph 1.
The application for managing the ELTIF shall include the following:
(a)

the written agreement with the depositary;

(b)

information on delegation arrangements regarding portfolio and risk
management and administration with regard to the ELTIF;

(c)

information about the investment strategies, the risk profile and other
characteristics of AIFs that the AIFM is authorised to manage.

The competent authority of the ELTIF may ask the competent authority of the EU
AIFM for clarification and information as regards the documentation referred to in
the second subparagraph or an attestation as to whether ELTIFs fall within the scope
of the EU AIFM’s authorisation to manage AIFs. The competent authority of the EU
AIFM shall provide an answer within 10 working days from the date it received the
request submitted by the competent authority of the ELTIF.
3.

The ELTIF and the EU AIFM shall be informed within two months from the date of
submission of a complete application whether authorisation of the ELTIF has been
granted.

4.

Any subsequent modifications of the documentation referred to in paragraphs 1 and 2
shall be immediately notified to the competent authority of the ELTIF.
Article 5
Conditions for granting the authorisation

1.

2.

EN

An applicant ELTIF shall be authorised only where its competent authority:
(a)

is satisfied that the applicant ELTIF is able to meet all the requirements of this
Regulation;

(b)

has approved the application of an EU AIFM authorised in accordance with
Directive 2011/61/EU to manage the ELTIF, the fund rules and the choice of
the depositary.

The competent authority of the ELTIF may refuse the application of the EU AIFM to
manage the ELTIF only where:
(a)

the EU AIFM does not comply with this Regulation;

(b)

the EU AIFM does not comply with Directive 2011/61/EU;

(c)

the EU AIFM is not authorised by its competent authority to manage AIFs that
include funds of the type covered in this Regulation;

(d)

the EU AIFM has not provided the documentation referred to in Article 4(2).

22

EN

Before refusing an application the competent authority of the ELTIF shall consult the
competent authority of the EU AIFM.
3.

The competent authority shall not grant authorisation as an ELTIF if the applicant
ELTIF is legally prevented from marketing its units or shares in its home Member
State.

4.

Authorisation as an ELTIF shall not be subject to a requirement that the ELTIF be
managed by an EU AIFM authorised in the ELTIF home Member State or that the
EU AIFM pursue or delegate any activities in the ELTIF home Member State
Article 6
Applicable rules and liability

1.

An ELTIF shall comply at all times with the provisions of this Regulation.

2.

An ELTIF and its manager shall comply at all times with the requirements of
Directive 2011/61/EU.

3.

The manager of the ELTIF shall be responsible for ensuring compliance with this
Regulation. The manager shall be liable for any loss or damage resulting from noncompliance with this Regulation.

Chapter II
Obligations concerning the investment policies of ELTIFs
SECTION 1
GENERAL RULES AND ELIGIBLE ASSETS
Article 7
Investment compartments
Where an ELTIF comprises more than one investment compartment, each compartment shall
be regarded as a separate ELTIF for the purposes of this Chapter.
Article 8
Eligible investments
1.

2.

18

EN

An ELTIF shall only invest in the following categories of assets and only under the
conditions specified in this Regulation:
(a)

eligible investment assets;

(b)

assets referred to in Article 50(1) of Directive 2009/65/EC of the European
Parliament and of the Council. 18

An ELTIF shall not undertake any of the following activities:
(a)

short-selling of assets;

(b)

taking direct or indirect exposure to commodities, including via derivatives,
certificates representing them, indices based on them or any other means or
instrument that would give an exposure to them;

OJ L 302, 17.11.2009, p. 32.

23

EN

(c)

entering into securities lending agreements, securities borrowing agreements,
and repurchase agreements or any other agreement that would encumber the
assets of the ELTIF;

(d)

using financial derivative instruments, except where the underlying instrument
consists of interest rates or currencies and it solely serves the purpose of
hedging the duration and exchange risks inherent to other investments of the
ELTIF.
Article 9
Eligible investment assets

An asset referred to in Article 8(1)(a) shall be eligible for investment by an ELTIF only where
it falls into one of the following categories:
(a)

equity or quasi-equity instruments which have been:
(i)

issued by a qualifying portfolio undertaking and acquired directly by the
ELTIF from the qualifying portfolio undertaking;

(ii)

issued by a qualifying portfolio undertaking in exchange for an equity
instrument previously acquired directly by the ELTIF from the qualifying
portfolio undertaking;

(iii) issued by an undertaking of which the qualifying portfolio undertaking is
a majority-owned subsidiary, in exchange for an equity instrument
acquired in accordance with points (i) or (ii) by the ELTIF from the
qualifying portfolio undertaking;
(b)

debt instruments issued by a qualifying portfolio undertaking;

(c)

loans granted by the ELTIF to a qualifying portfolio undertaking;

(d)

units or shares of one or several other ELTIFs, European Venture Capital Funds
(EuVECAs) and European Social Entrepreneurship Funds (EuSEFs) provided that
those ELTIFs, EuVECAs and EuSEFs have not themselves invested more than 10%
of their capital in ELTIFs;

(e)

direct holdings of individual real assets that require up-front capital expenditure of at
least EUR 10 million or its equivalent in the currency, and at the time, in which the
expenditure is incurred.
Article 10
Qualifying portfolio undertaking

1.

EN

A qualifying portfolio undertaking referred to in Article 9(1) shall be a portfolio
undertaking other than a collective investment undertaking, that fulfils all of the
following requirements:
(a)

it is not a financial undertaking;

(b)

it is not admitted to trading:
(i)

on a regulated market as defined in Article 4(14) of Directive
2004/39/EC;

(ii)

on a multilateral trading facility as defined in Article 4(15) of Directive
2004/39/EC;

24

EN

(iii) on organised trading facilities as defined in point […] of Regulation […];
(c)

2.

it shall be established in a Member State, or in a third country provided that the
third country:
(i)

is not a high-risk and non-cooperative jurisdictions identified by the
Financial Action Task Force (FATF);

(ii)

has signed an agreement with the home Member State of the manager of
the ELTIF and with every other Member State in which the units or
shares of the ELTIF are intended to be marketed to ensure that the third
country fully complies with the standards laid down in Article 26 of the
OECD Model Tax Convention on Income and on Capital and ensures an
effective exchange of information in tax matters, including any
multilateral tax agreements.

By way of derogation from paragraph 1(a) of this Article, a qualifying portfolio
undertaking may be a financial undertaking that exclusively finances qualifying
portfolio undertakings referred to in paragraph 1 of this Article and in real assets
referred to in Article 9.
Article 11
Conflict of interest

An ELTIF shall not invest in an eligible investment asset in which the manager has or takes a
direct or indirect interest, other than by holding units or shares of the ELTIF it manages.

SECTION 2
PROVISIONS ON INVESTMENT POLICIES
Article 12
Portfolio composition and diversification

EN

1.

An ELTIF shall invest at least 70% of its capital in eligible investment assets.

2.

An ELTIF shall invest no more than:
(a)

10% of its capital in assets issued by any single qualifying portfolio
undertaking;

(b)

10% of its capital in an individual real asset;

(c)

10% of its capital in units or shares of any single ELTIF, EuVECA or EuSEF;

(d)

5% of its capital in assets referred to in Article 8(1)(b) where those assets have
been issued by any single body.

3.

The aggregate value of units or shares of ELTIFs, EuvECAs and EuSEFs in an
ELTIF portfolio shall not exceed 20% of the value of its capital.

4.

The aggregate risk exposure to a counterparty of the ELTIF stemming from over the
counter (OTC) derivative transactions or reverse repurchase agreements shall not
exceed 5% of its capital.

5.

By way of derogation from paragraph 2(a) and 2(b), the ELTIF may raise the 10%
limit referred to therein to 20%, provided that the aggregate value of the assets held
by the ELTIF in qualifying portfolio undertakings and in individual real assets in

25

EN

which it invests more than 10% of its capital does not exceed 40% of the value of its
capital.
6.

Companies which are included in the same group for the purposes of consolidated
accounts, as regulated by Seventh Council Directive 83/349/EEC 19 or in accordance
with recognised international accounting rules, shall be regarded as a single
qualifying portfolio undertaking or a single body for the purpose of calculating the
limits referred to in paragraphs 1 to 5.
Article 13
Concentration

1.

An ELTIF may acquire no more than 25% of the units or shares of a single ELTIF,
EuVECA or EuSEF.

2.

The concentration limits laid down in Article 56(2) of Directive 2009/65/EC shall
apply to investments in the assets referred to in Article 8(1)(b) of this Regulation.
Article 14
Borrowing of cash

An ELTIF may borrow cash provided that such borrowing fulfils all of the following
conditions:
(a)

it represents no more than 30% of the capital of the ELTIF;

(b)

it serves the purpose of acquiring a participation in eligible investment assets;

(c)

it is contracted in the same currency as the assets to be acquired with the borrowed
cash;

(d)

it does not hinder the realisation of any asset held in the portfolio of the ELTIF;

(e)

it does not encumber the assets held in the portfolio of the ELTIF.
Article 15
Application of portfolio composition and diversification rules

1.

2.

19

EN

The investment limits laid down in Article 12(1) shall:
(a)

apply by the date specified in the ELTIF rules or instruments of incorporation,
where this date shall take account of the peculiarities and characteristics of the
assets to be invested by the ELTIF and shall not be later than five years after
the authorisation of the ELTIF. In exceptional circumstances, the competent
authority of the ELTIF, upon submission of a duly justified investment plan,
may approve an extension of this time limit by no more than one additional
year;

(b)

cease to apply once the ELTIF starts to sell assets in accordance with its
redemption policy as set out in Article 16;

(c)

be temporarily suspended where the ELTIF raises additional capital, so long as
such a suspension lasts no longer than 12 months.

Where a long-term asset in which the ELTIF has invested is issued by a qualifying
portfolio undertaking that no longer complies with Article 10(1)(b), the long-term
Name+oj

26

EN

asset may continue to be counted for the purpose of calculating the 70% referred to
in Article 12(1) for a maximum of three years as of the date when the portfolio
undertaking no longer fulfils the requirements in Article 10.

Chapter III
Redemption, trading and issue of ELTIF shares or units and
distributions of income
Article 16
Redemption policy
1.

Investors shall not be able to ask for redemption of their units or shares before the
end of life of the ELTIF. Redemption to investors shall be possible as of the day
following the date defining the end of life of the ELTIF.
The end of life of the ELTIF shall be clearly indicated as a specific date in the ELTIF
rules or instruments of incorporation and disclosed to investors.
The ELTIF rules or instruments of incorporation and disclosures to investors shall
lay down the procedures for redemption and disposal of assets and state clearly that
redemption to investors shall commence on the day following the date defining the
end of life of the ELTIF.

2.

The life of the ELTIF shall be sufficient in length to cover the life-cycle of each of
the individual assets of the ELTIF, measured according to the illiquidity profile and
economic life-cycle of the asset, and the stated investment objective of the ELTIF.

3.

Investors may request the winding down of the ELTIF if their redemption requests
have not been satisfied within one year after the end of life of the ELTIF.

4.

Investors shall always have the option to be repaid in cash.

5.

Repayment in kind out of the ELTIF’s assets shall be possible only where all of the
following conditions are met:

6.

(a)

the ELTIF rules or instrument of incorporation foresees this possibility, under
the condition that all investors receive fair treatment;

(b)

the investor asks in writing to be repaid through a share of the assets of the
fund;

(c)

no specific rules restrict the transfer of those assets.

ESMA shall develop draft regulatory technical standards specifying the
circumstances in which the life of an ELTIF is sufficient in length to cover the lifecycle of each of the individual assets of the ELTIF.
ESMA shall submit those draft regulatory technical standards to the Commission by
[…].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 of
Regulation (EU) No 1095/2010.

EN

27

EN

Article 17
Secondary market
1.

The ELTIF rules or instrument of incorporation shall not prevent units or shares of
an ELTIF from being admitted to trading on a regulated market as defined in Article
4(14) of Directive 2004/39/EC or on a multilateral trading facility as defined in
Article 4(15) of Directive 2004/39/EC or on an organised trading facility as defined
in point (…) of Regulation (…).

2.

The ELTIF rules or instrument of incorporation shall not prevent investors from
freely transferring their shares or units to third parties.
Article 18
Issuance of new shares or units

1.

An ELTIF may offer new issues of shares or units in accordance with its fund rules
or instruments of incorporation.

2.

An ELTIF shall not issue new shares or units at a price below its net asset value
without a prior offering of those shares or units at that price to existing investors.
Article 19
Disposal of ELTIF assets

1.

Each ELTIF shall adopt an itemised schedule for the orderly disposal of its assets in
order to redeem investors after the end of life of the ELTIF.

2.

The schedule referred to in paragraph 1 shall include:

3.

(a)

an assessment of the market for potential buyers;

(b)

an assessment and comparison of potential sales prices;

(c)

a valuation for the assets to be divested;

(d)

a precise timeframe for the disposal schedule.

ESMA shall develop draft regulatory technical standards specifying the criteria to be
used for the assessments in point (a) and valuation in point (c) of paragraph 2.
ESMA shall submit those draft regulatory technical standards to the Commission by
[…].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 of
Regulation (EU) No 1095/2010.
Article 20
Distribution of income

1.

EN

An ELTIF may regularly distribute to investors the income generated by the assets
contained in the portfolio. This income shall be composed of:
(a)

any income that the assets are regularly producing;

(b)

the capital appreciation realized after the disposal of an asset, but excluding the
original capital commitments made.

28

EN

2.

The income shall not be distributed to the extent that it is required for future
commitments of the ELTIF.

3.

The ELTIF shall state in its fund rules or instruments of incorporation the
distribution policy that it will adopt during the life of the fund.

Chapter IV
Transparency requirements
Article 21
Transparency
1.

The units or shares of an authorised ELTIF shall not be marketed in the Union
without prior publication of a prospectus.
The units or shares of an authorised ELTIF shall not be marketed to retail investors
in the Union without prior publication of a key information document (KID) in
accordance with Regulation No[…] of […] of the European Parliament and the
Council. 20

2.

The prospectus shall include the information necessary for investors to be able to
make an informed judgement regarding the investment proposed to them, and, in
particular, the risks attached thereto.

3.

The prospectus shall contain at least the following:

4.

(a)

a statement setting out how the ELTIF's investment objectives and strategy for
achieving these objectives qualify the fund as long term in nature;

(b)

information to be disclosed by collective investment undertakings of the
closed-end type in accordance with Directive 2003/71/EC of the European
Parliament and of the Council 21 and Commission Regulation (EC) No
809/2004 22;

(c)

information to be disclosed to investors pursuant to Article 23 of Directive
2011/61/EU, if it is not already covered under point(b) of this paragraph;

(d)

prominent indication of the categories of assets the ELTIF is authorised to
invest in;

(e)

any other information considered by the competent authorities to be relevant
for the purpose of paragraph 2.

The prospectus, the KID and any other marketing documents shall prominently
notify investors about the illiquid nature of the fund.
In particular, the prospectus, the KID, and any other marketing documents shall
clearly:

20
21
22

EN

(a)

inform investors about the long-term nature of the ELTIF’s investments;

(b)

inform investors about the end of life of the ELTIF;

(c)

state whether the ELTIF is intended to be marketed to retail investors;

OJ Reference.
OJ L 345, 31.12.2003, p.64.
OJ L 149, 30.4.2004, p. 1.

29

EN

(d)

state that investors shall have no right to redeem their investment until the end
of the life of the ELTIF;

(e)

state the frequency and the timing of any income payments, if any, to the
investors during the life of the fund;

(f)

advise investors that only a small proportion of their overall investment
portfolio should be invested in an ELTIF.
Article 22
Cost disclosure

1.

The prospectus shall prominently inform investors as to the level of the different
costs borne directly or indirectly by the investor. The different costs shall be grouped
according to the following headings:
(a)

costs of setting-up the ELTIF;

(b)

the costs related to the acquisition of assets;

(c)

management costs;

(d)

distribution costs;

(e)

other costs, including administrative, regulatory, custodial, and audit costs.

2.

The prospectus shall disclose an overall ratio of the costs to the capital of the ELTIF.

3.

The key information document shall reflect all of the costs outlined in the prospectus
within its expression of total costs in monetary and percentage terms.

4.

ESMA shall develop draft regulatory technical standards to specify:
(a)

the common definitions, calculation methodologies and presentation formats of
the costs referred to in paragraph 1 and the overall ratio referred to in
paragraph 2;

(b)

the common definition, calculation methodology and presentation format of the
expression of total costs in paragraph 3.

When developing these draft regulatory technical standards, ESMA shall take into
account the draft regulatory standards referred to in point (…) of Regulation (…)
[PRIPS].
ESMA shall submit those draft regulatory technical standards to the Commission by
[…].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 of
Regulation (EU) No 1095/2010.

Chapter V
Marketing of units or shares of ELTIFs
Article 23
Facilities available to investors
1.

EN

The manager of an ELTIF shall, in each Member State where it intends to market
units or shares of that ELTIF, put in place facilities available for making

30

EN

subscriptions, making payments to unit- or shareholders, repurchasing or redeeming
units or shares and making available the information which the ELTIF and its
managers are required to provide.
2.

ESMA shall develop draft regulatory technical standards to specify the types and
characteristics of the facilities, their technical infrastructure and of the content of
their tasks in respect of ELTIF investors referred to in paragraph 1.
ESMA shall submit those draft regulatory technical standards to the Commission by
[…].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 of
Regulation (EU) No 1095/2010.
Article 24
Additional requirements for marketing to retail investors

The manager of an ELTIF shall be able to market the units or shares of that ELTIF to retail
investors provided that all of the following additional requirements are fulfilled:
(f)

the ELTIF's rules or instruments of incorporation provide that all investors benefit
from equal treatment and no preferential treatment or specific economic benefits are
granted to individual investors or groups of investors;

(g)

the ELTIF is not structured as a partnership;

(h)

retail investors may, during the subscription period and at least two weeks after
subscription of units or shares of the ELTIF, cancel their subscription and have the
money returned without penalty.
Article 25
Marketing of units or shares of ELTIFs

EN

1.

The manager of an ELTIF shall be able to market the units or shares of that
authorised ELTIF to professional and retail investors in its home Member State upon
notification in accordance with Article 31 of Directive 2011/61/EU.

2.

The manager of an ELTIF shall be able to market the units or shares of that
authorised ELTIF to professional and retail investors in Member States other than in
the home Member State of the ELTIF manager upon notification in accordance with
Article 32 of Directive 2011/61/EU.

3.

The manager of the ELTIF shall in respect of each ELTIF specify to its competent
authority whether or not it intends to market it to retail investors.

4.

In addition to the documentation and information required pursuant to Articles 31
and 32 of Directive 2011/61/EU the manager of the ELTIF shall provide to its
competent authority all of the following:
(a)

the prospectus of the ELTIF;

(b)

the key information document of the ELTIF in case of marketing to retail
investors;

(c)

information on the facilities referred to in Article 22.

31

EN

5.

The competences and powers of the the competent authorities pursuant to Articles 31
and 32 of Directive 2011/61/EU shall be understood to also refer to the marketing of
ELTIFs to retail invetsors and to cover the additional requirments laid down in this
Regulation.

6.

In addition to its powers in accordance with Article 31(3) first paragraph of Directive
2011/61/EU, the competent authority of the home Member State of the ELTIF
manager shall also prevent the marketing of an authorised ELTIF if the ELTIF
manager does not or will not comply with this Regulation.

7.

In addition to its powers in accordance with Article 32(3) first paragraph of Directive
2011/61/EU, the competent authority of the home Member State of the ELTIF
manager shall also refuse the transmission of a complete notification file to the
competent authorities of the Member State where the ELTIF is intended to be
marketed, if the ELTIF manager does not or will not comply with this Regulation.

Chapter VI
Supervision
Article 26
Supervision by the competent authorities
1.

The competent authorities shall supervise compliance with this Regulation on an ongoing basis.

2.

The competent authority of the ELTIF shall be responsible for supervising
compliance with the rules laid down in Chapters II, III and IV.

3.

The competent authority of the ELTIF shall be responsible for supervising
compliance with the obligations set out in the fund rules or in the instruments of
incorporation, and the obligations set out in the prospectus, which shall be consistent
with this Regulation.

4.

The competent authority of the manager of the ELTIF shall be responsible for
supervising the adequacy of the arrangements and organisation of the manager so
that the manager of the ELTIF is in a position to comply with the obligations and
rules which relate to the constitution and functioning of all the ELTIFs it manages.
The competent authority of the manager shall be responsible for supervising
compliance of the ELTIFs manager with this Regulation.

5.

Competent authorities shall monitor collective investment undertakings established
or marketed in their territories to verify that they do not use the ELTIF designation or
suggest that they are an ELTIF unless they are authorised and comply with this
Regulation.
Article 27
Powers of competent authorities

EN

1.

Competent authorities shall have all supervisory and investigatory powers that are
necessary for the exercise of their functions pursuant to this Regulation.

2.

The powers conferred on competent authorities in accordance with Directive
2011/61/EU shall be exercised also with respect to this Regulation.

32

EN

Article 28
Powers and competences of ESMA
1.

ESMA shall have the powers necessary to carry out the tasks attributed to it by this
Regulation.

2.

ESMA’s powers in accordance with Directive 2011/61/EU shall be exercised also
with respect to this Regulation and in compliance with Regulation (EC) No 45/2001.

3.

For the purposes of Regulation (EU) No 1095/2010, this Regulation shall be included
under any further legally binding Union act which confers tasks on the Authority as
referred to in Article 1(2) of Regulation (EU) 1095/2010.
Article 29
Cooperation between authorities

1.

The competent authority of the ELTIF and the competent authority of the manager, if
different, shall cooperate with each other and exchange information for the purpose
of carrying out their duties under this Regulation.

2.

Competent authorities and ESMA shall cooperate with each other for the purpose of
carrying out their respective duties under this Regulation in accordance with
Regulation (EU) No 1095/2010.

3.

Competent authorities and ESMA shall exchange all information and documentation
necessary to carry out their respective duties under this Regulation in accordance
with Regulation (EU) No 1095/2010, in particular to identify and remedy breaches of
this Regulation.

Chapter VII
Final provisions
Article 30
Review
No later than three years after the entry into force of this Regulation, the Commission shall
start a review of the application of this Regulation. The review shall analyse in particular:

EN

(a)

the impact of the provision in Article 16(1) that excludes investors from
redeeming their units or shares before the end of life of the ELTIF. The review,
taking into account ELTIF’s distribution to different investor categories, shall
also assess whether exempting a limited number of individual retail investors
from such a rule would have the effect of increasing demand for ELTIF
amongst retail investors;

(b)

the impact on asset diversification of the application of the minimum threshold
of 70% of eligible investment assets laid down in Article 12(1), in particular to
assess whether increased measures on liquidity would be necessary should a
limited number of individual retail investors be exempted from the prohibition
on redeeming their units before the end of life of the ELTIF;

(c)

the extent to which ELTIFs are marketed in the Union, including whether
AIFMs falling under Article 3(2) of Directive 2011/61/EU might have an
interest in marketing ELTIFs.

33

EN

The results of this review shall be communicated to the European Parliament and the Council
accompanied, where necessary, by appropriate proposals for amendments.
Article 31
Entry into force
This Regulation shall enter into force on the twentieth day following its publication in the
Official Journal of the European Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels,

For the European Parliament
The President

EN

For the Council
The President

34

EN

LEGISLATIVE FINANCIAL STATEMENT
1.

FRAMEWORK OF THE PROPOSAL/INITIATIVE
1.1. Title of the proposal/initiative
1.2. Policy area(s) concerned in the ABM/ABB structure
1.3. Nature of the proposal/initiative
1.4. Objective(s)
1.5. Grounds for the proposal/initiative
1.6. Duration and financial impact
1.7. Management mode(s) envisaged

2.

MANAGEMENT MEASURES
2.1. Monitoring and reporting rules
2.2. Management and control system
2.3. Measures to prevent fraud and irregularities

3.

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE
3.1. Heading(s) of the multiannual financial framework and expenditure budget
line(s) affected
3.2. Estimated impact on expenditure
3.2.1. Summary of estimated impact on expenditure
3.2.2. Estimated impact on operational appropriations
3.2.3. Estimated impact on appropriations of an administrative nature
3.2.4. Compatibility with the current multiannual financial framework
3.2.5. Third-party contributions
3.3. Estimated impact on revenue

EN

35

EN

LEGISLATIVE FINANCIAL STATEMENT
1.

FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.

Title of the proposal/initiative
Regulation of the European Parliament and of the Council on Long-term Investment
Funds

1.2.

Policy area(s) concerned in the ABM/ABB structure 23
Internal Market – Financial markets

1.3.

Nature of the proposal/initiative
x The proposal/initiative relates to a new action
 The proposal/initiative relates to a new action following a pilot project/preparatory
action 24
 The proposal/initiative relates to the extension of an existing action
 The proposal/initiative relates to an action redirected towards a new action

1.4.

Objective(s)

1.4.1.

The Commission's
proposal/initiative

multiannual

strategic

objective(s)

targeted

by

the

Increase the safety and the efficiency of the financial markets; boost the internal
market for financial services
1.4.2.

Specific objective(s) and ABM/ABB activity(ies) concerned
Act as a source for long-term financing for the European economy; ensure a levelplaying field between long-term investment fund managers; increase the non-bank
finance available to businesses; ensure investor protection and financial stability

23
24

EN

ABM: activity-based management – ABB: activity-based budgeting.
As referred to in Article 54(2)(a) or (b) of the Financial Regulation.

36

EN

1.4.3.

Expected result(s) and impact
Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

The proposal aims at: enhancing the cross-border marketing of European long-term
investment funds (ELTIFS) to both retail and professional investors across the
Union; providing for a harmonised procedure for the authorisation of long-term
investment funds; identifying the permissible investment policies to be pursued by
long-term investment funds; preventing conflicts of interest; setting solid
transparency requirements and specific marketing conditions
1.4.4.

Indicators of results and impact
Specify the indicators for monitoring implementation of the proposal/initiative.

Reports should be prepared on:
developments on cross-border marketing of ELTIFs; impact of the proposed
Regulation on investor protection; progress made in achieving undistorted
competition; impact of the proposed measures on the pool of capital available for
long-term investments (e.g. investments on infrastructure projects, real estate and
unlisted companies)
1.5.

Grounds for the proposal/initiative

1.5.1.

Requirement(s) to be met in the short or long term
As a result of the adoption of the proposed Regulation:
•

Increased cross–border marketing of long-term investment funds is predicted;

•
The authorisation of the long-term investment funds by the national competent
authorities would be harmonised and the coordination between the national
supervisors would be improved;
•
Further development of long-term investing across the Union: the
harmonisation of the operating conditions for all relevant players in the investment
fund market will ensure the efficiency of long-term investment funds, as well as it
will enable the emergency of economies of scale;
•
Institutional investors, such as insurance companies and pension funds, as well
as individual retail investors will benefit from yield of regular returns offered by
long-term investment funds;
•

Increased investor choice and quality of service received;

•
Improved transparency will boost investor confidence and it is likely to lead to
better competition;
•
The long-term financing of the European economy would be enhanced, with a
special view to infrastructure projects and the financing of small and medium
enterprises (SMEA);
1.5.2.

Added value of EU involvement Besoin(s) à satisfaire à court ou à long terme
1) The regulatory fragmentation prevents investors from gaining exposure to longterm assets and thus it prevents the increase of pooling of capital and investment
expertise that creates economies of scale for long-term investment funds;

EN

37

EN

2) A lack of action at EU level would result in investor confusion and would impede
the emergence of a Union-wide level playing field between long-term investment
fund managers;
1.5.3.

Lessons learned from similar experiences in the past
The UCITS (Undertakings in Collective Investments for Transferable Securities)
Directive has first introduced a robust set of product rules used by investment funds
available to retail investors. UCITS assets under management have now reached
€6,697 billion . While the UCITS initiative does not necessarily mean that the
creation of ELTIF will attract similar levels of investor interest, but it does indicate
the success such EU-wide initiatives can have.

1.5.4.

Compatibility and possible synergy with other appropriate instruments Besoin(s) à
satisfaire à court ou à long terme
The proposed rules build on the existing regulatory framework established through
Directive 2011/61/EU (Alternative Investment Fund Managers Directive – AIFMD)
and the acts adopted for its implementation. The harmonised authorisation and
supervision procedures for AIFMs under the AIFMD are supplemented with an
authorisation procedure for ELTIFs. Moreover, the product rules concerning ELTIFs
apply in addition to the rules laid down in the existing Union legislation, unless they
are explicitly dis-applied. Particularly, the management and marketing rules laid
down in the existing framework, as well as the rules on the cross-border provision of
services and the freedom of establishment included in AIFMD will apply accordingly
to ELTIFs.

EN

38

EN

1.6.

Duration and financial impact
 Proposal/initiative of limited duration
–  Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY
–  Financial impact from YYYY to YYYY
x Proposal/initiative of unlimited duration
– Implementation with a start-up period from 2015 to 2020,
– followed by full-scale operation.

1.7.

Management mode(s) planned 25
 Centralised direct management by the Commission
 Centralised indirect management with the delegation of implementation tasks
to:
–  executive agencies
– x bodies set up by the Communities 26
–  national public-sector bodies/bodies with public-service mission
–  persons entrusted with the implementation of specific actions pursuant to Title
V of the Treaty on European Union and identified in the relevant basic act within
the meaning of Article 49 of the Financial Regulation
 Shared management with the Member States
 Decentralised management with third countries
 Joint management with international organisations (to be specified)
–

25

26

EN

If more than one management mode is indicated, please provide details in the "Comments" section.

Details of management modes and references to the Financial Regulation may be found on the
BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html
As referred to in Article 185 of the Financial Regulation.

39

EN

2.

MANAGEMENT MEASURES

2.1.

Monitoring and reporting rules
Specify frequency and conditions. Besoin(s) à satisfaire à court ou à long terme

Article 81 of the Regulation establishing the European Securities and Markets
Pension Authority (ESMA) provides for the evaluation of the experience acquired at
a result of the operation of ESMA within three years from the effective start of its
operation. To this end, the Commission will publish a general report that will be
forwarded to the European Parliament and to the Council.
2.2.

Management and control system

2.2.1.

Risk(s) identified Besoin(s) à satisfaire à court ou à long terme
The additional resource to ESMA foreseen as a result of the current proposal is
needed in order to allow ESMA to carry out its competences and notably its role in:
•
Ensuring harmonisation and coordination of rules of the ELITF Regulation by
drafting regulatory standards;
•
Reinforcing and ensuring consistent application of national regulatory powers
by issuing guidelines and by drafting implementing technical standards;
•
Collecting and publishing the necessary information concerning long-term
financial market participants;
The lack of this resource could not ensure a timely and efficient fulfilment of the role
of ESMA.

2.2.2.

Information concerning the internal control system set up Besoin(s) à satisfaire à
court ou à long terme
Management and control systems as provided for in the ESMA Regulation will apply
also with regard to the role of ESMA according to the present proposal.

2.3.

Measures to prevent fraud and irregularities
Specify existing or envisaged prevention and protection measures.

For the purposes of combating fraud, corruption and any other illegal activity, the
provisions of Regulation (EC) No 1073/1999 of the European Parliament and of the
Council of 25 May 1999 concerning investigations conducted by the European AntiFraud Office (OLAF) shall apply to the ESMA without any restriction, as stipulated
in Article 66(1) of the ESMA Regulation.
ESMA shall accede to the Inter-institutional Agreement of 25 May 1999 between the
European Parliament, the Council of the European Union and the Commission of the
European Communities concerning internal investigations by the European AntiFraud Office (OLAF) and shall immediately adopt appropriate provisions for all
ESMA staff, as provided for in Article 66(2) of the ESMA Regulation.

EN

40

EN

3.

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.

Heading(s) of the multiannual financial framework and expenditure budget
line(s) affected
• Existing budget lines
In order of multiannual financial framework headings and budget lines.
Type of
expenditure

Budget line
Heading of
multiannual
financial
framework

Diff./nondiff.

Number
[…][Heading…………………………

(27)

……………...……….]

1.a

[12.03.04][ESMA]

Diff.

Contribution
from
EFTA
countries
28

from
candidate
countries 29

from third
countries

within the
meaning of Article
21(2)(b) of the
Financial
Regulation

YES

YES

NO

NO

• New budget lines requested
In order of multiannual financial framework headings and budget lines.
Type of
expenditure

Budget line
Heading of
multiannual
financial
framework

Number
[…][Heading…………………………

Diff./nondiff.

……………...……….]

27
28
29

EN

Contribution
from
EFTA
countries

from
candidate
countries

from third
countries

within the
meaning of Article
21(2)(b) of the
Financial
Regulation

Diff. = Differentiated appropriations / Non-Diff. = Non-differentiated appropriations.
EFTA: European Free Trade Association.
Candidate countries and, where applicable, potential candidate countries from the Western Balkans.

41

EN

3.2.

Estimated impact on expenditure
The only impact on expenditures relates to the hiring of 2 additional temporary agents for an unlimited period of time. The new tasks
will be carried out with the human resources available within the annual budgetary allocation procedure, in the light of budgetary
constraints, which are applicable to all EU bodies and in line with the financial programming for agencies.

3.2.1.

Summary of estimated impact on expenditure
EUR million (to three decimal places)

Heading of multiannual financial
framework

1.a

DG: MARKT

Competitiveness for Growth and jobs

2015

2016

2017

2018

2019

2020

TOTAL

 Operational appropriations
Commitments

(1)

0.140

0.130

0.130

0.130

0.130

0.130

0.788

Payments

(2)

0.140

0.130

0.130

0.130

0.130

0.130

0.788

Commitments

(1a)

Payments

(2a)

0.140

0.130

0.130

0.130

0.130

0.130

0.788

0.140

0.130

0.130

0.130

0.130

0.130

0.788

12.03.04 ESMA

Number of budget line

Appropriations of an administrative nature financed from the
envelope of specific programmes 30
Number of budget line

(3)

Commitments

TOTAL appropriations

for DG MARKT

30

EN

=1+1a
+3
=2+2a

Payments

+3

Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former "BA" lines), indirect research,
direct research.

42

EN

Commitments

(4)

0.140

0.130

0.130

0.130

0.130

0.130

0.788

Payments

(5)

0.140

0.130

0.130

0.130

0.130

0.130

0.788

 TOTAL operational appropriations
 TOTAL appropriations of an administrative nature
financed from the envelope for specific programmes

TOTAL appropriations
for HEADING 1.a
of the multiannual financial framework

(6)

Commitments

=4+ 6

0.140

0.130

0.130

0.130

0.130

0.130

0.788

Payments

=5+ 6

0.140

0.130

0.130

0.130

0.130

0.130

0.788

If more than one heading is affected by the proposal / initiative:
 TOTAL operational appropriations

Commitments

(4)

Payments

(5)

 TOTAL appropriations of an administrative nature
financed from the envelope for specific programmes

TOTAL appropriations
under HEADINGS 1 to 4
of the multiannual financial framework
(Reference amount)

(6)

Commitments

=4+ 6

Payments

=5+ 6

Comment: this takes into account only 40% of the total costs, the other 60% are financed by Member States

EN

43

EN

Heading of multiannual financial
framework

5

" Administrative expenditure "
EUR million (to three decimal places)
Year
N

Year
N+1

Year
N+2

Year
N+3

Enter as many years as
necessary to show the duration
of the impact (see point 1.6)

TOTAL

DG: <…….>
 Human resources
 Other administrative expenditure

TOTAL DG <…….>

TOTAL appropriations
for HEADING 5
of the multiannual financial framework

Appropriations

(Total commitments =
Total payments)

EUR million (to three decimal places)

TOTAL appropriations
under HEADINGS 1 to 5
of the multiannual financial framework

EN

2015

2016

2017

2018

2019

2020

TOTAL

Commitments

0.140

0.130

0.130

0.130

0.130

0.130

0.788

Payments

0.140

0.130

0.130

0.130

0.130

0.130

0.788

44

EN

3.2.2.

Estimated impact on operational appropriations
–  The proposal/initiative does not require the use of operational appropriations
–  The proposal/initiative requires the use of operational appropriations, as explained below:

Comment:
See above.
Commitment appropriations in EUR million (to three decimal places)
Year
N

Indicate
objectives and
outputs

Year
N+2

Year
N+3

Enter as many years as necessary to show the
duration of the impact (see point 1.6)

TOTAL

Cost

Cost

Cost

No

Cost

No

Cost

No

Cost

No

Avera
ge
cost

No

Type 31

No

OUTPUTS

No



Year
N+1

Cost

No
total

Total
cost

SPECIFIC OBJECTIVE No 1 32 ...

- Output
- Output
- Output
Subtotal for specific objective No 1
SPECIFIC OBJECTIVE NO 2 ...
- Output
Subtotal for specific objective No 2

31
32

EN

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).
As described in point 1.4.2. ‘Specific objective(s)…’

45

EN

TOTAL COST

EN

46

EN

3.2.3.

Estimated impact on appropriations of an administrative nature

3.2.3.1. Summary
–  The proposal/initiative does not require the use of appropriations of an
administrative nature
–  The proposal/initiative requires the use of appropriations of an administrative
nature, as explained below:
EUR million (to three decimal places)
Year

N 33

Year
N+1

Year
N+2

Year
N+3

Enter as many years as necessary to show the
duration of the impact (see point 1.6)

TOTAL

HEADING 5
of the multiannual
financial framework
Human resources
Other
administrative
expenditure
Subtotal HEADING 5
of the multiannual
financial framework

Outside HEADING 5 34 of
the multiannual financial
framework

Human resources
Other
of
an
nature

expenditure
administrative

Subtotal
outside HEADING 5
of the multiannual
financial framework

TOTAL

The human resources appropriations required will be met by appropriations from the DG that are already assigned to
management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation
which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

33
34

EN

Year N is the year in which implementation of the proposal/initiative starts.
Technical and/or administrative assistance and expenditure in support of the implementation of EU
programmes and/or actions (former "BA" lines), indirect research, direct research.

47

EN

3.2.3.2. Estimated requirements of human resources
–  The proposal/initiative does not require the use of human resources.
–  The proposal/initiative requires the use of human resources, as explained
below:
Comment:
– No additional human and administrative resources will be needed in DG MARKT
as a result of the proposal. 2 additional temporary agents will be hired at ESMA
for an unlimited period.
Estimate to be expressed in full time equivalent units

Year
N

Year
N+1

Year N+2

Ye
ar
N+
3

Enter
as
many
years
as
necessa
ry to
show
the
duratio
n of the
impact
(see
point
1.6)

 Establishment plan posts (officials and temporary staff)
XX 01 01 01 (Headquarters and Commission’s
Representation Offices)
XX 01 01 02 (Delegations)
XX 01 05 01 (Indirect research)
10 01 05 01 (Direct research)
 External staff (in Full Time Equivalent unit: FTE) 35
XX 01 02 01 (CA, SNE, INT from the "global
envelope")
XX 01 02 02 (CA, LA, SNE, INT and JED in the
delegations)
- at Headquarters

XX 01 04 yy 36

- Delegations
XX 01 05 02 (CA, SNE, INT - Indirect research)
10 01 05 02 (CA, INT, SNE - Direct research)
Other budget lines (specify)
TOTAL

XX is the policy area or budget title concerned.
The human resources required will be met by staff from the DG who are already assigned to management of the
action and/or have been redeployed within the DG, together if necessary with any additional allocation which
may be granted to the managing DG under the annual allocation procedure and in the light of budgetary
constraints.

Description of tasks to be carried out:
35

36

EN

CA= Contract Staff; LA = Local Staff; SNE= Seconded National Expert; INT = agency staff; JED=
Junior Experts in Delegations).
Sub-ceiling for external staff covered by operational appropriations (former "BA" lines).

48

EN

Officials and temporary staff
External staff

EN

49

EN

3.2.4.

Compatibility with the current multiannual financial framework
–  Proposal/initiative is compatible the current multiannual financial framework.
–  Proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework.
Explain what reprogramming is required, specifying the budget lines concerned and the corresponding amounts.

–  Proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework 37.
Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts.

3.2.5.

Third-party contributions
– The proposal/initiative does not provide for co-financing by third parties.
–  The proposal/initiative provides for the co-financing estimated below:
Appropriations in EUR million (to 3 decimal places)
2015

2016

2017

2018

2019

2020

TOTAL

Member States via EU
national supervisors *

0.210

0.194

0.194

0.194

0.194

0.194

1,181

TOTAL
appropriations
cofinanced

0.210

0.194

0.194

0.194

0.194

0.194

1,181

*

37

EN

Estimation

based

on

current

financing

mechanism

in

ESMA

regulation

(Member

States

60%,

Community

40%)

See points 19 and 24 of the Interinstitutional Agreement (for the period 2007-2013).

50

EN

3.3.

Estimated impact on revenue
–  Proposal/initiative has no financial impact on revenue.
–  Proposal/initiative has the following financial impact:


on own resources



on miscellaneous revenue
EUR million (to three decimal places)
Impact of the proposal/initiative 38

Budget revenue line:

Appropriation
s available for
the current
financial year

Year
N

Year
N+1

Year
N+2

Year
N+3

Enter as many years as necessary to show
the duration of the impact (see point 1.6)

Article ………….

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected.
Specify the method for calculating the impact on revenue.

38

EN

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 25% for
collection costs.

51

EN

Annex to the Legislative Financial Statement for a proposal for Regulation of the European Parliament and of the Council on European
Long-Term Investment Funds (ELTIF)
This proposal intends to help increase the pool of capital available for long term investment in the European Union's real economy. It will do this
by creating a new form of fund vehicle, EU Long Term Investment Funds or ELTIFs. ELTIFs, by virtue of the asset classes that they are allowed
to invest in, are expected to be able to provide investors with long term, stable returns. Eligible assets would be qualified as forming part of
‘alternative investments’ – asset classes that fall outside the traditional definition of listed shares and bonds. While alternative investments
comprise real estate, venture capital, private equity, hedge funds, non-listed companies, distressed securities and commodities, ELTIFs would
only focus on alternative investments that fall within a defined category of long-term asset classes whose successful development requires a longterm commitment from investors.
There is a clear need to refocus investors' approach away from only investing with a short-term outlook or in assets requiring short-term
commitments. One way of achieving this is to reduce barriers to making longer-term commitments to assets such as infrastructure projects, by
providing what is often called 'patient capital'. This kind of investment may not be able to be redeemed for a number of years but are invested in
such a way as to be able to provide stable and predictable returns. Infrastructure projects or operating concessions would fit this description.
Capital invested in this long term, 'patient' manner benefits the real economy by providing predictable and sustained flows of finance to firms and
creates employment.
To ensure the effective removal of barriers to a pan-European market for ELTIFs and the trust of investors in these funds, it is necessary to
ensure the highest level of supervisory convergence and proportionate oversight. The role of ESMA therefore will be of great importance, both in
terms of the development of detailed regulatory requirements to achieve convergence and uniformity in the market, and in supporting ongoing
supervisory oversight.
The costs related to tasks to be carried out by ESMA have been estimated for staff expenditure (Title 1), in conformity with the cost classification
in the ESMA draft budget. The proposal of the Commission includes provisions for ESMA to develop 4 regulatory technical standards. In
addition, ESMA will have to keep a central register on all authorized ELTIFs. ESMA will also have the opportunity to develop guidelines on the
fields covered by this Regulation. ESMA will also have a role in relation to ensuring smooth cooperation and coordination of supervision of
ELTIFs by the competent authorities of Member States.
It has been assumed that the Regulation will enter into force in early 2015, and therefore the additional ESMA resources are required from 2015.
Additional staff has been estimated for the technical standards, advice and register to be produced by ESMA; and for other permanent tasks that
accompany the function of ESMA in enhancing cooperation with the competent authorities and convergence in supervisory practices. As regards
the nature of positions, the successful and timely delivery of new technical standards will require, in particular, additional policy, legal and
impact assessment officers.
The following assumptions were applied to assess the impact on number of FTEs required to develop technical standards, guidelines and reports:

EN

52

EN

•
•
•
•
•
•
•
•
•

One policy officer can draft on average 1,5 technical standards a year. All this work requires preparatory work such as:
Bilateral and multilateral meetings with stakeholders
Analysis and assessment of options and drafting of consultation documents
Public consultation of stakeholders
Setting up and management of standing expert groups composed of supervisors from Member States
Setting up and management of ad hoc expert groups composed of market participants and representatives of investors
Analysis of the responses to consultations
Drafting of cost/benefit analysis
Drafting of the legal text

A central register would need to be developed (IT project specified, tenders assessed, project managed). This register would then be subject to
ongoing maintenance, in view of ensuring its accuracy and completeness.
In addition, other work will be necessary on an ongoing basis, including coordination of the action of Member State supervisors, work to identify
supervisory practices and drive convergence in these, dispute resolution and mediation processes, and market monitoring and assessment work to
identify trends in the European market of long-term investments and clarify any emerging risks for investors or barriers to the smooth functioning
of the single market for such funds.
This means an additional 2 FTEs are needed from 2015. It was assumed that this increase in FTEs will be maintained in 2016 to 2020 since the
standards will most likely be finalised only in 2016-2017 and implementation will be required till 2020, while ongoing tasks as outlined above
would increase for ESMA following the implementation work.
Other assumptions:
•

Based on the distribution of FTEs as from 2015, the additional 2 FTEs are assumed to be comprised of 2 temporary agents

•

Average annual salary costs for different categories of personnel are based on DG BUDG guidance;

•

Salary weighting coefficient for Paris of 1,16;

•

Mission costs assumed at €10,000 per year

•

Recruiting-related costs (travel, hotel, medical examinations, installation and other allowances, removal costs, etc) estimated at €12,700,

•

The method of calculating the increase in the required budget for the 6 years is presented in more detail in table below. The calculation
reflects the fact that that the Community budget funds 40% of the costs.

EN

53

EN

Cost types

Calculations

Amount (in thousands)
2015

2016

…

2020

=2*131*1,16

304

304

304

304

=2*12.7

25

=2*10

20

20

20

20

349

324

324

324

140

130

130

130

210

194

194

194

Title 1: Staff expenditure:
11 Salaries and allowances
- of which temporary agents
- of SNEs
- of which contract agents
12 Expenditure related to
recruitment
13 Mission expenses
Total title
expenditure

1

:

Staff

Of
which
Community
contribution (40%)
Of which Member
contribution (60%)

State

The following table presents the proposed establishment plan for the 2 temporary agent positions:
Function group and grade
AD16
AD15
AD14
AD13
AD12
AD11
AD10

EN

Posts

54

EN

AD9
AD8
AD7
AD6
AD5
AD Total

EN

1
1

2

55

EN