Brussels, 25/06/2014 (Agence Europe) - The EU member states' representatives to the EU on the Coreper committee agreed on a draft regulation on Wedneday 25 June establishing a new type of investment fund for the financing of long-term investment in the economy.
European long-term investment funds (ELTIFs) will invest in asset types that require stable commitment from investors, says a press release issued by the EU Council of Ministers. Investors would not be able to withdraw their investment during the fund's life cycle, which must be clearly stated in the contract. Assets covered by such funds may include non-listed undertakings that issue equity or debt instruments for which there is no readily identifiable buyer, real assets that require significant up-front capital expenditure and small businesses admitted to trading on a regulated market or on a multilateral trading facility.
Only EU-authorised alternative management funds are eligible to market themselves as ELTIFs. ELTIFs must invest at least 70% of their capital in clearly-defined categories of eligible assets and trading in assets other than long-term investments would only be permitted up to a maximum of 30% of their capital.
In order to protect retail investors, the draft regulation stipulates that retail investors with a portfolio of below €500,000 may only invest up to 10% of that portfolio in ELTIFs and investment in each ELTIF must be at least €10,000. Where the lifecycle of the ELTIF is longer than ten years, the fund manager must inform retail investors in writing that this type of investment is not suitable for them.
It will be for the Italian Presidency of the EU Council to negotiate with representatives of the European Parliament in the second half of the year with a view to striking agreement at first reading. (MB)