The Council of EU Economy and Finance Ministers, meeting on Tuesday 24 May, is expected to adopt a political agreement in principle (‘general approach’) on the revision of the rules governing European Long-Term Investment Funds (ELTIFs) (see EUROPE 12957/9).
The legislative proposal aims to make ELTIFs more attractive and thus foster long-term investment by mobilising citizens’ savings to transform the EU economy, within the framework of the capital markets union.
Among the changes, and in the interests of transparency, the EU Council would like the application for authorisation as an ELTIF to include: - the fund rules or constituent documents; - the name of the proposed ELTIF fund manager; - the name of the depositary; - and, where required by the competent authority for ELTIFs marketed to retail investors, the written agreement with the depositary; - for retail investors, a description of the information, including the arrangements for dealing with complaints from retail investors.
According to the document from the General Secretariat of the EU Council, which EUROPE has obtained, the composition and diversification of the ELTIF portfolio is changed. The EU Council wants, for example, that an ELTIF should invest at least 60% of its capital in assets eligible for investment, compared to 70% in the 2015 text. An ELTIF should also not invest more than 20% of its capital in units or shares of a single ELTIF in European venture capital funds (EuVECA), European social entrepreneurship funds (EuSEF), EU UCITS or EU alternative investment funds (AIF) managed by an EU manager, compared to 10% previously. In addition, the total value of units or shares of EuvECAs, EuSEFs and EU AIFs managed by an EU alternative investment fund manager (AIFM) in a portfolio of AIFs shall not exceed 40% of the capital value of the AIF, compared to 20% previously.
In relation to the concentration, the threshold for acquiring an ELTIF would be raised from 25% to 30% of the units or shares of a single ELTIF, EuVECA, EuSEF, EU UCITS or AIF managed by an EU AIFM. In addition, the ELTIF would now be used to make investments or provide liquidity, including to pay costs and expenses, provided that the cash or cash equivalent holdings of the ELTIFs are not sufficient to make the investment concerned. It would be contracted in the same currency as the assets to be acquired with the borrowed cash or in another currency where the currency risk has been hedged or can be demonstrated.
MEPs discussed, on Wednesday 11 May, the amendment of this regulation and have yet to determine their position (see EUROPE 12951/23).
To read the EU Council’s proposal: https://aeur.eu/f/1sg (Original version in French by Anne Damiani)