On Monday 20 June, members of the European Parliament's Committee on Economic and Monetary Affairs (ECON) have approved their negotiating position on European long-term investment funds (ELTIFs). Despite adopting very different positions during the debates (see EUROPE 12951/23), they managed to find a compromise by 43 votes to 3.
This revision of the text is intended to encourage ELTIFs, which have been seldom used to date. “While the legislative framework for European long-term investment funds (ELTIFs) was adopted in 2015, so far their market remains small”, stressed rapporteur Michiel Hoogeveen (ECR, Netherlands) in a statement.
“This is despite ELTIFs’ potential to provide retail investors access to assets such as infrastructure projects, real estate and SMEs through a safe, well-diversified and well-managed product that is subject to appropriate regulatory oversight and investor protection safeguards”, he added.
The MEPs tabled no less than 286 amendments, almost all of which were adopted. Only two were rejected: one covering irrecoverable assets and one proposing minimum guarantees to protect social rights.
MEPs want to create an optional sub-category of European long-term investment funds (ELTIFs) marketed as environmentally-sustainable to raise capital from investors looking for sustainable investments. Such ELTIFs should be subject to stricter requirements, invest exclusively in assets that meet the taxonomy obligations and disclose what share of their assets complies with these requirements to avoid greenwashing.
They also wanted to strengthen investor protection, by adding transparency measures on communication. The European Securities and Markets Authority (ESMA) will also have a role to play. MEPs have suggested that the ESMA should keep and update quarterly a central public register of authorised ELTIFs with up-to-date links to their annual reports and, where available, the Key Information Document so that investors can analyse and compare existing ELTIFs.
MEPs also propose removing existing tax barriers and introducing tax incentives. Jessica Polfjärd (Sweden), shadow rapporteur for the EPP, welcomed this progress in a statement: “It is clear that the ELTIF has suffered from restrictions which have made it less attractive. Therefore my ambition has been clear from the start: we should let the market decide what works and what doesn't. The agreement we achieved ensures this in many ways, for instance by increasing flexibility and the universe of eligible investments”.
The inter-institutional negotiations will take place soon, given that the Council of the EU has already adopted its position (see EUROPE 12959/35). (Original version in French by Anne Damiani)