ELTIF 2.0 – a promising redesign with state-of-the-art features

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The EU co-legislators have published the text of a provisional agreement on the review of the Regulation on European long-term investment funds (ELTIFs). This agreement has the potential to access an untapped retail market and strengthen the ELTIF’s role as a complementary source of financing for the real economy.

On 19 October 2022, the Council of the EU announced that political agreement (the ‘Political Agreement’) had been reached with the EU Parliament on the review of the Regulation on European long-term investment funds (the ‘ELTIF Regulation’). Following additional inter-institutional negotiations aimed at fine-tuning the text of the Political Agreement, the EU co-legislators have now published the draft text of the compromise reached (the ‘Provisional Agreement’).

The Provisional Agreement sets out amendments to the ELTIF Regulation that render the ELTIF framework more attractive and easier to invest in, and aims to channel more financing to small and medium-sized enterprises (SMEs) and long-term projects. To achieve this, the redesigned ELTIF framework (‘ELTIF 2.0’) significantly broadens the investment universe, removes obstacles to investment by professional investors and makes it easier for retail investors to invest in ELTIFs, while ensuring strong investor protection.

To accelerate the ELTIF’s adoption as a ‘go-to’ fund structure for long-term investments, the EU co-legislators agreed to further increase the flexibility of its design and to enhance its attractiveness by simplifying its distribution.

Product redesign

ELTIF 2.0 also provides for additional structuring flexibility by clarifying the option for indirect investments, and by allowing co-investments if the ELTIF has organisational and administrative arrangements in place to handle possible conflicts of interest.

Product distribution

ELTIF 2.0 includes rules to make it easier for retail investors to invest in ELTIFs, while ensuring investor protection.

Entry into application and transitional rules

The revised ELTIF Regulation is expected to enter into application in Q1 2024. However, it will be possible to opt into the new regime from the date of entry into force of the revised ELTIF Regulation, which is expected to be in April 2023. A transitional period of 5 years after the application date guarantees that ELTIF managers will have sufficient time to adapt to the new regime.

Next steps

It is expected that the EU Parliament will adopt the draft amendment text during the plenary sitting on 13 February 2023 and that the approved text will be published in the Official Journal of the EU in March 2023.

Accelerating the uptake of the ELTIF

Since the original ELTIF framework was adopted in April 2015, 84 ELTIFs have been launched as of January 2023. These authorised ELTIFs are domiciled only in four Member States: Luxembourg (48), France (21), Italy (13) and Spain (2).

The EU Commission published a legislative proposal containing targeted amendments to the ELTIF Regulation on 25 November 2021. Through the proposed amendments, the EU Commission aimed to increase the uptake of ELTIFs across the EU for the benefit of the European economy and investors. The review of the ELTIF framework forms part of a package of four proposals prepared by the EU Commission as part of its CMU 2.0 Action Plan.

For further information, please reach out to your usual contact within the Fund Formation Group_


To access the text of the Provisional Agreement, click here_

To access a marked-up version of the ELTIF Regulation showing the amendments introduced by the Provisional Agreement, click here_

To access the EU Commission’s legislative proposal for amendments to the ELTIF Regulation, click here_

To access our newsflash ‘Unlocking the potential of the ELTIF’, click here_

Download the press release

Luxembourg Newsflash – ELTIF 2.0 – a promising redesign with state-of-the-art features

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