Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds (Text with EEA relevance)

CHAPTER I

GENERAL PROVISIONS

Article 1

Subject matter and objective

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(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 that are directly or indirectly borne by investors;

(2) ‘professional investor’ means an investor which is considered to be a professional client, or may, on request, be treated as a professional client in accordance with Annex II to Directive 2014/65/EU;

(3) ‘retail investor’ means an investor who is not a professional investor;

(4) ‘equity’ means ownership interest in a qualifying portfolio undertaking, represented by the shares or other forms of participation in the capital of the qualifying portfolio undertaking issued to its investors;

(5) ‘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;

(6) ‘real asset’ means an asset that has an intrinsic value due to its substance and properties;

(7) ‘financial undertaking’ means any of the following: (a) a credit institution as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (¹); (b) an investment firm as defined in point (1) of Article 4(1) of Directive 2014/65/EU; (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 (²); (ca) a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC; (d) a financial holding company as defined in point (20) of Article 4(1) of Regulation (EU) No 575/2013; (e) a mixed-activity holding company as defined in point (22) of Article 4(1) of Regulation (EU) No 575/2013; (f) a management company as defined in point (b) of Article 2(1) of Directive 2009/65/EC; (g) an AIFM as defined in point (b) of Article 4(1) of Directive 2011/61/EU.

(8) ‘EU AIF’ means EU AIF as defined in point (k) of Article 4(1) of Directive 2011/61/EU;

(9) ‘EU AIFM’ means EU AIFM as defined in point (l) of Article 4(1) of Directive 2011/61/EU;

(10) ‘competent authority of the ELTIF’ means the competent authority of the EU AIF within the meaning of point (h) of Article 4(1) of Directive 2011/61/EU;

(11) ‘home Member State of the ELTIF’ means the Member State where the ELTIF is authorised;

(12) ‘manager of the ELTIF’ means the authorised EU AIFM approved to manage an ELTIF, or the internally managed ELTIF where the legal form of the ELTIF permits internal management and where no external AIFM has been appointed;

(13) ‘competent authority of the manager of the ELTIF’ means the competent authority of the home Member State of the AIFM within the meaning of point (q) of Article 4(1) of Directive 2011/61/EU;

(14) ‘securities lending’ and ‘securities borrowing’ mean any transaction in which a counterparty transfers securities subject to a commitment that the borrower will return equivalent securities at some future date or when requested to do so by the transferor, that transaction being considered as securities lending for the counterparty transferring the securities and being considered as securities borrowing for the counterparty to which they are transferred;

(14a) ‘simple, transparent and standardised securitisation’ means a securitisation that complies with the conditions set out in Article 18 of Regulation (EU) 2017/2402 of the European Parliament and of the Council (³);

(14b) ‘group’ means a group as defined in Article 2, point (11), of Directive 2013/34/EU of the European Parliament and of the Council (⁴);

(15) ‘repurchase transaction’ means a repurchase transaction as defined in point (83) of Article 4(1) of Regulation (EU) No 575/2013;

(16) ‘financial instrument’ means a financial instrument as specified in Section C of Annex I to Directive 2014/65/EU;

(17) ‘short selling’ means an activity as defined in point (b) of Article 2(1) of Regulation (EU) No 236/2012 of the European Parliament and of the Council (⁵);

(18) ‘regulated market’ means a regulated market as defined in point (21) of Article 4(1) of Directive 2014/65/EU;

(19) ‘multilateral trading facility’ means a multilateral trading facility as defined in point (22) of Article 4(1) of Directive 2014/65/EU;

(20) ‘feeder ELTIF’ means an ELTIF, or an investment compartment thereof, which has been approved to invest at least 85 % of its assets in units or shares of another ELTIF or investment compartment of an ELTIF;

(21) ‘master ELTIF’ means an ELTIF, or an investment compartment thereof, in which another ELTIF invests at least 85 % of its assets in units or shares.

Article 3

Authorisation and central public register

ESMA shall keep an up-to-date central public register identifying for each ELTIF authorised under this Regulation:

(a) the Legal Entity Identifier (LEI) and national code identifier of the ELTIF, where available;

(b) the name and address of the manager of the ELTIF and, where available, the LEI of that manager;

(c) the ISIN codes of the ELTIF and each separate unit or share class, where available;

(d) the LEI of the master ELTIF, where available;

(e) the LEI of the feeder ELTIF, where available;

(f) the competent authority of the ELTIF and the home Member State of the ELTIF;

(g) the Member States where the ELTIF is marketed;

(h) whether the ELTIF can be marketed to retail investors or can be marketed solely to professional investors;

(i) the date of the authorisation of the ELTIF;

(j) the date on which the marketing of the ELTIF commenced;

(k) the date of the last update by ESMA of the information about the ELTIF.

The central public register shall be made available in electronic format.

Article 4

Designation and prohibition on transformation

Article 5

Application for authorisation as an ELTIF

The application for authorisation as an ELTIF shall include all of the following:

(a) the fund rules or instruments of incorporation;

(b) the name of the proposed manager of the ELTIF;

(c) the name of the depositary and, where requested by the competent authority of an ELTIF that can be marketed to retail investors, the written agreement with the depositary;

(d) where the ELTIF can be marketed to retail investors, a description of the information to be made available to investors, including a description of the arrangements for dealing with complaints submitted by retail investors;

(e) where applicable, the following information on the master-feeder structure of the ELTIF: (i) a declaration that the feeder ELTIF is a feeder of the master ELTIF; (ii) the fund rules or instruments of incorporation of the master ELTIF and the agreement between the feeder ELTIF and the master ELTIF, or the internal rules on the conduct of business, referred to in Article 29(6); (iii) where the master ELTIF and the feeder ELTIF have different depositaries, the information-sharing agreement referred to in Article 29(7); (iv) where the feeder ELTIF is established in a Member State other than the home Member State of the master ELTIF, an attestation by the competent authority of the home Member State of the master ELTIF that the master ELTIF is an ELTIF provided by the feeder ELTIF.

The competent authority of the ELTIF may request clarification and information as regards the documentation and information provided under the second subparagraph.

Without prejudice to paragraph 1, an EU AIFM that applies to manage an ELTIF established in another Member State shall provide the competent authority of the ELTIF with the following documentation:

(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 EU 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 on which it received the request submitted by the competent authority of the ELTIF.

Without prejudice to Article 7 of Directive 2011/61/EU, the application for authorisation as an internally managed ELTIF shall include the following:

(a) the fund rules or instruments of incorporation;

(b) where the ELTIF can be marketed to retail investors, a description of the information to be made available to retail investors, including a description of the arrangements for dealing with complaints submitted by retail investors.

By way of derogation from paragraph 3, an internally managed EU AIF shall be informed within three months from the date of submission of a complete application whether authorisation as an ELTIF has been granted.

Article 6

Conditions for granting authorisation as an ELTIF

An EU AIF shall be authorised as an ELTIF only where its competent authority:

(a) is satisfied that the EU AIF 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 or instruments of incorporation, and the choice of the depositary.

The competent authority of the ELTIF may refuse to approve the application of an EU AIFM to manage an ELTIF only where the EU AIFM:

(a) does not comply with this Regulation;

(b) does not comply with Directive 2011/61/EU;

(c) is not authorised by its competent authority to manage AIFs that follow investment strategies of the type covered by this Regulation; or

(d) has not provided the documentation referred to in Article 5(2), or any clarification or information requested thereunder.

Before refusing to approve an application, the competent authority of the ELTIF shall consult the competent authority of the EU AIFM.

Article 7

Applicable rules and liability

CHAPTER II

OBLIGATIONS CONCERNING THE INVESTMENT POLICIES OF ELTIFs

SECTION 1

General rules and eligible assets

Article 8

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 9

Eligible investments

In accordance with the objectives referred to in Article 1(2), an ELTIF shall invest only 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.

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 financial derivative instruments, certificates representing them, indices based on them or any other means or instrument that would give an exposure to them;

(c) entering into securities lending, securities borrowing, repurchase transactions, or any other agreement which has an equivalent economic effect and poses similar risks, if thereby more than 10 % of the assets of the ELTIF are affected;

(d) using financial derivative instruments, except where the use of such instruments solely serves the purpose of hedging the risks inherent to other investments of the ELTIF.

ESMA shall submit those draft regulatory technical standards to the Commission by 9 September 2015.

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 10

Eligible investment assets

An asset as referred to in Article 9(1), point (a), shall only be eligible for investment by an ELTIF 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 as referred to in Article 11 and acquired by the ELTIF from that qualifying portfolio undertaking or from a third party via the secondary market; (ii) issued by a qualifying portfolio undertaking as referred to in Article 11 in exchange for an equity or quasi-equity instrument previously acquired by the ELTIF from that qualifying portfolio undertaking or from a third party via the secondary market; (iii) issued by an undertaking in which a qualifying portfolio undertaking as referred to in Article 11 holds a capital participation in exchange for an equity or quasi-equity instrument acquired by the ELTIF in accordance with point (i) or (ii) of this point (a);

(b) debt instruments issued by a qualifying portfolio undertaking as referred to in Article 11;

(c) loans granted by the ELTIF to a qualifying portfolio undertaking as referred to in Article 11 with a maturity that does not exceed the life of the ELTIF;

(d) units or shares of one or several other ELTIFs, EuVECAs, EuSEFs, UCITS and EU AIFs managed by EU AIFMs provided that those ELTIFs, EuVECAs, EuSEFs, UCITS and EU AIFs invest in eligible investments as referred to in Article 9(1) and (2) and have not themselves invested more than 10 % of their assets in any other collective investment undertaking;

(e) real assets;

(f) simple, transparent and standardised securitisations where the underlying exposures correspond to one of the following categories: (i) assets listed in Article 1, point (a)(i), (ii) or (iv), of Commission Delegated Regulation (EU) 2019/1851 (⁶); (ii) assets listed in Article 1, point (a)(vii) or (viii), of Delegated Regulation (EU) 2019/1851, provided that the proceeds from the securitisation bonds are used for financing or refinancing long-term investments;

(g) bonds issued, pursuant to a Regulation of the European Parliament and of the Council on European green bonds, by a qualifying portfolio undertaking as referred to in Article 11.

The limit laid down in point (d) of the first subparagraph shall not apply to feeder ELTIFs.

For the purpose of determining compliance with the investment limit and the other limits laid down in Article 13 and Article 16(1), the assets and the cash borrowing position of an ELTIF and of the other collective investment undertakings in which that ELTIF has invested shall be combined.

The determination of compliance with the investment limit and the other limits laid down in Article 13 and Article 16(1) in accordance with this paragraph shall be carried out on the basis of information updated on at least a quarterly basis and, where that information is not available on a quarterly basis, on the basis of the most recent available information.

Article 11

Qualifying portfolio undertaking

A qualifying portfolio undertaking shall be an undertaking that fulfils, at the time of the initial investment, the following requirements:

(a) it is not a financial undertaking, unless: (i) it is a financial undertaking that is not a financial holding company or a mixed-activity holding company; and (ii) that financial undertaking has been authorised or registered more recently than 5 years before the date of the initial investment;

(b) it is an undertaking which: (i) is not admitted to trading on a regulated market or on a multilateral trading facility; or (ii) is admitted to trading on a regulated market or on a multilateral trading facility and has a market capitalisation of no more than EUR 1 500 000 000 ;

(c) it is established in a Member State, or in a third country provided that the third country: (i) is not identified as high-risk third country listed in the delegated act adopted pursuant to Article 9(2) of Directive (EU) 2015/849 of the European Parliament and of the Council (⁷); (ii) is not mentioned in Annex I to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes.

Article 12

Conflicts of interest

SECTION 2

Provisions on investment policies

Article 13

Portfolio composition and diversification

An ELTIF shall invest no more than:

(a) 20 % of its capital in instruments issued by, or loans granted to, any single qualifying portfolio undertaking;

(b) 20 % of its capital in a single real asset;

(c) 20 % of its capital in units or shares of any single ELTIF, EuVECA, EuSEF, UCITS or EU AIF managed by an EU AIFM;

(d) 10 % of its capital in assets referred to in Article 9(1), point (b), where those assets have been issued by any single body.

Article 14

Rectification of investment positions

In the event that an ELTIF infringes the portfolio composition and diversification requirements laid down in Article 13 or the borrowing limits set out in Article 16(1), point (a), and the infringement is beyond the control of the manager of the ELTIF, the manager of the ELTIF shall, within an appropriate period of time, take such measures as are necessary to rectify the position, taking due account of the interests of the investors in the ELTIF.

Article 15

Concentration limits

Article 16

Borrowing of cash

An ELTIF may borrow cash provided that such borrowing fulfils all of the following conditions:

(a) it represents no more than 50 % of the net asset value of the ELTIF in the case of ELTIFs that can be marketed to retail investors, and no more than 100 % of the net asset value of the ELTIF in the case of ELTIFs marketed solely to professional investors;

(b) it serves the purpose of making investments or providing liquidity, including to pay costs and expenses, provided that the holdings in cash or cash equivalent of the ELTIF are not sufficient to make the investment concerned;

(c) it is contracted in the same currency as the assets to be acquired with the borrowed cash, or in another currency where currency exposure has been appropriately hedged;

(d) it has a maturity no longer than the life of the ELTIF.

When borrowing cash, an ELTIF may encumber assets to implement its borrowing strategy.

Borrowing arrangements that are fully covered by investors’ capital commitments shall not be considered to constitute borrowing for the purposes of this paragraph.

Article 17

Application of portfolio composition and diversification rules

The portfolio composition and diversification requirements laid down in Article 13 shall:

(a) apply by the date specified in the rules or instruments of incorporation of the ELTIF;