Luxembourg positions itself as the leading European jurisdiction for launching ELTIFs under the new regime
In brief
The regulatory reform of the European long-term investment funds (ELTIFs) enters into force on 10 January 2024, following its approval by the European Parliament and the Council in February 2023.
Regulation (EU) 2023/606 (“Regulation“) aims at revitalizing a vehicle that was put in place back in 2015 but which, in the words of the Regulation itself, “did not scale up as expected.”
With this in mind, the new regime tackles the shortfalls identified both on the managers’ side, as they will now find themselves dealing with a much more flexible product in items such as eligible assets, borrowing, or concentration and diversification rules, as well as on the side of the investors, notably retail investors, whose access to this investment product now becomes simpler.
In Luxembourg, which has positioned itself as the main European hub for ELTIFs (as more than 50% of the total ELTIFs authorized in Europe are domiciled in Luxembourg as of the date of this publication),1 market actors are keeping a close eye on that cornerstone, while it remains to be seen what the practical application of the reform will be.
For further information and to discuss what these new developments mean to you as an ELTIF manager, distributor or investor, please get in touch with your Baker McKenzie specialist.
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1 Register of authorized European long-term investment funds: https://www.esma.europa.eu/document/register-authorised-european-long-term-investment-funds-eltifs.
