Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), is simplifying the process for investment firms to create European Long-Term Investment Funds (Eltifs) as sub-funds under existing alternative investment funds. Firms no longer need to fill out a separate approval form for a new sub-fund when adding an Eltif-class to an existing fund.
This week, the CSSF released an updated version of the application questionnaire for Eltifs. The revised questionnaire aims to “simplify and streamline” the application process for Eltif authorisations, according to the CSSF.
Expedited application
The updated questionnaire, which was last published on December 15, 2023, includes several key improvements designed to expedite the application and modification processes for Eltifs. The CSSF’s primary goal with these updates is to “clarify critical points early in the authorisation process, reducing delays and administrative burdens for applicants.”
Investment firms seeking to establish a new Eltif within an existing alternative fund will find the revised form “more user-friendly.” These alternative funds can include an Undertaking for Collective Investment (UCI) Part II, a Specialised Investment Fund (SIF), or an Investment Company in Risk Capital (Sicar). The update eliminates the need to fill out a separate “Questionnaire for approval of a new sub-fund,” consolidating all necessary information into a single document.
Major hub
This update, though small, is significant. Luxembourg is a major hub for Eltifs in Europe, and the bulk of all Eltif 2.0 funds are expected to be domiciled in the Grand Duchy. The new EU rules for the updated Eltif 2.0 regime, which took effect in January, aim to broaden the investor base for such funds to include retail investors. Previously, private markets were primarily the domain of professional and high-net-worth investors. Under the Eltif 2.0 rules, no investment thresholds are required, although most new Eltifs require a minimum investment of 10,000 euros.
The Eltif register maintained by Esma currently lists 119 Eltifs, of which 80 are registered in Luxembourg. However, only a subset are managed by Luxembourg AIFMs.
Adaptability
One notable feature of the updated Eltif application questionnaire is its adaptability. Depending on the specific nature of the application, certain sections of the form that are not applicable will be automatically greyed out, simplifying the completion process. For instance, when an applicant selects the option “Eltif in new UCI Part II / SIF / SICAR to be authorised (eDesk UCI Approval),” any redundant information related to eDesk/UCI Approval will be excluded from the questionnaire.
With the Eltif regulation, the EU aims to foster long-term investment in the real economy by facilitating access to finance for projects such as infrastructure, small and medium-sized enterprises, and real estate. The latest regulatory amendments introduce significant changes intended to enhance the attractiveness and operational flexibility of Eltifs and to open them up also to retail investors.
The CSSF has mandated that the updated questionnaire be used for all new Eltif authorisation requests submitted after July 29, 2024. It is also required for communicating substantial changes to existing Eltifs.