It has been 10 years since the adoption of the Regulation (EU) 2015/760, with which the EU established European Long-Term Investment Funds. The main idea behind the effort was to generate more investment opportunities for professional as well as retail investors in the real economy of the European Union, primarily in sectors that need long-term capital such as transportation and energy while also enabling investing into SMEs that fulfill certain conditions. The goal of the regulation was to further promote digital and ecological transition, which was to be done by directly marketing the possibilities of ELTIF to retail investors on a cross-border basis.
Due to the strict requirements imposed by the regulation, primarily regarding strict requirements on the investors’ side, a revision was necessary in order to attract more investors, as well as distributors. The most significant changes made to the regulation include:
- decreasing the minimum thresholds for investment;
- relaxation of the rules regarding real estate investments;
- the broadening of the definition of ‘real estate’ itself, as well as;
- introducing the possibility of redemption before the end of the ELTIF’s fixed-term life, although under certain conditions.
The changes brought with the new regulation allow for a more streamlined investment procedure which in the end-line will create a more flexible environment for investing (particularly into real estate) while simultaneously encouraging more dynamic investor approach.
With the new regulation being adopted in January of the previous year, and the Commission publishing regulatory technical standards regarding the directive which entered into force in October, this new approach by the Union is expected to attract a significant number of new investors.
Prepared by,
Daniel Vujacic, LL.M. (UW)