Regulation (EU) 2023/606

What it is

increase the attractiveness of European Long-Term Investment Funds (ELTIFs) for investors and enhance their role as a complementary source of financing for EU companies. PROPOSED ACT: Regulation of the European Parliament and of the Council. ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council. BACKGROUND: Regulation (EU) 2015/760 of the European Parliament and of the Council on European long-term investment funds (ELTIF Regulation) is a European framework for alternative investment funds (AIFs) that invest in long-term investments, such as social and transport infrastructure projects, real estate and SMEs. The ELTIF market is still relatively new, but it is evident that it has not scaled up to the extent originally envisaged, with only 57 authorised ELTIFs in four Member States as of October 2021. Amendments are necessary to improve the attractiveness and effectiveness of the framework for investment managers and investors. The Committee on Economic and Monetary Affairs adopted the report by Michiel HOOGEVEEN (ECR, NL) on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) 2015/760 as regards the scope of eligible assets and investments, the portfolio composition and diversification requirements, the borrowing of cash and other fund rules and as regards requirements pertaining to the authorisation, investment policies and operating conditions of European long-term investment funds. The committee responsible recommended that the European Parliament's position adopted at first reading under the ordinary legislative procedure should amend the proposal as follows: The objective of this Regulation is to facilitate the raising and channelling of capital towards long-term investments in the real economy, including towards the digital agenda for Europe, the European Green Deal and other priority areas, in line with the Union objective of smart, sustainable and inclusive growth. Investors, and in particular retail investors, are showing increasing interest in sustainable investments. Therefore, a new optional subcategory of ELTIFs marketed as environmentally sustainable would be created to accommodate capital from investors seeking sustainable investments. This optional sub-category should be subject to stricter requirements regarding the list of eligible assets. Members clarified that an ELTIF marketed as environmentally sustainable should comply with the requirements of Regulation (EU) 2019/2088 on sustainability reporting in the financial services sector and will only have to invest in eligible investment assets that meet the taxonomy requirements set out in the delegated acts adopted under Regulation (EU) 2020/852 on the establishment of a framework to promote sustainable investment. ELTIFs marketed as environmentally sustainable should be subject to additional disclosure requirements. In particular, ELTIFs marketed as environmentally sustainable should disclose the share of their assets that comply with the taxonomy requirements. In order to encourage private capital flows towards…

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