The Central Bank of Ireland (CBI) issued a consultation on the AIF Rulebook on 9 September. The consultation is called CP162, there is a significant volume of changes consulted on.
The changes proposed are as a consequence of the amendments in Directive (EU) 2024/927 (the Amending Directive) which entered into force on 15 April 2024. Almost all provisions will apply in member states from 16 April 2026. The Amending Directive made changes to both the UCITS and AIFM Directives. The changes proposed to the AIF Rulebook are to align with the themes in the EU's Savings and Investment Union (SIU) initiative, to better support the establishment of private asset funds in Ireland and to remove or update out-dated provisions in the AIF Rulebook that have become out-of-date through passage of time or because of legislative or regulatory developments since last publication of the AIF Rulebook.
The principal policy proposals below are grouped under the following four themes:
- Alignment with AIFMD
- Removal of the Loan Origination QIAIF section of the AIF Rulebook to align fully with the European AIFMD framework
- Expectations on disclosure around the selection and use of liquidity management tools (LMTs)
- Regulatory Effectiveness
- Change to requirements for Qualifying Investor AIFs investing through intermediary investment vehicles
- Removal of requirement to seek authorisation as an AIF management company
- Incorporating capital commitments into the Qualifying Investor AIFs subscription mechanism and expanding the list of exempted parties
- Incorporation of rules governing DAoFIs
- Extension of requirements applicable to Qualifying Investor AIFs with registered AIFMs to Qualifying Investor AIFs with non-EU AIFM
- Removal of Chapter 3 Part A of the AIFM requirements
- Provision for Charity share classes
- Clarification around investor voting rights
- Providing for Money Market Fund Regulation stress testing requirements
- Capital Commitment Structures and Private Asset Strategies
- Incorporating guidance on share class features of closed-ended Qualifying Investor AIFs into the Qualifying Investor AIF chapter to align with relevant provisions in the ELTIF chapter
- Changes to offer period requirements for Qualifying Investor AIFs that are closed-ended or open-ended with limited liability
- Removal of current market value requirements relating to warehousing
- Further technical changes
- Removal of requirement to specify depositary/AIFM replacement procedures in the constitutional documents of the investment fund
- Differentiation of certain charges from LMTs
- Restriction on issuing Bearer Securities
- Clarification that connected party dealing rules apply to asset transactions with unitholders
- Consequential updates to the ELTIF chapter
Note also that the CBI is consulting on its guidance on performance fees for UCITS and Retail Investor AIFs in its consultation paper on the UCITS framework, CP161. The updated CBI guidance on performance fees has been included only in consultation paper CP 161 even though it relates to Retail Investor AIFs and so is relevant for the AIF framework. This is in order to reduce the length of the AIF Rulebook consultation paper. See article below on the CBI UCITS consultations for a summary of the proposed changes to performance fees relevant for Retail Investor AIFs.
Principal policy proposals
1. Alignment with AIFMD
The following proposed amendments seek to align the AIF Rulebook with the revised AIFMD:
Removal of the Loan Origination QIAIF section of the AIF Rulebook to align fully with the European AIFMD framework
The Amending Directive introduced a pan-European framework for loan origination and private credit. These new EU rules are inconsistent in some instances with the current requirements in the AIF Rulebook. It is proposed to remove the Loan Origination QIAIF (L-QIAIF) section from the AIF Rulebook and to align fully with the European framework. These amendments support the broader objective under SIU of promoting private asset and credit investments. The removal of the L-QIAIF section will also align with the position set out in the private asset Q&As published in Q1 2025. As part of the alignment with the new EU loan origination framework, the general restriction on QIAIFs acting as guarantor will be removed from the AIF Rulebook.
Expectations on disclosure around the selection and use of liquidity management tools (LMTs)
Proposed amendments to the AIF Rulebook will incorporate requirements for the selection and use of LMTs and providing for AIFMs to also select further LMTs in addition to those defined in the original AIFMD.
2. Regulatory Effectiveness
Amendments are proposed to provide greater clarity on certain regulatory requirements including investment limits, AIFM reporting and investment through intermediary investment vehicles.
Change to requirements for Qualifying Investor AIFs investing through intermediary investment vehicles
It is proposed to update the rules governing investment through intermediary investment vehicles by Qualifying Investor AIFs. Under the revised approach, there will be an obligation on the AIFM to disclose the use and purpose of intermediary investment vehicles in its prospectus, to carry out due diligence on the vehicles and to have in place documented policies and procedures for the oversight and monitoring of the vehicle.
As a result, the current requirements related to wholly owned subsidiaries will be removed, including the requirement for CBI approval prior to the establishment of a subsidiary, the obligation for fund directors to constitute the majority of the subsidiary's board, and the restriction preventing subsidiaries themselves from entering into contracts unless the fund is party to those arrangements. In addition to the new domestic requirements, general requirements already exist under AIFMD related to the use of these vehicles, ensuring that there is adequate disclosure to investors regarding the use of such vehicles, and safeguarding the Qualifying Investor AIF's assets. These requirements include rules on acquisition of control, depositary oversight and look-through requirements for leverage. This approach ensures that Qualifying Investor AIFs can continue to use intermediary structures with clear regulatory expectations and protections in place.
Removal of requirement to seek authorisation as an AIF management company
It is proposed to remove the requirement for investment funds to seek authorisation as an AIF Management Company as set out in Chapter 4 – Management Company Requirements.
When acting for an AIF, an AIF Management Company performs functions comparable to those already carried out by a board of directors or general partner. The additional requirements imposed in the AIF Rulebook results in duplication. The focus of the framework is on the AIFM as the main regulated entity overseeing the management of the AIF and the implementation of its investment strategy. Governance and director suitability requirements for AIF Management Companies will continue to apply through existing regulatory mechanisms, including the CBI's Fitness and Probity regime.
This will reduce the burden for investment funds and is consistent with the previous CBI decision to remove this requirement for Investment Limited Partnerships (ILPs).
Incorporating capital commitments into the Qualifying Investor AIFs subscription mechanism and expanding the list of exempted parties
It is proposed to update the Qualifying Investor AIFs minimum
investment requirements to provide for investments made through
capital commitments.
Investing in a Qualifying Investor AIF requires investors to invest
a minimum of €100,000 (or its equivalent in another currency)
that can be provided as a single payment. It is further proposed to
permit the minimum investment requirement to be met through a
capital commitment model, whereby an investor commits to investing
at least €100,000 but the amount is drawn down in stages over
time by the Qualifying Investor AIF as it ramps-up its investment
portfolio. It is also proposed to expand the list of entities
eligible for an exemption from the minimum subscription requirement
to include the AIFM itself or a group company of the AIFM,
discretionary or non-discretionary investment advisers, and
directors (or equivalent), employees, secondees, consultants or
partners of these entities. The exemption will continue to be
limited to those directly involved in the Qualifying Investor
AIF's investment activities or to senior employees and partners
within the relevant management, investment or advisory firms who
have appropriate expertise in the provision of investment
management services.
Incorporation of rules governing DAoFIs
In 2021 the CBI published guidance for Depositaries for AIFs under Regulation 22(3)(b) of the AIFM Regulations (Depositaries of Assets other than Financial Instruments or DAoFIs). DAoFIs are a type of depositary that may only act as depositary for specific types of AIFs (i.e. those which have no redemption rights exercisable for at least five years from the date of initial investment, and which generally do not invest in financial instruments that can be held in custody). It is proposed to incorporate CBI guidance on DAoFIs into the Depositary Chapter of the AIF Rulebook.
Extension of requirements applicable to Qualifying Investor AIFs with registered AIFMs to Qualifying Investor AIFs with non-EU AIFM
Under AIFMD, Member States may allow non-EU AIFMs to manage and/or market AIFs to professional investors within their jurisdictions. In line with the requirements for registered AIFMs, it is proposed to also apply these requirements to non-EU AIFMs that manage Qualifying Investor AIFs and to also require compliance with the EU loan origination requirements. Part III of the Qualifying Investor AIF chapter of the AIF Rulebook will be updated to include non-EU AIFMs to ensure the consistent application of the framework.
Removal of Chapter 3 Part A of the AIFM requirements
Chapter 3 Part A of the AIF Rulebook was a set of provisions to support the transition of AIFMs into the new capital requirements introduced following CP152. These provisions are no longer relevant as all AIFMs are now subject to the requirements as set out in Chapter 3 Part B.
Provision for Charity share classes
It is proposed to incorporate Q&A ID 1144 into the AIF Rulebook which permits AIFs to establish share classes that make distributions to charities, subject to specific conditions.
Clarification around investor voting rights
Provisions have been updated in relation to investor voting rights for Qualifying Investor AIFs, including the alignment of these voting rights with the relevant provisions in the fund's constitutional document. It is proposed to permit Qualifying Investor AIFs and ELTIFs to use other investor voting mechanisms, including written resolutions, where explicitly provided for in the relevant legislation and disclosed in the fund's constitutional document.
Providing for Money Market Fund Regulation stress testing requirements
Qualifying Investor AIFs authorised in accordance with the Money Market Fund Regulation (EU) 2017/1131 (MMFR) shall, when conducting stress testing under Article 28 MMFR, adhere to the periodically updated guidelines establishing common reference parameters of the stress test scenarios issued by the European Securities and Markets Authority (ESMA). Complying with the annual guidelines will now form part of the rules governing the relevant funds.
3. Capital Commitment Structures and Private Asset Strategies
The CBI is consulting on targeted amendments to the AIF Rulebook to provide greater flexibility to investment managers when structuring their investment funds to better meet investors' needs. These changes are also necessary to support investments in private assets as recommended in the 2030 Funds Review.
Incorporating guidance on share class features of closed-ended Qualifying Investor AIFs into the Qualifying Investor AIF chapter to align with relevant provisions in the ELTIF chapter
The CBI guidance on share class features of closed-ended Qualifying Investor AIFs will be incorporated into the Qualifying Investor AIF chapter aligning with the approach taken for ELTIFs. This will allow managers to establish share classes with specific features to meet investors' needs and provides for the efficient structuring of investment funds including those that are open ended. The proposed changes will also permit side-letter arrangements, subject to the disclosure of such arrangements in the prospectus and the requirement that such arrangements do not materially disadvantage other investors in the fund. The incorporation of the share class guidance will enable greater flexibility in structuring investment funds, including share classes that permit differentiated participation for specific purposes such as issuance of shares at a price other than Net Asset Value (NAV), the inclusion of excuse and exclude provisions related to investor preference and taxation requirements, stage investing and management participation. This will allow fund managers to better facilitate the participation of investors in the fund whilst being able to tailor its operational elements to better meet the needs of those investors.
Changes to offer period requirements for Qualifying Investor AIFs that are closed-ended or open-ended with limited liability
It is proposed to remove the restriction on the initial offer period that is currently limited to two years and six months. Instead, there will be a requirement that the initial offer period is disclosed in the prospectus. The revised text aligns with the approach taken in the ELTIF Chapter and ensures consistency across the framework while providing greater flexibility for asset managers, particularly private asset funds that may have longer ramp-up periods. In order to ensure that investor interests are safeguarded, a new provision will be added that imposes an obligation on the AIFM to return an investor's subscription proceeds upon request to that investor if the offer period has expired or if the AIFM extends the offer period and the fund has failed to issue units to the investor.
Removal of current market value requirements relating to warehousing
It is proposed to align the Qualifying Investor AIFs warehousing requirements with those applied to ELTIFs. This amendment is consistent with the valuation principles under AIFMD, which require AIFMs to carry out asset valuations impartially and with due skill, care and diligence. Additionally, warehousing arrangements remain subject to connected party transaction rules providing further safeguards for investors.
4. Further technical changes
Other provisions within the AIF Rulebook will also be revised as part of a general review of the requirements, to correct for errors or to provide additional clarification on the purpose and intended outcome of a particular rule. These include:
Removal of requirement to specify depositary/AIFM replacement procedures in the constitutional documents of the investment fund
The current obligation for a Qualifying Investor AIF's constitutional document to specify the procedure for replacing a depositary is being removed. This requirement is considered disproportionate given the broader regulatory safeguards already in place for investors. A corresponding obligation in relation to the replacement of an AIFM will also be removed.
Differentiation of certain charges from LMTs
Amendments are being made to clarify that certain administrative charges applied to investor redemptions/repurchases are distinct from the use of LMTs under Annex V of AIFMD. This change is necessary to ensure that where a fund imposes such standard charges as part of its normal redemption/repurchase process it does not trigger the requirements under Annex V of AIFMD.
Restriction on issuing Bearer Securities
The issuance of bearer shares is no longer permitted under the Companies Act 2014 and references will be removed.
Clarification that connected party dealing rules apply to asset transactions with unitholders
Unitholders will be added to the list of entities subject to the requirements under the provisions directed at dealings with connected parties. These additions are necessary to address circumstances where an investment fund may enter into commercial transactions with unitholders in the fund. A footnote will be included to clarify that these requirements do not apply to transactions (redemption/subscriptions/other distributions) by unitholders in relation to their units in the fund.
Consequential updates to the ELTIF chapter
The ELTIF Chapter of the AIF Rulebook will be updated to ensure that the relevant provisions remain consistent with similar provisions in the Qualifying Investor AIF Chapter. The proposed technical amendments are intended to ensure that the ELTIF Chapter is implemented in a manner that aligns, where appropriate, with the Qualifying Investor AIF framework.
Next steps
The consultation will be open for 8 weeks. Feedback from stakeholders must be provided by 5 November 2025. The CBI will review all feedback received on the consultation paper CP 162 and prepare and publish a feedback statement.
William Fry will be submitting a response to the CP 162 AIF Rulebook consultation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
