Introduction
Directive (EU) 2024/927 (“AIFMD II”) came into effect on 15 April 2024. The deadline for its transposition into Irish and other domestic law of EU member states is 16 April 2026. We are pleased to share the latest in our series of updates on key regulatory developments arising from AIFMD II. This update focuses on clarifications and amendments to authorised activities for Alternative Investment Fund Managers (“AIFMs“) under AIFMD II.
Clarification of AIFM functions: loan origination and servicing securitisation SSPEs
AIFMD II clarifies that the management of Alternative Investment Funds (“AIFs“) can also comprise the activities of:
- originating loans on behalf of an AIF; and
- servicing securitisation special purpose entities (“SSPEs”).
The recitals to AIFMD II acknowledge that the provision of loans by investment funds can be a useful source of funding for the real economy, but the absence of a harmonised regime at EU level has led to divergence in local regulatory approaches and variance in levels of investor protection across member states. Accordingly, the harmonisation of the rules applicable to authorised AIFMs that manage AIFs that originate loans has the aim of improving risk management across the market and increasing transparency for investors, with a view to facilitating the establishment of an efficient internal market for loan origination.
Ancillary Services
AIFMD II also expands the list of ancillary services permitted under AIFMD to include benchmark administration (i.e., managing the provision of a benchmark index, including the collation of data and composition of the index) and credit servicing (e.g., the administration of loan portfolios).
AIFMD II also clarifies that AIFMs may provide to third parties any of the non-core/ancillary functions and activities that they already provide to one or more AIFs for which they act as AIFM (e.g., corporate services such as human resources and information technology (“IT“), as well as IT services for portfolio management and risk management).
Next steps
The Department of Finance in Ireland has indicated that transposition of AIFMD II into domestic law in Ireland will precede the 16 April 2026 deadline.
An Irish authorised AIFM should assess whether the functions explicitly recognised under AIFMD II and any of the ancillary services added by AIFMD II are necessary for its business (e.g., AIFMs that manage funds which originate loans) or would be appropriate to support new business activities. If so, any such AIFM should consider what updates are necessary to its existing programme of activities and policies and procedures, and monitor guidance emanating from the Central Bank on any related filing obligations in good time ahead of AIFMD II taking effect in Irish law.
Recent Updates on AIFMD II
Regulatory technical standards on open-ended loan-originating AIFs published | Arthur Cox LLP
Should you need any assistance assessing the expanded activities, or indeed anything stemming from the application of AIFMD II to Irish AIFs, please do not hesitate to reach out to any of our team who can assist.