Earlier today (29 January 2026), the Central Bank of Ireland (the “Central Bank“) published an Authorisation process note setting out a streamlined application process for the extension of authorisation of alternative investment fund managers (“AIFMs“) that currently manage loan originating alternative investment funds (“AIFs“). This is part of the Central Bank’s preparation for the implementation of Directive (EU) 2024/927 (“AIFMD II”) which amends Directive 2011/61/EU (“AIFMD”) and is due to be transposed into Irish law by 16 April 2026.
Background
The Central Bank has an existing regulatory framework for the authorisation of loan originating AIFs in Ireland, which permits loan origination only by Qualifying AIFs (“QIAIFs“) managed by an authorised AIFM. AIFMD II introduces a harmonised framework for loan origination by AIFs and AIFMs across the EU. The changes introduced by AIFMD II include new harmonised rules across the EU on concentration and leverage limits, borrower restrictions, and policy requirements. These rules will apply to all AIFs that originate loans, with additional requirements for loan originating AIFs, whose investment strategy is mainly to originate loans, or where the notional value of the AIF’s originated loans represents at least 50% of its net asset value.
Requirement for authorisation
AIFMD II provides that the origination of loans on behalf of an AIF is an additional AIFM function requiring authorisation. There are no grandfathering provisions in respect of this, so AIFMs managing loan originating QIAIFs must have the requisite authorisation in place by 16 April 2026 to continue to manage AIFs that originate loans.
For more on additional activities under AIFMD, please see our previous update here: AIFMD II – Authorised activities update | Arthur Cox LLP
Central Bank approach
The Central Bank has acknowledged that AIFMs managing loan originating QIAIFs are subject to high governance and oversight standards, which are more prescriptive than those that will be in place under AIFMD II. The Central Bank has said it will take a proportionate approach to the authorisation of the Central Bank-authorised AIFMs managing loan originating QIAIFs to enable them to achieve authorisation by 16 April 2026.
Application process
An AIFM seeking to be authorised to perform the new Annex I function of “originating loans on behalf of an AIF” should follow the procedure set out below and submit an application to the Central Bank as soon as possible.
AIFMs should submit:
- a letter to the FSP Authorisations Team seeking authorisation to perform the function of originating loans on behalf of an AIF; and
- a separate letter which should:
a. list the AIFs which originate loans and for which it acts and when these were established;
b. outline the list of the policies and procedures it has in place to manage loan origination activity in relation to those funds;
c. outline how, in its view, these policies and procedures are aligned with the requirements for AIFMs perform the function of originating loans on behalf of an AIF under AIFMD II;
d. advise whether it had experienced any issues in relation to management of the AIFs since its authorisation.
The Central Bank will engage with the AIFM in relation to any queries concerning the application with a view to authorising the AIFM for this additional function on 16 April 2026.
If you would like any further information on or assistance with this process, please do not hesitate to contact any of our team.