Background

The Department of Finance in Ireland (the “Department“) has now published a Feedback Statement following its 2024 consultation on the transposition into Irish law of the discretionary provisions of Directive (EU) 2024/927 of the European Parliament and of the Council of 13 March 2024 (“AIFMD II”). There have been no surprises in the feedback published, which is a positive indication of the direction of travel that Ireland will take in transposing AIFMD II and the amendments to the UCITS Directive. The Department has indicated that Ireland will exercise the following discretions, which will ultimately be reflected in the amendments to the Irish AIFMD Regulations and UCITS Regulations by the transposition deadline of 16 April 2026.

Extension of Services Provided by AIFMS and UCITS management companies

Ireland will extend the scope of services which AIFMs and UCITS management companies may provide to include:

• any function or activity which is already provided by them in relation to an AIF or UCITS to third parties, provided any potential conflict of interest is appropriately managed. Such functions and activities could include, for example, corporate services such as human resources and information technology (“IT“), as well as IT services for portfolio management and risk management. The expressed intent behind this provision in AIFMD II is to support the international competitiveness of EU AIFMs and UCITS management companies by enabling economies of scale and to help diversify revenue sources; and
• the administration of benchmarks.

In addition:

• an AIFM will be permitted to provide credit servicing activities; and
• a UCITS management company will be permitted to perform the activity of the reception and transmission of orders in relation to financial instruments. This brings UCITS management companies in line with a permission already available to AIFMs.

Prohibition on AIFs Granting Loans to Consumers

Irish and non-Irish domiciled AIFs will be prohibited from granting loans to Irish consumers. It was expected that Ireland would not exercise its discretion in favour of permitting such lending activity given consumer protection concerns and the risk profile of such activity.

Refusal of Discretion to Permit an Irish-domiciled AIF to Appoint a Non-Irish Depositary

An Irish-domiciled AIF will not be permitted to appoint a non-Irish depositary. The rationale given for this decision is that the Irish depositary market is “well served” by custodians and the bulk of assets belong to Irish-domiciled funds, negating any requirement to appoint a non-Irish depositary.

Analysis and Next Steps

The Feedback Statement shows that Ireland is exercising the discretions available under AIFMD II in a manner that ensures that AIFMs and UCITS management companies have the full benefit of the additional flexibility and permissions introduced by that Directive.

It is expected that the Department will bring forward the necessary legislation required to transpose AIFMD II in good time ahead of the transposition deadline of 16 April 2026. We will provide further updates on this as they arise. In the meantime, we are advising clients on an assessment of their business model in light of the additional flexibility provided by AIFMD II and other forward planning for the other updates to the AIFMD and UCITS regimes.

If you have any questions on this, please do not hesitate to get in touch with your usual Arthur Cox contact.