In November 2021, a legislative proposal was published to “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,” according to the European Parliament’s legislative observatory. The amendments aim to “increase the uptake of Eltifs across the EU,” which would then “support the continued development of the capital markets union” and make it easier for companies in the EU to access long-term financing.

“European long-term investment funds promote economic growth and job creation by financing SMEs, which are a vital source of innovation and employment, but too often struggle to access the financing they need in order to grow,” , rapporteur and member of the European Parliament’s European and Reformists Group.

A majority (492) of MEPs voted in favour of the Eltif amendments, 109 voted against (mostly consisting of Greens and Left MEPs), and 27 abstained.

“This is good news for the European economy as it could lead to an additional €100bn of private financing over the next five years,” the ECR group , quoting rapporteur Hoogeveen.

Legislative changes have made Eltifs “more attractive” to both managers and investors, thanks to a broader scope of eligible assets, including a simplified definition of “real assets,” more flexibility in fund rules and risk diversification requirements and improved access and safer conditions for retail investors, noted a press release from the European Fund and Asset Management Association (Efama).

“The changes to the current Eltif framework are an excellent and necessary step forward that will assist Eltif in becoming a complementary source of financing for the European real economy and notably, accessing the almost untapped retail market for longer-term real assets investments,” stated Antoine de la Guéronnière, vice-chair of the Efama fund regulation standing committee.

After the legislative proposal was published in November 2021, a committee referral was announced in parliament in February 2022, followed by a vote in committee, a first reading and a committee decision to open inter-institutional negotiations with the report adopted in committee in June 2022. Committee reports and decisions continued throughout the year.

The text agreed at the first reading of inter-institutional negotiations was approved in committee on 11 January 2023. A debate during the EU parliament’s plenary took place on 14 February, and--following a disturbance and delay during the plenary session on 15 February--was voted upon and approved on 15 February.

“Nice that an overwhelming majority of @Europarl_SV voted in favour of the agreement on European long-term investment funds #ELTIF, for which I was shadow rapporteur. This will facilitate and mobilise investments in SMEs, fintech companies and the green transition!” Swedish MEP Jessica Polfjärd .

Revised regulation to enter into application in Q1 2024

The revised Eltif regulation is expected to be published in the Official Journal of the EU in March 2023, then enter into application nine months later--in the first quarter of 2024. Existing Eltifs will be considered compliant for five years following the entry into application of Eltif 2.0, noted Efama, while Eltifs who wish to take advantage of the new regime can opt in after notifying their national competent authority.

“A great future ahead for ELTIFs,” wrote Silke Bernard, global head of Linklaters’ investment funds practice in a LinkedIn post following the vote on the amendments. Bernard was a speaker in a webinar in early February, where she talked about .