Commission Delegated Regulation (EU) 2024/2759 of 19 July 2024 supplementing Regulation (EU) 2015/760 of the European Parliament and of the Council with regard to regulatory technical standards specifying when derivatives will be used solely for hedging the risks inherent to other investments of the European long-term investment fund (ELTIF), the requirements for an ELTIF’s redemption policy and liquidity management tools, the circumstances for the matching of transfer requests of units or shares of the ELTIF, certain criteria for the disposal of ELTIF assets, and certain elements of the costs disclosure (Text with EEA relevance)

The manager of an ELTIF that chooses to determine a minimum holding period as referred to in Article 18(2), first subparagraph, point (a), of Regulation (EU) 2015/760 shall consider all of the following:

1. the long-term nature and investment strategy of the ELTIF;

2. the underlying asset classes of the ELTIF, their liquidity profile, and their position in their life-cycle;

3. the ELTIF’s investment policy, and the extent to which the ELTIF takes part in the investment policy and governance of the underlying assets in which the ELTIF invests;

4. the investor base of the ELTIF and:

   1. where the ELTIF is marketed to retail investors, the expected aggregate concentration of retail investors;

   2. the information on the degree of concentration of the ownership of the professional investors in the ELTIF, where available;

5. the liquidity profile of the ELTIF;

6. the procedures for the valuation of the ELTIF’s assets, and the time required to produce a reliable, sound, and up-to-date (based on the most recent data) valuation;

7. the extent to which the ELTIF lends or borrows cash, grants loans, or enters into securities lending, securities borrowing, repurchase transactions, or any other agreement which has an equivalent economic effect and poses similar risks;

8. the portfolio composition and diversification of the ELTIF;

9. the average and mean length of life, where applicable, of the assets of the portfolio of the ELTIF;

10. the duration and the characteristics of the life-cycle of the ELTIF and the ELTIF’s redemption policy;

11. the timeframe for the investment phase of the investment strategy of the ELTIF;

12. whether the minimum holding period, where applicable, is consistent and commensurate with the time necessary to complete the investment of the ELTIF’s capital contributions, and in particular:

    1. whether that minimum holding period covers at least the initial investment phase of the ELTIF;

    2. unless duly justified by the manager of the ELTIF, whether the minimum holding period lasts at least until the ELTIF’s aggregate capital contributions have been invested.

Where requested by the competent authority of the ELTIF, the manager of the ELTIF shall justify to the competent authority of the ELTIF, in particular, on the basis of the criteria set out in paragraph 1, the appropriateness of the duration of the minimum holding period of the ELTIF and its compatibility with the valuation procedures and the redemption policy of the ELTIF.

Where an ELTIF provides for the possibility of redemptions during the life of the ELTIF, the manager of an ELTIF shall provide the competent authority of the ELTIF, at the time of authorisation of the ELTIF, with all of the following information:

1. the redemption policy of the ELTIF, which shall contain and clearly indicate all of the following:

   1. information on the periodicity and the duration of the redemptions;

   2. a description of the available liquidity management tools, and the conditions for their activation;

   3. the conditions and procedures for requesting redemptions and for processing the redemption requests received;

2. the entities responsible for managing the redemption process and how the redemptions will be documented;

3. a description of how the assets and liabilities of the ELTIF will be managed to meet redemption requests;

4. a description of the procedures, if any, to prevent redemptions causing dilution effects for investors;

5. a description of the valuation procedures of the ELTIF set out in accordance with Article 19(3), third subparagraph, of Directive 2011/61/EU, and Articles 72 and 74 of Commission Delegated Regulation (EU) No 231/2013⁽¹⁾.

6. the results, assumptions and inputs used for liquidity stress tests, where such liquidity stress tests are to be carried out pursuant to Article 15(3), point (b), and Article 16(1), second subparagraph, of Directive 2011/61/EU, demonstrating whether and how, in severe but plausible scenarios, the ELTIF is able to deal with redemption requests;

7. the liquidity offered to investors of the ELTIF, and the liquidity profiles of the investments of the ELTIF, both under normal and stressed conditions;

8. information about the implementation of the liquidity management tools;

9. the elements referred to in Article 5(1) of this Regulation;

10. the approach used by the manager of the ELTIF to determine the maximum percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760 as per Article 5(5) first subparagraph, of this Regulation;

11. any other information that the competent authority of the ELTIF considers relevant to assess whether the redemption policy of the ELTIF and the liquidity management tools meet the requirements set out in Regulation (EU) 2015/760.

Throughout the life of the ELTIF, before changing the elements referred to in paragraph 1, points (a)(i) or (a)(ii) and point (j), or materially changing the elements referred to in paragraph 1, point (a)(iii), the manager of the ELTIF shall notify the competent authority of the ELTIF of such change in writing at least 1 month before such change, or immediately after an unforeseeable change beyond the control of the manager of the ELTIF has occurred. Where that competent authority does not react within 20 calendar days, it shall be deemed to have agreed to such change.

Throughout the life of the ELTIF, the manager of an ELTIF shall, upon request from the competent authority of the ELTIF, also provide all of the following information:

1. up-to-date and detailed information on whether the liquidity management tools of the ELTIF have been activated and used to manage redemption requests, and if so, in which circumstances and how;

2. up-to-date results of the liquidity stress tests and up-to-date assumptions and inputs used for the liquidity stress tests performed, both under exceptional and stressed market conditions;

3. up-to-date information referred to in paragraph 1 in case of material changes to that information.

Where an ELTIF provides for the possibility of redemptions during the life of the ELTIF, the redemption policy of the ELTIF shall contain all of the following elements:

1. the conditions under which redemptions can be granted;

2. the time window within which redemptions can be granted;

3. the frequency or periodicity at which redemptions can be granted;

4. the timing limitations, if any, and the procedures and requirements applicable to the redemptions, including:

   1. the notice period and the extension of the notice period, if any, and a description of how and within which time investors will be repaid;

   2. the conditions and procedures for redemptions requests;

   3. the role and responsibilities of the entities involved in the procedures;

5. whether and how investors can request the cancellation of their redemption requests that have not been fully executed;

6. whether the ELTIF provides for the possibility of repayments in kind out of the ELTIF’s assets, as referred to in Article 18(5) of Regulation (EU) 2015/760;

7. whether the ELTIF has a minimum holding period as referred to in Article 18(2), first subparagraph, point (a), of Regulation (EU) 2015/760, and if so, the duration of, and conditions for such minimum holding period;

8. a description of the available liquidity management tools and of the conditions for their activation;

9. the percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760.

For the purposes of point (h), where the ELTIF is marketed to retail investors, the description of the available liquidity management tools shall be written in non-technical terms that enable retail investors’ understanding of those tools.

When adopting the redemption policy of an ELTIF, the manager of the ELTIF shall take into account all of the following features of the ELTIF to assess the liquidity profile of the ELTIF:

1. the composition of the portfolio of the ELTIF, including the assets referred to in Article 9(1), point (b), of Regulation (EU) 2015/760;

2. the life of the ELTIF;

3. the liquidity profile of the ELTIF;

4. the methods and documented process for the valuation of the assets of the ELTIF;

5. the market conditions and material events that may affect the possibility of the manager of the ELTIF to implement the redemption policy;

6. the minimum holding period determined by the manager of the ELTIF in accordance with Article 3 of this Regulation, and the criteria used to determine that minimum holding period, where applicable;

7. the available liquidity management tools, their calibration, and the conditions for their activation;

8. the percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760, and the criteria used to determine that percentage;

9. the liquidity stress tests, where such liquidity stress tests are to be carried out pursuant to Article 15(3), point (b), and Article 16(1) of Directive 2011/61/EU, and their results;

10. how the interests of investors will be protected.

Throughout the life of the ELTIF, the redemption policy shall be sound, well-documented, and consistent with the ELTIF’s investment strategy and liquidity profile. All of the following shall be consistent with the nature and the level of liquidity of the ELTIF’s underlying assets:

1. the different features of the redemption policy, including the redemption frequency;

2. the minimum holding period, where applicable;

3. the date referred to in Article 17(1), first subparagraph, point (a), of Regulation (EU) 2015/760;

4. the liquidity management tools referred to in Article 18(2), first subparagraph, point (b), of Regulation (EU) 2015/760.

When reviewing the validity of risk measurement and the new information acquired by the manager of the ELTIF throughout the life of the ELTIF, the manager of an ELTIF shall take into account the results of the back-testing performed on its liquidity stress tests, where such back-testing is to be carried pursuant to Article 45(3), point (b), of Delegated Regulation (EU) No 231/2013.

Where redemptions take place more frequently than on a quarterly basis, the manager of the ELTIF shall justify to the competent authority of the ELTIF the appropriateness of the redemption frequency and its compatibility with the individual features of the ELTIF.

The percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760 shall be an integral part of the redemption policy of the ELTIF. The manager of the ELTIF shall calibrate that percentage at its discretion on the basis of one of the following:

1. the redemption frequency and the notice period of the ELTIF, including the extension of the notice, if any, depending on which of one of the three options referred to in Annex I to this Regulation is selected by the manager of the ELTIF; or

2. the redemption frequency and the minimum percentage of the assets referred to in Article 9(1), point (b), of Regulation (EU) 2015/760, as specified in Annex II to this Regulation.

To determine the maximum size of redemption at a given redemption date, the manager of the ELTIF shall apply the percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760, as specified in Annex I or Annex II to this Regulation, to the sum of:

1. the assets referred to in Article 9(1), point (b) of Regulation (EU) 2015/760 at that redemption date; and

2. the expected cash flow, forecasted on a prudent basis over 12 months.

For the purposes of point (b), the manager of the ELTIF shall only take into account those expected positive cash flows for which the ELTIF manager can demonstrate that there is a high degree of certainty that they will materialise. The manager of the ELTIF shall not consider as expected positive cash flows the possibility that the ELTIF can raise capital through new subscriptions.

Where the percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760 is calibrated on the basis of paragraph 5, point (b), and the amount of assets of the ELTIF referred to in Article 9(1), point (b), of Regulation (EU) 2015/760 falls below the thresholds set out in Annex II to this Regulation, the ELTIF manager shall, within a period of time that is appropriate for that ELTIF, take the necessary measures to reconstitute the minimum percentage of the liquid assets, while maintaining the ability of investors to redeem their units or shares, taking due account of the interests of the investors in the ELTIF.

Where the notice period of the ELTIF, including the extension of the notice period, if any, is less than 3 months, the manager of the ELTIF shall inform the competent authority of the ELTIF thereof, including the reasons for such shorter notice period, and shall explain how that shorter notice period is consistent with the individual features of the ELTIF.

The manager of an ELTIF shall not be required but may, at its discretion, select and implement at least one anti-dilution liquidity management tool from among any of the following anti-dilution liquidity management tools:

1. anti-dilution levies;

2. swing pricing;

3. redemption fees.

In addition to the anti-dilution liquidity management tools referred to in the first subparagraph, the manager of the ELTIF may also at its discretion select and implement other liquidity management tools. In such a case, the manager of the ELTIF shall upon request by the competent authority of the ELTIF provide the competent authority of the ELTIF with information on why, on the basis of the features of the ELTIF referred to in paragraph 2, the anti-dilution liquidity management tools referred to in the first subparagraph are not adequate for that specific ELTIF or why another set of liquidity management tools would be more appropriate, taking into account the interests of the ELTIF and of its investors.

A competent authority may, upon request of the manager of the ELTIF, exempt the ELTIF that can solely be marketed to professional investors from the obligation to provide that competent authority with the information referred to in paragraph 8 and paragraph 9, second subparagraph.