The Central Bank of Ireland is proposing a series of reforms to its alternative investment fund (AIF) rulebook, with the goal of attracting more fund managers to its jurisdiction and to align with EU legislation.
One of the proposed key changes includes removing the country’s own domestic framework on loan origination funds to align with EU revisions to the Alternative Investment Fund Managers Directive.
The directive, which entered into force in April 2024 aims to improve investor protections by introducing stricter rules for private credit funds, including leverage limits and measures to curb the exposure to a single borrower. EU member states have until April 2026 to transpose the revised directive into national law.
Conor Durkin, partner at law firm Pinsent Masons, welcomed the removal of the loan origination framework in a briefing note.
“It means that managers of Irish loan origination AIFs will have greater flexibility in relation to borrower types and asset exposures,” he said. “This development will introduce a harmonised regime in the EU for loan origination activity which should support the further growth of European loan origination funds and enhance Ireland’s attractiveness as a domicile for loan origination and private credit.”
Aongus McCarthy, partner in the asset management & funds practice of law firm Walkers Global, agrees, adding that the changes “remove unnecessary gold-plating and ensure that Ireland’s funds regime is attractive to asset managers and on a par with other leading private fund domiciles.”
Read more: Private credit market predicted to grow by up to $300bn by 2030
Other proposed changes by the Central Bank of Ireland would allow non-EU fund managers to oversee Irish-domiciled loan-originating AIFs, on the condition that they target professional investors.
The suggested regulatory reforms are up for consultation until 5 November.
According to McCarthy, the proposed changes will further support the establishment of private asset funds in Ireland.
“Growth in private market funds internationally ensures that asset managers will continue to consider what is the best domicile for their private market funds, taking into account speed to market, regulatory safeguards, cost efficiencies and investor preferences,” he added. “Ireland is on an upward trajectory and has a very compelling offering.”
