The article drafted by Vasiliki Kalogirou, Associate & Magdalini Mavromichali , Senior Associate for Lexology on 17 June 2026
On 26 March 2024, Directive 2024/927/EU “amending Directives 2011/61/EU and 2009/65/EC as regards delegation arrangements, liquidity risk management, supervisory reporting, the provision of depositary and custody services and loan origination by alternative investment funds”, also known as AIFMD II, was published and entered into force on 15 April 2024. The deadline for Member States to transpose the Directive was 16 April 2026. In Greece, on 26 May 2026, the Minister of National Economy and Finance presented before the Council of Ministers a new bill intended, inter alia, to transpose the Directive into national law.
During the period of application of Directive 2011/61/EU, the framework proved successful, with AIFs accounting for approximately one third of the European investment fund sector by the end of 2020 and the overall size of the Union AIF market recording growth more than 15% between 2020 and 2022. Nevertheless, it was considered that the sector’s growth potential remained greater, provided that institutional investors were afforded a broader range of investment opportunities and the competitiveness of the Capital Markets Union was further strengthened. Through the amending Directive, several significant reforms were introduced, the most important being the establishment of harmonized requirements applicable to AIFMs managing loan-originating AIFs. Emphasis was also placed on delegation arrangements, cross-border access to depositary services, enhanced supervisory oversight and the facilitation of the use of liquidity management tools throughout the Union. The changes under AIFMD II apply to all EEA full-scope AIFMs who manage AIFs engaged in loan origination. Consumer lending is expressly excluded from the scope of the amending Directive, as it is governed by other Union legislative acts, while Member States remain free to prohibit lending by AIFs to consumers within their territories. The Directive appears to aim to align, to the extent that there is no objective or functional justification for differentiation, the compliance requirements applicable to AIFMs and UCITS management companies.
First, considering the crucial role played by AIFs in financing small and medium-sized enterprises and with a view to addressing both microprudential and macroprudential financial risks, Directive 2011/61/EU was amended so as expressly to recognize direct lending as a permissible activity of an AIF. Provision was also made to ensure that indirect loan origination by an AIF, through third parties or special purpose vehicles, falls within the scope of the lending framework, thereby preventing circumvention of the relevant provisions. Following this reform, the list of activities that may be carried out by an AIFM was expanded to include, inter alia, credit servicing activities and loan origination on behalf of an AIF, given that under the previous regime the national laws of certain Member States prohibited lending activities by AIFMs.
To enhance legal certainty for AIFMs and UCITS management companies regarding the services they provide to third parties, it is clarified that appropriate measures must be always taken to ensure the proper management of conflicts of interest. AIFMs are prohibited from receiving loans from AIFs under their management or from entities connected with them. Transparency requirements concerning the human and technical resources of AIFMs have also been strengthened and are calibrated according to the size and complexity of the relevant AIFM and AIF. Emphasis is placed, in relation to both AIFs and UCITS, on transparency regarding the integration of sustainability risks and environmental, social and governance (ESG) factors into investment decision-making processes. In order to provide a more reliable overall picture of delegation activities within the Union and to eliminate the phenomenon of “letter-box entities” acting as managers, supervisory authorities will henceforth receive up-to-date information concerning the essential features of delegation arrangements, as well as information regarding portfolio composition and liquidity management, thereby enabling them to address redemption pressures more effectively during periods of market stress. In this manner, the focus of transparency shifts from the level of individual investment vehicles to systemic risks and interconnectedness among participants in the financial markets. A further significant reform is the introduction, under certain conditions, of a cross-border depositary regime, whereby Member States may allow their competent authorities to authorize the appointment of a depositary established in another Member State.
Furthermore, the supervisory reporting process applicable to UCITS is standardized to improve the collection and exchange of information and to address overlaps between reporting requirements arising under Union and national law. In addition, to mitigate moral hazard, risk-retention requirements are introduced in relation to the transfer of loans to third parties. More specifically, AIFMs must ensure that the AIFs they manage retain for a specified period a minimum of 5% of the notional value of each loan originated by the relevant AIF and subsequently transferred to a third party. Accordingly, the principle is established that an AIF may not completely divest itself of a loan that it originally originated; rather, it must retain a minimum economic interest and continue to bear part of the associated credit risk. At the same time, AIFMs are prohibited from managing AIFs whose sole purpose in originating loans is to sell those loans to third parties (“originate-to-distribute strategy”). It is thus made clear that loans must be originated exclusively for the purpose of investing the capital raised by the AIF in accordance with its investment strategy.
You can read the article on Lexology here: AIFMD II: The New EU Framework for Loan-Origination Funds