As of April 16, 2026, the updated Alternative Investment Fund Managers Directive, commonly referred to as AIFMD 2, officially comes into effect across the EU. This marks a significant milestone for managers of alternative investment funds (AIFs), particularly those engaging in loan origination activities or operating open-ended structures. While the Directive was adopted in 2024, April 16, 2026, is the deadline for EU Member States to apply these rules to managers.
AIFMD 2 introduces a number of new obligations for fund managers. Key areas of focus include:
- Loan origination restrictions: Funds may no longer engage in “originate to distribute” strategies. Managers must retain 5% of the notional value of each loan they originate and subsequently transfer to a third party. New leverage caps are also introduced: 175% for open-ended funds and 300% for closed-ended funds.
- Liquidity management tools: Managers of open-ended AIFs are now required to select at least two liquidity management tools, such as redemption gates or swing pricing, to manage redemptions during market stress.
- Governance and risk management: AIFMs must establish robust policies, procedures, and monitoring processes for loan origination activities, tailored to the scale of their exposure. There are also stricter requirements for substance, requiring at least two senior staff members to be residents in the EU.
- Disclosure requirements: Transparency to investors is enhanced under Article 23. Managers must provide a comprehensive list of all fees, charges, and expenses that are allocated to the fund. For funds that originate loans, managers must also periodically disclose the composition of the originated loan portfolio to investors. While the new Annex IV regulatory reporting templates are not expected until April 2027, these investor-facing disclosures must be integrated into fund documentation (ie., prospectuses) by the April 16, 2026, deadline.
- Cross-border harmonization: AIFs can originate loans across EU jurisdictions, subject to certain consumer protection restrictions imposed by individual member states.
For funds existing before April 15, 2024, transitional provisions and exemptions may apply, particularly regarding diversification and leverage limits. However, all AIFMs should ensure their frameworks are fully compliant by the April 16 deadline.
Implementing these rules can be complex, particularly when interpreting definitions, structuring loan origination processes, and updating risk management frameworks. Firms that act early will be better positioned to meet regulatory expectations without disrupting investment operations.
If your firm is preparing for the transition to AIFMD 2, our team can support your data management and reporting workflows. While the new Annex IV reporting templates are expected in 2027, now is the time to ensure your operational processes and data collection can capture the required metrics. Reach out to us to discuss how we can support your future Annex IV obligations.
