Reform of Irish private fund regulatory rules

On 9 September 2025, the Central Bank of Ireland (Central Bank) published a public consultation (CP162) setting out significant changes it proposes to make to its AIF Rulebook, with a specific focus being placed on changes impacting the Qualifying Investor Alternative Investment Fund (QIAIF) and the Loan Originating QIAIF (L-QIAIF), (Rulebook Consultation).

With 125 separate consultation questions, this is the largest overhaul of the AIF Rulebook since its original publication in July 2013 and presents an opportunity for Ireland to become a leader in the private funds area. Having already delivered a market leading European Long-Term Investment Fund (ELTIF) regime, the Central Bank has now turned its attention to overhauling its QIAIF regime by ensuring that it addresses the needs of private fund general partners and limited partners alike.

The Rulebook Consultation has been published following a period of intense consultation between representatives from the Irish funds industry and the Central Bank and against the backdrop of the upcoming transposition of Directive (EU) 2024/927 (and its ancillary regulations and technical standards) (collectively AIFMD II). The Rulebook Consultation also follows on from the publication by the Irish government of the Funds Sector 2030 Review in October 2024, which included a specific recommendation that the Central Bank review and update the AIF Rulebook and associated requirements that impact on the establishment of private asset funds in Ireland.

What are the main changes being consulted on?

The Rulebook Consultation is extensive and if all the areas which have been identified as part of this process are changed, as expected, the updates will represent a significant overhaul of the existing private funds regulatory regime in Ireland.

Following a review of the AIF Rulebook, certain requirements in the AIF Rulebook have been identified by the Central Bank in the Rulebook Consultation as areas which could benefit from targeted improvements, in order to bring Irish private funds regulatory rules more into line with international best practice for private funds.

We have set out below an overview of the most material changes which are proposed in the Rulebook Consultation, together with some commentary on the impact of the change, as well as details on other miscellaneous updates proposed to the AIF Rulebook.

Alignment of loan origination rules with AIFMD II

It is proposed that the L-QIAIF chapter of the AIF Rulebook will be deleted in its entirety and in its place, QIAIFs wishing to originate loans or loan-originating QIAIFs (being those QIAIFs whose investment strategy is mainly to originate loans; or for which the notional value of loans originated by the QIAIF exceeds 50% of the QIAIF's net assets), will need to comply with the requirements of AIFMD II, which is required to be transposed into Irish Law by 16 April 2026. These amendments are also intended to support the broader objective under the EU Commission's Savings and Investment Union of promoting private asset and credit investments.

This creates a level playing field for Irish loan-origination QIAIFs which will no longer be subject to domestic gold plating and will have far greater flexibility in terms of the investments that can be made within the relevant funds, both in terms of asset and borrower type.

Importantly, the Central Bank will also permit non-EU alternative investment fund managers (AIFMs) to manage closed-ended loan originating QIAIFs. This is an important development as previously the management of L-QIAIFs was limited to authorised EEA AIFMs.

Investment through subsidiaries and intermediary investment vehicles

In relation to wholly owned subsidiaries of QIAIFs, the Central Bank proposes to remove a number of onerous and ancillary requirements regarding the operation of Irish and non-Irish subsidiaries, including the requirement to have a majority of directors from the fund board on the board of the subsidiary and the requirement for the QIAIF to be party to material contracts entered into by the subsidiary. The Central Bank proposes now only to require that there is a provision in the constitutional document of the wholly-owned subsidiary, which stipulates that the subsidiary will act in a manner consistent with the investment objective and policy of the QIAIF. The Central Bank will no longer require that its prior approval be obtained in connection with the establishment of such wholly-owned subsidiaries which provides greater flexibility for managers.

In relation to all other non-wholly owned subsidiaries and acquisition vehicles, the Central Bank proposes to place enhanced responsibility on the AIFM as part of its due diligence obligations to ensure that the appropriate oversight is in place in relation to the establishment and operation of such entities rather than imposing specific requirements on the underlying vehicle.

These changes will be particularly helpful for funds which use intermediary investment vehicles and co-investment structures.

Removal of the general restriction on QIAIFs granting loans / acting as a guarantor for third party

It is proposed that the general restriction on granting loans and acting as a guarantor for third parties will be deleted in its entirety. This will better align the QIAIF rules with AIFMD II and the ELTIF Regulations. Updates in early 2025 to soften the requirements in respect of a QIAIFs ability to guarantee the indebtedness of third parties were not seen as sufficiently flexible and continued to represent a hinderance to fund financing arrangements in certain cases. The changes contemplated by the consultation will remove those obstacles.

This is a significant development and will be particularly helpful for fund financing arrangements to better facilitate cross collateralisation, which in turn could reduce financing costs for QIAIFs.

Changes to the significant influence requirements

QIAIFs are currently subject to restrictions in respect of acquiring positions of significant influence in 'issuers', unless those positions are acquired as part of a private equity, development capital or venture capital strategy. It is proposed that QIAIFs may in the future take such positions in underlying issuers (be they private or public) provided sufficient disclosure in respect of the ability to take legal and management control of underlying issuers is appropriately disclosed in the fund documentation.

This is an important development as it allows a broader range of funds to take controlling stakes in underlying issuers, particularly hedge fund and private credit strategies which may not ordinarily be characterised as private equity strategies.

Removal of equal treatment requirement

The AIF Rulebook currently requires that unitholders in a share class must be treated 'equally' and where more than one share class exists, all the unitholders in the different share classes must be treated fairly.

The requirement that unitholders in a share class be treated equally has caused ambiguity in the context of AIFMD preferential treatment requirements. The Rulebook Consultation proposes that the AIF Rulebook be amended to remove this reference to unitholders in the same class being treated 'equally' and clarify that unitholders may be treated fairly while taking into account AIFMD preferential treatment requirements.

This proposed amendment is helpful in removing any ambiguity around the basis upon which AIFMs and asset managers may enter into side-letter arrangements.

Other miscellaneous updates

As part of the Rulebook Consultation, the Central Bank proposes a number of other miscellaneous updates to the AIF Rulebook to facilitate the smooth operation of private market funds. Such proposed changes include, but are not limited to the following:

• Incorporating capital commitments into the QIAIF subscription mechanism and expanding the list of exempted parties – General updates are proposed to the AIF Rulebook to better reflect the typical capital commitment and drawdown approach utilised by the promoters of private asset funds and to reflect the staged closing mechanics typically utilised by these types of (closed-ended or open-ended with limited liquidity) funds in their initial fund-raising periods. In this regard, the QIAIF requirements will account for the contribution of the committed capital towards the minimum subscription amount and the list of eligible exempted parties from this minimum subscription/commitment requirement will be expanded. The requirement that the initial offer period be no longer than 2.5 years for private equity and similar type strategies would be removed to facilitate longer closing cycles. The guidance that the Central Bank published in 2021 on share class features of closed-ended funds will also be incorporated into the updated AIF Rulebook enabling all QIAIFs (both open-ended and closed-ended funds) to avail of these provisions.
  
  
• Liquidity Management Tools (LMTs) – Proposed amendments to the AIF Rulebook will incorporate disclosure and notification requirements for the selection and operation of LMTs, reflecting the AIFMD II requirements and also provide for AIFMs to select further LMTs in addition to those defined in Annex V of AIFMD II. Amendments are also being made to clarify that certain administrative charges applied to the normal investor redemptions/repurchase process are distinct from (and will not trigger) requirements related to the use of LMTs under Annex V.
  
  
• Warehousing disclosures – The current requirement that the QIAIF not pay more than the current market value for warehoused assets has been removed, subject to the disclosure to investors of the terms of the warehousing arrangement.
  
  
• Connected party dealing rules - The provisions directed at dealings with connected parties will be expanded to include unitholders in the list of entities subject to the requirements. This will address circumstances where an investment fund may enter into commercial transactions with unitholders in the fund and will not apply to transactions by unitholders in relation to their units (subscriptions, redemptions, conversions or dividend payments).
  
  
• Clarification of the ability to impose suspensions in respect of Investment Limited Partnerships (ILPs) – Proposed updates to remove language restricting ILPs to calling suspensions only in exceptional circumstances and where specifically provided for in the partnership agreement.
  
  
• Disclosure of provisions in governing documents – A series of general updates are proposed to add additional flexibility to include certain specific provisions in the constitutional document and / or the prospectus. Currently certain provisions must be disclosed in both, which makes it cumbersome to make changes.

What are the next steps?

The Central Bank has indicated that the Rulebook Consultation will run for an 8-week period until 5 November 2025. Stakeholders are invited to review and respond to the queries raised by the Central Bank in respect of the individual changes which are being proposed. Following the conclusion of the consultation, the Central Bank intends to publish a feedback statement, outlining the commentary received from stakeholders and setting out how the Central Bank proposes to proceed in respect of the changes suggested. Industry are hopeful that the entire process will be completed before year-end 2025.

While updates to the section of the AIF Rulebook relating to Retail Investor Alternative Investor Funds (RIAIFs) do not form part of the Rulebook Consultation at this stage, the Central Bank has indicated that it is open to engaging in a review of RIAIF regulatory rules and requirements as a next step in the Central Bank's review of the AIF Rulebook and with a view to better supporting the establishment of retail focused private assets funds in Ireland, in the future following the successful introduction of the ELTIF authorisation framework in 2024.

The Central Bank has also published a consultation paper (CP161) on proposed amendments to both the Central Bank UCITS Regulations and the Central Bank Guidance on performance fees for UCITS and certain types of RIAIFs. The proposed amendments update the domestic regulatory framework applicable to UCITS and take account of policy developments since the current Central Bank UCITS Regulations were published. For further details on that consultation please see our separate advisory publication.

Conclusion

The Rulebook Consultation is an extremely positive and welcome development from the Irish fund industry perspective. It demonstrates that the Central Bank is seeking to implement the recommendations in the Funds Sector 2030 Report and is actively looking to reform the rules that promoters of private assets funds are most focused on when selecting a jurisdiction in which to establish new product.

Together with the AIF Rulebook changes introduced last year to facilitate the creation of retail, qualifying and professional investor ELTIFs, these additional QIAIF related updates to the AIF Rulebook are likely to be well received by the market and will shape how those promoters view Ireland when looking to set up new fund structures in the future.

We are monitoring these developments closely and have been actively engaged in industry discussions with the Central Bank in advance of the publication of the Rulebook Consultation. We will provide further updates, at the appropriate time. Please do reach out to your usual Walkers contact if you need more information or wish to contribute a response to the Rulebook Consultation.