Today (16 April 2026) marks a significant milestone for the European fund management industry, as EU Member States formally place the legislative amendments to the Alternative Investment Fund Managers Directive (AIFMD) into national law.

These changes collectively known as AIFMD II were published on 26 March 2024 and represent a substantial change to the original framework since the initial implementation in 2011. In parallel, the amending directive also updates the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive in line with the European Commissions (‘Commission’) intention to promote greater alignment and supervisory consistency across the two principal fund management regimes.

Although much of the narrative has been focused on EU Alternative Investment Fund Managers (AIFMs) preparing for these amendments, there are material implications for non-EU AIFMs that market their Alternative Investment Funds (AIFs) into EU Member States under the National Private Placement Regime (NPPR). These managers must now contend with increased reporting requirements and some key changes in the marketing conditions.

As the amended framework takes effect today, firms across the EU and those marketing into it must begin operating under a more demanding regulatory standard. Meeting these obligations requires a clear grasp of the updated rules, more detailed reporting expectations, and strengthened internal processes. Establishing robust, well‑coordinated practices from day one is essential as managers adjust to the new rules.

Key changes under AIFMD II

1. A new regime for loan originating AIFs

AIFMD II introduces a dedicated framework for loan originating AIFs, to ensure a uniform level of investor protection and by ensuring consistent standards across the EU. The Commission recognises that private credit markets are growing at a fast pace and requirements are needed to address the potential micro-prudential and macro-prudential risks. The rules are designed to improve risk management across financial markets and most importantly increase transparency for investors.

The amendments provide a formal definition of “loan origination” or “originating a loan”, meaning:

“Granting of a loan directly by an AIF as the original lender; or

indirectly through a third party or special purpose vehicle which originates a loan for or on behalf of the AIF, or for or on behalf of an AIFM in respect of the AIF, where the AIFM or AIF is involved in structuring the loan, or defining or pre-agreeing its characteristics, prior to gaining exposure to the loan.”

The amendments also provide a definition of a ‘Loan Originating AIF’, which is as follows:

“Loan origination is the main investment strategy; or

Originated loans have a notional value of at least 50% of the AIF’s net asset value”

AIFMs will be required to implement dedicated policies and processes for the granting of loans, these should be proportionate to the extent of loan origination carried out. The most notable requirements imposed on loan originating AIFMs are as follows:

• Leverage limits of:

  • 175% for open-ended‑ AIFs

  • 300% for closed ended AIFs

• Counterparty exposure cap: exposures to financial undertakings, other AIFs or UCITS is capped at 20% of the AIF’s capital.

• Risk retention requirement: AIFs must retain 5% of the notional value of each loan originated and subsequently transferred to a third party.

These measures are designed to enhance resilience and ensure consistent credit risk management across the European market. It is important to note there are transitional provisions for AIFs constituted before the adoption of the Directive, these AIFs have until 16 April 2029 to comply with the leverage and counterparty exposure limits explained above.

2. Liquidity management tools

In recent years there has been a sustained focus on liquidity risk by global regulatory bodies and therefore it came as no surprise that the amendments under AIFMD II build on liquidity management requirements. The Commission notes the updates are required to support redemption management under stressed markets and to strengthen investor protection.

The amendments to liquidity management are included in Article 16. AIFMs of open-ended AIFs must select at least two liquidity management tools (LMTs) from the list contained in Annex V, these include:

1. Suspension of subscriptions, repurchases, and redemptions

2. Redemption gate

3. Extension of notice period

4. Redemption fee

5. Swing pricing

6. Dual pricing

7. Anti-dilution levy

8. Redemption in kind

9. Side pockets

The choice of LMTs must be based on a clear assessment of the AIF’s investment strategy, underlying asset liquidity, and investor profile. AIFMs are also required to establish detailed policies and procedures governing the activation and deactivation of each selected tool, ensuring decisions are consistent, transparent, and appropriately governed.

Supervisory notification requirements

AIFMD II introduces new notification obligations to enhance regulatory oversight:

• AIFMs must notify their home Member State Competent Authority without delay whenever they activate or deactivate LMT 1 (,suspension of subscriptions repurchases or redemptions).

• For LMTs 2-8, notification is required when activation or deactivation occurs outside the ordinary course of business, reflecting heightened supervisory interest in exceptional liquidity measures.

• An AIFM shall, within a reasonable timeframe before it activates or deactivates the liquidity management tool 9 (side pockets), notify the competent authorities of its home Member State of such activation or deactivation.

Together, these measures aim to strengthen liquidity risk management practices across the industry and reduce the likelihood of disorderly asset sales during periods of market stress. By requiring earlier planning, clearer governance, and more consistent engagement with regulators, the revised regime is designed to promote market stability and improve outcomes for investors.

Similarly, the amendments bring in a requirement for UCITS to select at least 2 LMTs under the creation of Article 18a within the UCITS directive.

3. Regulatory reporting: Changes to Annex IV

AIFMD II introduces significant amendments to Article 24, commonly referred to as Annex IV reporting. These reporting obligations apply to both EU and Non-EU AIFMs marketing in the EU under the NPPR. In parallel, the directive introduces an equivalent reporting regime for UCITS management companies through the creation of Article 20a of the UCITS directive.

The European Securities and Markets Authority (ESMA) has been mandated to develop the regulatory technical standards for both the revised Article 24 of the AIFMD and the new Article 20a of the UCITS directive. These standards must be submitted to the Commission by 16 April 2027.

Key updates to the Annex IV (Article 24) reporting include:

• AIFMs will be required to report on all markets and instruments traded on behalf of AIFs, rather than only the principal ones.

• New reporting requirements relating to delegation arrangements, concerning portfolio management and risk management as detailed within the delegation section below.

• Reporting the relevant Member States in which the AIF is being marketed.

• ESMA may impose additional reporting requirement on a specific Member State after consulting the European Systemic Risk Board (ESRB) if it is required to ensure integrity of the financial system, or to promote long term sustainable growth

Overall, the reforms make Annex IV reporting significantly more detailed and data intensive, requiring AIFMs to capture and submit broader, more granular information. This heightens the need for strong data governance, reliable reporting processes, and systems capable of supporting increased supervisory expectations.

4. Delegation: Reinforced requirements

Delegation continues to be a central supervisory priority. The Commission recognises that delegation can help create efficient management of investment portfolios and for sourcing the necessary expertise in a particular geographic market or asset class, however they note that it is important that supervisors have updated information on the main elements of an AIFMs delegation arrangements. AIFMD II clarifies and expands the definition of delegation to include all functions listed in Annex I, plus the services referenced under Article 6(4).

The new rules emphasise that the AIFM remains fully liable to the AIF and its investors even where functions are delegated.

• AIFMs must provide additional reporting to regulators covering:

  • Detailed descriptions of delegated portfolio and risk management activities

  • The percentage of assets subject to delegation

  • Information about each delegate, including name, domicile, regulatory status, and any relevant close links

These changes reflect the EU’s ongoing scrutiny of delegation arrangements and are designed to improve transparency and oversight.

5. Investor disclosure requirements

AIFMD II strengthens investor disclosure obligations, requiring AIFMs to provide clearer and more comprehensive information to prospective and existing investors within Article 23.

• Liquidity management tools: Conditions for using liquidity management tools selected in accordance with Article 16

• Fees, charges and expenses: That are borne by the AIFM in connection with the operation of the AIF and that are to be directly or indirectly allocated to the AIF

• Loan origination: The composition of the originated loan portfolio

These enhanced disclosures are designed to strengthen investor protection by improving transparency, supporting more informed investment decisions, and aligning expectations between AIFMs and their investors from the outset.

Impact on non-EU AIFMs using NPPR

The amendments have direct and immediate implications for non-EU AIFMs marketing AIFs under the NPPR. Although these firms remain outside the full scope of AIFMD II, several key provisions extend to them which require prompt attention and operational adjustments. The articles that have a direct impact are as follows:

Putting it all together

The implementation of AIFMD II marks a substantial movement in the EU regulatory landscape for alternative investment funds. With new rules on loan origination, enhanced liquidity management requirements, reinforced delegation oversight, and expanded reporting and disclosure obligations, the Directive introduces a more robust and harmonised supervisory framework.

For EU AIFMs, preparation now turns to action, and it is key that all governance arrangements are updated where required and operational processes have been adapted to meet the new requirements.

For non-EU AIFMs, the reforms bring meaningful changes to NPPR conditions, particularly on AML linked jurisdictional eligibility and the expansion of Annex IV reporting.

Early internal assessment, clear communication across functions, and proactive engagement with administrators, depositaries, and other service providers will be critical to ensuring a smooth transition under the updated regime and will help mitigate compliance risks.

At the same time, the UK is entering a critically important phase in its own review of the AIFMD framework. HM Treasury and the FCA will continue to consult on a revised UK regime for AIFMs throughout 2026, which may introduce areas of divergence or selective alignment with the EU’s updated rules. Firms operating across both jurisdictions should therefore monitor UK developments closely and prepare for the possibility of diverging compliance requirements, ensuring their operating models remain flexible in the face of evolving regulatory expectations.

If you have any questions about the new regime, or require support in meeting your obligations, you can contact us to speak with a member of the team.