AIFMD II: What Fund Managers Need to Know Now

Deadline 16 April 2026 – the clock is ticking

On 15 April 2024, Directive (EU) 2024/927 – better known as "AIFMD II" – entered into force. It is not a radical overhaul but a targeted recalibration of the AIFM Directive after more than a decade of practical experience. For AIFMs, depositaries and service providers it nevertheless means significant work: national transposition laws must apply by 16 April 2026, with extended reporting obligations following one year later.

This article provides an overview of the key changes – and of the implications and risks that result for governance practice.

The five pillars of the reform

1. Loan origination by AIFs – a new harmonised framework

The most far-reaching change: for the first time, there is an EU-wide harmonised regime for loan-originating funds. A loan-originating AIF exists where lending is the primary investment strategy or where originated loans account for at least 50 % of net asset value.

The key new obligations:

• 5 % risk retention for the first eight years of a loan – pure syndication strategies are off the table
• Leverage caps of 300 % (closed-ended) and 175 % (open-ended)
• Structural preference for closed-ended funds; open-ended loan-originating AIFs only where a robust liquidity management system can be demonstrated
• Prohibitions: no lending to the AIFM or related parties, no securitisation strategies
• Exemption for shareholder loans up to 150 % of the AIF's capital – relevant for private equity

2. Liquidity risk management – at least two tools in the box

Managers of open-ended AIFs must select at least two liquidity management tools from a defined list (Annex V) and embed them in the fund documentation – including redemption fees, anti-dilution levies, swing pricing, redemption gates or the suspension of redemptions. The selection and use of these tools must be documented and reviewed regularly.

3. Delegation and substance – the end of the "letterbox" debate

Requirements for delegation arrangements are tightened and reporting duties significantly expanded. New is the explicit substance requirement: at least two natural persons employed full-time or acting as executive members of the governing body, with habitual residence in the EU.

4. Depositaries – cross-border becomes viable

Cross-border appointment of depositaries is made easier under certain conditions. This particularly benefits smaller markets with a limited depositary landscape.

5. Supervisory reporting – more data, more harmonisation

Reporting is aligned between AIFMD and UCITS regimes and expanded substantially in scope. The technical standards will be delivered by ESMA; the enhanced reporting obligations apply from 16 April 2027.

Implications for governance practice

For AIFMs: Governance requirements shift from pure documentation toward demonstrable process quality. Liquidity management, lending processes and delegation oversight must not only exist but also be shown to work when the regulator asks.

For depositaries: Competitive pressure rises, while expectations around controls and documentation in cross-border mandates grow.

For loan-originating structures: Existing business models – particularly syndication-driven strategies and highly leveraged open-ended structures – need to be rethought. Limited grandfathering applies to AIFs launched before 15 April 2024.

For service providers and governance specialists: Demand for standardised policies, reporting templates, stress-test frameworks and delegation registers is rising sharply. Being compliant in 2026 means delivering in 2025.

The risks that are often underestimated

Implementation risk: Many details will only be clarified through ESMA RTS – in some cases after the transposition deadline has passed. Build too early and you may have to rework; build too late and you will run out of time.

Interpretation risk: Concepts like "appropriate liquidity management system" or "effective lending processes" are open-textured. The supervisory interpretation by BaFin and other national regulators is yet to develop.

Contractual risk: The new liquidity tools and lending restrictions must be reflected in existing fund documentation. For retail funds, this triggers non-trivial approval and communication workstreams.

Operational risk: The expanded reporting from 2027 presumes a data quality that many firms do not currently have – particularly for delegation arrangements and lending portfolios.

Business model risk: For managers whose model relied on fast syndication or high open-ended leverage, AIFMD II represents a structural break. The pressure to adapt is real.

What to do now

A pragmatic roadmap for the months until April 2026:

1. Gap analysis against the new requirements – policies, processes, contracts, reporting
2. Delegation register: build one, or raise the existing one to the new level of detail
3. Liquidity management toolkit: define, document, anchor in fund documentation
4. Lending processes – also for traditional funds – raised to AIFMD II standard
5. Substance review of your own organisation: do your senior managers meet the new requirements?
6. Track ESMA RTS and iterate your implementation as they land

Bottom line

AIFMD II is not a revolution, but it is not cosmetics either. It demands demonstrable governance – and rewards those who treat compliance as a quality marker rather than a box to tick. The timeline is tight, the detail work is substantial. Starting now in a structured way gets you there on time; waiting means delivering before you have had time to think.

This article provides a general overview and does not replace individual legal advice.

Original directive text: EUR-Lex (PDF)