Article 5
Requirements to be fulfilled by the ELTIF in relation to its redemption policy and liquidity management tools, as referred to in Article 18(2), first subparagraph, points (b) and (c), of Regulation (EU) 2015/760
Where an ELTIF provides for the possibility of redemptions during the life of the ELTIF, the redemption policy of the ELTIF shall contain all of the following elements:
the conditions under which redemptions can be granted;
the time window within which redemptions can be granted;
the frequency or periodicity at which redemptions can be granted;
the timing limitations, if any, and the procedures and requirements applicable to the redemptions, including:
the notice period and the extension of the notice period, if any, and a description of how and within which time investors will be repaid;
the conditions and procedures for redemptions requests;
the role and responsibilities of the entities involved in the procedures;
whether and how investors can request the cancellation of their redemption requests that have not been fully executed;
whether the ELTIF provides for the possibility of repayments in kind out of the ELTIF’s assets, as referred to in Article 18(5) of Regulation (EU) 2015/760;
whether the ELTIF has a minimum holding period as referred to in Article 18(2), first subparagraph, point (a), of Regulation (EU) 2015/760, and if so, the duration of, and conditions for such minimum holding period;
a description of the available liquidity management tools and of the conditions for their activation;
the percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760.
For the purposes of point (h), where the ELTIF is marketed to retail investors, the description of the available liquidity management tools shall be written in non-technical terms that enable retail investors’ understanding of those tools.
When adopting the redemption policy of an ELTIF, the manager of the ELTIF shall take into account all of the following features of the ELTIF to assess the liquidity profile of the ELTIF:
the composition of the portfolio of the ELTIF, including the assets referred to in Article 9(1), point (b), of Regulation (EU) 2015/760;
the life of the ELTIF;
the liquidity profile of the ELTIF;
the methods and documented process for the valuation of the assets of the ELTIF;
the market conditions and material events that may affect the possibility of the manager of the ELTIF to implement the redemption policy;
the minimum holding period determined by the manager of the ELTIF in accordance with Article 3 of this Regulation, and the criteria used to determine that minimum holding period, where applicable;
the available liquidity management tools, their calibration, and the conditions for their activation;
the percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760, and the criteria used to determine that percentage;
the liquidity stress tests, where such liquidity stress tests are to be carried out pursuant to Article 15(3), point (b), and Article 16(1) of Directive 2011/61/EU, and their results;
how the interests of investors will be protected.
Throughout the life of the ELTIF, the redemption policy shall be sound, well-documented, and consistent with the ELTIF’s investment strategy and liquidity profile. All of the following shall be consistent with the nature and the level of liquidity of the ELTIF’s underlying assets:
the different features of the redemption policy, including the redemption frequency;
the minimum holding period, where applicable;
the date referred to in Article 17(1), first subparagraph, point (a), of Regulation (EU) 2015/760;
the liquidity management tools referred to in Article 18(2), first subparagraph, point (b), of Regulation (EU) 2015/760.
When reviewing the validity of risk measurement and the new information acquired by the manager of the ELTIF throughout the life of the ELTIF, the manager of an ELTIF shall take into account the results of the back-testing performed on its liquidity stress tests, where such back-testing is to be carried pursuant to Article 45(3), point (b), of Delegated Regulation (EU) No 231/2013.
The percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760 shall be an integral part of the redemption policy of the ELTIF. The manager of the ELTIF shall calibrate that percentage at its discretion on the basis of one of the following:
the redemption frequency and the notice period of the ELTIF, including the extension of the notice, if any, depending on which of one of the three options referred to in Annex I to this Regulation is selected by the manager of the ELTIF; or
the redemption frequency and the minimum percentage of the assets referred to in Article 9(1), point (b), of Regulation (EU) 2015/760, as specified in Annex II to this Regulation.
To determine the maximum size of redemption at a given redemption date, the manager of the ELTIF shall apply the percentage referred to in Article 18(2), first subparagraph, point (d), of Regulation (EU) 2015/760, as specified in Annex I or Annex II to this Regulation, to the sum of:
the assets referred to in Article 9(1), point (b) of Regulation (EU) 2015/760 at that redemption date; and
the expected cash flow, forecasted on a prudent basis over 12 months.
For the purposes of point (b), the manager of the ELTIF shall only take into account those expected positive cash flows for which the ELTIF manager can demonstrate that there is a high degree of certainty that they will materialise. The manager of the ELTIF shall not consider as expected positive cash flows the possibility that the ELTIF can raise capital through new subscriptions.
The manager of an ELTIF shall not be required but may, at its discretion, select and implement at least one anti-dilution liquidity management tool from among any of the following anti-dilution liquidity management tools:
anti-dilution levies;
swing pricing;
redemption fees.
In addition to the anti-dilution liquidity management tools referred to in the first subparagraph, the manager of the ELTIF may also at its discretion select and implement other liquidity management tools. In such a case, the manager of the ELTIF shall upon request by the competent authority of the ELTIF provide the competent authority of the ELTIF with information on why, on the basis of the features of the ELTIF referred to in paragraph 2, the anti-dilution liquidity management tools referred to in the first subparagraph are not adequate for that specific ELTIF or why another set of liquidity management tools would be more appropriate, taking into account the interests of the ELTIF and of its investors.