Central Bank of Ireland proposes major shift for QIAIF guarantees and security arrangements

In a move that will simplify and streamline Irish fund finance transactions, the Central Bank of Ireland has proposed changes to remove the prohibition on Qualifying Investor Alternative Investment Funds from acting as a guarantor for third party obligations.

This positive development was outlined in a consultation paper published on 9 September 2025 in which the Central Bank of Ireland outlined a number of proposed changes to the Alternative Investment Fund (AIF) Rulebook.

This amendment will mark a significant change to how fund finance transactions are structured where Irish Qualifying Investor Alternative Investment Funds (QIAIFs) are required to provide security.

Read the Central Bank of Ireland’s consultation paper.

Background to the change

The background to this change can be traced to the Central Bank's Alternative Investment Fund Managers Directive (AIFMD) Q&A published earlier this year. Published on 7 March 2025, the Q&A offered clarification on the restriction on QIAIFs providing guarantees or security in respect of third-party obligations. It confirmed that it is possible for a QIAIF to act as guarantor for third parties in circumstances where they have a direct or indirect economic interest in an investment. This was subject to certain further conditions being met.

Ogier’s Fund Finance team in Dublin explain more in this briefing: Fund finance: Irish funds and third-party security

Removal of the prohibition

The Central Bank of Ireland's recently issued consultation paper now proposes that the restriction on QIAIFs providing guarantees and security for third parties be deleted in its entirety from the AIF Rulebook. This would simplify Irish fund finance transactions, eliminating the need for "cascading" security structures. These structures allow a QIAIF to provide security for its own direct obligations to an intermediate fund, with the right to such security being assigned up the chain to the ultimate lender / security agent.

In its consultation paper, the Central Bank noted that the provision of guarantees is "standard market practice for fund financing arrangements such as bridge financing and financing where the fund is part of a wider fund family, and in the context of private equity investments where financing is provided to underlying portfolio companies / investment vehicles". It also notes that the removal of the restriction on QIAIFs aligns with the AIFMD’s new European loan origination rules.

Implications and next steps

The removal of the prohibition represents a significant enhancement of the fund finance regime in Ireland, aligning the country with other major fund jurisdictions. This important change should result in simplified and more flexible transactions, reduced complexity and enhanced attractiveness of Ireland as a funds jurisdiction.

Stakeholders are invited by the Central Bank to provide responses to the proposed amendments laid out in the consultation paper, with the consultation process closing on 5 November 2025. As a result, it is possible that the removal of the prohibition might come into effect by the end of this year.

How Ogier can help

Ogier in Ireland provides one of the largest single-source service packages spanning the full fund life cycle. Our team of experienced investment fund and fund finance experts in Ireland can help advise or aid in any query you may have when it comes to navigating Irish funds, their funding requirements and third-party security.

If you have questions in relation to this update or other related matters, contact our Fund Finance team.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice