Central Bank of Ireland's AIF Rulebook: reforms bring welcome development for fund finance transactions

On 5 May 2026, the Central Bank published its updated AIF Rulebook, removing the long-standing prohibition on Qualifying Investor Alternative Investment Funds (QIAIFs) acting as a guarantor for third-party obligations or granting security to a third party.

This reform marks a significant evolution for fund finance transactions involving Irish fund structures.

Background to the reforms

This update forms part of a broader package of significant amendments to the AIF Rulebook introduced in connection with the transposition of AIFMD II, which will apply from 16 April 2026. These amendments aim to:

• align the AIF Rulebook with the revised European regulatory framework
• enhance regulatory effectiveness
• provide additional clarity regarding the Central Bank of Ireland’s expectations for regulated investment funds

Historically, QIAIFs were expressly prohibited from acting as a guarantor for a third-party obligations or granting security to a third party. The Central Bank has now removed this prohibition in its entirety from the AIF Rulebook.

The change follows Consultation Paper CP162 (from September 2025), in which the Central Bank noted that the provision of guarantees by QIAIFs is standard market practice for fund financing arrangements and in particular:

• bridge financing arrangements
• financing arrangements where the fund is part of a wider fund family
• private equity transactions where financing is provided to underlying portfolio entities

Implications for fund finance in Ireland

The reforms represent a very positive development for lenders, sponsors and borrowers engaging in fund finance transactions involving Irish fund structures.

The prohibition had previously often required parties to fund financing transactions to implement "cascading" or multi‑layered security structures, typically involving intermediate entities providing upstream pledges or contractual support.

Under the revised AIF Rulebook: 

• a QIAIF can now grant security in respect of third party obligations
• that security interest can be granted or assigned directly to the ultimate lender or security agent

The removal of the prohibition should simplify structural complexity, and reduce deal costs and negotiation timelines.

Reforms to Intermediary Investment Vehicle rules

The updates to the Central Bank of Ireland's AIF Rulebook also introduces changes to its rules relating to intermediary investment vehicles, including wholly owned subsidiaries.

The previous requirement relating to wholly owned subsidiaries requiring prior Central Bank approval for the establishment of the wholly owned subsidiary has been removed. Further changes include that the board of directors of the QIAIF will no longer be required to form the majority the subsidiary's board and the subsidiary is no longer restricted from entering into contracts unless the QIAIF is also a party.

The updated AIF Rulebook places emphasis on transparency and AIFM oversight which includes requirements that:

• the use and purpose of such intermediary investment vehicles is disclosed in the prospectus of the Qualifying Investor AIF
• the constitutional document of the subsidiary shall restrict its ability to act other than in a manner consistent with the investment objective and policy of the QIAIF
• appropriate due diligence and ongoing monitoring by the AIFM with documented internal procedures
• written confirmation to the Central Bank that effective due diligence and ongoing oversight will be maintained

The proposed changes recognise that protections related to the acquisition of control, asset valuation, depositary oversight and leverage look-through requirements are provided for under AIFMD. Collectively these changes should provide for greater flexibility for fund finance transactions involving Irish funds and subsidiaries.

How Ogier can help

Ogier’s Fund Finance and Investment Funds teams can assist with the practical implications of these reforms, including:

• structuring QIAIF‑level guarantees and security packages
• revising fund documentation to comply with the updated disclosure and governance requirements
• advising on investment intermediary structuring in light of the new rules

If you have questions or if we can assist, contact our team via the details provided below.

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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