Ireland: QIAIFs can now grant loans and guarantees

This change aligns Ireland with other leading fund finance jurisdictions. Fund managers and lenders should review their documentation.

Why should I read this?

On 5 May 2026, the Central Bank of Ireland (CBI) published its revised Alternative Investment Fund (AIF) Rulebook (Rulebook).  The Rulebook removes the prohibition on Qualifying Investor AIFs (QIAIFs) granting loans or acting as guarantor to third parties.  This is a significant development for fund finance transactions involving Irish entities.

The previous Rulebook prohibited QIAIFs from providing guarantees or security for the obligations of any entity other than itself, a wholly owned or controlled subsidiary, or a limited partnership.  A fund could lend only if it was authorised under the CBI’s domestic loan origination fund regime.  Now that the Alternative Investment Fund Managers Directive II (AIFMD II) covers loan origination at EU level, the revised Rulebook no longer includes this restriction.

The removal of this prohibition brings the Irish regulatory regime into line with other leading fund jurisdictions.  It removes a long-standing structural hurdle that complicated fund finance transactions.  Fund managers and lenders should review their documentation to take advantage of the new flexibility.

What was the position under the previous Rulebook?

The old prohibition on QIAIFs granting loans or acting as guarantor to third parties meant that the Irish fund finance market had to rely on a “cascading” security approach.

Rather than granting security directly to the lender, the QIAIF would grant security in favour of the borrower.  The borrower would then assign its rights under that security to the lender.

These complex structures were unattractive to lenders.  They led to a reliance on offshore special purpose vehicles or parallel arrangements.  The provision of guarantees in fund financing arrangements was standard market practice in other fund finance jurisdictions.

What does this mean for fund managers and lenders?

QIAIFs can now provide guarantees and grant security directly to lenders.  This eliminates the need for restructuring.  Irish funds, together with their group and co-investment structures, can now benefit from a wider range of financing solutions.

The CBI’s removal of this prohibition aligns Ireland with the cleaner security structures available to lenders in jurisdictions such as Luxembourg, Delaware and the Cayman Islands.  Loan Markets Association (LMA)-style loan documentation can now be used without the additional documentation and complexity involved in providing for cascading security.

The removal of this restriction is a welcome development for fund finance transactions involving Irish entities.  “Cascading” security will continue to be a useful mechanism in certain circumstances.  It is no longer a necessary workaround for fund finance transactions under the Irish regulatory regime.

What should I do?

Fund managers should consider taking the following steps:

• Review existing QIAIF documentation

Fund managers should review their existing QIAIF constitutional documents, prospectuses and partnership agreements.  They should make any necessary amendments to permit the granting of loans or guarantees to third parties.

• Review credit documentation templates

Lenders should review their credit documentation templates.  They should make any necessary amendments to reflect that direct guarantees and security from QIAIFs are now permitted, subject to the applicable investment policy and leverage limits.

• Consider the investment policy

Fund managers should check that the QIAIF’s investment policy permits the granting of guarantees or loans.  If it does not, they should consider whether an amendment to the investment policy is appropriate.

What else do I need to know?

The removal of the prohibition restates Ireland’s competitiveness in fund finance transactions.  Ireland no longer risks being excluded from transactions on the basis of guarantor restrictions.  This change is one of a number of reforms aimed at enhancing Ireland’s regulatory framework for private asset funds and supporting their continued growth.

The revised Rulebook was published alongside the CBI’s Feedback Statement on Consultation Paper 162.  It consolidates the requirements for Irish-authorised AIFs, AIFMs and depositaries.  The Rulebook takes account of AIFMD II and the recommendations of the Department of Finance’s Funds Sector 2030 Final Report.

The Irish AIFMD II Regulations do not materially gold plate the EU directive.  Ireland’s approach broadly reflects a faithful transposition of AIFMD II.  This supports EU harmonisation objectives and maintains Ireland’s attractiveness as a fund domicile.

See our further client briefings

• Ireland: CBI board effectiveness review for fund management companies
• Ireland: Investment Funds Update – Q1 2026

How Eversheds Sutherland can help

We advise on the full lifecycle of funds, acting for asset managers, depositaries and service providers on the structuring, establishment and operation of Irish UCITS and AIFs. We have deep experience advising on fund finance transactions, including security structures, guarantees and credit facilities for Irish-domiciled funds. We support clients on authorisation, regulatory compliance and cross-border distribution.