Finland Implements Fund Regulation Reforms – Effective 16 April 2026

The Finnish Government has approved substantial amendments to fund legislation, transposing EU Directive (EU) 2024/927, which revises both AIFMD and the UCITS Directive. The amendments apply almost exclusively to authorised AIFMs. In addition to certain technical changes relating to sanctions and the Finnish Financial Supervisory Authority (the ”FIN-FSA”), the only changes that affect registered AIFMs relate to (i) management requirements and (ii) periodic reporting obligations. All other substantive requirements apply exclusively to authorised AIFMs.

1. Mandatory liquidity management tools
 
AIFMs managing open-ended AIFs and UCITS management companies must select and implement at least two liquidity management tools from a specified list (money market funds need only one). Available tools include redemption gates, notice period extensions, redemption fees, swing pricing, side pockets, anti-dilution levies, and redemption in kind. Selected tools must align with the fund's investment strategy, liquidity profile, and redemption policy, and must be disclosed in fund rules and notified to FIN-FSA.
 
FIN-FSA gains enhanced authority to require temporary suspension or reinstatement of redemptions, subscriptions, and repurchases in extraordinary circumstances.
 
2. New loan origination fund framework
 
The new legislation introduces comprehensive regulation for loan origination funds, including leverage limits of 175% for open-ended funds and 300% for closed-ended funds. AIFMs must retain at least 5% of each loan's nominal value until maturity for consumer loans or loans with maturity up to eight years. "Originate-to-distribute" strategies are prohibited.
 
Lending to consumers by AIFs is permitted under consumer protection regulations. Transitional rules allow loan origination AIFs established before 15 April 2024 until 16 April 2029 to comply with leverage limits, concentration rules, and retention requirements.
 
3. Enhanced outsourcing and reporting requirements
 
Outsourcing requirements are extended, with detailed reporting obligations on outsourcing and subcontracting of significant functions including portfolio management and risk management. Notification must be provided prior to commencement of outsourcing, and has to include detailed information about subcontractors, regulatory status, jurisdictions, and conflicts of interest.
 
Reporting duties to FIN-FSA are expanded to include detailed portfolio positions, liquidity management tools, risk profiles, leverage levels, outsourcing arrangements, and loan portfolio compositions.
 
4. Real estate fund regulation integration
 
The Finnish Real Estate Fund Act is repealed, with provisions transferred to a new chapter (18a) in the Alternative Investment Fund Managers Act. The regulation maintains specific requirements on fund structure, investment policy, risk diversification, borrowing limits, and asset valuations whilst preserving tax relief provisions.
 
5. Depositary Passport
 
The Finnish law will allow the appointment of a depositary located in another EEA member state when no suitable Finnish depositary service is available. This "depositary passport" is subject to a cap on assets under custody in Finland (currently approximately EUR 50 billion) and requires case-by-case approval by FIN-FSA.

6. Expanded ancillary services for AIFMs
 
Authorised AIFMs may now offer as ancillary services any task or function already performed in managing their AIFs, provided conflicts of interest are appropriately managed. Examples include HR and IT services, portfolio and risk management IT services, reporting, compliance, ESG, and back-office services. The objective is to enhance international competitiveness through economies of scale and revenue diversification.
 
7. Mandatory management and residency requirements
 
AIFMs must appoint at least two natural persons responsible for the full-time daily management of the business, and both must work full-time and reside in an EEA state.

The legislative changes enter into force on 16 April 2026, with certain supervisory reporting obligations becoming applicable from 16 April 2027.

Borenius' Fund Formation & Investment Management team has deep expertise in Finnish and EU fund regulation. Our specialists are ready to help you navigate these reforms and ensure smooth compliance with the new requirements.