Alternative investment funds (AIFs) are subject to new regulations in Austria. The amendment implements Directive (EU) 2024/927 and applies in particular to AIFs that grant loans. The goal is to enable credit funds to serve as an additional source of financing for companies while, at the same time, better controlling the associated risks. The relevant federal law, which amends, among other things, the Alternative Investment Fund Managers Act, entered into force on July 29, 2026.

Lending by AIFs Is Explicitly Regulated

In the future, it will be explicitly recognized that AIFs may grant loans. To this end, common rules are being established so that credit funds are not only classified more clearly from a legal perspective but are also more easily managed from a regulatory standpoint. In the future, an AIF will be considered a lending AIF if its investment strategy consists primarily of granting loans or if the loans granted account for at least 50% of its net asset value. Loans may be granted directly by an AIF or indirectly (e.g., through a special-purpose vehicle).

AIFs can thus play a greater role in corporate financing. At the same time, alternative investment fund managers (“AIFMs”) must pay closer attention to risk management, liquidity, and investor interests when structuring such funds.

Why Closed-End Funds in Principle?

A key point of the amendment is that lending AIFs should, in principle, be structured as closed-end funds to avoid liquidity mismatches. Put simply, this means that investors cannot redeem their shares at any time but are typically locked in for a specific term.

The reason for this lies in the nature of lending. When a fund extends long-term loans, the fund’s money is tied up for an extended period. If investors were simultaneously able to demand their money back on short notice, the fund could run into liquidity problems. It is precisely this so-called liquidity mismatch that the closed-end fund structure is intended to prevent.

Open-end lending AIFs are possible, but only under specific conditions. In particular, a suitable liquidity management system must be in place to ensure that the fund remains stable even when investors request redemptions.

Stricter Liquidity Management

The amendment also tightens the requirements for liquidity management. This refers to how a fund ensures that it can meet its payment obligations, particularly when investors wish to redeem their shares.

In the future, open-ended AIFs must, as a general rule, select at least two suitable liquidity management instruments. Examples include redemption restrictions, longer notice periods, redemption fees, swing pricing, dual pricing, anti-dilution fees, or distributions in kind.

These instruments are intended to help the fund remain operational even during difficult market conditions. They are intended to prevent the fund from having to sell assets under pressure or from giving preferential treatment to individual investors at the expense of the other investors.

In exceptional cases, an AIFM may also suspend subscriptions, repurchases, and redemptions or spin off illiquid investments. However, this is only permitted if special circumstances exist and the measure is justified in the interest of the investors.

No Consumer Loans

Austria exercises an option under the EU Directive and prohibits AIFs from granting loans to consumers. AIFs are therefore not permitted to grant consumer loans in Austria, nor may they provide credit services to consumers. This applies to both AIFs managed by licensed AIFMs and those managed by registered AIFMs.

Additional Information for the FMA and Investors

If certain liquidity management instruments are activated or deactivated, the AIFM must inform the FMA. The FMA must be notified immediately in the event of a suspension of subscriptions, buybacks, and redemptions. For other instruments, the duty to provide information applies in particular when their use does not correspond to the normal course of business.

In addition, AIFMs must also inform investors about the activation or deactivation of liquidity management instruments. This information must be provided in an appropriate manner and as agreed upon in the terms and conditions of the contract.

Conclusion

The AIFMG amendment creates greater legal certainty for AIFs that extend credit. Lending by funds is expressly recognized but subject to stricter regulation. Of particular importance are the fundamental structure as a closed-end fund, stricter liquidity rules, and the prohibition on consumer loans in Austria by AIFs.

In practice, this means that credit funds are becoming more attractive as a financing instrument but must be carefully structured. Above all, it is crucial that the term, redemption options, loan portfolio, and liquidity management are aligned.