Lithuania Approves AIFMD II Amendments to Expand Non-Bank Financing and Fund Rules

On September 23, 2026, the Government of the Republic of Lithuania approved a package of legislative amendments prepared by the Ministry of Finance to transpose Directive (EU) 2024/927 (AIFMD II) into national law. The amendments affect the Law on Managers of Alternative Collective Investment Undertakings, the Law on Collective Investment Undertakings, and the Law on Collective Investment Undertakings for Informed Investors.

The primary objective of these amendments is to expand non-bank financing channels for growing Lithuanian companies, particularly through private debt and venture capital funds, thereby reducing structural reliance on commercial bank lending. At the same time, the rules establish standardized operational and risk management obligations for fund managers.

A central change grants the Bank of Lithuania statutory authority to permit alternative investment fund managers (AIFMs) to procure depositary services cross-border from other European Union Member States. This provision addresses local depositary supply constraints and rising administrative costs within the domestic financial market.

The draft laws formally codify a regulatory framework for loan-originating alternative investment funds. Such funds will be subject to single-borrower exposure limits and portfolio diversification criteria. The framework also institutes an explicit prohibition against issuing loans to the fund manager, its employees, board members, or any closely affiliated natural and legal persons.

Organizational requirements for fund management companies are also updated: individuals responsible for executing investment decisions must either be employed on a full-time basis and reside permanently within the European Union or serve as formal members of the management body. Furthermore, managers of open-ended funds will be required to select and implement at least two liquidity management tools (LMTs) from a harmonized European framework, such as redemption gates, notice periods, or redemption fees.

For companies seeking capital, the expansion of the private debt market facilitates alternative funding options, provided transaction terms align with new regulatory diversification and affiliation restrictions. The legislative package is submitted to the Seimas for parliamentary consideration; final effective dates and transitional provisions will depend on parliamentary adoption, with secondary supervisory rules to be issued by the Bank of Lithuania.