Position dated 5 September 2026. Status: In force. Instruments: Pravila o evropskim fondovima za dugoročna ulaganja (rules on European long-term investment funds, ELTIF) and Pravila o osnivanju i poslovanju novčanih fondova (rules on the establishment and operation of money market funds), both Official Gazette of Montenegro 096/26 of 6 July 2026, adopted by the Capital Market Authority at its 190th session on 2 July 2026.
Until this summer, a family office asking how to hold Montenegrin real assets in a fund wrapper got a thin answer. The Alternative Investment Funds Act was in place — Gazette 024/25, amended by 117/25 and 014/26 — but the detailed rules that make a vehicle usable were not. Two rulebooks, adopted at the same session, have now filled that in: one builds the long-term fund, the other the money market fund. This note is about what they permit.
The ELTIF rulebook
The rules are made under Article 134b(5) of the Alternative Investment Funds Act and run to more than twenty articles: the licence application, permitted investments, eligible assets and eligible companies, conflicts of interest, portfolio composition, concentration, borrowing, redemption, the secondary market, transparency, prospectus and cost disclosure, and specific protections where the fund may be offered to retail investors.
Article 2 sets the application. It goes to the Authority with the fund rules or constitutive documents, the name of the proposed AIF management company, the name of the depositary — and, where the fund may be offered to retail investors, a written agreement with that depositary and a description of the information investors will receive, including the complaints mechanism. Only a management company holding a licence equivalent to Articles 20 and 21 of the Act may apply to manage an ELTIF.
Article 7 fixes the portfolio.
At least 55 per cent of the fund's capital must go into eligible investment assets. Against that, the fund may not invest more than 20 per cent in instruments issued by, or loans granted to, a single qualifying company; more than 20 per cent in a single real asset; or more than 20 per cent in units of any single ELTIF, EuVECA, EuSEF, UCITS or EU AIF. A 10 per cent limit applies to certain assets from a single issuer. Simple, transparent and standardised securitisations are capped at 20 per cent of capital, and counterparty exposure from OTC derivatives, repos and reverse repos at 10 per cent.
Article 9 caps concentration at 30 per cent of the units of any one ELTIF, EuVECA, EuSEF, UCITS or EU AIF — but that cap does not apply where the fund is offered exclusively to professional investors, nor to a feeder investing into its master.
Article 10 is where the retail line bites hardest.
Borrowing may not exceed 50 per cent of net asset value for a fund that may be offered to retail investors, and 100 per cent of NAV for a fund offered exclusively to professional investors. The borrowing must serve investment or liquidity where cash is insufficient, must be in the same currency as the asset acquired or else hedged, and must not mature later than the life of the fund. The fund may encumber assets to carry out its borrowing strategy.
| Rule | Retail-eligible ELTIF | Professional-only ELTIF |
|---|---|---|
| Borrowing (Article 10) | Up to 50% of NAV | Up to 100% of NAV |
| Concentration cap (Article 9) | 30% of one fund's units | Cap does not apply |
| Depositary agreement | Written agreement required at application | Not required by Article 2 |
The money market fund rulebook
Made under Article 229a(6) of the Open-Ended Public Investment Funds Act, this one covers the establishment application, permitted investments, the credit quality of money market instruments, risk management, valuation and reporting. The application must state which type of money market fund is intended, describe the fund for investors, and set out the mechanisms for meeting the rules. Articles 12 to 15 build a credit quality assessment procedure, including internal assessment, documentation and governance of it, and Articles 16 and 17 give separate portfolio rules for short-term and for standard money market funds.
What we did not read
We worked through the structural provisions, not every number. The minimum life of an ELTIF and any entry threshold for retail investors may sit in Articles 3 and 21; we saw the headings, not the figures. The weighted average maturity and life limits for money market funds are in Articles 16 and 17, and we did not read them. Nor did we examine transitional provisions or how existing funds are expected to align. Take those from the text rather than from here.
Our reading
The professional-only decision is not a marketing choice; it is the structuring choice. Doubling the borrowing headroom from 50 to 100 per cent of NAV and switching off the 30 per cent concentration cap changes what a fund can actually do with Montenegrin real assets, where a single hotel or marina position can easily exceed a diversification limit written for listed portfolios. If the intention is ever to admit retail money, that ambition has to be priced into the structure from the application onwards, because the depositary agreement and the investor information regime attach at that point too.
The 55 per cent floor is the other number to plan around. It is a floor on eligible assets, not a ceiling on anything else, and it means the vehicle is meant to hold the illiquid position rather than sit in cash waiting for one. For a family office that has been holding Montenegrin assets directly, our company formation page sets out how we work through the corporate layer beneath a fund.
What did not change
These are rules made under two statutes that were already in force; the Alternative Investment Funds Act and the Open-Ended Public Investment Funds Act are not rewritten by them. Licensing of the management company still runs through the Act, and the rulebooks add detail to that rather than replacing it. Nothing here creates a tax regime for funds — that sits elsewhere and is unaffected by these two instruments.
How to verify
Both rulebooks are published by the Capital Market Authority on its own regulation page: scmn.me/regulativa. Open the ELTIF rules and read Article 7 for the 55 per cent floor and the 20 and 10 per cent limits, Article 9 for the concentration cap and its professional-investor exception, and Article 10 for the 50 and 100 per cent borrowing lines. The money market rules open with Article 1, which lists exactly what they regulate, and Articles 16 and 17 carry the portfolio rules for the two fund types.
Each rulebook states its own gazette citation on its first page — both are Gazette 096/26 of 6 July 2026 — along with the enabling provision and the 190th session of 2 July 2026. We follow this file under Legal Updates.
