On the 24th June 2021, the MFSA issued a Circular to inform the Funds industry of the publication of a revised version of the Notified Alternative Investment Fund (‘NAIF’) Rules.

With Alternative Investment Fund Managers (‘AIFMs’) increasingly prioritising an efficient and straightforward application process and speed-to-market when establishing their funds, the MFSA has proactively undertaken a holistic review of the Notified AIF regulatory framework and updated its NAIF Rulebook with a view towards addressing certain regulatory gaps and enhancing the effectiveness and efficiency of the NAIF Regime in general.

Under the enhanced regime, the regulatory framework applicable to NAIFs has been entirely consolidated in the revised NAIF Rules which Rules have effectively revisited the permissible investment scope of the regime and introduced a number of key changes, including:

With AIFMs increasingly prioritising an efficient and straightforward application process and speed-to-market, the MFSA has proactively undertaken a holistic review of the Notified AIF regulatory framework with a view towards enhancing the effectiveness and efficiency of the NAIF Regime in general

• Existing licensed collective investment schemes may now request conversion into Notified AIFs;
• NAIFs are now able to invest in any asset class, including through the acquisition of loans qua ‘loan funds’ insofar as they comply with the rules applicable thereto and provided that they do not engage in loan origination and only acquire loans from, and originated by, authorised credit institutions or firms duly regulated and authorised to engage in the activity of lending;
• The MFSA has committed to even shorter processing timeframes, whereby changes to the prospectus shall be reviewed within five working days (as opposed to ten), and certain pre-notification changes (such as changes to the AIFM’s investment management and valuation functions) will be processed within three weeks (as opposed to two months).

The new NAIF Rules came into effect as at 24th June 2021.

AIFMs of existing Notified AIFs are expected undertake an impact assessment of the revised Rules against their current operations and any potential gaps must be addressed by no later than the 31st December 2021.