During an information session for industry players held on the 1st April 2016, the MFSA set out various proposals aimed at consolidating and simplifying Malta’s current fund regimes and also presented the new investment fund framework for the notification of Alternative Investment Funds.
Review of Funds Regime
The MFSA’s proposals are geared towards improving the overall competitiveness of the Maltese funds market and enhancing the efficiency of the authorisation process by simplifying the supervisory process.
The MFSA’s proposals are geared towards improving the overall competitiveness of the Maltese funds market and enhancing the efficiency of the authorisation process
It is understood that the MFSA’s said regulatory review will comprise 3 phases:
Phase 1 – Consolidation of the fund regimes which are currently available (as set out below);
Phase 2 – Review of the processes in relation to the authorisation of funds;
Phase 3 – Revamping of corresponding application forms and applicable rulebooks.
During the briefing, the MFSA explained that the review process will focus on streamlining the current fund typologies. The key proposal in this respect relates to the Professional Investor Fund (PIF) regime and presupposes the elimination of the ‘Experienced Investor Fund’ and the simultaneous amalgamation of the ‘Qualifying Investor Fund’ and the ‘Extraordinary Investor Fund’ such that a new Qualifying Investor Fund will be introduced with the following eligibility criteria:
- minimum investment threshold of EUR100,000;
- entities or individuals with assets in excess of EUR750,000 or the currency equivalent and/or senior fund personnel;
- written declaration that the Qualifying Investor is aware of and accepts the risks of the proposed investment.
The MFSA is also proposing the streamlining and simplification of Malta’s current Retail Fund offering by limiting retail fund structures to UCITS and Retail AIFs.
Accordingly, the proposed ‘post-consolidation’ funds regime will comprise:
|Professional Investor Funds||Qualifying Investor PIFs|
|Alternative Investor Funds|| Retail AIFs
Qualifying Investor AIFs
Notified AIFs (new regime)
The internal time-frames set by the MFSA for this review process are as follows:
- Phase 1 (issue of circular outlining the consolidation of the fund regimes): April 2016;
- Phase 2 (review of the licensing process): May 2016;
- Phase 3 (review of application documentation and rulebook): Q3 2016.
New Fund Framework – Introducing the ‘Notified AIF’ Regime
The MFSA’s drive to simplify Malta’s fund offering and bolster efficiency of the authorisation process is effectively manifested in the launch of a new framework applicable for notification of Alternative Investment Funds (“Notified AIFs”).
The key feature of the new structure is that the AIFM will assume full responsibility for the Notified AIF
The new Notified AIF regime is rooted in the AIFM Directive and will be available to AIFs (open or closed ended) promoted to qualifying or professional investors and which are managed by a Maltese or EEA passported full-scope AIFM. Accordingly, the notification process will not be available to:
- Self-managed AIFs;
- AIFs which are not marketed and sold exclusively to qualifying and/or professional investors;
- Loan funds;
- AIFs that invest in ‘non-financial’ assets.
The key feature of the new structure is that the AIFM will assume full responsibility for the Notified AIF as well as for the fulfilment of the ongoing obligations of the Notified AIF and, as such, Notified AIFs will not be authorised or in any way approved by the MFSA and will not be subject to ongoing prudential regulation.
The MFSA will maintain a publicly available list of Notified AIFs in good standing on its website.
Notification requests are to be submitted by AIFMs and must be supported by:
Within 10 business days from the date of submission of the notification, the MFSA will proceed to include the AIF in the list of Notified AIFs
A compliant prospectus prepared on the basis of the ‘proforma’ document to be made available in the MFSA Rules;
- A resolution of AIF governing body certifying the AIF’s prospectus as compliant;
- AIFM self-certification confirming that it has the necessary competence and experience to manage and monitor the AIF;
- A joint AIFM/AIF governing body declaration undertaking responsibility for the AIF and its continuing compliance with the AIFM Directive;
- A declaration by the AIFM confirming that it has carried out the necessary due diligence in respect of the AIF’s governing body and service providers.
To this end, it is understood that the MFSA will be publishing specimens of all documents to ensure uniformity and to facilitate efficiency.
Within 10 business days from the date of submission of the relative notification pack, the MFSA will proceed to include the AIF in the list of Notified AIFs.
The efficiency and ‘speed to market’ inherent in the Notified AIF regime coupled with the safety of the underpinning AIFMD provisions, is expected to attract considerable interest from fund operators and it is understood that the MFSA will accept notification requests as early as Q2, 2016.