On the 23rd November 2016 the Malta Financial Services Authority (MFSA) a consultation document soliciting the fund industry’s feedback on the proposed revised investment fund rulebooks.
The proposed revisions follow the MFSA’s April 2016 announcement of its intention to consolidate and simplify Malta’s fund regimes, which announcement was followed up by a Circular addressed to the investment funds industry setting out the newly refined fund frameworks.
Summarily, the said streamlining of the available fund typologies comprised the phasing-out of Professional Investor Funds (PIFs) targeting ‘Experienced’ investors and the simultaneous amalgamation of PIFs targeting ‘Qualifying’ investors and those targeting ‘Extraordinary’ investors such that a new ‘Qualifying Investor Fund’ was 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 exercise also revamped Malta’s Retail Fund offering by eliminating non-UCITS retail funds and limiting retail fund structures to UCITS and Retail AIFs.
Accordingly, the available post-consolidation fund structures are:
|Professional Investor Funds||Qualifying PIFs|
|Alternative Investor Funds|| Retail AIFs
Qualifying Investor AIFs
The purpose of the present consultation is to share the updated rulebooks with the industry and obtain feedback in this regard.
The changes to the MFSA’s fund Rulebooks reflect the above-mentioned streamlining of Malta’s available fund regimes and also broadly comprise the following:
- The term ‘custodian’ is being replaced with ‘depositary’;
- Part A of all Rulebooks has been dove-tailed to be uniform across all three Rulebooks the provisions dealing with the application process now incorporates a three-month validity period for the MFSA’s ‘in principle’ approval;
- The statutory Application Form has been enhanced to take into account the developments relating to EUVECAs, EUSEFs and ELTIFs where applicable;
- The Competence Form is to be amalgamated with the PQ;
- The application form for a licence to operate as an overseas based retail collective investment scheme has been deleted;
- A chapter on the duties of the governing body of the fund has been introduced in all the Rulebooks. Moreover, the changes include a requirement that a fund’s governing body/ board of directors must be composed of at least three members (one of whom must be resident in Malta) and must have at least one member independent from the fund manager and the depositary of the fund;
- The definition of ‘Qualifying Investor’ has been revised to reflect the new eligibility criteria.
The consultation period closes on the 5th January 2017, where-after all feedback will be collated and processed and the new Rulebooks will subsequently enter into force
The MFSA further clarified that investment fund’s operating under a licence issued prior to the publication of the new Rulebooks will continue to be regulated by the same Rulebooks which are currently in force, provided that the Authority is also in the process of reviewing such Rulebooks and any proposed changes will be subject to an additional consultation exercise.
The consultation period closes on the 5th January 2017, where-after all feedback will be collated and processed and the new Rulebooks will subsequently enter into force.