On 26 May 2016, the Malta Financial Services Authority (the “MFSA”) issued a circular to the financial services industry on the consolidation of the Maltese fund frameworks (the “Circular”), which lays down the manner in which the various fund regimes currently available in Malta are to be consolidated.
The Current Fund Frameworks
The fund regimes presently available in Malta can be divided into the following categories:
(i) Retail Schemes: these include UCITS, Non-UCITS Retails Schemes, Overseas Non-UCITS Retail Schemes and Retail AIFs;
(ii) Professional Investors Funds (“PIFs”): these consist of three sub-categories namely PIFs promoted to Experienced Investors, PIFs promoted to Qualifying Investors or PIFs promoted to Extraordinary Investors; and
(iii) Alternative Investment Funds (“AIFs”): AIFs can be subdivided into four sub-categories (other than Retail AIFs) namely AIFs promoted to Experienced Investors, AIFs promoted to Qualifying Investors, AIFs promoted to Extraordinary Investors and AIFs promoted to Professional Investors.
By early June, the Maltese fund frameworks will also include Notified AIFs (“NAIFs”), which are AIFs compliant with the AIFMD which will be established by way of notification by the AIFM to the MFSA.
Following an assessment of the current frameworks by the MFSA, a number of fund frameworks will be discontinued and the following will remain:
- A. Retail Schemes
These will include UCITS and Retail AIFs. Non-UCITS retail schemes will be subject to the following considerations:
Non-UCITS retail schemes: will be gradually phased out. Whilst no new collective investment scheme licences will be issued under this category, existing licence holders will be allowed to continue operating under the current regime as hitherto.
Overseas-Based Non-UCITS retail schemes: will be required to comply with the Maltese National Private Placement Regime. In this regard, the MFSA will be communicating with the licence holders concerned/the respective local representatives to ensure a smooth transition to the National Private Placement Regime. The MFSA aims to completely phase out this regime by 31 December 2016.
- B. PIFs
There will be one category of PIF, namely PIFs promoted to Qualifying Investors. The main change will consist of an increase in the minimum initial investment from €75,000 to €100,000. Existing PIFs for Experienced, Extraordinary and Qualifying Investors (the latter with a minimum initial investment limit of €75,000) will continue to operate under their respective regulatory regime as hitherto.
- C. AIFs
AIFs will be either Retail AIFs or Professional AIFs. AIFs authorised in terms of the Investment Services Act can be marketed to Professional Investors as defined in MiFID and/or to Qualifying Investors having a minimum investment requirement of €100,000 (and which meet the revised criteria in respect of Qualifying Investors laid down in the Circular).
As from 3 June 2016, the MFSA will not be accepting any applications for the licensing of Non-UCITS Retail Schemes, PIFs targeting Experienced and Extraordinary Investors, and AIFs targeting Experienced and Extraordinary Investors. The MFSA will also be publishing revised Investment Services Rules to reflect the consolidation of the fund regimes.
27 May 2016