Consolidating Fund Regimes

The MFSA has announced that it will be consolidating the existing Fund regimes which will start applying for any new applications as from June 2016. It is noted that existing Funds will not be required to make any adjustments to their licence obligations.

Re-Defining a Qualifying Investor

Following such a consolidation, the MFSA have revamped the definition of what constitutes a Qualifying Investor.  That said, the following criteria need to be satififed in order to be classified as a Qualifying Investor:

1. Invest a minimum of €100,000 or its currency equivalent in the AIF/PIF which investment may not be reduced below such a minimum at any time by way of partial redemption;
2. Declare in writing to the Manager and the AIF/PIF that they are aware of and accept the risks associated with the proposed investment;
3. Satisfy, at least, one of the following:
   • A body corporate which has net assets in excess of €750,000 or which is part of a group which has net assets in excess of €750,000 or, in each case, the currency equivalent thereof;
   • An unincorporated body of persons or association which has net assets in excess of €750,000 or the currency equivalent;
   • A Trust where the net value of the Trust’s assets is in excess of €750,000 or the currency equivalent;
   • An individual whose net worth or joint net worth with that of a person’s spouse, exceeds €750,000 or the currency equivalent;
   • A senior employee or a director of a service provider to the AIF/PIF

Retail Funds

Besides the consolidation of the quasi-retail nature of PIFs & AIFs targeting experienced investors, the MFSA has also brushed-up the options for promoters/managers interested in setting up a Retail structure in Malta.  During such a consolidation, the MFSA has also parked the PIF Retail Non-UCITS option.  Therefore, Retail Structures can be in the below forms:

• UCITS Schemes, governed by the UCITS directive as transposed within the Investment Services Act and subject to the Investment Restrictions as per SLCs (and the Directive itself)
• Retail AIFs, governed by the AIFM Directive as transposed within the Investment Services Act and subject to the Investment Restrictions as per SLCs

Introducing the Notified Aif (“Naif”)

The MFSA is expected to issue the NAIF Guidelines for the NAIF in June of 2016.  The process of notification should apply to AIFs which are promoted to Qualifying or Professional Investors.  Funds falling within the scope of the notification process shall be managed by a Full-Scope AIFM which is authorised and regulated under Directive 2011/61/EU of the EU Parliament and of the Council of 8^th June 2011 on Alternative Investment Fund Managers.

Expected Features of Notified Aif (“Naif”):

• The Investment Fund is not subject to the licensing process by the MFSA;
• The NAIF is subject to a Notification Process;
• Onus of Due-Diligence & Ongoing supervision lie within the AIFM;
• The NAIF can be both open & closed ended;
• The NAIF cannot be self-managed;
• The NAIF cannot be in the form of a Loan Fund;
• The NAIF cannot invest in non-financial assets, including real-estate;
• The AIFM is to appoint and MLRO as an oversight over the NAIF.

Notification Process:

Although the NAIF is not subject to the 3-phased licensing procedure, it is still subject to a Notification process.  In fact, the AIFM is to notify the MFSA of the creation of the NAIF whilst, together with such notification, a notification pack composed of:

1. Prospectus of the NAIF;
2. Resolution of the NAIF’s Governance;
3. Self-Certification of the AIFM;
4. Joint Declaration by the AIFM and the Governing Body of the NAIF;
5. Declaration of the AIFM.

Should the MFSA be satisfied with the above, then the NAIF will be included in the MFSA’s list of Notified AIFs.  The MFSA reserves the right to reject incomplete notifications.