The Alternative Investment Fund Managers Directive (“AIFMD”) is a 2011 EU Directive regulating the marketing and management of funds, excluding UCITS funds, within the EU. The AIFMD and its regulation was transposed within the Investment Services Act in July of 2013. The Directive defines an Alternative Investment Fund (“AIF”) as:
“A Collective Investment Scheme (CIS), including sub-funds thereof, which raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and which does not qualify as an Undertaking for Collective Investment in Transferable Securities (UCITS) Scheme in terms of the UCITS Directive.”
To Whom Does Alternative Investment Fund Managers Directive (AIFMD) apply?
The implementing procedures of the Alternative Investment Fund Managers Directive (AIFMD) subjects fund managers to an authorisation, or registration, requirement as well as a number of ongoing obligations such as investor disclosures, regulatory reporting, the role of the depository and remuneration. Essentially, the Directive would concern:
- Fund Managers established in the EU managing and / or marketing Alternative Investment Funds (“AIFs”), and outside the EU;
- Fund Managers established outside the EU managing and / or marketing their AIFs in the EU;
- Collective Investment Schemes (“CISs”), other than UCITS, marketed in the EU or managed by an EU/EEA manager of alternative investment funds
AIFs carrying out activities in Malta are regulated in Malta and require an Investment Fund Licence issued by the Malta Financial Services Authority (“MFSA”). For regulatory purposes, Professional Investor Funds (“PIFs”), and Private Collective Investment Schemes would not be captured by the definition of an AIF in terms of the AIFMD.
Alternative Investment Fund Managers Directive (AIFMD) & Malta
In June 2013 the MFSA updated its Investment Services Rulebooks as part of Malta’s implementation of the Alternative Investment Fund Manager Directive. The Investment Services Act, 1994 provides the statutory basis for regulating Collective Investment Schemes constituted in or operating in or from Malta. AIFs are a special class of Collective Investment Schemes which fall within the scope of this Act.
It is still possible to apply for a Professional Investor Fund (PIF) license in either of the following cases:
- Applicants who opt to apply to be licensed as a “de-minimis” self-managed AIF;
- Applicants who opt to apply for a PIF licence provided the PIF is managed by as “de-minimis” AIFM;
The lighter touch “de-minimis” AIFMD regime applies in respect of fund managers whose assets under management:
- Do not exceed €100 million (when leveraged), or
- Do not exceed €500 million, where there is no leverage and where investors may not effect redemptions for a 5-year period
Service Providers of an Alternative Investment Fund (AIF) under Maltese Law
An AIF may appoint service providers as it deems necessary. Nonetheless, a Maltese licenced AIF is required to, at least, appoint:
|AIFM||Should the AIF be 3rd party managed, then an AIFM subject to the AIFMD is required. Should the AIF be self-managed, then the Board of Directors of the AIF will set up an Investment Committee composed of, at least, three persons.|
|Custodian / Depository||Up till the 22nd July 2017, an AIF licenced in Malta may appoint a custodian / depository situated in any EU Member State. Following this date, the AIF must appoint such credit institution having substance in Malta and authorised by the MFSA.|
|Compliance Officer||Although the AIF’s compliance with its licence conditions rest within the Board of Directors, a Malta-licenced AIF must have a Compliance Officer at all times. Such role would envisage to issue a compliance report, at least, semi-annually and made available to the regulator.|
|MLRO||Responsibility for the AIF’s compliance with the prevention of money laundering regulations rests within the Board of Directors (or GPs). Nonetheless, a Malta-licenced AIF must have an MLRO in place at all times.|
|External Valuer||The External Valuer shall be appointed by the AIFM, or by the AIF should the latter be self-managed|
Application and Supervisory Fees of an Alternative Investment Fund (AIF) in Malta
Regulatory fees comprise of a non-recurring Application fee payable on submission of the Application for an AIF and an annual supervision fee which is due on the anniversary of the license being granted as outlined below.
|Application Fee||Annual Supervisory Fee|
|Sub-Funds (per sub-fund)||€1,000||€600|
|Incorporated Cells of RICCs (per Incorporated Cell)||€1,000||€600|
|Notification Fee||Annual Supervisory Fee|
|Per Scheme Sub-Fund||€450||€500 up to 15 Scheme Sub-funds (per sub-fund)*|
|*No Annual Supervisory Fee will be payable from the 16th Scheme sub-fund upwards|