Malta AIFMD: Revision of the Investment Services Rulebook
On the 24th March 2014 the MFSA issued the revised Investment Services Rulebooks and Guidance Notes, namely:
Investment Services Rules for Alternative Investment Funds;
Investment Services Rules for Professional Investor Funds;
Investment Services Rules for Retail Collective Investment Schemes;
Investment Services Rules for Recognised Persons;
Guidance Notes on the Computation of the Annual Supervisory Fees for Investment Services Licence Holders.
The main general change effected throughout the Rulebooks relates to the the revised application and annual supervisory fees in line with the recently enacted Investment Services Act (Fees) Regulations.
Additionally, there were specific changes in the Alternative Investment Funds Rulebook and Professional Investor Funds Rulebook.
Investment Services Rules for Alternative Investment Funds
In order to increase the efficiency in the transition from a professional investor fund (‘PIF’) to an alternative investment fund (‘AIF’), five new categories of AIFs were introduced depending on the category of investors the AIF is promoted to:
· Retail Investors
· Professional Investors (as defined in Annex Ii of MiFID)
· Experienced Investors
· Qualifying Investors
· Extraordinary Investors
In this respect, Appendix 4 was revised to reflect the introduction of the different categories of AIFs, and now provides the statement which is to be included in the Offering Document when an AIF is sold to Experienced, Qualifying and Extraordinary Investors; and Appendix 9 was newly introduced to provide for the Declaration Forms for Professional, Experienced, Qualifying and Extraordinary Investors.
With respect to marketing of AIF, the revisions provide inter alia that where an AIF is sold in a jurisdiction outside Malta to investors other than professional investors, the national provisions applicable in the relevant jurisdiction would become applicable, as required by the Alternative Investments Fund Managers Directive (‘AIFMD’).
Additionally, Appendix 8 relating to disclosure and transparency requirements was revised in line with the ESMA Guidelines on reporting obligations (the ‘Guidelines’) issued by the European Securities and Markets Authority (‘ESMA’) on 1 October 2013. The Guidelines clarify the AIFMs requirements to report on a number of areas including investment profile, portfolio concentrations and the risk profile of their AIFs. The Guidelines also provided for a new consolidated reporting template and detailed IT technical guidance. ESMA also issued its view on the collection of additional information for the effective monitoring of systemic risk, including inter alia the gathering of value-at-risk (VaR) reporting on AIFs.
Investment Services Rules for Professional Investment Funds
The standard licence conditions now bind the PIF to continuously monitor the appointed third party fund manager’s regulatory status to ensure that so that where the fund manager ceases to be a de minimis fund manager, compliance with the AIFMD requirements remains secured.
The standard licence conditions regulating cross sub-funds were amended to reflect MFSA’s recent clarification that the 50% limitation on cross-investments by a sub-fund, applies for an investment in any one other sub-fund of the same scheme, but not to the collectivity of investments by such sub-fund in all the other sub-funds of the same scheme.
Annexes 1 and 2 relating to reporting obligations of the PIF were introduced in Appendix 1 incorporating the requirements under the ESMA Guidelines on reporting obligations.
The revised rules introduced Appendix VI providing a list of regulatory requirements which must be complied with by PIFs so as to be compliant with AIFMD.
Malta AIFMD: Revision of the Investment Services Rulebook
On the 24th March 2014 the MFSA issued the revised Investment Services Rulebooks and Guidance Notes, namely:
Investment Services Rules for Alternative Investment Funds;
Investment Services Rules for Professional Investor Funds;
Investment Services Rules for Retail Collective Investment Schemes;
Investment Services Rules for Recognised Persons;
Guidance Notes on the Computation of the Annual Supervisory Fees for Investment Services Licence Holders.
The main general change effected throughout the Rulebooks relates to the the revised application and annual supervisory fees in line with the recently enacted Investment Services Act (Fees) Regulations.
Additionally, there were specific changes in the Alternative Investment Funds Rulebook and Professional Investor Funds Rulebook.
Investment Services Rules for Alternative Investment Funds
In order to increase the efficiency in the transition from a professional investor fund (‘PIF’) to an alternative investment fund (‘AIF’), five new categories of AIFs were introduced depending on the category of investors the AIF is promoted to:
· Retail Investors
· Professional Investors (as defined in Annex Ii of MiFID)
· Experienced Investors
· Qualifying Investors
· Extraordinary Investors
In this respect, Appendix 4 was revised to reflect the introduction of the different categories of AIFs, and now provides the statement which is to be included in the Offering Document when an AIF is sold to Experienced, Qualifying and Extraordinary Investors; and Appendix 9 was newly introduced to provide for the Declaration Forms for Professional, Experienced, Qualifying and Extraordinary Investors.
With respect to marketing of AIF, the revisions provide inter alia that where an AIF is sold in a jurisdiction outside Malta to investors other than professional investors, the national provisions applicable in the relevant jurisdiction would become applicable, as required by the Alternative Investments Fund Managers Directive (‘AIFMD’).
Additionally, Appendix 8 relating to disclosure and transparency requirements was revised in line with the ESMA Guidelines on reporting obligations (the ‘Guidelines’) issued by the European Securities and Markets Authority (‘ESMA’) on 1 October 2013. The Guidelines clarify the AIFMs requirements to report on a number of areas including investment profile, portfolio concentrations and the risk profile of their AIFs. The Guidelines also provided for a new consolidated reporting template and detailed IT technical guidance. ESMA also issued its view on the collection of additional information for the effective monitoring of systemic risk, including inter alia the gathering of value-at-risk (VaR) reporting on AIFs.
Investment Services Rules for Professional Investment Funds
The standard licence conditions now bind the PIF to continuously monitor the appointed third party fund manager’s regulatory status to ensure that so that where the fund manager ceases to be a de minimis fund manager, compliance with the AIFMD requirements remains secured.
The standard licence conditions regulating cross sub-funds were amended to reflect MFSA’s recent clarification that the 50% limitation on cross-investments by a sub-fund, applies for an investment in any one other sub-fund of the same scheme, but not to the collectivity of investments by such sub-fund in all the other sub-funds of the same scheme.
Annexes 1 and 2 relating to reporting obligations of the PIF were introduced in Appendix 1 incorporating the requirements under the ESMA Guidelines on reporting obligations.
The revised rules introduced Appendix VI providing a list of regulatory requirements which must be complied with by PIFs so as to be compliant with AIFMD.