On 26 May 2016 the Malta Financial Services Authority ('MFSA') published a circular, thus putting flesh on the bones of its intention to consolidate and reduce the number of fund frameworks available to fund promoters pursuant to the Investment Services Act (Chapter 370 Laws of Malta) and the applicable Rules thereof.
As at the date of publication of the aforementioned circular, the available fund frameworks available to promoters were as follows:
- Retail Schemes
These included UCITS, Non-UCITS Retail Schemes, Overseas Based Non-UCITS Retail Schemes and Retail AIFs.
- Professional Investor Funds ('PIFs')
These comprised the below three sub-categories:
- PIFs promoted to Experienced Investors with a minimum investment requirement of EUR 10,000;
- PIFs promoted to Qualifying Investors with a minimum investment requirement of EUR 75,000; and
- PIFs promoted to Extraordinary Investors with a minimum investment requirement of EUR 750,000.
- Alternative Investment Funds ('AIFs')
These were subdivided into the following sub-categories (save from the retail AIFs which have been included under the Retail Schemes above):
- AIFs promoted to Experienced Investors with a minimum investment requirement of EUR 10,000;
- AIFs promoted to Qualifying Investors with a minimum investment requirement of EUR 75,000;
- AIFs promoted to Extraordinary Investors with a minimum investment requirement of EUR 750,000;
- AIFs promoted to Professional Investors, as defined in Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments ('MiFID'), with no minimum investment requirement; and
- Notified AIFs ('NAIFs'), which have been available since June 2016.
Further to an assessment of the aforementioned available fund frameworks, the MFSA decided to proceed with their consolidation thereof, thus adopting an even more promoter-friendly approach. Thus, with effect from 3 June 2016, the new fund regulatory status quo has been moulded as follows:
- Retail Schemes
These include UCITS and Retail AIFs. Non-UCITS retail schemes have been phased out (whilst no new licences are being issued, the existing licence holders are allowed to continue operating under the previous regime) whereas the Overseas-Based Non-UCITS retail schemes are now required to comply with the Maltese National Private Placement Regime.
- PIFs
These now include only PIFs promoted to Qualifying Investors (revised definition to be found below) with a minimum investment requirement of EUR 100,000. As with Non-UCITS retail schemes above, PIFs licenced under the previous regulatory framework are allowed to continue operating under their respective regulatory regime.
- AIFs
These are now subdivided into the following sub-categories (save from the retail AIFs above):
- AIFs promoted to Qualifying Investors (revised definition to be found below) with a minimum investment requirement of EUR 100,000;
- AIFs promoted to Professional Investors, as defined in MiFID, with no minimum investment requirement; and
- NAIFs
The term 'Qualifying Investor' has been revised not only vis-à-vis the investment requirement but also the eligibility criteria. It is worth mentioning here that the revised definition shall not be applicable before the publication of the revised rulebooks, until when the previous definition shall continue to be used. The table below includes both definitions (previous and revised) for comparison purposes:
Previous Definition | Revised Definition |
A 'Qualifying
Investor', is required to meet one or more of the following
criteria:
|
A 'Qualifying
Investor', is an investor which fulfils the following
criteria:
|
The aforementioned consolidation proves yet again the MFSA's pro-investor mentality through the unambiguous and quite welcome simplification and clarity introduced. Such mentality has been prominent in every measure adopted by the regulator, working in tandem with the industry, thus ensuring that Malta remains a nonpareil international financial services hub as well as a global investment jurisdiction of choice.
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