On the 25th August 2020, the Malta Financial Services Authority (“MFSA”) issued a circular on the updates made to the Investment Services Rules (the “Rules”) applicable to Collective Investment Schemes. The Rules have been updated by adding a requirement for Collective Investment Schemes to report any breaches which occurred during the reporting period in the Annual Report and the Audited Financial Statements.
By Collective Investment Schemes, the MFSA is addressing all funds which are established in Malta, namely Professional Investor Funds, Alternative Investment Funds and Undertakings for the Collective Investment in Transferable Securities. Collective Investment Schemes are now requested to incorporate a statement in the Directors’ report or in any other significant section in the Annual Report and Audited Financial Statements addressing any breaches which took place during the period being reported.
This new requirement has already been implemented in the following sections of the below Rules:
- SLC 1.15A in Part B of the Investment Services Rules for Alternative Investment Funds;
- SLC 1.98A in Part BI/ SLC 1.71A in Part BII/ SLC 1.73A in Part BIII of the Investment Services Rules for Professional Investor Funds; and
- SLC 12.21A in Part BII of the Investment Services Rules for Malta based Retail UCITS Collective Investment Schemes.
The respective updated Rules for each type of fund also clarify that the mandatory statement is to include the following factors:
- a brief explanation of the nature of each breach;
- whether the breach was rectified both during the period and after; and
- any regulatory action that may have been taken by the MFSA as a result of the breach.
Furthermore, Collective Investment Schemes are expected to include a statement even in the periods where no breaches occurred.
Feel free to contact us if you require any further information in relation to the new requirement for Collective Investment Schemes.
