Externally managed funds in Malta, and in other European jurisdictions, are effectively regulated both at fund management level and at fund level. Following the introduction of the Alternative Investment Fund Managers Directive (“AIFMD”), one would therefore have an Alternative Investment Fund Manager (“AIFM”), the entity managing the fund, requiring an Investment Services licence, and the Alternative Investment Fund (“AIF”), the regulated fund itself, requiring a Collective Investment Scheme licence.
The MFSA understands that at times, depending on market conditions, fund managers may need to launch a new fund product in the shortest time-frame possible, offering a cost-effective solution to target a potential area of investment. The MFSA therefore introduced the Notified AIF regime, a solution which relies heavily on the AIFM’s regulated status and does away with the prudential regulation of the AIF itself. The result is a product which is quicker to market, more efficient to operate and more in line with the intentions of the AIFMD, i.e. to regulate the fund manager itself.
The Notified AIF regime is applicable to any full scope AIFM, licensed in Malta or in any other EEA jurisdiction and exercising its passport in Malta. The Notified AIF may be promoted to Professional Investors or Qualifying Investors and may be either closed ended or open ended.
Professional Investors are those investors falling within the definition of professional clients under MiFID. Qualifying Investors must satisfy at least one of the following conditions to qualify as such:
Be a body corporate or group with net assets over EUR 750,000;
An unincorporated body with net assets over EUR 750,000;
A trust with net assets over EUR 750,000;
An individual (with any spouse) with over EUR 750,000; or
A senior employee or director of a service provider to the Notified AIF
A Qualifying Investor must invest a minimum of EUR 100,000 in the Notified AIF and must declare in writing that he is aware of and accepts the risks of the proposed investment.
The Notified AIF regime is not applicable to funds which are not AIFs. It is also not applicable to self-managed AIFs, AIFs sold to investors other than those mentioned above (retail clients are excluded), AIFs managed by third country AIFMs (pending the introduction of the passporting facility for third countries), loan funds and AIFs investing in non-financial assets.
The governing body of the AIF approves the prospectus following which the AIFM submits a duly completed notification application to the MFSA within thirty days. The MFSA undertakes to place the AIF on the Notified AIF list within ten business days, following which the prospectus may then be dated.
The above is based on the current information and draft documents published by the MFSA and may be subject to changes once the final set of rules is published.