The Malta Financial Services Authority (“MFSA”) has issued a Circular announcing that the European Securities and Markets Authority (“ESMA”) has published its Q&A Guide on the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088) (“SFDR”) (SFDR) and the SFDR Delegated Regulation (Commission Delegated Regulation (EU) 2022/1288).
The SFDR continues to reshape the landscape of sustainable investing across the European Union (“EU”), and Malta is no exception. With the latest consolidated Q&A released by the ESMA and the European Commission, new clarifications are shedding light on areas that have long caused confusion – especially for Maltese Alternative Investment Fund Managers (“AIFMs”), Notified Alternative Investment Funds (“NAIFs”), and other local financial market participants.
Below are some of the most relevant pitfalls Maltese stakeholders should avoid:
- Registered AIFMs Are Not Exempt
Many Maltese AIFMs operate below the full Alternative Investment Fund Managers Directive (“AIFMD”) threshold and are registered under Article 3(3) of the Directive 2011/61/EU. However, they are still subject to SFDR. Despite not being required to prepare AIFMD-style pre-contractual or annual disclosures, they must apply these disclosures by analogy, meaning they must integrate them into investor communications required under national law. Ignoring this obligation is a key compliance risk.
- Website Disclosures Are Mandatory for Article 8/9 SFDR Products
Even smaller AIFMs marketing products under Article 8 of the SFDR (Environmental, Social, and Governance (“ESG”) characteristics) or Article 9 of the SFDR (sustainable investment objective) must maintain a website with relevant disclosures under Article 10 of the SFDR. AIFMs cannot rely on absence of an existing website as a workaround. Where applicable, a dedicated microsite or use of a group website may be acceptable, but accessibility and staying up to date are key.
- No Shortcut Around Sustainability Due Diligence
Disclosing that sustainability risks are “not relevant” under Article 6(1) of the SFDR does not exempt an AIFM from sustainability due diligence obligations under other EU legislation, such as Article 18(5) of the Commission Delegated Regulation (EU) No 231/2013. Maltese investment managers must take sustainability risks into account as part of their due diligence regardless of their SFDR disclosures.
- Non-EU AIFMs Must Comply When Marketing in Malta
Non-EU AIFMs marketing to Maltese investors via the National Private Placement Regime (“NPPR”) must comply with the SFDR when offering products in Malta. This includes pre-contractual and ongoing product-level disclosures, even if the AIFM is not established within the EU.
- “Comply or Explain” Still Requires Careful Justification
Smaller Maltese firms may opt out of entity-level principal adverse impact (“PAI”) disclosures under Article 4(1)(b) of the SFDR. However, this route requires clear, published justifications. Furthermore, these firms may still need to consider PAI at the product level, particularly for funds which fall under Article 8 or Article 9 of the SFDR.
Takeaway for Malta-based Fund Managers and Advisors
In the Maltese context where small to mid-sized managers, NAIFs, and boutique advisory firms are common, SFDR compliance is not optional. Even “registered” or “non-EU” status does not exempt firms from many of the regulation’s requirements. Early engagement with legal counsel and ESG specialists is essential to avoid enforcement risk, reputational harm, or investor mistrust.
The full ESMA Q&A guide on the SFDR and SFDR Delegated Regulation can be accessed here.
