The Malta Financial Services Authority (“MFSA”) has published a circular announcing amendments to the Notified Professional Investor Fund (“NPIF”) framework. These changes now allow NPIFs to be established as self-managed structures in addition to the previously permitted third-party managed funds.
Since its introduction on 18 December 2023, the NPIF framework only permitted the creation of third-party managed funds. However, following industry feedback and a consultation process, including a Consultation Document published on 12th June 2024 and a Feedback Statement released on 26 September 2024, the MFSA has now expanded the framework to accommodate self-managed NPIFs.
The key updates aim to enhance flexibility for fund managers, offering them the option to manage their own funds under the NPIF framework, which is designed to offer lighter regulatory oversight compared to fully licensed funds.
Key Amendments to the NPIF Framework:
- Investment Committee Structure: After reassessing feedback, the MFSA has decided not to require a local member to the Investment Committee (“IC”) for self-managed NPIFs. This decision aligns with the framework’s intention to operate under less stringent oversight. The previous requirement to have a local IC member was seen as incompatible with the nature of the NPIF framework, where at least one member of the governing body is required to be resident in Malta.
- Changes to the NPIF Rulebook: The MFSA has made several updates to the Investment Services Rules for NPIFs to integrate the new self-managed fund option:
- Part A has been updated to permit NPIFs to be set up as self-managed structures and introduces additional requirements for Due Diligence Service Providers (“DDSPs”) for self-managed funds.
- Part B aligns with these amendments to maintain consistency across the rules.
- A new Section 6 has been added to the Supplementary Rules, detailing the additional provisions for self-managed NPIFs.
- Reporting Requirements: Reporting obligations for self-managed NPIFs will align with those of self-managed licensed PIFs. This includes full reporting of AIFM-specific and AIF-specific information to the MFSA, as outlined in Rule 6.20 of the Supplementary Rules. It’s important to note that the Reporting Guidelines for Notified PIFs apply differently to third-party managed NPIFs, with certain exceptions no longer applicable to self-managed funds.
- Due Diligence Service Providers: Unlike third-party managed NPIFs, which only require regulatory approval for eligible Company Service Providers (“CSPs”) acting as DDSPs, self-managed NPIFs now require prior approval for both Fund Administrators and CSPs. Entities seeking approval must submit a declaration of adequacy and a competence assessment, either at the time of notification or before submitting the NPIF for inclusion in the official NPIF list.
Further updates and developments on the MFSA’s strategic initiatives will be made public on the Authority’s website. Should there be any queries in relation to the above, kindly send an email to [email protected].
The full circular can be accessed through the following link: MFSA Extends the Notified PIF Framework to Cater for Self-Managed Structures
References
- Investment Services Act (List of Notified CISs) Regulations, as amended;
- Investment Services Rules for NPIFs and related Due Diligence Service Providers, and to the annexes thereto; and
- Reporting Guidelines for Notified Professional Investor Funds.
