On the 22nd of December 2022, the Malta Financial Services Authority (“MFSA”) published a Consultation Document on the proposed establishment of a Framework for Notified Professional Investor Funds (“NPIFs”). The aim behind this Consultation Paper is for the MFSA to seek stakeholder’s views on the proposed Framework dedicated to NPIFs, which (as is proposed) will be comprise of a dedicated rulebook titled ‘Rules for Notified PIFs and related Due Diligence Service Providers’, together with proposed amendments to Part A of the ‘Investment Services Rules for Professional Investor Funds’.
The concept of NPIFs was first introduced in October 2021 with the publication of the MFSA’s Discussion Paper on its Asset Management Strategy. The aim behind the NPIF proposal is to provide an additional fund structure which complements existing fund frameworks, and which would entail a lower associated setup and lower operational/regulatory costs. This NPIF proposal was well-received by the responding stakeholders.
The proposed dedicated rulebook for NPIFs will set out the main characteristics of NPIFs, describe the applicable framework, and outline the role of the NPIFs’ governing body, due diligence required and ongoing requirements, reporting matters, duties of the Service Providers, anti-money laundering obligations, safekeeping arrangements, the roles of the fund administrator and manager, and other regulatory notifications. Furthermore, proposed amendments to Part A of the ‘Investment Services Rules for Professional Investor Funds’ will mainly cater for the eventuality of a conversion of a licensed PIF to a NPIF.
Important to note is that the proposed NPIFs will be subject to a notification process and will therefore not be licensed by the MFSA. Furthermore, NPIFs will only be available for Qualifying Investors since they are not proposed to be retail-schemes due to their riskier nature brought about by the less onerous regulatory obligations and levels of supervision. NPIFs will only be managed by locally licensed de minimis Alternative Investment Fund Managers (“AIFMs”), EU de minimis AIFMs deemed by the MFSA as subject to regulation in an equivalent level locally, or third country AIFMs with which the MFSA has a cooperation agreement.
The MFSA is therefore inviting stakeholders to submit their comments on the proposed NPIFs Framework in this Consultation Document. The interested parties should send their comments in writing by not later than the 31st of January 2023.
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