NAIF Consultation Document on the Proposed Amendments

The Malta Financial Services Authority (the “MFSA”) has recently published a Consultation document on the Proposed Amendments to the Notified Investment Funds Regime (NAIFs).

Proposed Changes

The proposed changes seek to allow the possibility of NAIFs to invest directly in immovable property or infrastructure. In this respect, the MFSA Property Funds Property will no longer apply to NAIFs and regulated AIFs but will remain solely applicable to PIFs. AIFs targeting retail investors cannot be established as property funds.  The MFSA is also looking into the possibility of extending the scope of funds which can be established as NAIFs to those funds which invest in non-financial assets.

The independence of the Board of Directors is further emphasised as the AIF is expected to comply with the Corporate Governance Manual for Directors of Investment Companies and Collective Investment Schemes and in case that the governing body does not fulfil such requirement, the offering documentation of the NAIF shall include a statement to this effect.

Following the listing of the NAIF, a copy of the updated Terms of Reference and the Risk Management Policy shall also be submitted to the Authority. Furthermore, the AIFM is being required to ensure that the relevant Valuation Policy and Procedures are updated and to submit for the Authority’s consideration and approval any new valuation arrangements which it will be implementing in respect of the NAIF.

Another important proposed amendment relates to who can be appointed as MLRO of the NAIF. Indeed, the AIF may subject to certain conditions, delegate the MLRO function to the administrator of the NAIF, an officer of the NAIF or to the MLRO of the AIFM itself.

In addition to the above, the MFSA is also proposing a review in the Continuation of Companies Regulations for the purpose of providing for the possibility of continuation of a scheme licenced in another jurisdiction as a NAIF as well as, reviewing the rules laid down in the Investment Services Act (Prospectus of Collective Investment Schemes) Regulations and in the Investment Services Act (Performance Fees) Regulations (SL. 370.12).

The Next Step

The above proposals are open for public consultation until the 1st September 2017. Following this period, the MFSA will take into account the feedback received and will decide whether any changes or revisions are required to the proposed amendments.