Thu, 22/09/2016 - 14:54
On 10 June 2016, Malta burnished its reputation when the Malta Financial Services Authority (MFSA) launched the Notified Alternative Investment Fund (NAIF) regime through the publication of the Investment Services Act (List of Notified AIFs) Regulations in the Malta Government Gazette.
This sets the scene for fund promoters to launch AIFs through Malta by means of a light touch notification process without having to go through a full licensing process with the MFSA. Rather, the NAIF may be launched by full-scope AIFMs authorised by the MFSA under the Investment Services Act, who will shoulder the responsibility of oversight and compliance.
"Aside from Malta-based AIFMs, an EU AIFM that has passported its fund management license to Malta under Article 33 of the AIFMD will also be able to launch a NAIF. Third country AIFMs may submit requests for a notification of an AIF, if passporting rights have been granted to the country where the AIFM has been established," confirms Dr Jean C Farrugia, senior partner at DF Advocates.
The AIFM will need to submit a request for inclusion by the MFSA of an AIF or for one or more sub-funds of a NAIF in the List of Notified AIFs.
The AIFM must submit the following documentation together with the aforementioned notification request:
• A prospectus containing the minimum criteria prescribed in the relevant Investment Services Rules and duly compiled having regard to the template made available by the MFSA;
• A resolution approved by the governing body of the AIF certifying that the prospectus of the AIF satisfies the minimum criteria prescribed by the MFSA in the applicable Investment Services Rules;
• A self-certification by the AIFM that, having regard to any delegate manager(s) or advisers it has in place, it has the necessary competence and experience to manage the AIF and monitor it effectively;
• A joint declaration by the AIFM and the governing body of the AIF by which each undertakes responsibility for the AIF, including, inter alia, the obligations arising under the AIFMD;
• A declaration by the AIFM confirming that it has carried out the necessary due diligence with regard to the service providers of the AIF and the governing body of the AIF.
The MFSA has committed itself to processing NAIF applications within 10 days. If everything is in order, the fund will be registered under the Notified AIF register and the manager will be able to start marketing and raising capital.
A NAIF can be launched using any of the following legal structures (either open- or closed-ended):
• SICAV (an investment company with variable share capital);
• INVCO (an investment company with fixed share capital);
• SICAV ICC (an incorporated cell of a SICAV set up in terms of the Companies Act (SICAV Incorporated Cell Company) Regulations;
• RICCs (an incorporated cell of company set up as Recognised Incorporated Cell Company);
• Limited partnership;
• Unit trust;
• Contractual Fund.
"Since the launch of the NAIF regime, we've seen an increased interest in de minimis fund managers upgrading their license to become a full-scope AIFM. Over time, I believe that the NAIF regime will take over the Professional Investor Fund ("PIF") regime that Malta retained alongside AIFMD, with respect to hedge funds," concludes Dr Farrugia.
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