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Introducing Malta as a Notified AIF Regime

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Introducing Malta as a Notified AIF Regime - Peter Astleford

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Introducing Malta as a Notified AIF Regime

  1. 1. © 2016 Dechert LLP INTRODUCING MALTA’S NOTIFIED AIF REGIME Peter Astleford 1 April 2016
  2. 2. Our View: 2 22548139
  3. 3. REGULATION AFFECTING FUNDS IN EUROPE REGULATION OF THE MANAGER  Prudential – capital  Conduct – suitability/fair treatment  Systems – individuals/operational policies and procedures  “Fit and Proper” Etc… 22548139 4
  4. 4. REGULATION AFFECTING FUNDS IN EUROPE REGULATION OF THE FUND  Eligible assets/exposures  Service provider requirements  Transparency/reporting Etc… 22548139 4
  5. 5. MANAGER & PRODUCT REGULATION POST AIFMD  Regulated fund product Plus  Regulated manager Equals  Overlapping/inconsistent regulatory requirements affecting the fund  Need for double lawyering if AIFM is in a different jurisdiction 5 22548139
  6. 6. MALTA’S NOTIFIED AIF REGIME - A SOLUTION  Reliance on EEA AIFM’s regulated status  Grounded in AIFMD requirements  Declarations from AIF’s governing body  No prudential regulation of the AIF by MFSA  Quicker to market; more efficient operation 22548139 6
  7. 7. BASIS FOR THE NOTIFIED FUNDS REGIME  New regulations under the Investment Services Act  Investment Services Rules produced by the MFSA 7 22548139
  8. 8. WHO CAN MAKE USE OF THE REGIME?  A Maltese/EEA passported full scope AIFM  Of an unlicensed AIF  Promoted to Professional Investors/Qualifying Investors  Any form (open or closed ended) 22548139 8
  9. 9. WHO CAN NOTIFIED FUNDS BE SOLD TO?  Professional Investors – professional clients under MiFID 22548139 9
  10. 10. PROFESSIONAL INVESTORS & QUALIFYING INVESTORS  Qualifying Investor – invest a minimum EUR 100,000 (no reduction by way of a partial redemption); – declare in writing that they are aware of and accept the risks of the proposed investment; and 10 22548139
  11. 11. – satisfy at least one of the following:  a body corporate or group with net assets over EUR 750,000;  an unincorporated body with net assets over EUR 750,000;  a trust with net assets over EUR 750,000;  an individual (with any spouse) with over EUR 750,000; or  a senior employee or director of a service provider to the Notified AIF. 11 22548139
  12. 12. WHO CANNOT MAKE USE OF THE REGIME?  Funds which are not AIFs  Self-Managed AIFs  AIFs sold to “other” investors  AIFs managed by third country AIFMs (pre passport)  Loan Funds  AIFs investing in non-financial assets 22548139 12
  13. 13. NOTIFICATION PROCESS  AIF governing body approves prospectus  AIFM submits duly completed notification to MFSA within 30 days  AIF placed on Notified AIF List within 10 business days  Prospectus can then be dated 22548139 13
  14. 14. DOCUMENTATION SUBMITTED  Compliant prospectus  Resolution of AIF governing body certifying compliant prospectus  AIFM certification as to competence to manage/ monitor  Joint AIFM/AIF governing body declaration re continuing compliance with AIFMD  AIFM declaration re AIF governing body/service provider due diligence 14 22548139
  15. 15. DOCUMENTATION SUBMITTED PROSPECTUS  Form requirement – pro forma prospectuses included in the Rules  AIFMD pre sale disclosure requirements  Mandated legend covering: – AIFs Notified AIF status ...absence of review, assessment or approval by MFSA 15 22548139
  16. 16. HEALTH WARNING  XXXXX Fund is a Notified AIF under the Investment Services Act (List of Notified AIFs) Regulations. The Fund has been entered onto the List of Notified AIFs on the basis of a notification submitted by the AIFM confirming that:- – the AIFM is in possession of either:  a licence granted by the MFSA under the Investment Services Act; or  a management passport under Article 33 of AIFMD; and – the governing body of the Fund has approved the prospectus.  The entry of the xxxxxx Fund on the List of Notified AIFS is not an endorsement, guarantee or statement of approval by the MFSA nor is the MFSA responsible for the contents of this document or the selection or adequacy of its governing body or service providers.  The MFSA has made no assessment or value judgment of the soundness of the Fund or for the accuracy or completeness of statements made or opinions expressed with regard to it.  The MFSA has not reviewed or approved the Fund’s investment objective, policy or investment universe. Any person making statements to the contrary may be prosecuted under the Maltese Criminal Code [Chapter 9 – Laws of Malta]. Investors must rely solely upon their own and their advisors’ due diligence in making any decision to invest. 16 22548139
  17. 17. PROSPECTUS AMENDMENTS  Amended compliant prospectus must be submitted (clean and blackline)  Resolution of governing body re: – Continuing compliance with prospectus requirements – Material changes  Submitted within 30 days of resolution  Acknowledgment within 10 business days; prospectus can then be dated 17 22548139
  18. 18. AIFM OBLIGATIONS  Initial due diligence on AIF governing body/service providers – Fit and proper  Update due diligence at least annually  Rights over founder shares  AML – appointment of MLRO/periodic reporting  Compliance with AIFMD and marketing requirements 18 22548139
  19. 19. REMOVAL FROM THE NOTIFIED LIST  By the MFSA in its discretion  On request by AIFM  AIFM must request removal: – Termination or winding up – AIFM or custodian terminates or becomes insolvent – Service providers/governing body lack fitness/probity  AIF must then be wound down 19 22548139
  20. 20. 20 22548139 v
  21. 21. NOTIFIED AIF v RAIF 21 NOTIFIED AIF RAIF LICENSED AND SUPERVISED FUND   EXTERNAL EEA AIFM   VARIETY OF LEGAL STRUCTURES   DOMESTIC SERVICE PROVIDERS REQUIRED Auditor (and local director?) (depo, admin services (may be in sourced), auditor) SPECIFIC PROSPECTUS REQUIREMENTS   BROAD ASSET ELIGIBILITY   22548139
  22. 22. NOTIFIED AIF v RAIF NOTIFIED AIF V. RAIF REGISTRATION CHARACTERISTICS NOTIFIED AIF RAIF Notified to the MFSA Not registered with the CSSF Must register within 30 days of board approval of prospectus Must register within 10 days of notarial attestation of constitution Registration effective within 10 business days of filing Effective immediately Prospectus (form specified) and certain board and AIFM declarations to be filed Notarial attestation to be filed Prospectus updates to be filed with certain board declarations No revised documentation required to be filed 2222548139
  23. 23. 23 v 22548139
  24. 24. NOTIFIED AIF v QIAIF 24 NOTIFIED AIF QIAIF LICENSED AND SUPERVISED FUND   EXTERNAL EEA AIFM REQUIRED   VARIETY OF LEGAL STRUCTURES   DOMESTIC SERVICE PROVIDERS REQUIRED auditor (and local director?) (admin, depo, directors,) SPECIFIC PROSPECTUS REQUIREMENTS   BROAD ASSET ELIGIBILITY   22548139
  25. 25. NOTIFIED AIF v QIAIF NOTIFIED AIF V QIAIF REGISTRATION CHARACTERISTICS NOTIFIED AIF QIAIF NOTIFICATION EFFECTIVE • Within 10 business days of filing APPROVAL PERIOD • Within 24 hours of filing but… 25 22548139
  26. 26. Notified Fund Pros and Cons  Pros – Quick and easy to use – Safety of AIFMD – Early mover advantage – A “winner”?  Cons – Not regulated (as a product) – New to market; need to sell (LUX has the same job) – No changing regime 26 22548139
  27. 27. Timetable  Regulations to be submitted to Ministry in early April  MFSA to issue Rules once Regulations approved  Requests for Notified Funds to be accepted during Q2 2016 27 22548139
  28. 28. QUESTIONS 28 22548139
  29. 29. For further information, visit our website at dechert.com. Dechert practices as a limited liability partnership or limited liability company other than in Dublin and Hong Kong.

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