On 22 May 2023, the Malta Financial Services Authority (the “MFSA”) published a Consultation Document on the proposed legislative amendments related to the promulgation of the new framework for Notified Professional Investor Funds (“NPIFs”)
This follows and is complementary to the previous Consultation Document, which was issued by the MFSA on 22 December 2023, and which sought input from stakeholders on the main features of the proposed framework for NPIFs and the draft rulebook to regulate such framework.
The NPIFs Framework Proposal
The NPIFs framework proposal aims to introduce a new fund structure that is similar to the existing and largely successful Notified Alternative Investment Fund (“NAIF”) framework. Similarly to NAIFs, NPIFs will be subject to a notification process and not a licensing process. This will mean that NPIFs will have the possibility of obtaining their notified status with the MFSA in as little as 10 working days. The new framework will introduce the possibility of lower setup and other operational and regulatory expenses to those currently incurred by fully licensed funds. Moreover, the risk-based and proportional approach that is expected to be taken will lessen entry barriers for professional investor funds (“PIFs”).
You may read more about the proposed NPIFs framework in our previous article in relation to the first Consultation Document here.
The Suggested Legislative Amendments
Apart from the introduction of a dedicated rulebook, in its effort to establish this new NPIFs framework, the MFSA is proposing amendments to the following Regulations:
- Investment Services Act (List of Notified AIFs) Regulations (S.L. 370.34)
- Investment Services Act (Exemption) Regulations (S.L. 370.02)
- Investment Services Act (Fees) Regulations (S.L. 370.03)
- Trusts and Trustees (Exemption) Regulations (S.L. 331.02)
- Companies Act (Investment Companies with Variable Share Capital) Regulations (S.L. 386.02)
What’s Next?
Interested parties are encouraged to submit their feedback on the proposed legislative amendments to the MFSA by 22 June 2023. The MFSA then intends to issue one holistic feedback statement addressing both consultation documents.
The NPIF regime is a new product that aims to build on the success of the NAIF framework and enhance Malta’s appeal as a fund jurisdiction – particularly for US, UK and other third country investment managers.
This article was written by Dr Mark Caruana Scicluna (Associate, Investment services & funds) and Yasmine Ellul (Advocate, Investment services & funds
