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Key features of Malta’s new regime

Dr Louis de Gabriele, head of Camilleri Preziosi Advocates’s Corporate and Finance practice group, outlines the benefits of Malta’s Notified AIF (NAIF) regime…

"In my view, the main benefits are twofold," says Dr Louis de Gabriele, head of the Corporate and Finance practice group at Camilleri Preziosi Advocates, when discussing the newly introduced Notified AIF (NAIF) regime. 

"Firstly, the NAIF regime will significantly condense time to market for these types of funds. Indeed, the MFSA has committed itself to list funds on the `Notified AIF List' within ten business days from the submission of a complete notification pack, which will allow AIFMs to bypass the costs and delays associated with licensing regimes elsewhere . 

"Secondly, the NAIF regime removes the dual layer of regulation currently applicable at both AIFM level and fund level. In the spirit of AIFMD, the NAIF regime shifts the onus of ensuring AIFMD compliance onto managers and eliminates regulation at product level."

There are several key features of the NAIF:

Full compliance with AIFMD

NAIFs are not authorised, licensed or in any way approved by the MFSA. "Nonetheless," says Dr de Gabriele, "it is imperative to note that the Notified AIF regime is fully compliant with AIFMD – this new regime merely relies on the AIFM's regulatory status and good standing and thus the onus of ensuring AIFMD compliance is borne by the AIFM." 


In a similar manner to AIFs, a NAIF can be either open-ended or closed-ended and established as an investment company (either a SICAV or INVCO), a unit trust, a contractual fund, a limited partnership, an incorporated cell within an incorporated cell company or as an incorporated cell of a recognised incorporated cell company. 

Self-managed AIFs, property funds, loan funds and funds which invest in instruments and assets other than financial instruments listed in Section C of Annex I of MiFID cannot be established as NAIFs. 

Furthermore, collective investment schemes which are already licensed in terms of the Investment Services Act cannot convert into NAIFs.

Notification process

This is broadly as follows: the AIFM must submit a notification pack to the MFSA which includes a notification form with the required accompanying documentation within 30 calendar days from the date of resolution of the governing body of the AIF approving the prospectus. "The above mentioned accompanying documentation includes, amongst others, the prospectus of the fund and 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," explains Dr de Gabriele. 

Due diligence requirements

Prior to submitting a request for inclusion of the AIF in the `List of Notified AIFs', AIFMs will need to carry out the necessary due diligence to ensure that the service providers and the governing body of the AIF are `fit and proper'. 

"In particular, at the outset, the AIFM shall not permit a person to hold the office of director of the AIF unless it is satisfied on reasonable grounds that the person complies, and will comply on an ongoing basis, with high standards of fitness and probity," confirms Dr de Gabriele. He concludes by adding:

"The introduction of the NAIF regime consolidates Malta's reputation in the global fund industry as a domicile of choice for fund promoters and managers and it could be a game changer. If competing jurisdictions don't follow suit, Malta could be well placed for an inflow of business in the coming months and years.

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