Notified PIF regime: MFSA publishes second consultation document and draft legislation

The proposed Notified PIF (‘NPIF’) regime appears to be gaining interest locally as the Malta Financial Services Authority (the ‘MFSA’) has published a second consultation document along with draft legislation regulating the framework. The proposed NPIF regime seeks to introduce a similar notification process to that of the Notified Alternative Investment Fund (‘NAIF’) regime, albeit in the context of funds targeting ‘qualifying investors’.

Key features

In line with the current NAIF regime, NPIFs will be subject to a notification process, rather than full licensing, which process may be completed within 10 working days from the submission of a complete notification pack to the MFSA.

In accordance with the draft legislation, NPIFs may be managed by:

a) A Malta licensed de minimis AIFM;
b) An EU licensed de minimis AIFM; or
c) A third country licensed AIFM (subject to certain conditions).

As a result, the above categories of fund manager should benefit from limited setup and operational costs and a quick time-to-market when looking to establish their funds in Malta.

In particular, NPIFs:

• should not be subject to statutory investment restrictions except for certain ‘lending’ activities;
• are not required to obtain approval from the MFSA on the Offering Memorandum; and
• may, but are not required to, appoint a custodian – on the basis that appropriate safekeeping arrangements are in place.

The NPIF framework is facilitated by the imposition of certain conditions, including that a NPIF must, inter alia:

• only be offered to certain ‘qualifying investors’;
• appoint at least one Malta resident person to its governing body, which body will ultimately be responsible for ensuring ongoing compliance of the fund with all applicable regulations and rules;
• appoint a fund administrator established and authorised to operate in Malta;
• appoint a third-party service provider to be responsible for conducting due diligence with respect to the NPIF, both at notification stage and on an ongoing basis;
• appoint a MLRO; and
• comply with certain limited ongoing compliance obligations.

The way forward

The MFSA is seeking feedback from interested parties on the proposed draft legislation by 22 June 2023.

How can Deloitte Help?

Should you require additional information, assistance or have any queries with regards to the proposed NPIF regime, do not hesitate to contact us.