At present, the Maltese regulatory regime does not provide for tailored rules governing private equity funds (“PE Funds”). This has not stopped PE Funds from setting up shop in Malta – indeed, the flexibility underpinning the Maltese PIF and AIF structures had made them suitable conduits to accommodate private equity structures.
However, by virtue of a consultation document issued on 19 November 2014, the Malta Financial Services Authority (“the MFSA”) has sought to clarify and consolidate the status quo ante. Indeed, the MFSA’s proposed rules (the “Rules”), expressly delineate that it will be possible for PE Funds to be structured either as PIFs or AIFs. However, by virtue of the Rules, specific rules will apply to PE schemes which invest in non-listed companies or issuers. These Rules are truncated into seven sections and cover: (i) general requirements; (ii) service providers; (iii) investment objectives; (iv) policies and restrictions; (v) disclosure to investors; (vi) reporting requirements; and (vii) supplementary conditions for self-managed schemes.
The MFSA did not opt for the preparation of an ad hoc rulebook to codify the Rules. Rather, the Rules have been drafted as Supplementary Licence Conditions (“SLCs”) which will apply in addition to the Investment Services Rules for AIFs or PIFs (depending on the structure adopted by the PE Fund).
In addition to the above Rules, the MFSA is also considering amending the Investment Services Rules for PIFs and AIFs in order to clarify the manner in which a self-managed Limited Partnership may be structured and is also considering whether to include the asset stripping provisions in the supplementary license conditions for PIFs.
Further to the above, the MFSA called for comments from industry stakeholders on the following issues:
(i) whether they agree with the Authority’s approach as outlined above;
(ii)whether they consider a limited partnership, where the general partner undertakes the investment management activities, as being an internally managed or an externally managed scheme; and
(iii) whether the AIFMD asset stripping provisions should be applied to private equity funds structured as PIFs.