Salient features of MFSA’s Circular re revision of NAIF Regime
News    ·   08-07-2021

AUTHOR: Stephanie Heitkemper

On the 24th of June 2021, the Malta Financial Services Authority (MFSA) published a revised version of the Notified Alternative Investment Fund Rules, reflecting the amendments of the MFSA NAIF regime.

The updated NAIF Rule Book shall be applicable to both current and prospective NAIFs as from the 24th of June 2021.

The purpose of said changes:

i)                    Ensure the alignment of AML/CFT provisions in the Rulebook with the updated FIAU Implementing Procedures;

ii)                   Reflect the Authority’s revised approach, aimed at achieving a more efficient authorisation process in terms of the documentation required at notification stage, as well as the regulatory approval of investment committee members; and

iii)                 Revision of timings

Salient changes to note:

  • Shorter processing timeframes –
    • Changes requiring notification to MFSA – namely changes to the prospectus must be acknowledged by the MFSA within 5 working days from the notification of changes (this was previously 10 days)
    • Changes requiring approval of MFSA - acknowledgement within 3 weeks applies to any changes made to the investment management function and/or valuation arrangements not requiring the submission of a PQ (as opposed to the previous 2 months timeframe), whilst those requiring the submission of a PQ shall be submitted at least 2 months prior to the filing of the notification documentation
  • The Risk Management Policy is no longer required to be included in the notification pack
  • The possibility of converting a licensed Collective Investment Scheme into a NAIF
  • NAIF may acquire loans (not originate)
  • It is no longer allowed for the MLRO of the AIFM to also act as the MLRO of the NAIF

The NAIF still remains a fast-track means for Managers looking for distribution of shares through passporting across Europe.

AIFMs of existing Notified AIFs are expected to undertake an impact assessment of the revised Rules against their current operations. Any potential issues arising as a result of the revised NAIF Rules, which requires action by the scheme, needs to be addressed by no later than 31 December 2021.
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