Malta Enhances Its Innovative Notified AIF Regime

When Malta launched its Notified Alternative Investment Fund (NAIF) regulatory regime in 2016 it was among the first EU Member States to adopt such a framework. Since then, the NAIF has become popular among alternative investment managers seeking to launch funds for EU investors.

The key benefits of the NAIF regime remain: (find out more here)

• Short time to market
• EU passporting
• Flexibility in structure

After five years of operating the framework, the Malta Financial Services Authority (MFSA) has carried out a wide-ranging review of the existing regulatory framework to address any existing gaps in relation to the applicability of the rules for overseas AIFMs managing local NAIFs and to increase the permissible investments within the NAIF regime.

The results of this review have recently been published and include improvements in the authorisation process, expansion of the asset classes a NAIF may invest in and changes to ensure that the NAIF rules remain aligned with the Financial Intelligence Analysis Unit’s AML/CFT provisions. The revisions introduced by the MFSA are summarised below.

Scope of Application
It is now possible to convert a licensed collective investment scheme into a NAIF and it is also possible for a NAIF to acquire (but not originate) loans, subject to further requirements included in the NAIF rules.

Investment restrictions
There are now no restrictions on the type of asset classes in which a NAIF may invest in, with the only exception being the origination of loans.

MFSA processing timeframes

• Changes to the prospectus requiring notification to the MFSA must now be acknowledged by the MFSA within 5 working days (current: 10 working days) from the notification of change.
• Changes to the investment management function and/or valuation arrangements of an MFSA licenced Alternative Investment Fund Manager (AIFM) which do not require the submission of a PQ shall now be submitted at least 3 weeks (current: 2 months) prior to the filing of the notification documents.
• AIFMs are no longer required to submit the risk management policy with the notification pack.

Compliance Requirements

• The MLRO of the NAIF and the MLRO of the AIFM have to be two different individuals. The MLRO of the AIFM can no longer be also the MLRO of the NAIF.
• Currently, the compliance function of the NAIF is, by default, vested upon the compliance officer of the AIFM. Under the updated framework, alternative arrangements may be set up, subject to these being assessed and approved by the MFSA on a case-by-case basis.

The above revision in the NAIF Rules became applicable to current and prospective Notified AIFs as from 2 June 2021. Additionally, AIFMs of existing NAIFs should undertake an impact assessment of the revised rules against their current operations and any potential issues should be addressed by 31 December 2021.

How Trident can assist
Trident Fund Services (Malta) Ltd is a recognised Fund administrator regulated by the MFSA pursuant to the Investment Services Act, 1994. We have broad experience in handling the administration of a variety of fund structures and can provide the following services:

• Assistance with the licensing of a fund in Malta including liaison with the MFSA, legal advisors and other parties
• Incorporation of the fund and the fund manager
• Provision of registered office and local directors
• Preparation of net asset value calculations
• Preparation of interim and annual financial statements
• Transfer agency services
• Company secretarial services
• Administration services and coordination of the year-end audit

If you have any questions about the changes being introduced to the NAIF regime or if you want to know more about it, please contact Aaron or call our Malta office on +356 23 715 500.