MFSA Launches Framework for Notified PIFs
PIF or Notified PIF?
A Professional Investor Fund (PIF) follows a standard licensing process with the Malta Financial Services Authority. Typically the process adheres to rigorous scrutiny and a timeline of approximately six to eight months for it to go to market. A Notified PIF (NPIF) follows a notification procedure with a duration of 10 working days from submission to launch. It has lower set up costs to that of a PIF.
The Malta Financial Services Authority published an article on the 18th of December 2023 to inform the industry about the framework being launched regarding the Notified PIF. The establishment of this new framework requires amendments to the existing fund’s rulebooks.
The announcement made by the MFSA introducing a new fund structure in Malta, enhances the Maltese financial landscape comes as a result of thoughtful consideration and feedback received during two public consultations. This being a result of the MFSA’s continuous work to introduce additional ways to market for smaller and or emerging managers. Introduction of the NPIF provides a lighter regulatory regime available to de minimis managers under the EUs AIFM directive.
The NPIF framework operates under a set of proportional and risk-based criteria, ensuring a smooth onboarding process. NPIFs are exclusively serviced by specified regulated providers, align with established asset thresholds, and are designed for eligible investors.
The NPIF is particularly of interest to:
- a licensed de minimis Alternative Investment Manager (AIFM) in Malta;
- a de minimis AIFM which is duly authorised in an EU or EEA State; or
- a third country AIFM which has been authorised in a jurisdiction with which the MFSA has a bilateral cooperation agreement of memorandum of understanding on securities.
The Notified Professional Investor Fund (NPIF), is a distinctive non-retail collective investment scheme. NPIFs are tailored for professional and/or qualifying investors with a minimum investment of âŹ100k per investor.
At launch Chief Officer Strategy, Policy and Innovation, Michael Xuereb, shared his insights on this groundbreaking initiative: âThese initiatives are aimed at further improving the regulatory platform for professional investment funds by means of streamlined, pragmatic and risk-based policymaking. It is expected that the framework will lead to lower setup, operational and regulatory costs than those currently experienced in operating a fully licensed fund.â
Benefits of setting up a NPIF
NPIFs can be established in various legal structures such as a common fund in a contractual form, a unit trust, a RICC (Recognised Incorporated Cell Company) or as a limited partnership. Alternatively, they can be organized as an investment company with variable/fixed capital (SICAV/INVCO), utilizing any of the legal formats specified in the Maltese Companies Act.
Additionally, NPIFs may adopt an umbrella structure with separate compartments and may operate as either closed-ended or open-ended entities.
A notified PIF can be utilized for capital-raising throughout the EU, with adherence to national regulations in each jurisdiction. The promotion of an NPIF outside of Malta in EU or EEA countries may be permissible, contingent upon compliance with the respective national regulations. This type of structure is suitable for a private equity fund, hedge fund and also real estate funds, but not as a loan fund.
What are the requirements to establish a NPIF
A NPIF is subject to supervision by the MFSA and therefore one must appoint a Maltese service provider that is recognised by the local regulator to monitor the fund.
The appointed service provider will assist with the application process and filing the notification request. It is their responsibility to ensure that a thorough due diligence review is carried out before the notification is submitted.
Like a PIF, a NPIF is not obliged to appoint a depository for the safekeeping, a prime broker is also acceptable.
A Fund Manager, Fund Administrator, Money Laundering Officer and Compliance Officer shall also be appointed. Additionally, a local Auditor will be required to audit the mandatory annual accounts of the NPIF.
The notification process takes 10 days from the date of submitting the notification request and supporting documents to the MFSA, the competent authority. The MFSA will include the NPIF in the official list of NPIFs within 10 working days.
To discuss in detail contact us and request a free exploratory call to obtain more information on this framework.