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Alternative Investment Fund Managers Directive (AIFMD) Implementation Takes Shape in Malta

May 2013 - Corporate & Commercial. Legal Developments by Chetcuti Cauchi Advocates.

More articles by this firm.


The Alternative Investment Fund Managers Directive ("AIFMD" or "the Directive") has been in discussion since its announcement in April of 2009, but the detail of its implementation has, until fairly recently, been somewhat unclear. However, following the issuing of a number of consultation documents and other instruments there is now far more clarity on the subject. This article will seek to provide an overview of the various instruments by means of which the Directive is to be introduced into Maltese law and will also briefly touch upon the effect that these changes will have on the structure of Maltese funds legislation.  

Issuing of AIFM self-assessment questionnaires

An important practical development has been the issuing by the Malta Financial Services Authority ("MFSA" or "the Regulator") of two self-assessment questionnaires, namely: 

  • Questionnaire (1): Self-Assessment for Fund Managers and Self-Managed Collective Investment Schemes Applying as De Minimis Licence Holders;
  • Questionnaire (2): Self-Assessment for Fund Managers and Self-Managed Collective Investment Schemes applying for an AIFM licence.


Through these documents, the licence holder is requested to determine (depending on the business model):

  • Whether it can be categorised as ‚Äėde minimis' AIFM and does not intend to opt to be licensed as an AIFM in terms of the AIFMD; or
  • Whether it can be categorised as a ‚Äėde minimis' AIFM but intends to opt to be licensed as an AIFM in terms of the AIFMD or its activities requires it to be re-licensed as an AIFM in terms of the AIFMD.


MFSA has notified operators that existing fund managers and self-managed schemes have a one year transitional period with effect from 22nd July 2013 so as to register either as a ‚Äėde minimis' AIFM or to apply for a full AIFM licence and satisfy the requirements of the AIFMD. The MFSA has recommended that the relevant self-assessment questionnaire forms should filed before 31st March 2014. It should be noted that irrespective of whether the entity required authorisation as an AIFM or not, the reporting obligations under the AIFMD will commence from the 22nd of July 2013.

Publication of new Regulations which transpose the Alternative Investment Fund Managers Directive  

As part of the transposition process, four legal notices were published on the 8th of March 2013. Each of these is dealt with in turn below:

  • L.N. 113 of 2013: Investment Services Act (Marketing of Alternative Investment Funds) Regulations, 2013;
  • L.N. 114 of 2013: Investment Services Act (Alternative Investment Fund Manager) (Passport) Regulations, 2013;
  • L.N. 115 of 2013: Investment Services Act (Alternative Investment Fund  Managers) Regulations, 2013; and
  • L.N. 116 of 2013: Investment Services Act (Alternative Investment Fund Manager) (Third Country) Regulations, 2013.

De Minimis Rulebook

The Directive stipulates that certain AIFM are not subject to all of its provisions. Such AIFM are said to benefit from a de minimis exemption. In order to be eligible for the exemption, the AIFM must satisfy one of the following conditions: 

  • assets of AIFs under management directly or indirectly do not exceed in the aggregate ‚ā¨100m; or 
  • assets of AIFs under management directly or indirectly do not exceed in the aggregate ‚ā¨500m where the AIFs are unleveraged and have no redemption rights during the first 5 years from initial investment

The MFSA has stated that it has opted to apply a minimum licencing regime rather than registration to de minimis AIFMs as it considers that it is in the best interest of fund managers to be licensed particularly when dealing with potential investors. The de minimis licence holder will only be allowed to provide collective portfolio management to collective investment schemes which are not retail schemes. A de minimis licence holder may also provide MiFID type services (such as investment advice), but in such cases the licence holder will also be required to comply with the rulebook in place for MiFID firms.

The proposed rulebook focuses on the following matters:

  • General requirements
  • Organizational requirements
  • Conduct of business requirements
  • Financial resource requirements

AIF Rulebook

The MFSA has also circulated a proposed rulebook covering AIF. This new Rule Book is intended to provide Maltese/EU AIFMs with a simple regulatory framework which will allow them to establish AIFMD-ready funds for marketing to professional investors in Malta or across the EU. The Rule Book applies to AIFs whether these are externally managed or self-managed. The proposed rulebook includes a set of Standard Licence Conditions, which focus on the following matters:

  • General Requirements
  • Governing body of the AIF
  • Service Providers
  • Distribution of income and side-letters
  • Transparency requirements
  • Dealings by officials of an AIF
  • Marketing of an AIF
  • Specific conditions applicable to self-managed AIFs

Collective Investment Scheme Licences in Malta post-AIFMD

The jurisdiction's existing and highly successful Professional Investor Fund (PIF) regime will not be withdrawn post-AIFMD. The PIF Regime shall be retained in parallel with the AIF Regime (which will be regulated by the AIF Rulebook). De minimis fund managers and third country managers will be able to establish funds in terms of the Investment Services Act and regulated by the Investment Services Rules for Professional Investor Funds. Therefore, the categories of CISs which will be available in Malta post-AIFMD are:

  • UCITS Schemes 
  • Non-UCITS Retail Schemes 
  • Professional Investor Funds; and 
  • Alternative Investment Funds.

Malta's prospects post-AIFMD

Malta already has various characteristics which make it attractive as a hedge fund domicile, such as the attitude of the regulator, the general cost effectiveness of the country, a competitive fiscal regime and an English speaking workforce. These characteristics have led to the growth that the country has achieved so far. During the various reviews of domiciliation status which the AIFMD will is triggering, these characteristics are likely to place Malta among most shortlists. The increased clarity vis-√†-vis AIFMD implementation which has recently been afforded to this industry is another positive development.  


Malta Investment Funds

AIFMD Self-Assessment Questionnaires

Malta Recognized Incorporated Cell Companies

Financial Services in Malta

Side pockets in Maltese PIFs