Valuation: MFSA Identifies Shortcomings With Fund Managers

The Malta Financial Services Authority (the "MFSA") has published a detailed circular following reviews of the valuation processes adopted by UCITS Management Companies and AIFMs, including self-managed structures (collectively, "Fund Managers"). While the overall level of compliance with regulatory requirements was satisfactory, the MFSA recommended improvements in crucial areas.

Main Observations by the MFSA

The MFSA identified the following 'major' deficiencies in relation to the valuation function:

• weak governance arrangements;
• a lack of proper assessments, probing, and oversight by the Board of Directors;
• inadequate valuation policies/ procedures; and
• failures in respect of external valuers.