Investment Schemes) Regulations, 2005

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 17,846, 25 ta’ Novembru, 2005

L.N. 392 of 2005

INVESTMENT SERVICES ACT

(CAP. 370)

Investment Services Act (Prospectus of Collective

Investment Schemes) Regulations, 2005

IN exercise of the powers conferred by article 12 of the Investment

Services Act, the Prime Minister and Minister of Finance, acting on the

advice of the Malta Financial Services Authority, has made the following

regulations>-

(1) The title of these regulations is the Investment Services Citation and

commencement.

Act (Prospectus of Collective Investment Schemes) Regulations.

(2) These regulations shall come into force immediately

upon publication> provided however that where any of the provisions

thereof relate to offers to the public and to prospectuses submitted to

the competent authority on or after the 15 th December, 2005, such

provisions shall come into force on the 15 th December, 2005.

In these regulations, unless the context otherwise requires>

Interpretation.

“the Act” means the Investment Services Act<

“approval” means the positive act at the outcome of the

scrutiny of the completeness of the prospectus by the competent

authority or by the European regulatory authority including the

consistency of the information given and its comprehensibility,

within the meaning of the Directive<

“closed-ended scheme” means a scheme with fixed share

capital<

“competent authority” means the Malta Financial Services

Authority appointed under article 2A of the Act<

“the Directive” means Directive 2003#71#EC of the European

Parliament and of the Council of 4 November, 2003 on the

prospectus to be published when securities are offered to the public

or admitted to trading and amending Directive 2001#34#EC as may

be amended from time to time and includes any implementing

measures that have been or may be issued thereunder<

“EEA State” means a State which is a contracting party to the

Agreement on the European Economic Area signed at Oporto on

the 2 nd May, 1992 as amended by the Protocol signed at Brussels

on the 17 th March, 1993 and as amended from time to time<

“European based scheme” means a European based closed-

ended scheme covered by the Directive and a collective investment

scheme within the meaning of article 2 of the Act established in a

Member State other than Malta or an EEA State or set up by contract

or otherwise under the laws of a country which is a Member State

or an EEA State and which is not a European UCITS within the

meaning of the Investment Services Act (Undertakings for

Collective Investment in Transferable Securities and Management

Companies) Regulations, 2004<

“European based closed-ended scheme covered by the

Directive” means a collective investment scheme within the

meaning of article 2 of the Act established in a Member State other

than Malta or an EEA State or set up by contract or otherwise

under European law, which is closed-ended and which is covered

by the Directive<

“European regulatory authority” means the body or bodies

designated by a Member State other than Malta or an EEA State to

carry out the duties provided for in the Directive<

“home Member State or EEA State” means the Member State

or EEA State where the prospectus has been approved in terms of

the Directive<

“host Member State or EEA State” means one or more

Member States or EEA States where an offer to the public is made,

in respect of which Malta is the home Member State<

“Malta based scheme” means a collective investment scheme

within the meaning of article 2 of the Act, constituted or

incorporated under Maltese law<

“Malta based closed-ended scheme” means a Malta based

scheme which is closed-ended<

“Member State” means a Member State of the European

Communities<

“Non-European based schemes” means a collective

investment scheme within the meaning of article 2 of the Act

established outside a Member State or an EEA State or set up by

contract or otherwise under the laws of a country which is not a

Member State or an EEA State<

“offer to the public” has the same meaning assigned to the

words “offer of securities to the public” in article 2 of the Cap. 386.

Companies Act, and reference therein to the words “securities” or

“shares” shall be read as references to “units”<

“summary” shall in a brief manner and in non-technical

language, convey the essential characteristics and risks associated

with the Malta based closed-ended scheme and the units on offer,

in the language in which the prospectus is originally drawn up and

shall contain a warning as specified in Article 5 (2) of the Directive<

“unit” has the same meaning assigned to it by the Act.

PART I – MALTA BASED SCHEMES

(1) A Malta based scheme shall not offer any of its units to Prospectus

requirements for

the public unless it has issued a prospectus which complies with these Malta based

regulations and which is made available for inspection by the public. schemes.

(2) The contents of a prospectus shall comply with the

licence conditions and, or such other requirements as the competent

authority may, from time to time, establish.

(3) No prospectus shall be published, nor shall any

amendments to a prospectus be made, by any Malta based scheme unless

such prospectus and any amendments thereto, have been approved by

the competent authority>

Provided that Malta based schemes, which under regulations

made under the Act are exempted from the requirement of a licence

under article 4 of the Act, are prohibited from making any offer of any

of its units to the public except with the prior approval of the competent

authority which may impose such terms and conditions as it may deem

appropriate.

(4) The approval of the prospectus of a Malta based closed-

ended scheme shall also meet the requirements of regulation 4 hereof.

(5) A prospectus shall be dated and signed by the persons

who are responsible for its issue.

(6) The prospectus shall be made available to investors free

of charge before they become committed to investing in the Malta based

scheme. The essential elements of the prospectus shall be kept up to

date.

(7) All advertising and publicity material comprising an

offer to the public to purchase or subscribe for units in the Malta based

scheme shall indicate that a prospectus is available and the place or

places where the prospectus and any documents updating it may be

obtained.

(8) Where the Malta based scheme is a company, a

partnership en commandite or a limited partnership or other commercial

partnership formed and registered under the laws of Malta, a signed

copy of the prospectus shall be lodged with the Registrar of Companies

prior to the issue of the form of application for the subscription of units.

Such copy shall be signed by at least two directors or persons holding

equivalent posts, or by one director and the company secretary, or by at

least two persons duly authorised in writing by the Board of Directors

for that purpose, in which case the Board authority or a certified true

copy thereof, shall be lodged.

(1) The documents submitted to the competent authority for

approval shall be complete and the competent authority shall notify the

Malta based closed-ended scheme that documents are incomplete within

ten working days of their submission.

(2) The competent authority shall notify a Malta based

closed-ended scheme of its decision regarding the approval of the

prospectus within ten working days of the submission of the draft

prospectus.

(3) The time limit referred to in sub-regulation (2) of this

regulation shall be extended to twenty working days if the offer to the

public involves units issued by a Malta based closed-ended scheme

which does not have any securities admitted to trading on a Recognised

Investment Exchange and which has not previously offered units to the

public.

(4) If the competent authority fails to give a decision on the

prospectus within the time limits mentioned in sub-regulations (2) and

(3) of this regulation, this shall not be deemed to constitute approval of

the prospectus.

(5) Where the competent authority finds, on reasonable

grounds, that the documents submitted to it are incomplete or that

supplementary information is needed, the time limits referred to in sub-

regulations (2) and (3) shall apply only from the date on which such

information is provided by the Malta based closed-ended scheme. The

competent authority shall nonetheless as specified in sub-regulation (1)

of this regulation notify the Malta based closed-ended scheme that the

documents are incomplete within ten working days of the submission

of the prospectus.

Any person responsible for the issue, circulation or distribution Responsibility for

compliance.

of a prospectus or for the issue of a form of application for units in a

Malta based scheme shall ensure that these regulations are complied

with.

A prospectus including a statement purporting to be made by Prospectus

including a

an expert shall not be issued unless -

statement by

experts.

(a) the expert has given and has not, before the issue of the

prospectus, withdrawn his written consent to the issue thereof< and

(b) a statement that he has given and has not withdrawn his

consent as aforesaid appears in the prospectus.

(1) The persons who are responsible for the issue of a Civil liability for

misstatements in

prospectus shall be jointly and severally liable for any damage sustained prospectus.

by a person subscribing for units on the faith of that prospectus, by

reason of any untrue statement included therein.

(2) An expert who has given the consent required by

regulation 6 shall be liable in respect of an untrue statement made by

him as an expert.

(3) A person shall be civilly liable for statements made in

the summary, including any translation thereof, where such statements

are untrue when read together with the other parts of the prospectus.

For the purposes of these regulations>

Interpretation of

provisions relating

to prospectus.

(a) the term “expert” includes engineer, valuer, accountant

and any other person whose profession gives authority to a

statement made by him<

(b) a statement included in a prospectus shall be deemed to

be untrue if it is misleading, inaccurate or inconsistent in the form

and context in which it is included< and

(c) a statement shall be deemed to be included in a

prospectus if it is contained therein or in any document appearing

on the face thereof or by reference incorporated therein or issued

therewith.

Exercise of passport

(1) Where a Malta based closed-ended scheme whose

prospectus and supplements thereto have been drawn in accordance

with the Directive wishes to offer units to the public in one or more

host Member States or EEA States, the competent authority shall, at the

request of the Malta based closed-ended scheme or the person

responsible for drawing up the prospectus of the said scheme and within

three working days following that request or, if the request is submitted

together with the draft prospectus, within one working day after the

approval of the prospectus provide the European regulatory authority

of the host Member State or EEA State with a certificate of approval

attesting that the prospectus and supplements thereto have been drawn

up in accordance with the Directive and with a copy of the said

prospectus and supplements thereto. If applicable, this notification shall

be accompanied by a translation of the summary produced under the

responsibility of the Malta based closed-ended scheme or person

responsible for drawing up the prospectus. The same procedure shall

be followed for any supplement to the prospectus.

(2) Where certain information required to be disclosed in

terms of the Directive has been omitted the competent authority shall

outline the reasons for the omission in the certificate of approval referred

to in sub-regulation (1) of this regulation.

(3) When an offer to the public is made in one or more

Member States or EEA States excluding Malta, the prospectus shall be

drawn up either in a language accepted by the European regulatory

authorities of those Member States or EEA States or in a language

customary in the sphere of international finance, at the choice of the

Malta based closed-ended scheme>

Provided that for the purpose of scrutiny by the competent

authority, the prospectus shall be drawn up in Maltese or English or in

a language customary in the sphere of international finance, at the choice

of the Malta based closed-ended scheme.

(4) Where an offer to the public is made in more than one

Member States or EEA States including Malta, the prospectus shall be

drawn up in English or Maltese and shall also be made available either

in a language accepted by the European regulatory authorities of each

host Member State or EEA State or in a language customary in the

sphere of international finance, at the choice of the Malta based closed-

ended scheme.

PART II – EUROPEAN AND NON-EUROPEAN BASED

SCHEMES

Regulation 3, other than sub-regulation (4) thereof, and European and non-

European based

regulations 5, 6, 7 and 8, shall apply mutatis mutandis to a European schemes.

based scheme and to a non-European based scheme and accordingly

reference in these regulations to “Malta based scheme” shall be deemed

to include a reference to a “European based scheme and to a non-

European based scheme”.

(1) Regulation 10 of these regulations shall not apply to a Exercise of passport

rights by a

European based closed-ended scheme covered by the Directive whose European based

prospectus and supplements thereto have been drawn up in accordance closed-ended

scheme covered by

with the requirements of the Directive.

the Directive.

(2) The certificate of approval provided by the European

regulatory authority of the home Member State or EEA State in terms

of Article 18(1) of the Directive attesting that the prospectus and

supplements of a European based closed-ended scheme covered by the

Directive have been drawn in accordance with the requirements of the

said Directive shall be valid for the offer to the public in Malta.

(3) The prospectus shall be drawn up either in English or in

a language customary in the sphere of international finance at the choice

of the European based closed-ended scheme covered by the Directive.

(4) A summary of the prospectus shall be translated either

in English or in Maltese.

(5) Where the competent authority finds that irregularities

have been committed by the European based closed-ended scheme

covered by the Directive making an offer to the public in Malta, it shall

refer these findings to the European regulatory authority of the home

Member State or EEA State.

(6) If despite the measures taken by the European regulatory

authority of the home Member State or EEA State or because such

measures prove inadequate, the European based closed-ended scheme

covered by the Directive persists in breaching the relevant legal or

regulatory provisions, the competent authority, after informing the

European regulatory authority of the home Member State or EEA State,

shall take all appropriate measures in order to protect investors. The

European Commission shall be informed of such measures at the earliest

opportunity.

PART III - MISCELLANEOUS

Where the scheme qualifies as a professional investor fund

in terms of guidelines issued for this purpose by the competent authority,

any prospectus or other offering document issued by the scheme shall

comply with such requirements as the competent authority may from

time to time establish by the said guidelines, and regulations 3 to 8

shall not apply thereto.

(1) For the purposes of implementing the relevant

provisions of the Directive, the “central competent administrative

authority” within the meaning of the Directive shall be the competent

authority.

(2) Without prejudice to the powers of the competent

authority under the Act and under any other law and to better implement

the provisions of the Directive, the competent authority shall have the

power to>

(a) require a Malta based closed-ended scheme to include,

if necessary, supplementary information in the prospectus for

investor protection<

(b) require a Malta based closed-ended scheme and the

persons that control it or are controlled by it, to provide information

and documents<

(c) require auditors and managers of the Malta based closed-

ended scheme, as well as financial intermediaries commissioned

to carry out the offer to the public to provide information<

(d) suspend a public offer for a maximum of ten consecutive

working days on any single occasion if it has reasonable grounds

for suspecting that the provisions of the Directive have been

infringed<

(e) prohibit or suspend advertisements for a maximum of

ten consecutive working days on any single occasion if it has

reasonable grounds for believing that the provisions of the Directive

have been infringed<

(f) prohibit a public offer if it finds that the provisions of

the Directive have been infringed or if it has reasonable grounds

for suspecting that they would be infringed<

(g) make public the fact that the Malta based closed-ended

scheme is failing to comply with its obligations.

Without prejudice to the powers of the competent authority Cooperation.

under the Act and under any other law and to better implement the

provisions of the Directive, the competent authority shall have the power

to cooperate with other European regulatory authorities within the

meaning of Article 22 of the Directive.

(1) Without prejudice to civil or criminal sanctions imposed Administrative

penalties.

under any other law, the competent authority may impose administrative

penalties within the meaning of article 6 of the Act where the competent

authority is satisfied that a scheme’s conduct amounts to a breach of

any provision of the Act, regulations or guidelines issued thereunder to

implement the provisions of the Directive.

(2) The competent authority may disclose to the public every

measure or sanction that has been imposed for infringement of the

provisions adopted pursuant to the Directive unless>

(a) the disclosure would seriously jeopardise the financial

markets< or

(b) cause disproportionate damage to the parties involved.

Any decision taken in terms of these regulations by the Appeals.

competent authority in respect of any matter concerning the prospectus

or an offer to the public, shall be subject to a right of appeal to the

Financial Services Tribunal within the meaning of article 19 of the Act.

(1) The objective of these regulations is partly to implement Objective.

the relevant provisions of the Directive and shall be interpreted and

applied accordingly.

(2) In the event that any of these regulations conflict with

the provisions of the Directive, the latter shall prevail.

The Investment Services Act (Prospectus of Collective

Repeals L.N. 103 of

1996. Investment Schemes) Regulations, 1996, are hereby repealed.