Funds) Regulations, 2013

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,044, 8 ta’ Marzu, 2013

L.N. 113 of 2013

INVESTMENT SERVICES ACT

(CAP. 370)

Investment Services Act (Marketing of Alternative Investment

Funds) Regulations, 2013

IN exercise of the powers conferred by article 12 of the

Investment Services Act, the Minister for Finance, the Economy and

Investment, acting on the advice of the Malta Financial Services

Authority, has made the following regulations:-

PRELIMINARY

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

Services Act (Marketing of Alternative Investment Funds) commencement

and scope.

Regulations, 2013.

(2) These regulations shall come into force on 22nd July 2013.

(3) These regulations provide the requirements applicable to

the cross-border marketing of Alternative Investment Funds in Malta

or in any other Member State or EEA State.

(4) These regulations transpose and implement, in part, the

provisions of Article 4(1)(a), (b), (h), (j)(i) and (ii), (k), (l), (m), (p),

(q), (r)(i) and (ii), (w), (x), (y), (aa), (ag) and (aj), Articles 31(1) to (4)

and (6), Article 32(1) to (7) and (9), Article 43, Article 61(2), Annex

III and Annex IV of the AIFM Directive, and they shall be interpreted

and applied accordingly.

(1)

In these regulations, unless the context otherwise Interpretation.

requires

"the Act" means the Investment Services Act;

"Alternative Investment Fund" or "AIF" means a collective

investment scheme, including subfunds thereof, which raises capital

from a number of investors, with a view to investing it in accordance

with a defined investment policy for the benefit of those investors,

and which does not qualify as a UCITS Scheme in terms of the

UCITS Directive;

"Alternative Investment Fund Manager" or "AIFM" means a

legal person whose regular business is managing one or more AIFs;

"the AIFM Directive" means Directive 2011/61/EU of the

European Parliament and of the Council of 8 June 2011 on

Alternative Investment Fund Managers and amending Directives

2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009

and (EU) No 1095/2010 as amended from time to time, and includes

any implementing measures that may be issued thereunder;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act,

which body shall also carry out the duties as competent authority for

all purposes of the AIFM Directive;

"ESMA" means the European Securities and Markets Authority

established by Regulation (EU) No. 1095/2010 of the European

Parliament and of the Council of the 24 November 2010;

"established" means

(a)

in relation to an AIF, the place where the AIF is

authorised or registered or if the AIF is not authorised or

registered, the place where the AIF has its registered office;

(b) in relation to an AIFM, the place where the AIFM

has its registered office;

"European AIF" means

(a)

an AIF which is authorised or registered in a

Member State or EEA State, including Malta, under the

applicable national law;

(b) an AIF which is not authorised or registered in a

Member State or EEA State but has its registered office and, or

head office in a Member State or EEA State including Malta;

"European AIFM" means an AIFM which has its registered

office in a Member State or EEA State other than Malta;

"European AIFM home Member State or EEA State" means the

Member State or EEA State other than Malta, in which the European

AIFM has its registered office;

"European AIFM host Member State or EEA State" means

(a)

a Member State or EEA State, other than the home

Member State or EEA State, in which a European AIFM

manages European AIFs; or

(b) a Member State or EEA State, other than the home

Member State or EEA State, in which a European AIFM

markets units or shares of a European AIF;

"European regulatory authority" means the body or bodies

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

accordance with Article 44 of the AIFMD to carry out the duties

provided for in the AIFM Directive;

"feeder AIF" means an AIF which

(a)

invests at least 85% of its assets in units or shares of

another AIF hereinafter referred to as the master AIF;

(b) invests at least 85% of its assets in more than one

master AIFs where those master AIFs have identical investment

strategies; or

(c)

has otherwise an exposure of at least 85% of its

assets to such a master AIF;

"home Member State of the AIF" means

(a)

the Member State or EEA State in which the AIF is

authorised or registered under applicable national law, or in case

of multiple authorisations or registrations, the Member State or

EEA State in which the AIF has been authorised or registered

for the first time; or

(b) if the AIF is neither authorised nor registered in a

Member State or EEA State, the Member State or EEA State in

which the AIF has its registered office and, or head office;

"Maltese AIFM" means an AIFM which is licensed in terms of

the Act and which has its registered office in Malta;

"Maltese AIFM host Member State or EEA State" means

(a)

a Member State or EEA State, other than Malta, in

which a Maltese AIFM manages European AIFs; or

(b) a Member State or EEA State, other than Malta, in

which a Maltese AIFM markets units or shares of a European

AIF;

"master AIF" means an AIF which a feeder AIF invests in or has

an exposure in accordance with the definition of "feeder AIF";

"managing AIFs" means performing at least investment

management functions referred to in point 1(a) or (b) of Annex I of

the AIFM Directive for one or more AIFs;

"marketing" means a direct or indirect offering or placement at

the initiative of the AIFM or on behalf of the AIFM of units or shares

of an AIF that it manages to or with investors domiciled or with a

registered office in the European Union;

"professional investor" shall have the meaning assigned to

"professional client" in the Investment Services Rules or an investor

who has opted to be treated as a professional client in terms of said

Rules;

"retail investor" means an investor who is not a professional

investor;

"third country" means a country which is not a Member State or

an EEA State;

"third country AIF" means an AIF which is not a European AIF;

"Tribunal" means the Financial Services Tribunal established in

terms of the Malta Financial Services Authority Act;

"the UCITS Directive" means Council Directive 85/611/EEC of

20 December 1985 on the co-ordination of laws, regulations and

administrative provisions relating to undertakings for collective

investment in transferable securities (UCITS), as amended from time

to time, and includes any implementing measures that may be issued

thereunder.

(2) Words and expressions used in these regulations which are

also used in the Act but which are not defined herein shall have the

same meaning as in the Act.

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

provisions of the AIFM Directive, the latter shall prevail.

MARKETING OF UNITS OR SHARES OF EUROPEAN AIFs BY

MALTESE AIFMs TO PROFESSIONAL INVESTORS IN MALTA

(1) A Maltese AIFM may market to professional

investors in Malta, units or shares of a European AIF, which it

manages and such European AIF, where registered in a Member State

or EEA State other than Malta, shall be exempt from the provisions of

article 4 of the Act, provided that prior to commencement of its

marketing in Malta the conditions prescribed in this regulation are

met.

(2) Without prejudice to regulation 6, European AIFs managed

and marketed by a Maltese AIFM shall be marketed only to

professional investors.

(3) Where the European AIF is a feeder AIF, the right to

market referred to in sub-regulation (1) is subject to the condition that

the master AIF is also a European AIF which is managed by an AIFM

authorised by a Member State or an EEA State.

(4) The Maltese AIFM shall submit to the competent authority

a notification in respect of each European AIF which it intends to

market. Such notification shall comprise the documentation and

information prescribed hereunder

(a)

a notification letter, including a programme of

operations identifying the European AIFs which the Maltese

AIFM intends to market and the information on where the AIFs

are established;

(b) the European AIF’s prospectus or equivalent rules or

instruments of incorporation;

(c)

identification of the custodian of the European AIF;

(d) a description of, or any information on, the

European AIF available to investors;

(e)

information on where the master AIF is established

if the AIF is a feeder AIF in terms of sub-regulation (3);

(f)

any additional information concerning the

disclosure obligations prescribed in Investment Services Rules,

for each European AIF which the Maltese AIFM intends to

market;

(g) where relevant, information on the arrangements

established to prevent units or shares of the European AIF from

being marketed to retail investors, including in the case where

the Maltese AIFM relies on activities of independent entities to

provide investment services in respect of the European AIF.

(5) Within twenty working days following receipt of a

complete notification file pursuant to sub-regulation (4), the

competent authority shall inform the Maltese AIFM whether it may

start marketing the European AIF identified in the notification

referred to in sub-regulation (4).

(6) In the case where the AIF identified in the notification

referred to in sub-regulation (4) has been set up in a Member State or

EEA State other than Malta, the competent authority shall proceed to

inform the European Regulatory Authority of the home Member State

or EEA State of the AIF that the Maltese AIFM may start marketing

the units or shares of the said AIF in Malta.

(7) In the case of a positive decision by the competent

authority, the Maltese AIFM may start marketing the European AIF in

Malta from the date of notification by the said competent authority to

that effect.

(8) The competent authority shall prevent the marketing in

Malta of a European AIF only if the Maltese AIFM’s management of

the European AIF does not or will not comply with the provisions of

the AIFM Directive, or the Maltese AIFM does not or will not

comply with the provisions of the AIFM Directive.

(9) In the event of a material change to any of the particulars

communicated in accordance with sub-regulation (4), the Maltese

AIFM shall give written notice thereof to the competent authority at

least one month prior to the implementation of such change in the

case of changes planned by the Maltese AIFM, or immediately after

an unplanned change has occurred.

(10) Where, pursuant to a planned change, the management of

the Maltese AIFM would no longer comply with the provisions of the

AIFM Directive or the Maltese AIFM would otherwise no longer

comply with the provisions of the AIFM Directive, the competent

authority shall immediately inform the Maltese AIFM that it shall not

implement the change.

(11) Where the Maltese AIFM proceeds with the

implementation of the planned change, notwithstanding the

notification received pursuant to sub-regulation (10), or if an

unplanned change has taken place pursuant to which the management

of the European AIF by the Maltese AIFM no longer complies with

the provisions of the AIFM Directive or the Maltese AIFM otherwise

no longer complies with the provisions of the AIFM Directive, the

competent authority shall take all due measures in accordance with

the provisions of the Act and any regulations issued thereunder

including, if necessary, the express prohibition of marketing of the

European AIF.

MARKETING OF UNITS OR SHARES OF EUROPEAN AIFs BY

MALTESE AIFMs TO PROFESSIONAL INVESTORS IN A

MEMBER STATE OR EEA STATE OTHER THAN MALTA

(1) A Maltese AIFM may market to professional

investors in a Member State or EEA State other than Malta, units or

shares of a European AIF which it manages and such European AIF,

where registered in a Member State or EEA State other than Malta,

shall be exempt from the provisions of article 4 of the Act, provided

that prior to commencement of its marketing in a Member State or

EEA State other than Malta, the conditions prescribed in this

regulation are met.

(2) Without prejudice to Article 43(1) of the AIFM Directive,

European AIFs managed and marketed by the Maltese AIFM shall be

marketed only to professional investors.

(3) Where the European AIF is a feeder AIF, the right to

market referred to in sub-regulation (1) is subject to the condition that

the master AIF is also a European AIF which is managed by an

AIFM.

(4) The Maltese AIFM shall submit to the competent authority

a notification in respect of each European AIF which it intends to

market. Such notification shall comprise the documentation and

information prescribed hereunder

(a)

a notification letter, including a programme of

operations identifying the European AIFs which the Maltese

AIFM intends to market and the information on where the

European AIFs are established;

(b) the European AIF’s prospectus or equivalent rules or

instruments of incorporation;

(c)

identification of the custodian of the European AIF;

(d) a description of, or any information on, the

European AIF available to investors;

(e)

information on where the master AIF is established

if the European AIF is a feeder AIF in terms of sub-regulation

(3);

(f)

any additional information concerning the

disclosure obligations prescribed in the Investment Services

Rules for each European AIF which the Maltese AIFM intends

to market;

(g) an indication of the Member State or EEA State in

which the Maltese AIFM intends to market the units or shares of

the European AIF to professional investors;

(h) information about arrangements made for the

marketing of European AIFs and, where relevant, information

on the arrangements established to prevent units or shares of the

European AIFs from being marketed to retail investors,

including in the case where the Maltese AIFM relies on

activities of independent entities to provide investment services

in respect of the AIF

Provided that the notification letter to the competent

authority by the Maltese AIFM as referred to above shall be provided

in a language customary in the sphere of international finance.

(5) The competent authority shall, no later than twenty

working days after the date of receipt of a complete notification file

pursuant to sub-regulation (4), transmit the complete notification file

to the European regulatory authority of the Member State or EEA

State where the Maltese AIFM intends marketing the European AIF.

(6) The competent authority shall also enclose a statement to

the effect that the Maltese AIFM concerned is authorised to manage

European AIFs with a particular investment strategy

Provided that the statement referred to above shall be

provided in a language customary in the sphere of international

finance.

(7) The competent authority shall transmit the complete

notification file only if the Maltese AIFM’s management of the

European AIF complies with and will continue to comply with the

provisions of the AIFM Directive and if the Maltese AIFM otherwise

complies with the provisions of the AIFM Directive.

(8) Upon transmission of the notification file, the competent

authority shall, without delay, notify the Maltese AIFM thereof. The

Maltese AIFM may start marketing the European AIF in the Maltese

AIFM’s host Member State or EEA State as from the date of such

notification.

(9) In so far as they are different, the competent authority shall

also inform the European regulatory authority of the home Member

State or EEA State of the European AIF that the Maltese AIFM may

start marketing the units or shares of the European AIF in the host

Member State or EEA State of the Maltese AIFM.

(10) Arrangements referred to in sub-regulation (4)(h) shall be

subject to the laws of the Maltese AIFM host Member State or EEA

State where the European AIF is to be marketed and to the

supervision of the European regulatory authority therein.

(11) In the event of a material change to any of the particulars

communicated in accordance with sub-regulation (4), the Maltese

AIFM shall give written notice thereof to the competent authority at

least one month prior to the implementation of such planned change,

or immediately after an unplanned change has occurred.

(12) Where, pursuant to a planned change, the Maltese AIFM’s

management of the European AIF would no longer comply with the

provisions of the AIFM Directive or the Maltese AIFM would

otherwise no longer comply with the provisions of the AIFM

Directive, the competent authority shall inform the Maltese AIFM

without undue delay that it shall not implement the change.

(13) Where the Maltese AIFM proceeds with the

implementation of the planned change, notwithstanding the

notification received pursuant to sub-regulations (11) and (12), or if

an unplanned change has taken place pursuant to which the Maltese

AIFM’s management of the European AIF no longer complies with

the provisions of the AIFM Directive or the Maltese AIFM otherwise

no longer complies with the provisions of the AIFM Directive, the

competent authority shall take all due measures in accordance with

the provisions of the Act and any regulations issued thereunder

including, if necessary, the express prohibition of marketing of the

European AIF.

(14) If the changes are acceptable because they do not affect the

compliance of the Maltese AIFM’s management of the European AIF

with the provisions of the AIFM Directive, or the compliance by the

Maltese AIFM with the provisions of the AIFM Directive, the

competent authority shall, without delay, inform the European

regulatory authority of the host Member State of the Maltese AIFM of

those changes.

MARKETING OF UNITS OR SHARES OF EUROPEAN AIFs BY

EUROPEAN AIFMs TO PROFESSIONAL INVESTORS IN

MALTA

(1) A European AIFM may market to professional Marketing of

investors in Malta, units or shares of a European AIF that it manages units

of European

and shall be exempt from the provisions of article 3 of the Act. The AIFs by a

European AIFM

European AIF, where registered in a Member State or EEA State other in Malta.

than Malta, shall thereafter be exempt from the provisions of article 4

of the Act, provided that prior to commencement of its marketing in

Malta, the conditions prescribed in this regulation are met.

(2) Without prejudice to regulation 6, European AIFs managed

and marketed by a European AIFM shall be marketed only to

professional investors.

(3) Where the European AIF is a feeder AIF, the right to

market referred to in sub-regulation (1) is subject to the condition that

the master AIF is also a European AIF which is managed by a

European AIFM or by a Maltese AIFM.

(4) The European AIFM shall submit to the European

regulatory authority in its home Member State or EEA State a

notification in respect of each European AIF which it intends to

market. Such notification shall comprise the documentation and

information prescribed hereunder

(a)

a notification letter, including a programme of

operations identifying the European AIFs which the European

AIFM intends to market and the information on where the AIFs

are established;

(b) the European AIF’s prospectus or equivalent rules or

instruments of incorporation;

(c)

identification of the custodian of the European AIF;

(d) a description of, or any information on, the

European AIF available to investors;

(e)

information on where the master AIF is established

if the AIF is a feeder AIF in terms of sub-regulation (3);

(f)

any additional information referred to in Article

23(1) of the AIFM Directive for each European AIF which the

European AIFM intends to market;

(g) the indication that the European AIFM intends

marketing the units or shares of the European AIF to

professional investors in Malta;

(h) information about arrangements made for the

marketing of European AIFs and, where relevant, information

on the arrangements established to prevent units or shares of the

European AIFs from being marketed to retail investors,

including in the case where the European AIFM relies on

activities of independent entities to provide investment services

in respect of the AIF

Provided that the notification letter to the European

regulatory authority by the European AIFM as referred to above shall

be provided in a language customary in the sphere of international

finance.

(5) The competent authority shall, no later than twenty

working days after the date of receipt of a complete notification file

pursuant to sub-regulation (4), receive from the European regulatory

authority of the AIFM’s home Member State or EEA State the

complete notification file.

(6) The notification file transmitted to the competent authority

shall also include a statement to the effect that the European AIFM

concerned is authorised to manage European AIFs with a particular

investment strategy

Provided that the statement referred to above shall be

provided in a language customary in the sphere of international

finance.

(7) The competent authority shall only receive the complete

notification file if the European AIFM’s management of the European

AIF complies with and will continue to comply with the provisions of

the AIFM Directive and if the European AIFM otherwise complies

with the provisions of the AIFM Directive.

(8) Upon transmission of the notification file to the competent

authority, the European AIFM may start marketing the European AIF

in Malta as from the date that it is notified by the European regulatory

authority of such transmission.

(9) Arrangements referred to in sub-regulation (4)(h) shall be

subject to the laws of Malta and to the supervisions of the competent

authority.

MARKETING OF AIFs TO RETAIL INVESTORS IN MALTA

(1) An AIF shall not be marketed to retail investors in Marketing of

Malta unless it is in possession of an authorisation for this purpose AIFs

to retail

from the competent authority.

investors in

Malta.

(2) Regulations 3 and 5 shall, in so far as applicable, apply

mutatis mutandis and reference to the term "professional investor"

shall be deemed to be a reference to "retail investors", subject to such

variations or modifications as may be prescribed.

(3) Where an AIF is to be marketed to retail investors in

Malta, the AIF and its AIFM shall be subject to Investment Services

Rules, which shall prescribe the following

(a)

the types of AIF with respect to which an

application for marketing to retail investors may be made to the

competent authority;

(b) the manner and form of an application for an

authorisation to market an AIF to retail investors in Malta,

including the imposition of an application fee where applicable;

(c)

the conditions for authorisation for marketing to

retail investors;

(d)

the on-going obligations applicable to the marketing

of an AIF to retail investors in Malta, including the imposition

of a supervision fee where applicable; and

(e)

any other relevant matter determined by the

competent authority.

(4) The competent authority may in Investment Services Rules

impose stricter requirements on the AIFM or the AIF than the

requirements applicable to the AIFs marketed to professional

investors in Malta in accordance with the provisions of the AIFM

Directive. The competent authority shall not, however, impose stricter

or additional requirements on European AIFs established in Member

State or EEA State other than Malta and marketed on a cross-border

basis than on AIFs marketed in Malta.

(5) The competent authority shall, by 22 July 2014, inform the

European Commission and ESMA of

(a)

the types of AIF which AIFMs may market to retail

investors in Malta; and

(b) any additional requirements that the competent

authority imposes for the marketing of AIFs to retail investors.

(6) The competent authority shall also inform the European

Commission and ESMA of any subsequent changes with regard to

sub-regulation (5).

TRANSITORY PROVISIONS

Regulations 3 and 4 shall not apply to the marketing of

units or shares of European AIFs that are subject to a current offer to

the public under a prospectus that has been drawn up and published in

accordance with 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 before 22 July 2013 for

the duration of validity of that prospectus.

€0.54