Funds) (Amendment) Regulations, 2021

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 20,698, 10 ta’ Settembru, 2021

L.N. 360 of 2021

INVESTMENT SERVICES ACT

(CAP. 370)

Investment Services Act (Marketing of Alternative Investment

Funds) (Amendment) Regulations, 2021

IN EXERCISE of the powers conferred by article 12 of the

Investment Services Act, the Minister responsible for the regulation of

Financial Services, acting on the advice of the Malta Financial

Services Authority, has made the following regulations

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

Services Act (Marketing of Alternative Investment Funds) scope.

(Amendment) Regulations, 2021, and these regulations shall be read

and construed as one with the Investment Services Act (Marketing of

Alternative Investment Funds) Regulations, hereinafter referred to as

"the principal regulations".

(2) The scope of these regulations is to transpose, in part,

Article 2 of Directive (EU) 2019/1160 of the European Parliament and

of the Council of 20 June 2019 amending Directives 2009/65/EC and

2011/61/EU with regard to cross-border distribution of collective

investment undertakings.

In sub-regulation (3) of regulation 1 of the principal Amends

regulations, for the words "Article 4(1)(a), (b), (h), (j)(i) and (ii), (k), regulation

the principal

(l), (m),(p), (q), (r)(i) and (ii), (w), (x), (y), (aa), (ag) and (aj), Article regulations.

31(1) to (4) and (6), Article 32(1) to (7) and (9), Article 43, Article

61(2),", there shall be substituted the words "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), Article 30a, Article 31(1) to (4) and (6), Article 32(1) to (7)

and (9), Article 32a, Article 43, Article 43a, Article 61(2), Article

69a,".

Sub-regulation (1) of regulation 2 of the principal Amends

regulation 2 of

regulations shall be amended as follows

the principal

regulations.

(a) immediately after the definition ""competent

authority" ", there shall be added the following new definition

""durable medium" means any instrument, which

enables a client to store information addressed personally

to that client in a way accessible for future reference, for a

period of time adequate for the purposes of the information

and which allows the unchanged reproduction of the

information stored;"; and

(b) immediately after the definition " "marketing" ", there

shall be added the following new definition

""pre-marketing" means provision of information or

communication, direct or indirect, on investment strategies

or investment ideas by the AIFM or on its behalf, to

potential professional investors domiciled or with a

registered office in the Member State or EEA State in order

to test their interest in an AIF or a compartment which is

not yet established, or which is established, but not yet

notified for marketing in accordance with regulations 3, 4

and 5, in that Member State or EEA State where the

potential investors are domiciled or have their registered

office, and which in each case does not amount to an offer

or placement to the potential investor to invest in the units

or shares of that AIF or compartment;".

Regulation 3 of the principal regulations shall be amended

as follows

(a)

in sub-regulation (6) thereof, for the words, "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.", there

shall be substituted the words "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 said AIF in Malta.";

(b) for sub-regulation (10) thereof, there shall be

substituted the following

"(10) Where, pursuant to a planned change, the

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 within fifteen (15) working days of receipt of all the

information referred to in the sub-regulation (9) inform the

Maltese AIFM that it shall not implement the change. In

such case, the competent authority shall notify the

European Regulatory Authority of the home Member State

or EEA State of the AIF accordingly."; and

(c) immediately after sub-regulation (11) thereof, there

shall be added the following new sub-regulations

"(12) The

Maltese

AIFM

may

de-notify

arrangements made for marketing of units or shares of

some or all of the European AIFs under its management,

in respect of which it has made a notification pursuant to

this regulation, where all the following conditions are

fulfilled

(a) except in the case of closed-ended AIFs

and funds regulated by the Regulation on European

long-term investment funds, a blanket offer is made

to repurchase or redeem, free of any charges or

deductions, all such European AIF units or shares

held by investors in Malta, is publicly available for at

least thirty (30) working days, and is addressed,

directly or through financial intermediaries,

individually to all investors in Malta, whose identity

is known;

(b) the intention to terminate arrangements

made for marketing units or shares of some or all of

its European AIFs in Malta is made public by means

of a publicly available medium, including by

electronic means, which is customary for marketing

European AIFs and suitable for a typical European

AIF investor; and

(c) any contractual arrangements with

financial intermediaries or delegates are modified or

terminated with effect from the date of de-notification

in order to prevent any new or further, direct or

indirect, offering or placement of the units or shares

identified in the notification referred to in sub-

regulation (13).

As of the date referred to in paragraph (c), the

Maltese AIFM shall cease any new or further, direct or

indirect, offering or placement of units or shares of the

European AIF it manages in Malta, in respect of which it

has submitted a notification in accordance with sub-

regulation (13).

(13) The Maltese AIFM shall submit a notification

to the competent authority containing the information

referred to in paragraphs (a), (b) and (c) of sub-regulation

(12).

(14) The competent authority shall verify whether

the notification submitted by the Maltese AIFM in

accordance with sub-regulation (13) is complete and shall,

no later than fifteen (15) working days from the receipt of a

complete notification, transmit that notification to ESMA.

Upon transmission of the notification, the competent

authority shall without undue delay, notify the Maltese

AIFM of that transmission. For a period of thirty six (36)

months from the date referred to in paragraph (c) of sub-

regulation (12), the Maltese AIFM shall not engage in pre-

marketing of units or shares of the European AIFs referred

to in the notification, or in respect of similar investment

strategies or investment ideas, in the Member State

identified in the notification referred to in sub-regulation

(13).

(15) The Maltese AIFM may engage in pre-

marketing to professional investors of units or shares of a

European AIF in Malta, except where the information

presented to potential professional investors

(a) is sufficient to allow investors to commit

to acquiring units or shares of a particular AIF;

(b) amounts to subscription forms or similar

documents whether in a draft or a final form; or

(c) amounts to constitutional documents, a

prospectus or offering documents of a not-yet-

established AIF in a final form.

(16) Where a draft prospectus or offering documents

are provided, they shall not contain information sufficient

to allow investors to take an investment decision and shall

clearly state that

(a) they do not constitute an offer or an

invitation to subscribe to units or shares of an AIF;

and

(b) the information presented therein should

not be relied upon because it is incomplete and may

be subject to change.

(17) The Maltese AIFM is not required to submit

any prior notification to the competent authority, of the

content or of the addressees of pre-marketing, or to fulfil

any conditions or requirements other than those set out in

this regulation, before it engages in pre-marketing

activity in Malta.

(18) The Maltese AIFM shall ensure that investors

do not acquire units or shares in a European AIF through

pre-marketing and that investors contacted as part of pre-

marketing shall only acquire units or shares in that

European AIF through marketing permitted under

regulation 3(1).

(19) Any subscription by professional investors,

within eighteen (18) months of the Maltese AIFM having

begun pre-marketing, to units or shares of a European AIF

referred to in the information provided in the context of

pre-marketing, or of a European AIF established as a result

of the pre-marketing, shall be considered to be the result of

marketing and shall be subject to the applicable notification

procedures referred to in regulation 3(4).

(20) Within two (2) weeks of it having begun pre-

marketing, the Maltese AIFM shall send to the competent

authority an informal letter, in paper form or by electronic

means, which letter shall specify

(a) a brief description of the pre-marketing

including information on the investment strategies

presented; and

(b) where relevant, a list of the AIFs and

compartments of AIFs which are or were the subject

of pre-marketing.

(21) The Maltese AIFM shall ensure that pre-

marketing is adequately documented.

(22) A third party shall only engage in pre-

marketing on behalf of the Maltese AIFM where it is

authorised as an investment firm in accordance with

MIFID, as a credit institution in accordance with the

CRD, as a UCITS management company in accordance

with the UCITS Directive, as an AIFM in accordance

with the AIFM Directive or acts as a tied agent in

accordance with MIFID. Such a third party shall be

subject to the conditions set out in this regulation in

respect of the Maltese AIFM.".

Regulation 4 of the principal regulations shall be amended

as follows

(a) in paragraph (h) of sub-regulation (4) thereof, for

the words, "where the Maltese AIFM relies on activities of

independent entities to provide investment services in respect

of the AIF:", there shall be substituted the words "where the

Maltese AIFM relies on activities of independent entities to

provide investment services in respect of the AIF;";

(b) immediately after paragraph (h) of sub-regulation (4)

thereof, there shall be added the following new paragraph

"(i) the details necessary, including the address,

for the invoicing or for the communication of any

applicable regulatory fees or charges by the competent

authorities of the host Member State:";

(c) in sub-regulation (12) thereof, for the words, "the

competent authority shall inform the Maltese AIFM without

undue delay that it shall not implement the change.", there shall

be substituted the words "the competent authority shall inform

the Maltese AIFM within fifteen (15) working days of receipt

of all the information referred to in sub-regulation (11) that it

shall not implement the change. In that case, the competent

authority shall notify the European Regulatory Authority of

the host Member State of the Maltese AIFM accordingly.";

(d) in sub-regulation (13) thereof, for the words,

"Where the Maltese AIFM proceeds with the implementation

of the planned change, notwithstanding the notification

received pursuant to sub-regulations (11) and (12)", there shall

be substituted the words "Where the Maltese AIFM proceeds

with the implementation of the planned change, notwithstanding

the notification received pursuant to sub-regulations (12)", and

immediately after the words, "if necessary, the express

prohibition of marketing of the European AIF.", there shall be

added the following words, "The competent authority shall also

notify the European Regulatory Authority of the host Member

State of the Maltese AIFM accordingly without undue delay.";

(e) in sub-regulation (14) thereof, for the words, "If the

changes are acceptable because they do not affect the compliance

of the Maltese AIFM’s management", there shall be substituted

the words "If the changes do not affect the compliance of the

Maltese AIFM’s management", and for the words, "the

competent authority shall, without delay, inform the European

regulatory authority of the host Member State of the Maltese

AIFM of those changes", there shall be substituted the words

"the competent authority shall within one month inform the

European regulatory authority of the host Member State of the

Maltese AIFM of those changes."; and

(f) immediately after sub-regulation (14) thereof, there

shall be added the following new sub-regulations

"(15) The

Maltese

AIFM

may

de-notify

arrangements made for marketing of units or shares of

some or all of the European AIFs under its management in

a Member State or EEA State, in respect of which it has

made a notification pursuant to this regulation, where all

the following conditions are fulfilled

(a) except in the case of closed-ended AIFs

and funds regulated by Regulation (EU) 2015/760 of

the European Parliament and of the Council of 29

April 2015 on European long-term investment funds

a blanket offer is made to repurchase or redeem, free

of any charges or deductions, all such European AIF

units or shares held by investors in that Member State

or EEA State, is publicly available for at least thirty

(30) working days, and is addressed, directly or

through financial intermediaries, individually to all

investors in that Member State or EEA State, whose

identity is known;

(b) the intention to terminate arrangements

made for marketing units or shares of some or all of

its European AIFs in that Member State or EEA State

is made public by means of a publicly available

medium, including by electronic means, which is

customary for marketing European AIFs and suitable

for a typical European AIF investor;

(c) any contractual arrangements with

financial intermediaries or delegates are modified or

terminated with effect from the date of de-notification

in order to prevent any new or further, direct or

indirect, offering or placement of the units or shares

identified in the notification referred to in sub-

regulation (16).

As of the date referred to in paragraph (c) of

this sub-regulation, the Maltese AIFM shall cease any new

or further, direct or indirect, offering or placement of units

or shares of the European AIF it manages in the Member

State or EEA State, in respect of which it has submitted a

notification in accordance with sub-regulation (16).

(16) The Maltese AIFM shall submit a notification

to the competent authority containing the information

referred to in paragraphs (a), (b) and (c) of sub-regulation

(15).

(17) The competent authority shall verify whether

the notification submitted by the Maltese AIFM in

accordance with sub-regulation (16) is complete and no

later than fifteen (15) working days from the receipt of a

complete notification, transmit that notification to the

European regulatory authority of the Member State or

EEA State, identified in the notification referred to in sub-

regulation (16), and to ESMA. Upon transmission of the

notification, the competent authority shall promptly notify

the Maltese AIFM of that transmission. For a period of

thirty-six (36) months from the date referred to in

paragraph (c) of sub-regulation (15), the Maltese AIFM

shall not engage in pre-marketing of units or shares of the

European AIFs referred to in the notification, or in respect

of similar investment strategies or investment ideas, in the

Member State or EEA State identified in the notification

referred to in sub-regulation (16).

(18) The Maltese AIFM shall provide investors who

remain invested in the European AIF as well as the

competent authority with the information required under

Articles 22 and 23 of the AIFM Directive. Such

information can be provided, among others, using means

of any electronic or other distance communication.

(19) The competent authority shall transmit to the

European regulatory authority of the Member State or

EEA State identified in the notification referred to in sub-

regulation (16), information on any changes to the

documentation and information referred to in paragraphs

(b) to (f) of sub-regulation (4).

(20) The Maltese AIFM may engage in pre-

marketing to professional investors of units or shares of a

European AIF in a Member State or EEA State other than

Malta, except where the information presented to potential

professional investors

(a) is sufficient to allow investors to commit

to acquiring units or shares of a particular European

AIF;

(b) amounts to subscription forms or similar

documents whether in a draft or a final form; or

(c) amounts to constitutional documents, a

prospectus or offering documents of a not-yet-

established AIF in a final form.

(21) Where a draft prospectus or offering documents

are provided, they shall not contain information sufficient

to allow investors to take an investment decision and shall

clearly state that

(a) they do not constitute an offer or an

invitation to subscribe to units or shares of a

European AIF; and

(b) the information presented therein should

not be relied upon because it is incomplete and may

be subject to change.

(22) The Maltese AIFM does not require to submit

any prior notification to the competent authority before it

engages in pre-marketing activity in Malta, provided

however that it fulfils the requirements set out in this

regulation.

(23) The Maltese AIFM shall ensure that investors

do not acquire units or shares in a European AIF through

pre-marketing and that investors contacted as part of pre-

marketing shall only acquire units or shares in that

European AIF through marketing permitted under sub-

regulation 4(1).

(24) Any subscription by professional investors,

within eighteen (18) months of the Maltese AIFM having

begun pre-marketing, to units or shares of a European AIF

referred to in the information provided in the context of

pre-marketing, or of a European AIF established as a result

of the pre-marketing, shall be considered to be the result of

marketing and shall be subject to the applicable notification

procedures referred to in sub-regulation 4(4).

(25) Within two (2) weeks of it having begun pre-

marketing, the Maltese AIFM shall send to the competent

authority an informal letter, in paper form or by electronic

means, which letter shall specify

(a) the Member States in which and the

periods during which the pre-marketing is taking or

has taken place;

(b) a brief description of the pre-marketing

including information on the investment strategies

presented; and

(c) where relevant, a list of the AIFs and

compartments of AIFs which are or were the subject

of pre-marketing.

(26) The competent authority shall promptly

inform the European regulatory authority of the Member

State or EEA State, in which the Maltese AIFM is or was

engaged in pre-marketing.

(27) The European regulatory authority of the

Member State or EEA State, in which pre-marketing is

taking or has taken place may request the competent

authority to provide further information on the pre-

marketing that is taking or has taken place on its territory.

(28) The Maltese AIFM shall ensure that pre-

marketing is adequately documented.

(29) A third party shall only engage in pre-

marketing on behalf of the Maltese AIFM where it is

authorised as an investment firm in accordance with

MIFID Directive, as a credit institution in accordance

with CRD, as a UCITS management company in

accordance with UCITS Directive, as an AIFM in

accordance with AIFM Directive, or acts as a tied agent

in accordance with MIFID Directive. Such a third party

shall be subject to the conditions set out in this regulation

in respect of the Maltese AIFM.".

Regulation 5 of the principal regulations shall be amended

as follows

(a) in paragraph (h) of sub-regulation (4) thereof, for the

words, "the European AIFM relies on activities of independent

entities to provide investment services in respect of AIF:", "there

shall be substituted the words "the European AIFM relies on

activities of independent entities to provide investment services

in respect of AIF;", and immediately thereafter, there shall be

added the following new paragraph (i)

"(i) the details necessary, including the address,

for the invoicing or for the communication of any

applicable regulatory fees or charges by the competent

authorities of the host Member State:"; and

(b) immediately after sub-regulation (9) thereof, there

shall be added the following new sub-regulations

"(10) The European AIFM may de-notify

arrangements made for marketing of units or shares of

some or all of the European AIFs under its management

in Malta, in respect of which it has made a notification

pursuant to sub-regulation (4), where all the following

conditions are fulfilled

(a) except in the case of closed-ended AIFs

and funds regulated by Regulation (EU) 2015/760

of the European Parliament and of the Council of 29

April 2015 on European long-term investment

funds, a blanket offer is made to repurchase or

redeem, free of any charges or deductions, all such

European AIF units or shares held by investors in

Malta, is publicly available for at least thirty (30)

working days, and is addressed, directly or through

financial intermediaries, individually to all

investors in Malta, whose identity is known;

(b) the intention to terminate arrangements

made for marketing units or shares of some or all of

its European AIFs in Malta is made public by means

of a publicly available medium, including by

electronic means, which is customary for marketing

European AIFs and suitable for a typical European

AIF investor; and

(c) any contractual arrangements with

financial intermediaries or delegates are modified or

terminated with effect from the date of de-notification

in order to prevent any new or further, direct or

indirect, offering or placement of the units or shares

identified in the notification referred to in sub-

regulation (11). As of the date referred to in point (c)

of this sub-regulation, the European AIFM shall

cease any new or further, direct or indirect, offering

or placement of units or shares of the European AIF it

manages in Malta, in respect of which it has

submitted a notification in accordance with sub-

regulation (11).

(11) The European AIFM shall submit a notification

to the European regulatory authority of its home Member

State or EEA State containing the information referred to in

points (a), (b) and (c) of sub-regulation (10).

(12) The European regulatory authority of the

AIFM’s home Member State or EEA State shall verify

whether the notification submitted by the European AIFM

in accordance with sub-regulation (11) is complete and no

later than 15 working days from the receipt of a complete

notification, transmit that notification to the competent

authority and to ESMA. Upon transmission of the

notification, the European regulatory authority of the home

Member State or EEA State shall promptly notify the

European AIFM of that transmission. For a period of 36

months from the date referred to in point (c) of the sub-

regulation (10), the European AIFM shall not engage in

pre-marketing of units or shares of the European AIFs

referred to in the notification, or in respect of similar

investment strategies or investment ideas, in Malta.

(13) The European AIFM shall provide investors

who remain invested in the European AIF as well as the

competent authorities of the AIFM’s host Member State or

EEA State with the information required under Articles 22

and 23 of the AIFM Directive. Such information can be

provided, among others, using means of any electronic or

other distance communication.

(14) The European regulatory authority of the

European AIFM’s home Member State or EEA State shall

transmit to the competent authorities of the Member State

or EEA State, identified in the notification referred to in

sub-regulation (11), information on any changes to the

documentation and information referred to in points (b) to

(f) of sub-regulation (4).

(15) The European AIFM may engage in pre-

marketing in Malta, except where the information

presented to potential professional investors

(a) is sufficient to allow investors to commit

to acquiring units or shares of a particular AIF;

(b) amounts to subscription forms or similar

documents whether in a draft or a final form; or

(c) amounts to constitutional documents, a

prospectus or offering documents of a not-yet-

established AIF in a final form.

(16) Where a draft prospectus or offering documents

are provided, they shall not contain information sufficient

to allow investors to take an investment decision and shall

clearly state that

(a) they do not constitute an offer or an

invitation to subscribe to units or shares of an AIF;

and

(b) the information presented therein should

not be relied upon because it is incomplete and may

be subject to change.

(17) The European AIFM does not require to submit

any prior notification to the competent authority before it

engages in pre-marketing activity in Malta, provided

however that it fulfils the requirements set out in this

regulation.

(18) The European AIFM shall ensure that investors

do not acquire units or shares in an AIF through pre-

marketing and that investors contacted as part of pre-

marketing may only acquire units or shares in that AIF

through marketing permitted under sub-regulation 5(1).

(19) Any subscription by professional investors,

within eighteen (18) months of the European AIFM having

begun pre-marketing, to units or shares of an AIF referred

to in the information provided in the context of pre-

marketing, or of an AIF established as a result of the pre-

marketing, shall be considered to be the result of marketing

and shall be subject to the applicable notification

procedures referred to in sub-regulation 5(4).

(20) Within two (2) weeks of it having begun pre-

marketing, the European AIFM shall send to the European

regulatory authority of the European AIFM’s home

Member State or EEA State an informal letter, in paper

form or by electronic means, which letter shall specify

(a) the Member States in which and the

periods during which the pre-marketing is taking or

has taken place;

(b) a brief description of the pre-marketing

including information on the investment strategies

presented; and

(c) where relevant, a list of the AIFs and

compartments of AIFs which are or were the subject

of pre-marketing.

(21) The competent authority may request the

European regulatory authority of the European AIFM’s

home Member State or EEA State to provide further

information on the pre-marketing that is taking or has taken

place on its territory.

(22) The European AIFM shall ensure that pre-

marketing is adequately documented.

(23) A third party shall only engage in pre-

marketing on behalf of a European AIFM where it is

authorised as an investment firm in accordance with

MIFID, as a credit institution in accordance with the

CRD, as a UCITS management company in accordance

with the UCITS Directive, as an AIFM in accordance with

the AIFM Directive, or acts as a tied agent in accordance

with MIFID. Such a third party shall be subject to the

conditions set out in this regulation in respect of the

European AIFM.".

Regulation 6 of the principal regulations shall be amended

as follows

(a) in sub-regulation (2) thereof, for the words,

"subject to such variations or modifications as may be

prescribed." there shall be substituted the words "subject to

such variations or modifications as may be prescribed:", and

immediately thereafter, there shall be added the following new

proviso

"Provided that the AIFM shall not be allowed

to engage in the pre-marketing of any units or shares of

an AIF to retail investors.";

(b) immediately after sub-regulation (3) of regulation 6

thereof, there shall be added the following new sub-regulation

"(3A) The AIFM shall submit the notification letter

referred to in regulations 3(4) and 5(4) respectively and

shall also provide information on the facilities for

performing the tasks referred to in sub-regulation (7) of

this regulation.";

(c) immediately after sub-regulation (6) thereof, there

shall be added the following new sub-regulations (7) to (10)

"(7) Where an AIF is to be marketed to retail

investors in Malta, the AIFM shall take the measures

necessary to ensure that facilities are available therein to

perform the following tasks

(a) process investors’ subscription, payment,

repurchase and redemption orders relating to the units

or shares of an AIF, in accordance with the conditions

set out in the AIF’s documents;

(b) provide investors with information on

how orders referred to in paragraph (a) can be made

and how repurchase and redemption proceeds are

paid;

(c) facilitate the handling of information

relating to the exercise of investors’ rights arising

from their investment in an AIF in Malta;

(d) provide investors with information

relevant to the tasks that the facilities perform in a

durable medium; and

(e) act as a contact point for communicating

with the competent authority.

(8) In respect of an AIF, units of which are intended

for marketing in Malta, the AIFM shall make available to

investors for the purposes of inspection and obtaining

copies thereof an annual report for each financial year as

well as the information and documents required pursuant to

Article 23 of AIFM Directive.

(9) The AIFM shall ensure that the facilities to

perform the tasks referred to in sub-regulation (7), are

provided, including electronically

(a) in the official language or one of the

official languages of Malta or in a language approved

by the competent authority;

(b) by the AIFM itself, by a third party which

is subject to regulation and supervision governing the

tasks to be performed, or by both.

(10) For the purposes of paragraph (b) of sub-

regulation (9), where the tasks are to be performed by a

third party, the appointment of that third party shall be

evidenced by a written contract specifying which of the

tasks referred to in sub-regulation (7) are not to be

performed by the AIFM and that the third party will

receive all the relevant information and documents from

the AIFM.

(11) The AIFM shall not be required to have a

physical presence in Malta or to appoint a third party for

the purposes of sub-regulation 7.".

€0.72