MALTA FINANCIAL SERVICES AUTHORITY ACT (PACKAGED RETAIL AND INSURANCE-BASED INVESTMENT PRODUCTS (PRIIPS)) REGULATIONS (priips)

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

SUBSIDIARY LEGISLATION 330.18

MALTA FINANCIAL SERVICES AUTHORITY ACT

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS)) REGULATIONS

17th June 2022

LEGAL NOTICE 178 of 2022.

(1)

The title of these regulations is the Malta

Financial Services Authority Act (Packaged Retail and Insurance-

Based Investment Products (PRIIPs)) Regulations.

(2)

The purpose of these regulations is to implement the

relevant provisions of the PRIIPs Regulation as herein defined and

these regulations shall be interpreted and applied accordingly.

(1)

In these regulations, unless the context otherwise

requires

''Act'' means the Malta Financial Services Authority Act;

''Authority'' shall have the same meaning as that assigned to it in

the Malta Financial Services Authority Act;

"Directive 2009/138/EC" means Directive 2009/138/EC of the

European Parliament and of the Council of 25 November 2009 on the

taking-up and pursuit of the business of Insurance and Reinsurance

(Solvency II) (recast), as may be amended from time to time;

"Directive 2011/61/EU" 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 may be amended from time to time;

"Directive 2013/34/EU" means Directive 2013/34/EU of the

European Parliament and of the Council of 26 June 2013 on the annual

financial statements, consolidated financial statements and related

reports of certain types of undertakings, amending Directive 2006/43/

EC of the European Parliament and of the Council and repealing

Council Directives 78/660/EEC and 83/349/EEC, as may be amended

from time to time;

"Directive 2014/65/EU" means Directive 2014/65/EU of the

European Parliament and of the Council of 15 May 2014 on markets in

financial instruments and amending Directive 2002/92/EC and

Directive 2011/61/EU (recast), as may be amended from time to time;

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

"Directive (EU) 2016/97" means Directive (EU) 2016/97 of the

European Parliament and of the Council of 20 January 2016 on

insurance distribution (recast), as may be amended from time to time;

"ESA" means the European Banking Authority established by

Regulation (EU) No 1093/2010 of the European Parliament and of the

Council of 24 November 2010, the European Insurance and

Occupational Pensions Authority established by Regulation (EU) No

1094/2010 of the European Parliament and of the Council of 24

November 2010, or the European Securities and Markets Authority

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

Parliament and of the Council of 24 November 2010, as the case may

be;

"Financial Services Tribunal" means the tribunal established

under article 21 of the Act;

"insurance-based investment product" means an insurance

product which offers a maturity or surrender value and where that

maturity or surrender value is wholly or partially exposed, directly or

indirectly, to market fluctuations;

"packaged retail and insurance-based investment product" or

"PRIIP" means a product that is one or both of the following

(a)

a PRIP;

(b)

an insurance-based investment product;

"packaged retail and insurance-based investment product

manufacturer" or "PRIIP manufacturer" means

(a)

any entity that manufactures PRIIPs;

(b)

any entity that makes changes to an existing PRIIP

including, but not limited to, altering its risk and reward profile

or the costs associated with an investment in a PRIIP;

"packaged retail investment product" or "PRIP" means an

investment, including instruments issued by special purpose vehicles as

defined in point (26) of Article 13 of Directive 2009/138/EC or

securitisation special purpose entities as defined in point (an) of Article

4(1) of Directive 2011/61/EU, where, regardless of the legal form of

the investment, the amount repayable to the retail investor is subject to

fluctuations because of exposure to reference values or to the

performance of one or more assets which are not directly purchased by

the retail investor;

"person selling a PRIIP" means a person offering or concluding a

PRIIP contract with a retail investor;

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

"PRIIPs Regulation" means Regulation (EU) No 1286/2014 of

the European Parliament and of the Council of 26 November 2014 on

key information documents for packaged retail and insurance-based

investment products (PRIIPs), as may be amended from time to time,

and includes any binding legal instruments, guidelines and other

measures that have been or may be issued thereunder;

"Regulation (EU) 2017/1129" means Regulation (EU) 2017/

1129 of the European Parliament and of the Council of 14 June 2017

on the prospectus to be published when securities are offered to the

public or admitted to trading on a regulated market, and repealing

Directive 2003/71/EC, as may be amended from time to time;

"retail investor" means

(a)

a retail client as defined in point (11) of Article

4(1) of Directive 2014/65/EU;

(b)

a customer within the meaning of Directive (EU)

2016/97, where that customer would not qualify as a

professional client as defined in point (10) of Article 4(1) of

Directive 2014/65/EU.

(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 assigned to them in the Act.

(1)

These regulations shall apply to

PRIIP

manufacturers and persons advising on, or selling, PRIIPs.

(2)

Where PRIIP manufacturers subject to the PRIIPs

Regulation are also subject to Regulation (EU) 2017/1129, both the

PRIIPs Regulation and Regulation (EU) 2017/1129 shall apply to

them.

(3)

Where PRIIP manufacturers subject to the PRIIPs

Regulation are also subject to Directive 2009/138/EC, both the PRIIPs

Regulation and Directive 2009/138/EC shall apply to them.

(4)

Upon expiration of the exemption laid down in Article 32

of the PRIIPs Regulation, these regulations shall also apply to the

entities referred to in the same Article 32 of the PRIIPs Regulation.

(1)

The Malta Financial Services Authority

established by the Act shall be the designated competent authority in

Malta to supervise the requirements that the PRIIPs Regulation places

on PRIIP manufacturers and the persons advising on, or selling, the

PRIIP.

(2)

The Authority shall monitor the market for insurance-

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

based investment products which are marketed, distributed or sold in or

from Malta.

(1)

The Authority shall exercise and fulfil all the

functions, obligations and powers which are required or may be

imposed on competent authorities in accordance with the PRIIPs

Regulation and it shall satisfy all the applicable obligations and

requirements imposed on competent authorities by the PRIIPs

Regulation.

(2)

Without prejudice to sub-regulation (1), the Authority

may, for the better implementation of the PRIIPs Regulation, exercise

any of the powers assigned to it under the Act.

The Authority may issue and publish Rules in terms of

article 16(2)(a) and article 20A(3) of the Act for the better carrying out

of the provisions of the PRIIPs Regulation and of these regulations.

(1)

Without prejudice to the powers of the Authority

under the Act or any other law and to any criminal sanctions which

may be imposed on PRIIP manufacturers and persons advising on, or

selling, PRIIPs, the Authority shall impose administrative penalties and

measures for breaches of the provisions of the Act or regulations or

Rules made thereunder implementing the provisions of the PRIIPs

Regulation, and in respect of infringements covered by the PRIIPs

Regulation, and shall take all necessary measures to ensure that such

administrative penalties and measures are implemented.

(2)

The administrative penalties and measures taken pursuant

to sub-regulation (1) shall be effective, proportionate and dissuasive.

(1)

This regulation shall apply to infringements of

Article 5(1), Articles 6 and 7, Article 8(1) to (3), Article 9, Article

10(1), Article 13(1), (3) and (4) and Articles 14 and 19 of the PRIIPs

Regulation.

(2)

Without prejudice to the generality of regulation 7, the

Authority shall have the power to impose, in accordance with Maltese

law, at least the following administrative penalties and measures for the

infringements indicated in sub-regulation (1)

(a)

an order prohibiting the marketing of a PRIIP;

(b)

an order suspending the marketing of a PRIIP;

(c)

a public warning indicating the person responsible

for, and the nature of, the infringement;

(d)

an order prohibiting the provision of a key

information document which does not comply with the

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

requirement of Articles 6, 7, 8 or 10 of the PRIIPs Regulation

and requiring the publication of a new version of a key

information document;

(e)

in the case of a legal person, administrative

penalties of up to five million euro (€5,000,000) or of up to

three per cent (3%) of the total annual turnover of that legal

person according to the last available financial statements

approved by the management body or, where the profits gained

or losses avoided because of the infringement can be

determined, up to twice the amount of the profits gained or

losses avoided

Provided that, where the legal person is a parent

undertaking or a subsidiary of a parent undertaking which is required

to prepare consolidated financial statements in accordance with

Directive 2013/34/EU, the relevant total annual turnover shall be the

total annual turnover or the corresponding type of income in

accordance with the relevant Union law in the area of accounting

according to the last available consolidated financial statements

approved by the management body of the ultimate parent undertaking;

and

(f)

in the case of a natural person, administrative

penalties of up to seven hundred thousand euro (€700,000), or,

where the profits gained or losses avoided because of the

infringement can be determined, up to twice the amount of the

profits gained or losses avoided.

(3)

Where the Authority has imposed one or more

administrative penalties or measures in accordance with sub-regulation

(2), the Authority shall have the power to issue, or require the PRIIP

manufacturer or person advising on, or selling, the PRIIP to issue, a

direct communication to the retail investor concerned, providing such

retail investor with information on the administrative penalty or

measure, and informing such investor where to submit complaints or

claims for redress.

(4)

In the exercise of its powers under these regulations, the

Authority shall cooperate closely with other competent authorities to

ensure that the administrative penalties and measures produce the

results pursued by the PRIIPs Regulation and coordinate their action in

order to avoid possible duplication and overlap when applying

administrative penalties and measures to cross-border cases. For the

purposes of this sub-regulation, "competent authorities" shall mean the

body designated by a Member State or EEA State other than Malta, in

accordance with Article 4(8) of the PRIIPs Regulation to supervise the

requirements that the PRIIPs Regulation places on PRIIP

manufacturers and the persons advising on, or selling, the PRIIP.

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

When applying the administrative penalties and measures

referred to in regulation 8(2), the Authority shall take into account all

relevant circumstances including, where appropriate

(a)

the gravity and duration of the infringement;

(b)

the degree of responsibility of the person

responsible for the infringement;

(c)

the impact of the infringement on the interests of

retail investors;

(d)

the cooperative behaviour

of

the

person

responsible for the infringement;

(e)

any previous infringements

by

the

person

responsible for the infringement; and

(g)

measures taken after the infringement by the

person responsible for the infringement to prevent its repetition.

A right of appeal to the Financial Services Tribunal shall

lie from the decisions to impose penalties and measures taken by the

Authority pursuant to these regulations and the PRIIPs Regulation, and

the provisions of article 21 of the Act shall mutatis mutandis apply.

(1)

Where the Authority has disclosed administrative

penalties or measures to the public, it shall simultaneously report those

administrative penalties or measures to the competent ESA.

(2)

The Authority shall, on an annual basis, provide the

competent ESA with aggregate information regarding all

administrative penalties and measures imposed in accordance with

regulations 7, 8(2) and 8(4) of these regulations.

(1)

The Authority shall publish on its official website,

without undue delay, any administrative penalty or measure for

infringements referred to in regulation 8(1), after the person on whom

the penalty or measure was imposed has been informed of that

decision. The publication shall include, at least, information on the type

and nature of the infringement and the identity of the persons

responsible for the infringement

Provided that in cases where an appeal is made from a

decision to impose an administrative penalty or other measure, the

Authority shall, without undue delay, publish on its official website

such information and any subsequent information on the status of the

appeal and the outcome thereof. The Authority shall also publish any

decision annulling a previous decision to impose an administrative

penalty or other measure which has been published

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

Provided further that the obligation to publish does not

apply to decisions imposing measures that are of an investigatory

nature.

(2) Notwithstanding sub-regulation (1), where the

publication of the identity of the legal persons, or identity or personal

data of natural persons, is considered by the Authority to be

disproportionate following a case-by-case assessment conducted on

the proportionality of the publication of such data, or where such

publication would jeopardise the stability of financial markets or an

ongoing investigation, the Authority shall

(a)

delay the publication of the decision to impose an

administrative penalty or a measure until the moment where the

reasons for non-publication cease to exist;

(b)

publish the decision to impose a penalty or a

measure on an anonymous basis in a manner which complies

with Maltese law, if such anonymous publication ensures an

effective protection of the personal data concerned; or

(c)

not publish the decision to impose an

administrative penalty or measure in the event that the options

laid down in paragraphs (a) and (b) above are considered to be

insufficient to ensure

(i)

that the stability of financial markets would

not be put in jeopardy; and

(ii)

the proportionality of the publication of

such decisions with regard to measures which are

deemed to be of a minor nature.

(3)

The Authority shall inform the ESAs of all

administrative penalties or measures imposed but not published in

accordance with sub-regulation (2)(c), including any appeal in relation

thereto and the outcome thereof. In the case of a decision to publish an

administrative penalty or measure on an anonymous basis, the

publication of the relevant data may be postponed for a reasonable

period of time if it is envisaged that within that period the reasons for

anonymous publication will cease to exist.

(4)

The Authority shall ensure that any publication, in

accordance with this regulation, shall remain on its official website for

a period of at least five (5) years after its publication

Provided that the personal data contained in the

publication shall be kept on the official website of the Authority only

for the period which is necessary in accordance with the applicable

(PACKAGED RETAIL AND INSURANCE-BASED

INVESTMENT PRODUCTS (PRIIPS))

data protection legislation.