INVESTMENT SERVICES ACT (CROSS-BORDER DISTRIBUTION OF FUNDS) REGULATIONS

DISTRIBUTION OF FUNDS)

SUBSIDIARY LEGISLATION 370.50

INVESTMENT SERVICES ACT (CROSS-BORDER

DISTRIBUTION OF FUNDS) REGULATIONS

6th May, 2022

LEGAL NOTICE 131 of 2022.

(1)

The title of these regulations is the Investment

Services Act (Cross-Border Distribution of Funds) Regulations.

(2)

The purpose of these regulations is to implement Article

14 of Regulation (EU) 2019/1156 of the European Parliament and of

the Council of 20 June 2019 on facilitating cross-border distribution of

collective investment undertakings and amending Regulations (EU)

No 345/2013, (EU) No 346/2013 and (EU) No 1286/2014, and to

provide for ancillary matters related thereto.

In these regulations, unless the context otherwise

requires

"The Act" means the Investment Services Act;

"Alternative Investment Funds or AIFs" means a

collective investment scheme, including sub-funds 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, and shall

include EuVECA, EuSEF and ELTIF;

"Cross-Border Distribution of Funds Regulation" means

Regulation (EU) 2019/1156 of the European Parliament and of

the Council of 20 June 2019 on facilitating cross-border

distribution of collective investment undertakings and

amending Regulations (EU) No 345/2013, (EU) No 346/2013

and (EU) No 1286/2014 as amended from time to time and

includes any implementing measures, implementing technical

standards, regulatory technical standards, guidelines and

similar measures that have been or may be issued thereunder;

"European long-term investment fund" or "ELTIF" shall

have the same meaning as assigned to it in Regulation (EU)

2015/750 of the European Parliament and of the Council of 29

April 2015 on European long-term investment funds;

"EuSEF" shall have the same meaning assigned to it in

Regulation (EU) No 346/2013 of the European Parliament and

of the Council of 17 April 2013 on European social

entrepreneurship funds;

DISTRIBUTION OF FUNDS)

"EuSEF manager" means a manager of a qualifying social

entrepreneurship fund as defined in point (c) of Article 3(1) of

Regulation (EU) No 346/2013 and registered in accordance with

Article 15 of the said Regulation;

"EuVECA" shall have the same meaning assigned to it in

Regulation (EU) No 345/2013 of the European Parliament and

of the Council of 17 April 2013 on European venture capital

fund;

"EuVECA manager" means a manager of a qualifying

venture capital fund as defined in point (c) of the first paragraph

of Article 3 of Regulation (EU) No 345/2013 and registered in

accordance with Article 14 of the said Regulation;

"Home Member State" means the Member State in which

the AIFM, the EuVECA manager, the EuSEF manager or the

UCITS management company has its registered office;

"UCITS" shall have the same meaning as assigned to it in

the Act; and

"UCITS management company" shall have the same

meaning as assigned to it in the Act.

(2)

Words and expressions used in these regulations shall

have the same meaning assigned to them in the Act.

The Malta Financial Services Authority, established by

the Malta Financial Services Authority Act, shall be the designated

competent authority in Malta for the purposes of implementing the

relevant provisions of the Cross-Border Distribution of Funds

Regulation, and any reference in these regulations to the competent

authority shall be read and construed accordingly.

(1)

The competent authority shall exercise all the

functions, obligations and powers and shall satisfy all the requirements

imposed on competent authorities by the Cross-Border Distribution of

Funds Regulation.

(2)

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

authority may, for the better implementation of the Cross-Border

Distribution of Funds Regulation, exercise any of the powers assigned

to it under the Act and any regulations, Investment Services Rules and,

or Conduct of Business Rules issued thereunder.

For the better carrying out of the provisions of the Cross-

Border Distribution of Funds Regulation and of these regulations, the

competent authority may, from time to time, issue and publish

Investment Services Rules and, or Conduct of Business Rules within

the meaning of article 6(2)(b) of the Act. Such rules may lay down

DISTRIBUTION OF FUNDS)

additional requirements and conditions in relation to AIFMs, EuVECA

managers, EuSEF managers and UCITS management companies as

the competent authority may deem appropriate, including on

(a)

the operation of the Cross-Border Distribution of

Funds Regulation or of these regulations;

(b)

any matter relating to the functions, obligations

and powers of the competent authority under the Cross-Border

Distribution of Funds Regulation; or

(c)

any other matter arising in connection with the

Cross-Border Distribution of Funds Regulation or these

regulations.

The competent authority shall supervise compliance by

the AIFMs, EuVECA managers, EuSEF managers and UCITS

management companies with the requirements prescribed in the Cross-

Border Distribution of Funds Regulation.

(1)

Without prejudice to any other powers assigned to

the competent authority in terms of these regulations, where a person’s

conduct amounts to a breach of any of the provisions of the Cross-

Border Distribution of Funds Regulation, these regulations or any

Investment Services Rules or Conduct of Business Rules issued

thereunder and implementing the Cross-Border Distribution of Funds

Regulation, the competent authority may by notice in writing and

without recourse to a court hearing, impose on such person as the case

may be, an administrative penalty as follows

(a)

in the case of a legal person, the administrative

penalty of up to a maximum of five million euro (€5,000,000)

or 10% of the total annual turnover of the legal person

according to the last available accounts approved by the

management body

Provided that where the legal person is a parent

undertaking or a subsidiary of the parent undertaking which has

to prepare consolidated financial accounts 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 law in the area of

accounting according to the last available consolidated accounts

approved by the management body of the ultimate parent

undertaking;

(b)

in the case of a natural person, the administrative

penalty of up to a maximum of five million euro (€5,000,000);

(c)

as an alternative to paragraphs (a) and (b), an

administrative penalty up to a maximum equivalent to twice the

DISTRIBUTION OF FUNDS)

amount of the benefit derived from the infringement or breach,

where that benefit can be determined, even if it exceeds the

maximum amounts provided for under paragraphs (a) and (b).

(2)

Administrative penalties or other measures that may be

imposed by the competent authority on licence holders or others, as

may be specified, may be imposed in the form of a fixed penalty, a

daily penalty, or both.

(3)

The imposition by the competent authority of an

administrative penalty in terms of this regulation shall be without

prejudice to any other consequence arising from the act or omission of

the offender under civil or criminal law

Provided that in all cases where the competent authority

imposes an administrative penalty in respect of anything done or

omitted to be done by any person and such act or omission also

constitutes a criminal offence, no proceedings may be taken or

continued against the said person in respect of such criminal offence.

(4)

The competent authority may, by means of a public

statement, disclose the name of the person sanctioned, the particular

breach of the provision of these regulations, Investment Services Rules

or Conduct of Business Rules issued thereunder, and the penalty or

administrative measure imposed. The competent authority shall

withhold such public disclosure where it deems that such disclosure

would seriously jeopardize the financial markets, be detrimental to the

interests of investors or cause disproportionate damage to the parties

involved.

(5)

Where the competent authority has made a public

statement in terms of sub-regulation (4), it shall simultaneously report

that fact to ESMA.

(6)

The competent authority shall annually provide ESMA

with aggregated information about all the administrative measures and

sanctions imposed in accordance with this regulation and shall upon

request provide the necessary information on the application of

administrative measures and imposition of penalties in the case of

breaches of the provisions adopted in the implementation of the Cross-

Border Distribution of Funds Regulation.

A right of appeal to the Financial Services Tribunal, as

established under article 21 of the Malta Financial Services Authority

Act, shall lie from any decision which the competent authority may

take under these regulations and under the Cross-Border Distribution of

Funds Regulation, and the provisions of article 19 of the Act shall

apply mutatis mutandis.