Professional Investor Funds (“PIFs”) vs Notified PIFs

PIFs are the most common Collective Investment Scheme in Malta, as they provide a more practical regulatory regime and more flexibility than UCITS, Alternative Investment Funds (“AIFs”), Notified Alternative Investment Funds (“Notified AIFs”) and private funds. This is due to the fact that PIFs are non-retail schemes and thus, they are not available to the general public.

Following the success of Notified AIFs, the Malta Financial Services Authority (“MFSA”) launched a proposed framework for Notified Professional Investor Funds (“Notified PIFs”).

Notified PIFs are expected to improve Malta’s appeal as a fund jurisdiction, particularly for US, UK and other third country investment managers.

Main Differences between Traditional PIFs and Notified PIFs.

SubjectPIFsNotified PIFsLicenseLicensed by the MFSASubject to a notification processDuration of License or Notification ProcessLengthy process, duration will vary on a case-by-case basisMay be completed within 10 working days from submissionSet up CostsHigher set up costsLower set up costsAnnual Supervisory FeesApplicable – SICAV level and per Sub-FundApplicable – SICAV level and per Sub-Fund. However, fees will be lowerRetail or Non-Retail Collective Investment SchemeNon-RetailNon-RetailType of Eligible InvestorQualifying Investors, Extraordinary Investors and Experienced InvestorsQualifying Investors,Investment, Objectives, Policies and RestrictionsThe Scheme shall be subject to the investment objectives, policies and restrictions outlined in its Offering Document.

For PIFs targeting experienced investors and qualifying investors there are additional restrictions. Note that PIFs targeting experienced investors have the most restrictions.

The Scheme shall be subject to the investment objectives, policies and restrictions outlined in its Offering Document.

Note that Notified PIFs shall not engage in a ‘Lending’ activity as defined under the MFSA’s Loan Funds Rules

ManagementSelf-managed or third-party managed fundsOnly set up as third-party managed fundsFund AdministratorMay appoint a Maltese recognised Fund Administrator. Where an Administrator is not appointment, the Manager shall be responsible for the Administration functionFund administration services must be carried out by a Maltese recognised Fund AdministratorCustodianOptionalOptionalInvestment AdvisorOptionalOptionalStatutory AuditorRequiredRequiredMLRORequiredRequiredCompliance OfficerRequired (may also act as MLRO)Required (may also act as MLRO)Breaches RegisterRequiredRequiredAudited Financial StatementsWithin 6 months following the end of the reporting periodWithin 6 months following the end of the reporting periodAnnual Fund Return and Auditors Report signed by Staturory AuditorWithin 7 months following the end of the reporting periodWithin 7 months following the end of the reporting periodAppointments and Resignation’sThe MFSA shall be notified of the appointment, removal or replacement of any service provider in advance of the change,The MFSA shall be notified of the appointment, removal or replacement of any service provider in advance of the change,

Conversion of Professional Investor Funds (“PIFs”) to Notified PIFs.

After obtaining written consent from the MFSA, PIFs can apply for a conversion of the PIF into a Notified PIF. The PIF shall inform the MFSA at an early stage of its intention to convert from a PIF into a Notified PIF.

Requests for conversions from licensed PIFs to Notified PIFs are at the discretion of the MFSA and the MFSA may decide to delay the conversion of the scheme, in order to protect the interests of the investors.

In order for the conversion process to commence, the Board of Directors shall submit the below documents to the MFSA:

1. A signed confirmation letter which:

• Provides the rationale for the required conversion;
• Confirms that there are no regulatory implications associated with the required conversion;
• Discloses whether there are any open breaches;
• Provides the MFSA with an updated breaches register of the scheme;
• Declares that existing investors in the PIF have been duly notified of the prospective conversion (Note that a PIF may only be converted to a Notified PIF after all redemptions regarding investors opting to exit the fund have been made. Furthermore, any applicable redemption fees are to be waived);
• Confirms that any subscription fees for existing investors in the PIF entering the Notified PIF will be waived; and
• Confirms that the PIF has informed its service providers of its intention to give up its licensed status and convert to a Notified PIF.

2. A declaration by the appointed service provider confirming that:

• The respective service provider has carried out the necessary due diligence with regards to the functionaries and the Board of Directors of the Notified PIF; and
• The respective service provider is satisfied with the outcome of his exercise.

3. The original licence/s granted to it by the MFSA.

Note that the MFSA may impose additional requirements or vary the requirements from those described above in order to convert a PIF to a Notified PIF.

How can Zampa Partners be of Assistance? 

Should you require additional information or assistance with regards to the proposed NPIF framework, do not hesitate to contact us.

Janis Hyzler

Audit Leader

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