MFSA’s launch of the new NPIF framework

On 18 December 2023, the Malta Financial Services Authority (the ‘MFSA’) published the long awaited Notified Professional Investor Funds (NPIF) framework, which is set to complement Malta’s existing fund frameworks, serving as a new and efficient route to market for sub-threshold asset managers.

The NPIF framework offers a non-retail fund structure, which looks to replicate the notification process applied so successfully with the Notified Alternative Investment Fund (‘NAIF’) to funds promoted by fund managers considered to be out-of-scope or below the de minimis thresholds set out in the Alternative Investment Fund Managers Directive (‘AIFMD’).

Similar to the NAIF, the NPIF framework contemplates a fund structure which is subject only to a notification requirement with the MFSA (rather than a full licensing process) and with limited ongoing supervision and which, as a result, should allow fund managers operating such funds to benefit from a quick time to market and comparatively lower setup and ongoing compliance costs. The MFSA should be required to deliver an acknowledgement of notification within 10 days from the receipt of a complete notification pack.

The NPIF framework contemplates a NPIF to be managed by:

i. locally licensed de minimis AIFMs; or
ii. de minimis AIFMs duly authorised in an EU or EEA State; or
iii. third country AIFMs which are authorised in a jurisdiction with whom the MFSA has signed a cooperation agreement and which are subject to equivalent regulation that they would otherwise have been subject to in Malta.

Some of the other key features of the NPIF framework include, inter alia, that a NPIF should:

• not be required to have its Offering Memorandum vetted by the MFSA;
• be subject to minimal ongoing regulation and supervision by the MFSA on an ongoing basis;
• not be required to appoint a Custodian; and
• not be subject to restrictions around investment strategies (with the exception of carrying out lending activities).

Another core feature of the NPIF framework is that an ‘approved’ third-party service provider is entrusted with conducting due-diligence with regards to the NPIF, both at notification stage and on an ongoing basis, where such third-party service provider may be either (i) a recognised fund administrator in terms of the Investment Services Act (Chapter 370 of the Laws of Malta); or (ii) an entity licensed under the Company Service Providers Act (Chapter 529 of the Laws of Malta) to act as a Corporate Company Service Provider, which is not under-threshold.

In light of the less onerous regulatory requirements that are applicable, NPIFs may only be non-retail schemes and only be available to investors qualifying as ‘professional’ investors (within the context of MiFID II) and/or ‘qualifying investors’ (being those who invest a minimum of EUR 100,000 (or the currency equivalent) and have net assets in excess of EUR 750,000 (or the currency equivalent)).

Deloitte Malta will be monitoring developments in the furtherance of the NPIF Framework.

A link to the MFSA’s press release may be found here.