What are AIFs?
The Alternative Investment Fund Managers Directive (“AIFMD”) is intended to create a harmonized framework for the management and marketing of non-UCITS funds within the context of a high level of investor protection. It prescribes rules for the authorisation, operating conditions and transparency obligations to be applied to alternative investment fund managers (“AIFMs”) and for the marketing of alternative investment funds (“AIFs”) to professional investors throughout the EU.
The remit of the AIFMD is particularly wide due to its all-encompassing definition of AIFs. In effect, “AIFs” are collective investment undertakings which:
- raise capital from a number of investors with a view to investing it in accordance with a defined investment strategy; and
- do not require authorisation under the UCITS Directive
Therefore, hedge funds, private equity funds, real estate funds, venture capital funds and others all fall within the scope of the AIFMD.
CRITERIA WHICH MFSA WILL APPLY IN CONSIDERING AN APPLICATION FOR A LICENCE
The MFSA may only grant a Collective Investment Scheme licence to an AIF if it is satisfied to the extent that it can be, that the AIF will comply in all respects with the provisions of the Act, the relevant Regulations and these Rules and that its directors and officers, or in the case of a unit trust/ common contractual fund or limited partnership, its Trustee(s) or General Partner(s) respectively, are fit and proper persons to carry out the functions required of them in connection with the AIF.
When considering whether to grant or refuse a Licence, the MFSA will, in particular, have regard to:
- the protection of investors and the general public;
- the protection to the reputation of Malta taking into account Malta’s international commitments;
- the promotion of competition and choice; and
- the reputation and suitability of the applicant and all other parties connected
The following service providers must be appointed by an AIF:
- An AIFM, unless the AIF is self-managed, in which case an investment committee is set up by the board of directors. Such committee must consist of a minimum of three persons.
- An MLRO or compliance officer.
- A custodian, which must be established in Malta if the AIF is domiciled in Malta.
- An auditor
- An extrenal valuer, if the AIFM does not carry out the valuation functions itself.
An application fee of €5,000 is due together with an annual supervisory fee of €4,500 (for revenues up to €250,000) and €400 per tranche or part thereof (for further tranchesof €250,000 up to a maximum of €5,000,000). The application fee for An AIF licence is €2,000 for the scheme and €1,000 per sub-fund. The annual supervisory fee pre scheme is €2,000 and €600 per sub-fund.
With respect to the timelines, there is no fixed time within which the licence will certainly be granted by the MFSA. With respect to an application for a licence provider services as an AIFM, the MFSA must inform in writing within three months of the submission of a complete application, whether or not authorisation has been granted. The MFSA may prolong this period for up to three additional months, where it considers necessary due to specific circumstances of the case and after having notified the applicant accordingly.