The New Framework for Notified Professional Investor Funds

Key Differences Between PIFs and NPIFs

While both Professional Investor Funds (“PIFs”) and NPIFs target similar investor profiles, the notable difference lies in the regulatory pathway. PIFs undergo the standard licensing process, adhering to more rigorous scrutiny, whereas NPIFs follow a notification procedure, reducing the time required for market entry. This streamlined approach makes NPIFs an attractive option for fund managers seeking a faster route to launch and operate their investment funds. The efficiency of the notification process is noteworthy, since the MFSA will include the NPIF in the list of NPIFs within a period of 10 working days from the filing of a completed notification request. Unlike traditional funds, the MFSA refrains from approving or reviewing marketing or offering documentation, placing the responsibility on the NPIF. This expeditious approach enables fund managers to swiftly enter the market and capitalise on emerging opportunities.

Understanding the Framework

NPIFs are not intended for retail investors, meaning they are specifically catered for investors and may be managed by the following types of fund managers:

• a de minimis Alternative Investment Fund Manager (“AIFM”) which has been licensed in Malta;
• a de minimis AIFM which is duly authorised in an EU or EEA State; or
• a third country AIFM which has been authorised in a jurisdiction with which the MFSA has a bilateral cooperation agreement or memorandum of understanding on securities.

This flexibility allows for the ability to tailor the choice to specific business strategies, target markets, and regulatory considerations. This flexibility supports the diverse needs of fund sponsors and contributes to the overall attractiveness of Malta as a hub for fund management. Investor eligibility criteria ensure that NPIFs attract Qualifying Investors with a minimum investment requirement of EUR 100,000 and Professional Investors as defined in Annex II to MiFID II. The governing body of a NPIF assumes ultimate responsibility for ensuring compliance with the Investment Services Act, relevant regulations, and applicable rules. 

Conclusion

The new framework establishes a forward-looking and investor-friendly environment for NPIFs in Malta. It is designed to strike a balance between regulatory flexibility and robust oversight, fostering an environment conducive to diverse investment opportunities. 

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Article written by Dr. Andrea Abela, Junior Lawyer