Consultation Document- De Minimis AIFMs

On the 22nd March 2013, the Malta Financial Services Authority (MFSA) issued a Consultation Document on the proposed rulebook applicable to De Minimis Licence Holders in terms of Article 3 of the Alternative Investment Fund Managers Directive (‘AIFMD’), which provides for exemptions and lays the foundations for the said de minimis regime.

The AIFMD sets out the minimum conditions and reporting obligations which must be fulfilled by a de minimis AIFM, however, Member States are given the option to apply more stringent rules at their discretion and, to this end, the MFSA has opted to apply a minimum licensing regime rather than mere registration to de minimis AIFMs. In terms of the introduction to the consultation document, the motivation behind this decision is that it is in the best interest of fund managers to be licensed particularly when dealing with potential investors and, moreover, it is the policy of the MFSA that only persons who are fit and proper should be allowed to establish a financial activity and operate on an on-going basis in and from Malta.

Furthermore, de minimis AIFMs will only be allowed to provide portfolio management to collective investment schemes which are not retail schemes. The proposed specific conditions to which de minimis AIFMs will be subject are set out in the draft rulebook which also contains high-level principles which stipulate organisational requirements, conduct of business requirements and financial resources requirements.

The proposed MFSA rulebook is divided as follows:

1. General Requirements – transposing the relative requirements applicable to de minimis AIFMs in terms of Article 3 of the AIFMD and establishing notification and authorisation requirements for the purpose of allowing the MFSA to monitor compliance with the fit and proper test.
2. Organisation Requirements – establishing organisational requirements including general requirements on delegation and the requirement to appoint a compliance officer.
3. Conduct of Business Requirements – establishing high-level conduct of business requirements, including rules on conflicts of interest.
4. Financial Resources and Reporting Requirements – establishing requirements for the maintenance and reporting of financial resources and other record keeping requirements.

The rules proposed in respect of de minimis AIFMs will form part of the new Part BIII of the Investment Services Rules for Investment Services Providers, which was issued for consultation on 30th November 2012.

By 22nd July 2013 Member States are required to adopt and publish the laws, regulations and administrative provisions necessary to comply with the provisions of the AIFMD.

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