On 24 September 2019 the Government of Malta issued three legal notices with respect to three Regulations, falling under the Investment Services Act, which are to be amended in order to cater for the event of a no-deal Brexit. This comes following a circular which was issued by the MFSA on 28 March 2019 that introduced the possibility of granting temporary permission to UK entities 1 already passporting into Malta.
The three Regulations to be amended include the:
i. European Passport Rights for Investment Firms Regulations;
ii. Investment Services Act (UCITS Management Company Passport) Regulations; and
iii. Investment Services Act (Alternative Investment Fund Manager) (Passport) Regulations.
The amendments would include definitions of three new terms, namely 'no-deal Brexit date', 'UK investment firms' and 'United Kingdom'.
Furthermore, the amendments would also introduce a new section in each of the above-mentioned Regulations, which would deal with temporary permission granted by the MFSA to UK entities to continue servicing existing contracts with existing clients.
This section provides that:
i. To avail themselves of this regime, UK entities must already be passporting into Malta prior to the no-deal Brexit date 2;
ii. UK entities which are granted a temporary permission shall only be allowed to service those contracts with clients which were entered into by not later than 30 September 2019;
iii. UK entities wishing to avail themselves of this regime are required to notify the MFSA by completing the appropriate form and stating their intention to benefit from this regime by not later than three weeks from the no-deal Brexit date; and
iv. The temporary permission granted to UK entities shall be valid until 31 March 2020, and after that date UK investment firms and AIFMs shall be treated as third country firms/AIFMs, while UCITS management companies will no longer be treated as such.
Therefore, UK entities availing themselves of this regime will be exempt from the requirement of obtaining a licence under the Investment Services Act, until 31 March 2020. Thereafter, UK entities will be required to obtain a licence in order to perform/provide their services in Malta.
1. These include UK licenced investment funds, investment firms and asset managers.
2. The date on which the UK leave the EU without a withdrawal deal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.