Three legal notices (the “Legal Notices”) have been recently promulgated in anticipation of the possibility of a ‘No-Deal Brexit’. The Legal Notices primarily impact UK licenced investment funds, investment firms and fund managers (“UK Entities”) that are presently passporting their services within Malta. Said Legal Notices amend the following legislative instruments:
- Investment Services Act (UCITS Management Company Passport) – Subsidiary legislation 370.20;
- European Passport Rights for Investment Firms – Subsidiary Legislation 370.10; and
- Investment Services Act (Alternative Investment Fund Manager) (Passport) – Subsidiary legislation 370.22.
The Legal Notices define a ‘No-Deal Brexit’ scenario as being the “date on which the United Kingdom leaves the European Union without a withdrawal deal”. In all three instruments, the legislator distinguishes between European established entities wishing to passport their rights and UK established entities who are at present exercising their European rights of freedom to provide services within other Member States.
The amendments introduced, establish new articles providing for the provision of a temporary permission to UK Entities for the continuance of passporting rights. The procedure entails a notification to be made to the competent authority, this being the Malta Financial Services Authority (MFSA) along with the application and submission of a form provided by the same authority. The permission allows UK Entities to continue rendering their services to existing clients and fulfil service contracts entered into with clients by not later than the 30th September 2019. Additionally, UK Entities granted a temporary permission will be exempt from Article 3 of the Investment Services Act, Chapter 370, laws of Malta – dealing with licensing requirements, until the 31st March 2020. Finally, as from the 1st April 2020, the UK investment firms and alternative investment fund managers shall be considered as third country firms, and thus, regulations governing the provision of services to third countries will apply. As for UK UCITS (undertakings for collective investment in transferable securities), after the latter cut-off date, will no longer be treated as “management companies as defined in Article 2 of the UCITS Directive”. Thus, UK Entities wishing to render services in Malta would be required to acquire a licence upon the lapse of the timeframes established by the Legal Notices.
All temporary permissions granted under the temporary permission regime shall be valid until the 31st March 2020.