On the 29^th of March 2022, the Malta Financial
Services Authority (“MFSA“) issued a
circular to the industry in which several amendments to the
Investment Services Rulebooks were detailed. Such amendments cover
the following:

• amendments to the Transparency provisions in the Investment
  Services Rulebooks to elaborate on the suitable channels Licence
  Holders may use to disclose the information required under the
  Shareholder Rights Directive (“SRD II
  Directive“);




• additional whistle-blower protection provisions on the
  reporting of infringements by employees;




• updated cross-references to the Investment Services Rules for
  Investment Service Providers, Part BI: Rules applicable to
  Investment Services Licence Holders which qualify as MiFID Firms
  (“‘ISR ISP Part BI“‘); and




• other miscellaneous amendments relating to own funds and
  capital requirements, reporting requirements, and removal of
  obsolete provisions.

Amendments to the ISR ISP Part BI

Transparency Provisions

Minor changes have been introduced to the section
‘Transparency provisions’ of the ISR ISP Part BI to
elaborate on the suitable channels investment firms may use to
disclose the information required under Article 3i of the SRD II
Directive. Such disclosure shall be made in the Annual Audited
Financial Statements report for the financial year, or together
with the periodic communications referred to in Article 25(6) of
Directive 2014/65/EU to the institutional investor or a collective
investment scheme, or published on the licence holder’s
website.

Provisions on Whistleblowing

Two new definitions have been inserted in the ISR ISP Part BI,
namely the definitions of Approved Publication Arrangement
(“APA“) and Approved Reporting Mechanism
(“ARM“) to accompany the provisions of
Section 23.

A new Section 23 dealing with the reporting of infringements by
employees was included in Title 1. This new section
imposes an obligation on certain institutions to develop and
maintain appropriate mechanisms for employees to report potential
or actual infringements internally through a specific, independent
and autonomous channel. Section 23 applies to the following
institutions:

• investment firms, ARMs and APAs with a derogation in accordance
  with Article 2(3) of MiFIR;




• credit institutions in relation to investment services or
  activities and ancillary services; and




• branches of third-country firms.

Furthermore, such entities shall also be required to refer and
comply with the applicable provisions within the Protection of the
Whistleblower Act (Chapter 527 of the Laws of Malta).

Amendments to the Investment Services Rules for Investment
Services Providers, Part BII:  Standard Licence Conditions
applicable to Investment Services Licence Holders which qualify as
UCITS Management Companies (‘ISR ISP Part BII’)

Own Funds and Capital Requirements

Two Standard licence conditions were introduced in lieu of the
cross-references found in SLC 1.04 to regulate own funds and the
capital requirements of the Licence Holder. Namely, the composition
and amount of own funds, and the calculation of the capital
requirement aligning these provisions with the ISR ISP Part BI.

Reporting Requirements

The amendments have also added several rules obliging licence
holders to submit to the Authority;

1. the original Representations Sheet of the Annual Financial
   Return;




2. the Audited Annual Financial Return;




3. the original Representations Sheet,




4. the annual supervisory fee calculator, and




5. the original Representations Sheet of the Interim Financial
   Return, all duly signed.

The Annual Financial Return should be submitted in electronic
copy.

Transparency Provisions

The Section ‘Transparency provisions’ of the ISR ISP
Part BII has also been amended to elaborate on the suitable
channels UCITS Management Companies may use to disclose the
information required under Article 3i of the SRD II Directive.

Amendments to the Investment Services Rules for Investment
Services Providers, Part BIII:

Standard Licence Conditions applicable to Investment
Services Licence Holders which qualify as Alternative Investment
Fund Managers (‘ISR ISP Part BIII’) ISR ISP Part BI Cross
References

Amendments to the ISR ISP Part BIII are identical to those of
the ISR ISP Part BII insofar as ISR ISP Part BI cross references
found in SLC 1.09, SLCs regarding own funds and capital
requirements, reporting, and SRD II Disclosures.

Miscellaneous

The references to Categories were removed as these are now
considered outmoded given the introduction of Classes following the
IFDpackage.

Amendments to the Investment Services Rules for Alternative
Investment Funds, Part B:

Notification & Reporting Requirements

The ISR AIF Part B has been amended to remove the requirement to
notify the MFSA about address changes and clarifies the deadline
for submission of annual reports by AIFs admitted to listing on a
regulated market in line with the AIFMD. These entities must now
report every six months.

Furthermore, the provision allowing the extension of the
financial statements’ submission deadline of annual reports has
been removed.

Transparency Provisions

The Section ‘Transparency provisions’ of the ISR AIF
Part B has been amended to elaborate on the suitable channels AIFMs
may use to disclose the information required under  the SRD II
Directive

Amendments to the Investment Services Rules for Retail
Collective Investment Schemes

Part BII: Malta Based UCITS Collective Investment Schemes
(‘ISR RCIS Part BII)

Transparency Provisions

The Section ‘Transparency provisions’ of the ISR RCIS
Part BII has been amended to elaborate on the suitable channels
UCITS may use to disclose the information required under the SRD II
Directive.

Amendments to the Investment Services Rules for Professional
Investor Funds, Part BI:

Professional Investor Funds targeting Experienced Investors
(‘ISR PIF Part BI’)

Minimum Entry Levels

Minor amendments were done to substitute the reference to the
USD currency in the rulebook with the phrase “currency
equivalent” to be in line with the relevant Authorisations
Rulebook.

Amendments to the Investment Services Rules for Professional
Investor Funds, Part BII:

Minimum Entry Levels

The same changes as explained in the Section relating to the ISR
PIF Part BI have been reflected in the ISR PIF Part BII.

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.

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