Passporting of funds means the European right of a Maltese collective investment scheme to offer its units for subscription throughout the EU and EEA states. This right is not enjoyed by all kinds of funds. In fact, such rights are only automatically available in the case of Maltese UCITS and certain types of Maltese retail non-UCITS Schemes.
Maltese UCITS
Where a Maltese UCITS proposes to market its units in another Member State or EEA State, it needs to, prior to commencement of marketing, send a written notification of its intention to the MFSA. The UCITS must then inform the foreign authority of that other Member State or EEA State and must simultaneously send to the latter authority -
(a) an attestation by the MFSA to the effect that it fulfils the conditions imposed by the UCITS Directive;
(b) its fund rules or its instruments of incorporation;
(c) its full and simplified prospectus;
(d) where appropriate, its latest annual report and any subsequent half-yearly report, and
(e) details of the arrangements made of the marketing of its units in that other Member State or EEA State.
The Maltese UCITS may commence marketing its units in another Member State or EEA State at the expiry of two months, unless the foreign authority of that other Member State or EEA State establishes, in a reasoned decision taken before the expiry of that period of two months, notified to the UCITS concerned and to the competent authority, that the arrangements made for the marketing of units are not sufficient.
A Maltese UCITS which markets its units in another Member State or EEA State must obviously comply with the laws, regulations and administrative provisions in force in that State which do not fall within the field governed by the UCITS Directive. A Maltese UCITS which markets its units in another Member State or EEA State must also comply with any laws, regulations and administrative provisions in force in that Member State or EEA State governing advertising in that State.
A Maltese UCITS which markets its units in a Member State or EEA State must distribute in that Member State or EEA State the following documents and information in the official language or in one of the official languages of that State or in a language approved by the foreign authority of that Member State or EEA State:
(a) the full and simplified prospectus;
(b) the annual and half-yearly reports; and
(c) the fund rules and instruments of incorporation.
The Maltese UCITS must, inter alia, in accordance with the laws, regulations and administrative provisions in force in the host Member State or EEA State, take the measures necessary to ensure that facilities are available in that State for making payments to unit-holders, re-purchasing or redeeming units and making available the information which Maltese UCITS are obliged to provide.
Maltese retail non-UCITS schemes
Maltese retail non-UCITS schemes in general do not enjoy passporting rights. The only types of schemes that enjoy such rights are those whose prospectus is drawn up in accordance with the Prospectus Directive. In fact, a Maltese closed ended non-UCITS Scheme which makes an offer of securities to the public is required to draw up a Prospectus which complies with the requirements of the Prospectus Directive (Directive 2001/34/EC) and may accordingly avail itself of the passport under the said Directive.
When such a scheme wishes to offer units to the public in one or more host Member States or EEA States, the MFSA shall, at the request of the scheme and within three working days following that request or, if the request is submitted together with the draft prospectus, within one working day after the approval of the prospectus provide the European regulatory authority of the host Member State or EEA State with a certificate of approval attesting that the prospectus and supplements thereto have been drawn up in accordance with the Directive and with a copy of the said prospectus and supplements thereto.
PIFs and Private Schemes
Strictly speaking, PIFs and Private Schemes enjoy no passporting rights under the relevant EU Directives because their regulation has not yet been harmonised at EU level. However, due to the fact that the MFSA enjoys a high degree of respect and reputability as a serious regulator, foreign regulatory authorities usually look very favourably at such businesses.
