Brexit and its Passporting Implications

by , on Oct 07, 2019 12:39:09 PM

In the light of the recent developments of the UK moving towards a no-deal Brexit, Legal Notices 242, 243 and 244 address the changes brought about by Brexit. They also  shed light on the added passport rights for UK investment firms which are offering their services in Malta. These amendments establish a temporary period which UK investment services can make use of after the no-deal Brexit date. These legal notices seek to amend the Investment Services Act, with special regard given to Undertakings For The Collective Investment Of Transferable Securities (UCITs) and Alternative Investment Funds (AIFs).

Amendments to L.N. 243

These amendments shall be read in conjunction with the European Passport Rights for Investment Firms Regulations and set out the temporary passport regime for UK investment companies to continue to service the contracts with existing clients provided in Malta. This temporary period may only be granted to those investment firms which started their operations in Malta prior to the no-deal Brexit date and shall only service contracts which had been entered into prior of the 30th of September 2019. These firms may only participate in this temporary period after notifying the competent authority of their intention to make use of such temporary period. The temporary period shall be valid until the 30th of March 2020.

Amendments to L.N.242 and L.N. 244

These amendments specifically concern the UCITs Management Company Passport Regulations and the Alternative Investment Fund Manager (passport) Regulations respectively. The amendments now provide for a provision which provides the UK UCITs management companies and AIF managers with a temporary passport permission regime. In this way, UK UCIT fund managers and AIFMs will be allowed to continue providing their services to Maltese clients. These UCITs management companies and AIFMs shall, during this period, remain to be considered as European management companies providing services in Malta, for all the purposes of this Regulation.

This temporary period, however, is only permissible for the UCITs fund managers and AIFMs who have already been operating in Malta prior to the no-deal Brexit date, under the right to provide cross-border services across the EU. This temporary period shall also only be permissible for contracts with clients entered into before the 30th of September 2019, and shall have to notify the competent authority of their intention to make use of this temporary regime. The temporary regime shall be available to UCIT management companies and AIFMs until the 31st of March 2020.

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