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Recently, the Malta Financial Services Authority (“MFSA”) issued two circulars related to updates on Undertakings for Collective Investment in Transferable Securities (“UCITS”) Management Companies, and a clarification note on the disclosures in the financial return reporting and other essential regulatory clarifications. In this article, a brief overview of the salient features emanating from these two circulars shall be given to ensure that subject persons comply with the below updates and clarifications.

The first circular dated the 6th of April 2022 relates to the online and social media presence of UCITS Management Companies. The MFSA is requesting UCITS Management Companies to provide the Authority with any website link and/or any social media page that is held by the UCITS Management Companies, and to inform the Authority about the target market behind such websites and/or social media pages for the Authority to be able to update its records. The MFSA defines social media as including microblogs, social and professional networks, websites, image and video sharing platforms, forums, and any other medium that is utilised by UCITS Management Companies to target a specific market.

The MFSA added two further questions in the cover sheet of Appendix 2B Fund Manager Return (“Appendix 2B”) that needs to be submitted by those license holders holding a UCITS Management Company license. The MFSA requires such license holders to disclose the UCITS Management Company’s website link(s) that is/are used by the Company to provide information to the clients and to any potential clients about the Company’s products and services. The license holders must indicate whether the website(s) is/are intended for an identified jurisdiction and the specific target audience which it is/are intended for. Likewise, the MFSA requires license holders to disclose the company’s link(s) to any social media pages, and to indicate whether the social media page(s) is/are intended for an identified jurisdiction and the specific target audience which it is/are intended for. The MFSA in its circular informed the UCITS Management Companies that they are expected to submit the above-mentioned Appendix 2B within the time limits mentioned in the Timetable Document, starting from the financial submissions due by the 30th of April 2022.

The second circular dated the 5th of April 2022 was issued by the MFSA to clarify some common issues that cropped up when the Authority was going through the Financial Returns that were submitted by Investment Firms.

The first issue relates to the inaccurate client figures in the Passporting Survey of the MiFID Firms Quarterly Reporting Return that were reported by Investment Firms. The MFSA remarked that it is of the essence for Investment Firms to consider the location of their clients in cases of a cross-border activity of investment services to be able to determine the laws and provisions applicable to the case at hand. When populating the passporting tab, and the third country clients’ information of the MiFID First Quarterly Report, Compliance Officers must make sure to consider the location of the Company’s client base. Compliance Officers must also ensure that the data provided to the MFSA is accurate, that it reflects the client data and that the Investment Firm has the necessary pre-requisites required to offer services to European Union (“EU”), and non-EU clients before onboarding.

The second issue relates to the concept of reverse solicitation in line with the MiFID II Package. The MFSA remarked that the concept of reverse solicitation should not be given a broad interpretation, and that the exemption mentioned in Article 42 of the MiFID II Package is to be applied only in limited cases, including cases of third country firms targeting EU nationals. The MFSA explained that this exemption is only applicable when a retail or a professional client that is located in the EU commences, at its own exclusive initiative, the provision of an investment service or activity by a third-country firm. The exclusive initiative of the client should be assessed on a case-by-case basis for each investment service or activity provided, and if it results that such provision of an investment service or activity has been triggered at the sole initiative of the EU national, then the third country firm would not be subject to the requirements under Article 39 of the MiFID II Package.

Investment Firms should refer to the guidance provided by ESMA in its Questions and Answers booklet and to ESMA’s Public Statement on reverse solicitation which provide further guidance for an Investment Firm to be able to rely on the reverse solicitation rule.


This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Anthea Sammut.