S.L. 370.22 Art. 5Breaches by Maltese AIFMs.

(1) The competent authority shall be responsible for the prudential supervision of a Maltese AIFM, whether the Maltese AIFM manages and, or markets AIFs in another Member State or EEA State or not, without prejudice to the provisions of the AIFM Directive conferring responsibility for supervision on the European regulatory authority of the host Member State or EEA State of the Maltese AIFM.

(2) The supervision of the Maltese AIFM’s compliance with Articles 12 and 14 of the AIFM Directive shall be the responsibility of the European regulatory authority of the host Member State or EEA State where the Maltese AIFM manages and, or markets AIFs through a branch in that Member State or EEA State.

(3) A Maltese AIFM managing or marketing AIFs in a Member State or EEA State other than Malta whether or not through a branch, may be required by the European regulatory authority of the host Member State or EEA State to provide information necessary for the supervision of its compliance with the applicable regulatory requirements for which that European regulatory authority is responsible.

(4) Where a Maltese AIFM is managing and, or marketing AIFs in a Member State or EEA State other than Malta, whether or not through a branch, and is in breach of one of the regulatory requirements for which the European regulatory authority is responsible for ensuring compliance, the competent authority shall receive notification from the European regulatory authority of the host Member State or EEA State of its request made to the Maltese AIFM to put an end to that breach.

(5) If the Maltese AIFM refuses to provide the European regulatory authority with information falling under its responsibility, or fails to take the necessary steps to put an end to breach referred to in sub-regulation (4), the European regulatory authority shall inform the competent authority thereof.

(6) Where the competent authority receives a notification from a European regulatory authority pursuant to sub-regulation (5), the competent authority shall, at the earliest opportunity:

(a) take all appropriate measures to ensure that the Maltese AIFM concerned provides the information requested by the European regulatory authority of the host Member State or EEA State, pursuant to sub-regulation (3) or puts an end to the breach referred to in sub-regulation (4);

(b) request the necessary information from the relevant supervisory authorities in third countries: Provided that the competent authority shall communicate to the European regulatory authority of the host Member State or EEA State the nature of the measures taken pursuant to this sub-regulation.

(7) Where a Maltese AIFM continues to refuse to provide the information requested by the European regulatory authority in the host Member State or EEA State pursuant to sub-regulation (3) or persists in breaching the legal or regulatory provisions referred to in sub-regulation (4) in force in the host Member State or EEA State, despite the measures taken by the competent authority pursuant to sub-regulations (5) and (6), or due to the inadequacy or unavailability of such measures in Malta, the competent authority shall be notified of any measures that are proposed to be taken by the European regulatory authority of the host Member State or EEA State against the Maltese AIFM to prevent or penalise further irregularities by the Maltese AIFM.

(8) Where the European regulatory authority of the host Member State or EEA State of the Maltese AIFM has clear and demonstrable grounds for believing that such Maltese AIFM is in breach of regulatory provisions in relation to which such European regulatory authority has no responsibility for supervising compliance, the competent authority shall receive notification of such breach from the European regulatory authority in the host Member State or EEA State. The competent authority shall take appropriate measures including if necessary, request additional information from the relevant supervisory authorities in third countries.

(9) Where despite the measures taken by the competent authority, or due to the inadequacy of such measures or because the competent authority fails to act within a reasonable time, a Maltese AIFM persists in acting in a manner that is clearly prejudicial to the interests of the investors of the relevant AIF, the financial stability or the integrity of the market in the host Member State or EEA State, the competent authority shall receive notification by the European regulatory authority of the host Member State or EEA State of any measures proposed to be taken in order to protect the investors of the relevant AIF, the financial stability and integrity of the market in the European Member State or EEA State including the possibility of preventing the Maltese AIFM concerned to further market the units or shares of the relevant AIF in the host Member State or EEA State. FREEDOM TO PROVIDE SERVICES AND FREEDOM OF ESTABLISHMENT BY EUROPEAN AIFMs