S.L. 370.24 Art. 23Breaches by Maltese AIFMs or third country AIFMs licensed in Malta.

(1) The competent authority shall be responsible for the prudential supervision of any Maltese AIFM or third country AIFM

licensed in Malta, whether the AIFM manages and, or markets AIFs in another Member State or EEA State or not, without prejudice to the provisions of the AIFM Directive which confer the responsibility for supervision on the European regulatory authority of the host Member State or EEA State of the AIFM.

(2) The supervision of the 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 AIFM manages and, or markets AIFs through a branch in that Member State or EEA State.

(3) Where an 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 the request made to the AIFM to put an end to that breach.

(4) If the AIFM refuses to provide the European regulatory authority with information necessary for the supervision of the AIFM’s compliance with the applicable regulatory requirements of such European regulatory authority, or fails to take the necessary steps to put an end to breach referred to in sub-regulation (3), the competent authority shall be duly informed of such matter by the European regulatory authority.

(5) Where the competent authority receives a notification from a European regulatory authority pursuant to sub-regulation (4), the competent authority shall, at the earliest opportunity:

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

(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 paragraph (a).

(6) Where the 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 (4) or persists in breaching the legal or regulatory provisions referred to in sub-regulation (3) in force in the host Member State or EEA State, despite the measures taken by the competent authority, or due to the inadequacy or unavailability of such measures in Malta, the competent authority shall be notified of the measures that are proposed to be taken by the European regulatory authority of the host Member State or EEA State against the AIFM to prevent or penalise further irregularities by the AIFM and, in so far as necessary, to prevent that AIFM from initiating any further transactions in the host Member State or EEA State.

(7) Where the AIFM is in breach of obligations resulting from provisions in relation to which the European regulatory authority in the host Member State or EEA State 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.

(8) The competent authority shall take appropriate measures including, if necessary, request additional information from the relevant supervisory authorities in the third countries.

(9) Where an 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 Member State or EEA State, despite the measures taken by the competent authority, or due to the inadequacy of such measures in Malta or because the competent authority fails act within a reasonable time, the competent authority shall receive notification from the European regulatory authority of the host Member State or EEA State of any measures that are proposed to be taken in order to protect the investors of the relevant AIF, the financial stability and integrity of the market in the host Member State or EEA State including the possibility of preventing the AIFM concerned to further market the units or shares of the relevant AIF in the host Member State or EEA State.

(10) The procedure prescribed in sub-regulations (7) to (9) shall also apply in the event that the European regulatory authority of the AIFM host Member State or EEA State has clear and demonstrable grounds for disagreement with the licensing of a third country AIFM by the competent authority.