Malta AIFMD II 2026: New Fund Rules and the MFSA

Malta's fund industry received a broad legal update in two Gazette supplements in July 2026. On 10 and 14 July, the Minister responsible for the regulation of financial services, acting on the advice of the Malta Financial Services Authority, published twelve legal notices under the Investment Services Act. Together they carry the EU's revised fund manager directive, usually called AIFMD II, into Maltese subsidiary legislation.

Most of the changes are technical. Some are not. The word "custodian" is replaced by "depositary" across the amended fund regulations, the old Category 4a and 4b licences give way to "depositary" and "depositary lite", a Maltese fund can now in limited cases use a bank in another Member State as its depositary, and fund managers face new duties on liquidity tools, delegation and reporting. If you run a Maltese fund, promote one, or use a professional investor fund or notified AIF as a family office vehicle, the changes reach your fund documents, your depositary and your manager, and part of the detail sits outside the notices.

For how the regulator itself works and which fund vehicles it licenses, start with the MFSA overview. The 2026 MFSA reform covers the separate changes to the authority this year.

The directive behind the notices

Directive (EU) 2024/927 of 13 March 2024 amends both the AIFM Directive (2011/61/EU) and the UCITS Directive (2009/65/EC). Its own title lists the subjects: delegation arrangements, liquidity risk management, supervisory reporting, depositary and custody services, and loan origination by alternative investment funds.

Article 3 of the directive required Member States to adopt and publish their transposing measures by 16 April 2026 and to apply them from that date. Two items apply later, from 16 April 2027: the measures transposing Article 1(12), which rewrites the AIFM reporting rules in Article 24 of the AIFM Directive, and the new UCITS reporting rules in Article 20a of the UCITS Directive.

Malta's legal notices were published on 10 and 14 July 2026. None of the twelve names a separate commencement date in its text. Six of them (L.N. 185, 186, 189, 190, 191 and 196) state which provisions of the directive they transpose; the other six are terminology and cross-reference amendments.

Twelve notices, one map

The notices amend existing regulations rather than creating new ones:

L.N. 185: third-country AIFMs and AIFs;
L.N. 186: the main AIFM regulations;
L.N. 187: contractual funds;
L.N. 188: control of assets;
L.N. 189: custodians of collective investment schemes, now renamed depositaries;
L.N. 190: marketing of AIFs;
L.N. 191: marketing of UCITS;
L.N. 192: performance fees;
L.N. 193: UCITS penalties and investigatory powers;
L.N. 194: UCITS mergers;
L.N. 196: the UCITS management company passport;
L.N. 197: notified CISs (notified AIFs and notified PIFs).

One point shapes everything else. Much of AIFMD II works at the level of the fund manager's conduct: how loans are granted, which liquidity tools are chosen, how delegation is organised. The legal notices refer repeatedly to those obligations "as transposed into the Investment Services Rules", the rulebook the MFSA issues under the Act. The notices supply the regulation-level framework; the detailed conduct rules sit in the MFSA's rules. Anyone checking compliance needs both.

From custodian to depositary

The most visible change is vocabulary, and it runs through almost every notice. "Custodian" becomes "depositary" in the regulations on contractual funds, third-country AIFMs, marketing of AIFs, performance fees, UCITS penalties, UCITS mergers and notified CISs. In the notified CIS regulations even "custody" is replaced by "depositary".

L.N. 189 goes further. It renames the principal regulations the Investment Services Act (Depositaries of Collective Investment Schemes) Regulations and rebuilds the licensing structure. References to a "Category 4a" or "Category 4b" Investment Services Licence are replaced by two concepts:

a depositary, an investment services licence holder licensed to provide depositary services to any collective investment scheme; and
a depositary lite, licensed to provide depositary services only to a limited set of schemes.

Under the new regulation 4(3), the limited set is: AIFs marketed in Malta under the third-country AIFM regulations; AIFs with no redemption rights exercisable for five years from initial investment that generally do not invest in assets that must be held in custody; and professional investor funds targeting qualifying investors and extraordinary investors. For private equity, real estate and similar closed-ended structures, and for the PIF vehicles that many families use, the depositary lite remains the relevant category.

For UCITS depositaries, an investment firm from another Member State that provides safekeeping as an ancillary service may act if its own funds are not less than the initial capital referred to in Article 9(1) of the Investment Firms Directive, and the amended rule requires at least one Malta-resident director on its board.

A depositary from another Member State

The new regulation 29A transposes one of the directive's more practical changes. The MFSA may allow a credit institution authorised in another Member State to act as depositary for a Maltese AIF. Three requirements apply:

the AIFM files a reasoned request showing a lack of depositary services in Malta able to meet the AIF's needs given its investment strategy;
the assets entrusted for safekeeping in Malta's depositary market on behalf of Maltese AIFs managed by EU AIFMs do not exceed €50 billion in total; and
the MFSA carries out a case-by-case assessment of that lack of services, and informs ESMA if it allows the appointment.

This is not a free choice of depositary. It is a route for funds whose strategy cannot be served locally. L.N. 189 also clarifies how central securities depositories fit in: services of an issuer CSD are not a delegation of the depositary's functions, while services of an investor CSD are.

Third-country links: AML and tax lists

L.N. 185 tightens the conditions for third-country AIFMs and AIFs connected with Malta. Throughout the regulations, the country where the third-country AIF or AIFM is established must not be identified as a high-risk third country under Article 9(2) of the EU anti-money laundering directive, and must not appear in Annex I of the EU list of non-cooperative jurisdictions for tax purposes. The old condition, a tax agreement meeting Article 26 of the OECD Model Tax Convention, stays.

For a third-country AIFM already authorised whose home country is later added to either list, the new regulation 9(22a) gives a window to rectify the position for its AIFs, taking due account of investors' interests, of no longer than two years.

For family offices that pair a Maltese fund with a manager or feeder outside the EU, this is the clause to check first.

Liquidity management tools

AIFMD II makes liquidity tools mandatory for open-ended funds. Under the new Article 16(2b) of the AIFM Directive, an AIFM managing an open-ended AIF must select at least two liquidity management tools from a list in Annex V, points 2 to 8, after assessing them against the fund's strategy, liquidity profile and redemption policy. The tools to choose from are redemption gates, extended notice periods, redemption fees, swing pricing, dual pricing, anti-dilution levies and redemption in kind. Suspension and side pockets sit in the same annex, outside the list the two tools are chosen from. A selection may not consist only of swing pricing and dual pricing. Money market funds may select one. Redemption in kind may only be activated for professional investors.

The selected tools go into the fund rules or instruments of incorporation, and the selection and the activation policies are communicated to the home regulator.

The Maltese notices add the supervisory side. L.N. 186 lets the MFSA, in the interest of investors, in exceptional circumstances and after consulting the AIFM, require third-country AIFMs marketing AIFs in the EU, or EU AIFMs managing third-country AIFs, to activate or deactivate the tool in Annex V, point 1 (suspension of subscriptions, repurchases and redemptions) where risks to investor protection or financial stability justify it. L.N. 190 and L.N. 191 set out how the MFSA passes on notifications about liquidity tools to other regulators, ESMA and, where there are risks to financial stability, the European Systemic Risk Board.

Loan origination

The directive's loan origination rules apply at manager level and so reach Malta through the MFSA's rules rather than through the July notices. The directive text sets the substance:

a loan-originating AIF is one whose strategy is mainly to originate loans, or whose originated loans reach at least 50% of its net asset value;
loans to a single borrower that is a financial undertaking, an AIF or a UCITS may not exceed 20% of the AIF's capital;
leverage of a loan-originating AIF may not exceed 175% if open-ended and 300% if closed-ended;
an AIF that sells on a loan it originated must keep 5% of its notional value, subject to defined exceptions, and originate-to-distribute strategies are banned;
shareholder loans up to 150% of the AIF's capital are exempt from the credit-granting process requirements;
AIFs constituted before 15 April 2024 are deemed compliant with the concentration, leverage and closed-ended requirements until 16 April 2029, provided they do not increase exposures above the limits.

Recital 21 of the directive explains the default: loan-originating AIFs are expected to be closed-ended, and can be open-ended only if they meet requirements on liquidity management that ESMA's standards specify.

Delegation and reporting

Delegation is where Malta's model of a licensed manager working with service providers meets the directive most directly. AIFMD II requires an AIFM to notify its regulator before a delegation becomes effective, confirms that the manager's liability is not affected by delegation or sub-delegation, and repeats that it may not delegate to the point of becoming a letter-box entity. It also requires the business to be conducted by at least two people employed full-time or committed full-time to the AIFM, domiciled in the Union.

The reporting side is now spelled out in Maltese law for UCITS. L.N. 196 adds regulations 7A and 12A to the UCITS management company passport rules. A Maltese management company, and an EU management company managing Maltese UCITS, must report the UCITS's liquidity arrangements and selected tools, its risk profile and leverage, stress test results, and detailed information on delegates and sub-delegates: their names and domiciles, the staff numbers used for portfolio and risk management and for monitoring delegation, the share of assets delegated, the due diligence reviews carried out, and the start and end dates of each arrangement. Under the directive, these UCITS reporting rules and the revised AIFM reporting rules apply from 16 April 2027.

L.N. 186 makes sure the MFSA shares AIFM reporting with ESMA, the European Banking Authority, EIOPA and the European Systemic Risk Board, and for statistical purposes with the European System of Central Banks.

What notified AIFs and PIFs should check

The Notified CISs Regulations, already consolidated with L.N. 197, show how far AIFMD II reaches. A notified AIF is not separately licensed, but it must be notified by an AIFM licensed in Malta or passported in, and that AIFM must ensure the fund complies on an ongoing basis with the Act, the rules and, where applicable, its obligations under the AIFM Directive. The new definition of depositary in the regulations is "a person licensed by the competent authority or a European regulatory authority to provide depositary services".

For a family office using a notified AIF or a PIF, a short review covers most of it:

Documents: does the offering document or prospectus still say "custodian", and does the depositary agreement match the new terminology?
Liquidity: if the fund is open-ended, which two tools from the annex has the manager selected and written into the fund documents?
Lending: does the fund lend, including to related companies, and does it fall into the 50% loan-originating test?
Delegation: has every delegation been notified in advance, and can the manager show it is more than a letter box?
Third countries: are any managers, feeders or AIFs established in a country on the EU anti-money laundering or tax lists?

A fund often sits alongside other family structures. The Maltese foundation, a holding company or an authorised trustee or nominee may hold the fund units, and each has its own rulebook. The July notices change only the fund layer.

Smaller changes worth knowing

L.N. 190 allows an AIFM to market a European AIF that invests mainly in the shares of a particular company to employees of that company and its affiliates through employee savings or participation schemes, domestically or across borders, without extra Maltese requirements beyond those of the AIF's home state. L.N. 188 takes depositaries of collective investment schemes out of the control of assets regulations and points them to the depositary regulations instead. L.N. 193 updates the UCITS penalty provisions so that they refer to a depositary's failure to perform its tasks under the new depositary regulations.

None of these changes the economics of a Maltese fund. Together they mean the paperwork of every Maltese fund now speaks a different language, and the manager behind it carries more explicit duties on liquidity, lending and delegation.

Work with Sebastian

If you run, promote or invest through a Maltese fund and want to know which of the AIFMD II changes reach your structure, book a consultation.