Setting up a Fund in Malta[/pb_text][pb_accordion el_title=”Setting up a Fund in Malta” initial_open=”0″ multi_open=”no” filter=”no” appearing_animation=”0″ ][pb_accordion_item heading=”1. Why should I choose Malta as my fund’s domicile?” icon=”” tag=”Citizen” ]
The principal advantages which are generally perceived to give Malta a competitive edge as a fund domicile of choice include the low level of costs involved in the setting up of a fund, the flexibility of the legal structures that are permitted under Maltese law aswell as the approachability and efficiency of Malta’s single regulator and supervisor. Furthermore, Malta’s EU membership has paved the way for its adoption of the UCITS and AIFM directives. Malta also benefits from a large number of local and foreign credit institutions, fund administrators and investment firms having a presence and operating within the jurisdiction. In addition, Malta has also entered into an extensive network of double-taxation treaties with a number of jurisdictions.
Mamo TCV offers a comprehensive range of corporate and commercial legal services and boasts an experienced and dedicated financial services department. Besides the strictly legal services we offer to clients, we are also in a position to provide a one-stop shop service through the close co-operation arrangements which we have established with a number of local services providers (including fund administrators and persons who can act as local directors on the Board of the investment company) as well as our good relationship with a number of banks, audit firms and the MFSA.
For more information about the Financial Services practice of the firm please click here.
A collective investment scheme (“CIS”) typically refers to a legal arrangement which has as its object or as one of its objects the collective investment of capital that has been acquired by an offer of units such as shares or capital contributions to private equity. The scheme’s main characteristic is that it aims to spread risk by diversifying its investment portfolio. The scheme’s profits and income are then pooled between the participants, with unitholders having the option to repurchase or redeem their units continuously or in blocks at short intervals.
For more information about the Financial Services practice of the firm please click here.[/pb_accordion_item][pb_accordion_item heading=”3. What legal structure may an investment fund take? ” icon=”” tag=”” ]
Maltese legislation provides for a number of legal structures in relation to investment funds. The fund may either be set up as: an investment company with variable share capital (“SICAV”) or an investment company with fixed share capital (“INVCO”). Furthermore, the fund may also use non-corporate legal forms such as a limited partnership, a unit trust or a common contractual fund.Usually, clients opt for the SICAV form for various reasons, including operational flexibility.
Furthermore, a CIS may be structured as a multi-fund (umbrella) scheme, with a number of sub-funds. Under such a structure, the assets and liabilities of each sub-fund constitutes a separate legal patrimony. However, schemes opting for the form of a SICAV may also be constituted as an incorporated cell company (“ICC”). The ICC may establish one or more funds as incorporated cells with each cell being a limited liability company (SICAV or INVCO) with separate legal personality and requiring a licence independently from the ICC.
It is also possible to set up a Recognised Incorporated Cell Company (“RICC”); the RICC is constituted as a limited liability company, which may establish incorporated cells in the form of SICAVs or INVCOs and which provides such incorporated cells with administrative services. The RICC is required to obtain recognition from the Malta Financial Services Authority (the “MFSA”) for the provision of administrative services, while each incorporated cell must obtain a full licence.
Malta’s rules on ICCs and RICCs are designed particularly to accommodate investment fund platforms. The RICC structure presents certain advantages compared to the ICC, including the fact that the RICC itself must not be licensed as a CIS. Furthermore, the incorporated cells of an RICC may themselves be constituted as umbrella companies, with their own segregated sub-funds and may consist of a mix of externally managed and internally managed CISs.
In this regard, our financial services team will be able to assist you in choosing the right legal structure that is situated to your needs and intentions. Furthermore, we will be in a position to liaise with the Malta Financial Services Authority during the licensing process and can offer company secretary and registered office services for the chosen corporate structure.
For more information about the Financial Services practice of the firm please click here.[/pb_accordion_item][pb_accordion_item heading=”4. Which fund categories does Maltese law cater for? ” ]
There are four main categories of investor funds which are licensable under Maltese law namely:
- Professional Investor Funds (“PIFs”): These being the most popular due to the fact that they are subject to a significantly lighter and more flexible regime than retail funds. The level of regulation depends on the type of investors targeted, as a regulatory distinction is made between PIFs promoted to Experienced Investors, PIFs promoted to Qualifying Investors and PIFs promoted to Extraordinary Investors.
- Alternative Investor Funds (AIFS): Collective investment schemes for professional investors, which are managed by fund managers that are authorised under the European Union’s Alternative Investment Fund Manager Directive (“AIFMD”) or in the case of self-managed funds, are authorised in accordance with the AIFMD themselves. Like PIFS, the level of regulation afforded to AIFS varies according to the type of investors targeted. For regulatory purposes AIFS are divided into: AIFs promoted to Experienced Investors, AIFS promoted to Qualifying Investors, AIFS promoted to Extraordinary Investors, AIFS promoted to Professional Investors and Retail AIFS.
- Retail Collective Investment Schemes: Such funds are divided into UCITS and non-UCITS funds. The former refer to retail funds that are subject to the Collective Investments in Transferrable Securities Directive (UCITS) and benefit from the passporting rights attributed to such legislation. The latter on the other hand are not regulated by the UCITS regime but are subject to heavy regulation so as to ensure adequate investor protection
- Private Collective Investment Schemes: Collective investment schemes that are not required to obtain a full license but may receive simple recognition by the authority once it is established that scheme is legally compliant. However, the scheme must be solely limited to not more than 15 participants who must be either close friends or relatives of the fund promoters. It is also necessary that the scheme is purely private in nature and does not qualify as a fully licensable PIF.
The Malta Financial Services Authority has also recently expressed the desire to simplify Malta’s fund regime by discontinuing a number of sub-categories, such a change will come into effect in July 2016. For more information on such a proposed amendment please click here.
Mamo TCV Advocates has extensive experience with each fund category and will be in a position to provide comprehensive advice on the benefits and pitfalls of each classified category aswell as the specific legal requirements attributed to the chosen investment scheme. We will also be very happy to provide advice on the passporting of fund managers, investment firms and credit institutions into Malta and we may also assist in the drafting of various service provider agreements.
For more information about the Financial Services practice of the firm please click here.[/pb_accordion_item][pb_accordion_item heading=”5. What is the application procedure in relation to funds? ” icon=”” tag=”” ]
The application for a licence to operate a fund in or from Malta must be made to the Malta Financial Services Authority. The Authority may only license a fund if it is satisfied that the Fund will comply with all relevant legislation, regulations and rules and that its directors and officers are fit and proper persons to carry out the functions required of them in connection with the scheme. Upon submission of all documentation relative to the licence application in draft form (to the satisfaction of MFSA), it is usually a matter of weeks for the MFSA to issue an in-principle approval in respect of the Fund. This is then followed by a submission of all documents duly signed in original, after which the MFSA issues a licence accordingly within a couple of days.
In this regard, we may assist you in ensuring that your fund complies with all local legislation and rules and we will also be able to guide you in the drafting of the necessary offering, constitutional and corporate documents. Mamo TCV Advocates may also act as a local reference point with the Malta Financial Services Authority and relevant government departments.
For a complete rundown of the fees and costs involved in the registering of a fund kindly send an email to firstname.lastname@example.org.
For more information about the Financial Services practice of the firm please click here.[/pb_accordion_item][pb_accordion_item heading=”6. What can I do to redomicile an already established fund to Malta?” icon=”” tag=”” ]
Malta has an extensive framework applicable to the redomiciliation of funds with a number of guidelines issued by the MFSA in this regard. The process simply involves the fund transferring all its assets and liabilities to Malta and the subsequent approval by the MFSA. The fund will be able to make use of its existing assets and service provider agreements and will not be taxed on any transfer of units from one country to the other.
Mamo TCV Advocates will be in a position to assist you with all the legal requirements under Maltese law for the redomiciliation process. We also be very happy to liaise with both local and foreign authorities to ensure that such a process is carried out in a timely and effective manner.
For more information about the Financial Services practice of the firm please click here.[/pb_accordion_item][pb_accordion_item heading=”7. How can we be of service?” icon=”” tag=”” ]
Mamo TCV offers a comprehensive range of corporate and commercial legal services and boasts an experienced and dedicated Corporate department. Besides the legal services we offer to clients, we are also in a position to provide a one-stop shop service through the close co-operation arrangements which we have established with a number of local services providers. Furthermore, we will be in a position to liaise with the Registrar of Companies during the company formation process and can offer company secretary and registered office services.
For more information about the Financial Services practice of the firm please click here.[/pb_accordion_item][/pb_accordion][/pb_column][pb_column span=”span6″][pb_text el_title=”FAQ” width_unit=”%” enable_dropcap=”no” appearing_animation=”0″ ]
Other Frequently Asked Questions[/pb_text][pb_text el_title=”Text 3″ width_unit=”%” enable_dropcap=”no” appearing_animation=”0″ ]
Setting up a Fund in Malta
The Investment Funds sector is one of the fastest growing financial sectors in Malta with over 500 collective investment schemes licensed today