FundsIn Financial Services

About

Malta has been a hub for investment funds since its accession into the European Union in 2004. While maintaining the traditional Professional Investor Funds (PIFs), Malta has also implemented EU fund regimes such as Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS). In 2016, the Notified AIF (NAIF) was introduced which can be registered within ten days. Fund managers can choose to set up the fund in a number of different structures, with the most popular one being the investment company with variable share capital (SICAV), also known as open-ended schemes. Other structures include the investment company with fixed share capital units trusts (INVCO) also known as close-ended schemes, contractual funds and limited partnerships.

Key Features:

Professional Investor Funds (PIFs) are collective investment schemes intended solely for Qualifying Investors, which can be structured as a SICAV, INVCO, an incorporated cell company, an incorporated cell of a Recognised Incorporated Cell Company (RICC), a contractual fund, unit trust or limited partnership. Since PIFs are not regulated by the UCITS or AIFM Directive, the passporting scheme does not apply.

In order to be classified as a Qualifying Investor, the following criteria must be met:

(a) invest a minimum of €100,000 or its currency equivalent in the PIF, which investment may not be reduced below this minimum amount at any time by way of a partial redemption; 

(b) declare in writing to the fund manager and the PIF that he/she is aware of and accepts the risks associated with the proposed investment; and

(c) satisfy at least one of the following: 

(i) a body corporate which has net assets in excess of €750,000 or which is part of a group which has net assets in excess of €750,000;

(ii) an unincorporated body of persons or association which has net assets in excess of €750,000;

(iii) a trust where the net value of the trust’s assets is in excess of €750,000;

(iv) an individual whose net worth or joint net worth with that of the person’s spouse, exceeds €750,000; or

(v) a senior employee or director of a service provider to the PIF. 

The Rules regulating PIFs issued by the MFSA lay down the requirements which must be met in order to obtain a license. PIFs must appoint a fund manager licensed as a Category 2 Investment Service Provider by the MFSA. Alternatively, the fund can be self-managed if an Investment Committee is appointed, consisting of at least three members who must be subject to the fitness and properness test. Other mandatory service providers include an auditor and a Money Laundering Reporting Officer (MLRO) or a Compliance Officer who also takes up the role of MLRO. The appointment of a custodian, on the other hand, is optional.

Cost Structure

Application Fee

Annual Supervisory Fee

€2,000

€2,000

€1,000

€600

 

Alternative Investment Funds (AIFs) were introduced in Malta through the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in 2013, which defines AIFs as “collective investment undertakings, including investment compartments thereof, which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors and which does not qualify as an Undertaking for Collective Investment in Transferable Securities ("UCITS") Scheme in terms of the UCITS Directive.” AIFs can be structured as a SICAV, a SICAV Incorporated Cell Company (SICAV ICC), an INVCO, a limited partnership, a unit trust, or a contractual fund. A key benefit of AIFs is the applicability of the passporting scheme under the AIFMD, whereby AIFs can be passported to other jurisdictions within the European Union and the European Economic Area if the AIF is targeted to professional investors. A license for a Collective Investment Scheme must be obtained from the MFSA, which is subject to certain requirements and carrying out the fitness and properness test on all senior staff.

AIFs may be marketed to Retail or Professional Investors. Retail AIFs cannot be passported outside of Malta, however, they can be marketed in other jurisdictions subject to certain conditions. Professional AIFs are targeted to Professional Investors, which are considered as Professional Clients according to Annex II to MiFID II. While Retail AIFs are a subject certain investment and borrowing restrictions, Professional AIFs are not subject to any.

AIFs must appoint a manager authorised as an Alternative Investment Fund Manager (AIFM) in terms of the AIMFD, and the AIFM must be licensed as a Category 2 Investment Services provider. Alternatively, the AIF can be self-managed however the rules concerning the AIFM would still be applicable and an Investment Committee must be appointed consisting of at least three members who must be subject to the fitness and properness test. Other mandatory service providers include a Custodian, a Compliance Officer, a Money Laundering Reporting Officer (MLRO) and an Auditor.

Cost Structure

  Application Fee Annual Supervisory Fee
AIF €2,000 €2,000
Per sub-fund €1,000 €600
Incorporated Cells of RICCs (per Incorporated Cell) €1,000 €600

UCITS schemes are retail funds regulated by the UCITS Directive. These funds can be structured as an open-ended SICAV, a unit trust, a contractual fund or a limited partnership. UCITS schemes can be offered in Malta and marketed and passported to any other jurisdiction within the European Union and the European Economic Area. The UCITS scheme is required to have a substantial presence in Malta, whereby the head office and registered office must be instituted in Malta, and one of the minimum two directors must reside in Malta.

UCITS schemes must appoint a manager authorised as a UCITS manager and licensed as a Category 2 Investment Service provider. Alternatively, the UCITS scheme can be self-managed upon the appointment of an Investment Committee consisting of at least three members and subject to the fitness and properness test. Other mandatory service providers include a Custodian, a Compliance Officer, a Money Laundering Reporting Officer (MLRO) and an Auditor. Some of the documents which must be submitted to the MFSA in order to obtain a license include a Prospectus, a Key Investor Information Document (KIID), and a three-year marketing plan. 

Cost Structure

  Application Fee Supervisory Fee
UCITA €2,500 €3000
Per sub-fund €450 €500

Malta set up a NAIF framework in 2016, whereby AIFMs can market their fund in Malta within 10 working days from notification to the MFSA. Unlike other types of funds, NAIFs cannot be self-managed and an AIFM must be appointed, which will be regulated in terms of the AIFM Directive. NAIFs are restricted to Qualified and Professional Investors as defined in MiFID. NAIFs can be structured as a SICAV, INVCO, an Incorporated Cell Company of a SICAV (SICAV ICC), an Incorporated Cell of a RICC (RICC ICC), a limited partnership, a contractual fund or a unit trust.

  Application/Notification Fee Supervisory/Annual Notification Fee
NAIF €2,000 €2,000
Per sub-fund €1,000 €600

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