A licence is required for a Collective
Investment Scheme if such Collective Investment Scheme:
issue or create any units or carry on any activity in or from Malta;
formed in accordance with, or existing under, the laws of Malta and shall
issue or create any units or carry on any activity in or from within a
country, territory or other place outside Malta.
MFSA has the power to exempt schemes that are essentially “private” in
nature and purpose.
general rule, the Custodian of a Scheme should be established in Malta, but
alternative custodial arrangements may be considered by the MFSA, as long as
they achieve adequate protection for Unit holders and for the Scheme’s assets.
Management Company of a Scheme should have an established place of business in
Malta. However, the MFSA has the power to exempt from the licensing requirements
an overseas management company or administrator of sufficient standing and
for the grant of CIS Licences
considering whether to grant or refuse a Licence, the MFSA has, in particular,
to have regard to:
protection of investors and of the general public;
protection of the reputation of Malta;
promotion of competition and choice;
reputation and suitability of the applicant and all other parties connected
with the Scheme.
Types of collective investment
1. Open Ended Investment Companies
A SICAV is
an investment company with variable share capital. The objects of this type of
company consist of the collective investment of its funds in securities and in
other movable and immovable property with the aim of spreading investment risk.
A SICAV can be established both as a public company and as a private company.
The investor of a SICAV can realise his investment either through the sale of
his shares or redemption.
Ended Investment Companies (INVCOs)
companies having a fixed share capital. The aim of such companies is also to
spread investment risk and to give its shareholders the benefit of the results
of the management of its funds. INVCOs can only be established as public limited
funds are non-corporate funds whereby contractual arrangements are made between
the management company and its investors. The investor entrusts the management
company with a pool of funds pursuant to a declared investment policy. A
collective investment scheme may apply for a primary listing on the Malta Stock
Exchange. It may also apply for a secondary listing if it is already listed on
an exchange somewhere else. The main benefit of listing is that capital gains
made by the investor on the disposal or transfer of a holding are exempt from
provisions relating to the taxation of funds and investment services companies
are designed to complement the Investment Services Act (ISA) and to create a
fiscal regime which allows for the rapid development of a funds industry in
Malta, both at a domestic and international level.
Investment Schemes have generally taken the form of:
licensed funds are exempt from tax in Malta and, as a result, are specifically
excluded from benefiting under Malta’s double taxation treaty network. Capital
gains realised by the fund remain exempt from tax in Malta. A collective
investment scheme that opts to pay tax is entitled to treaty relief as well as
other methods of reducing the impact of double taxation.
residents may invest in ISA funds and are subject to a 15% final withholding tax
on distributions received from the fund and on any gains made through the
redemption of shares or units in the fund. The final withholding tax regime
applies to both Maltese individuals and Maltese companies. No further Maltese
tax is payable on receipts from ISA funds and there is no requirement for
individuals to disclose the income or gains received from ISA funds on their
income tax returns. To the extent that the amounts received are disclosed in an
income tax return, the tax deducted is available as a credit against the total
tax liability of the Maltese investor. Non-residents receiving dividends out of
a scheme’s foreign sourced income are entitled to a refund of Malta Tax paid.
This refund will normally be two-thirds of the Malta tax paid by the scheme. In
certain exceptional circumstances the refund may increase to 100% where the
dividends being distributed by the Scheme derive from a “participatin holding”
the main qualifying criterion being a holding of at least 10% of the equity
shares in a foreign body of persons.
addition, in respect of all Collective Investment Schemes and funds, there is:
stamp duty on share issues or transfers;
on the net asset value of the scheme;
withholding tax on dividends paid to non-residents;
taxation on capital gains on the sale of shares or CIS units by
taxation on capital gains on the sale of shares or CIS units by residents
provided such shares/units are listed on the Malta Stock Exchange (MSE).