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In the last decade, Malta has distinguished itself as a serious and extremely adaptable jurisdiction in the field of financial services. The Investment Services Act, 1994 (as further revised) (the “ISA”) presented various types of collective investment schemes or funds (Schemes) which may be registered with the Malta Financial Services Authority (MFSA), and may be targeted at both domestic and international markets.

The development of Malta as the jurisdiction of choice for various types of collective investment schemes has been greatly aided by the efforts of the local financial services authority, the MFSA, which adopts a prudent but flexible approach, providing a solid regulatory framework whilst encouraging progress and innovation.

The development of Malta as the jurisdiction of choice for various types of collective investment schemes has been greatly aided by the efforts of the local financial services authority, the MFSA, which adopts a prudent but flexible approach, providing a solid regulatory framework whilst encouraging progress and innovation.

Malta Funds & the Investment Services Act (ISA)

Collective Investment Schemes (CISs) have been defined by the ISA as arrangements having as their object (or as one of their objects) the collective investment of capital acquired by means of an offer of units for subscription, sale or exchange, and which have the following characteristics:

  • they operate according to the principle of risk spreading, and

  • the contributions by the participants, and the income payments made to them, are pooled; or  units are re-purchased or redeemed continuously or at short intervals, out of the assets of the Scheme at the request of the unit holders; or units are issued continuously or at short intervals.

A Scheme which does not actively spread its risk may still be allowed to operate if its units are offered only to licence holders and/or persons who deal in similar investment instruments or property as part of their ordinary business, or who are themselves exempt from an investment services licence.

Malta Fund Structures

The law provides that a scheme may be set up as either:

    ·          A Maltese CIS can be formed using various legal structures, specifically:

    ·          SICAV: a collective investment company with variable share capital

    ·          INVCO: a collective investment company with fixed share capital

    ·          Unit trust

    ·          Mutual fund: established by means of contractual agreement

    ·          Limited partnership

Malta Fund Types

Malta Professional Investor Funds (PIFs)

Such funds target either extraordinary investors or qualifying investors or experienced investors, in accordance with their minimum investment threshold. These types of funds are classified as non-retail type funds and are therefore not subject to any restrictions on their investment or borrowing powers.

PIFs may be sold solely to investors who satisfy the minimum investment threshold: ‘experienced investors’ are subject to a minimum threshold of US$ 20,000; ‘qualifying investors’ are subject to a minimum investment threshold of US$ 100,000; whilst 'extraordinary investors’ are subject to a minimum investment threshold of EUR 1,000,000 (or equivalent in any convertible currency) (click here for more info).

Private Schemes

The law defines a ‘private collective investment scheme’, as that scheme which limits the total number of participants to 15 persons. In such cases, the Regulator has to be satisfied that the participants are close friends or relatives of the promoters, that the scheme is essentially private in nature and purpose, and that it does not qualify as a professional investor fund. It is interesting to note that such private Schemes do not require a licence under the Investment Services Act, however one finds the requirement that the promoters apply to the MFSA for recognition. One would also need to pay special recognition and annual fees. Since such Schemes are not considered as being licensed, the special income tax rules applicable to other types of Schemes do not apply.

Specialist Schemes

These schemes would target special sectors such as venture capital or development funds; money market funds; property funds; and futures and options funds.

Retail Funds

As implied from the title itself, these Schemes collect funds from the general public and therefore, it goes without saying, that these are the most highly regulated funds from all those listed above. (click here for more info)

See also:

Favourable tax system for Investment Services Expatriates in Malta

 

Malta Funds News

Chetcuti Cauchi at IFA Paris 2011 the 65th Congress of the International Fiscal Association | 09/09/2011

Malta New Legislation transposing the UCITS IV Directive [1/08/2011]

Yellow Pages vs. Neumann - Malta Copyright Protection [01/08/2011]

The Alternative Investment Fund Managers (AIFM) Directive  [13/07/2011]

Chetcuti Cauchi partners to speak at Specialised Investment Funds Conference in Geneva & Luxembourg  [19/04/2011]

Jean-Philippe Chetcuti presents Malta's attractiveness as a tax planning and wealth management jurisdiction at Family Office Forum, London [14/04/2011]

Switzerland & Malta sign Double Tax Agreement  [25/02/2011]

 

 

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