Legal Form
As in all other types of funds, a Professional Investor
Fund maybe be set up as either:
General
Such funds target investors in
accordance with their minimum investment threshold. The character of the
fund is non-retail
and therefore not subject to some of the usual restrictions on their investment or
borrowing powers as normal retail funds.
Nomenclature usually used to refer to these type of
funds includes Professional Investor Funds, Hedge Funds, Expert Funds &
Institutional Funds. These are but a few names used to refer to funds that
target professional investors and/or high net worth individuals.
Maltese PIFs may be sold solely to investors who satisfy the
minimum investment threshold:
-
‘Experienced Investors’ are subject to a
minimum investment threshold of US$ 20,000, (or equivalent in any
convertible currency)
-
‘Qualifying Investors’
are subject to a minimum threshold of US$ 100,000 (or equivalent in any
convertible currency) and
-
‘Extraordinary Investors’ are subject to a
minimum investment threshold of US$ 1,000,000, (or equivalent in any
convertible currency).
In all PIFs, the Board of Directors and
Service Providers must satisfy the MFSA 'fit & proper' test. All
service providers may be established outside Malta provided that
they are established and regulated in a recognised jurisdiction
and a local Judicial Representative is appointed. Maltese PIFs
may also benefit from self-management.
Experienced Investors
Besides the minimum investment threshold of US$ 20,000
(which minimum investment threshold applies to each single Experienced
Investor) other conditions include that requirements that show that the Experienced Investors
are persons having the expertise and knowledge to be in a position to make
their own investment decisions and understand the risks involved.
An investor must state the basis on which he/she
satisfies this definition, by confirming that he/she is a person:
● having relevant work experience having at least worked
in the financial sector for one year in a professional position or having
been active in this type of investment; or
● having reasonable experience in the acquisition and/or
disposal of funds of a similar nature or risk profile, or property of the
same kind as the property, or a substantial part of the property, to which
the PIF in question relates; or
● who has carried out investment transactions in
significant size at a certain frequency; or by giving any other appropriate
reason.
The Experienced Investor PIF must appoint a Custodian
with a safekeeping and monitoring role; the leverage required is the same
level as that of UCITS and the only specific investment restrictions adopted
are those that are self-imposed by the Manager.
Qualifying Investors
Besides the minimum investment threshold of US$ 100,000
(which minimum investment threshold applies to each single Qualifying
Investor) other conditions include that the investor must certify that
he/she/it meets one or more of the following criteria:
● a body corporate which has net assets in excess of
USD1.0 million or which is part of a group which has net assets in excess of
USD1.0 million;
● an unincorporated bona fide body of persons or
association which has net assets in excess of USD 1.0 million;
● a trust where the net value of the trust’s assets is
in excess of USD1.0 million;
● a person having reasonable experience in the
acquisition and/or disposal of:-
- funds of a similar nature or risk profile;
- property of the same kind as the property, or a
substantial part of the property, to which the PIF in question relates;
● an individual whose net worth or joint net worth with
that person’s spouse, exceeds USD 1.0 million;
● employees and directors of service providers to the
PIF;
● relations and close friends of the promoters limited
to a total of 10 persons per PIF;
● entities with (or which form part of a group with) USD
5.0 million or more under discretionary management or advice, investing on
its own account or for the account of its clients;
● he/she/it qualifies as a PIF promoted to Qualifying
Investors.
A Custodian / Prime Broker need not be appointed
provided that there are adequate safekeeping arrangements; there are no
investment or borrowing restrictions and there is unlimited use of leverage.
Extraordinary Investors
Besides the minimum investment threshold of US$ 1,000,000
(which minimum investment threshold applies to each single Extraordinary
Investor), a few other conditions/criteria apply to PIFs that target
Extraordinary Investors:
● the PIF has no investment or borrowing restrictions;
● there is unlimited use of Leverage
● a Custodian/Prime Broker need not be appointed
provided that there are adequate safe keeping arrangements
● Prospectus is not necessary - a marketing document is
enough
● the Fit & Proper test in respect of Service Providers,
Directors and Founder Shareholders need not be concluded pre-licensing as
MFSA will be relying on the information declarations in the application
documents and supporting documentation
● When one or more service providers are not regulated
in recognised jurisdiction, the Fit & Proper test in respect of such Service
Provider (s) must be concluded pre-licensing
● may be set up as a self-managed fund
Offering Document
A PIF must issue an Offering Document which is a
document intended to provide sufficient information to enable potential
investors to take an informed investment decision. The Offering Document
must be approved by the PIF’s Board of Directors (or its external Manager,
if appointed) and a written copy of their approval must be provided to the
MFSA.
Listing on a Recognised Investment
Exchange
A PIF (provided that it is not a private company) may
apply to a Recognised Investment Exchange for a listing. A PIF which is
established abroad, marketed exclusively abroad and obtains a licence from
the MFSA solely for the purpose of obtaining a listing on a Recognised
Investment Exchange, must appoint a judicial representative in Malta.
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