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 Professional Investor Funds Malta

Professional Investor Funds in Malta

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Legal Form for Professional Investor Funds

As in all other types of funds, a Maltese Professional Investor Fund maybe be set up in either of the following corporate forms:

Professional Investor Funds Nomenclature

Maltese 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.

Malta Professional Investor Funds 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. Malta Professional Investor Funds 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 Malta Professional Investor Funds 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 of Malta PIFs 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.

News on Malta Professional Investor Funds

AIFMD Implementation in Malta: MFSA Issues AIFMD Implementing Measures - Dr Charles Cassar - 28/06/13

MFSA Issues AIFMD Self-Assessment Questionnaires - Dr Charles Cassar - 10/05/13

Cross Sub-Fund Investment - MFSA Feedback - Dr Robert Spiteri - 09/05/13

ESMA finds divergence in national supervision of money market funds - Nicola Lapira - 02/05/13

Malta Central Bank Governor confirms Resilience of Malta’s Banking Sector - Dr Anton Mifsud - 25/04/13

Bloomberg Brief confirms Malta’s Banking Clean Bill of Health - Dr Maria Chetcuti Cauchi - 18/04/13

Third-Party Managed Funds require MLRO - David Joseph Borg - 12/03/13

VAT exemptions applicable to investment fund advisory services - David Joseph Borg - 12/03/13

Improved EU securities markets and investment conditions - Dr Anton Mifsud - 26/02/13

The status of Gibraltar under the AIFMD - Dr Anton Mifsud - 15/02/13

 

 

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