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Fund Redomiciliation to Malta

     

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The registration of hedge funds, commonly professional investor funds (PIFs) is on the increase in Malta. This is mainly due to the efficiency of the Regulator, Malta's EU membership, local and international listing options and the tax advantages (exemption from income tax and capital gains tax at fund level and at non-resident investor level).

However it has been our experience that new registrations might not always be suitable for an existing fund. On the other hand, in these situations, managers would usually look at continuation/redomiciliation with all its assets, liabilities, rights and duties under Maltese law as the best route.

The Continuation of Companies Regulations came into force on 26 November 2002 and redomiciliation is allowed from all the EU, EEA and OECD states, the Bahamas, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Guernsey, the Isle of Man, Jersey and Mauritius, which have appropriate provisions in their laws.

In addition, the redomiciliation must also be provided for in the charter, statutes or memorandum and articles, or other instrument constituting or defining the foreign company.

The foreign company that is seeking redomiciliation must have existed for at least one year in the approved jurisdiction and be “similar in nature” to a Maltese company.

The typical corporate form of a Maltese fund is the company with variable share capital or SICAV, a tried, tested and flexible formula for the past 10 years for both retail and non-retail funds. In addition, the law also allows an investment company with fixed share capital or INVCO.

Needless to say, foreign funds constituted as investment partnerships or unit trusts do not qualify for redomiciliation as companies and it would be necessary (and still worthwhile) to reconstitute the fund in Malta afresh, whether as a SICAV or INVCO or, indeed, as a new investment partnership or unit-trust.

In this preliminary stage of adapting the foreign fund to the Maltese corporate structures, and for present purposes, we shall concentrate mainly on the more popular SICAV structure. A number of issues need therefore to be considered.

NAME
A Maltese SICAV must contain the word ‘SICAV’
in its name, followed by ‘p.l.c.’ to designate its
status as a public limited company that can offer
its shares for sale to the public.
OBJECTS
The objects of the SICAV, being a type of collective
investment scheme, must be the collective
investment of capital acquired by means of an
offer of units for subscription, sale or exchange.
Indeed, the scheme must operate according to
the principle of risk spreading and either (i) the
contributions of the participants and the profits or
 

 

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