Malta’s investment funds industry has become one of the most popular EU jurisdictions for the set-up of investment funds, attracting many international fund managers and investors to choose this jurisdiction to domicile their funds.
Malta, having the full security of being an EU based jurisdiction, offers a wide range of fund products and has one of the most accessible and proactive Financial Services Authorities. It offers the perfect balance between a tax efficient, well regulated and cost efficient fund domicile destination, able to accommodate more complex strategies and structures.
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Malta offers a highly advantageous tax regime, where licensed funds are generally exempt from Maltese income and capital gains tax as long as fall within the bracket of non-prescribed.
Under Maltese Law, a prescribed fund is a fund that:
Funds that do not fall under the above category are classified as non-prescribed funds and are therefore exempt from Malta tax. The following exemptions apply:
The Maltese Funds Regulator, the Malta Financial Services Authority (MFSA), is the single regulator responsible for the authorisation and supervision all financial services in Malta.
The Investment Services Act (ISA), with its subsidiary legislation is the principal legislative enactment governing the fund industry. ISA also transposes the legislation issued by the EU in terms of investment services, including the Markets in Financial Instruments Directive (MiFID), the UCITS Directive and the Alternative Investment Fund Manager Directive (AIFMD).
Funds in Malta are usually set up as investment companies, limited liability companies with a variable share capital (SICAV), or even without such variable share capital (INVCO).
Malta is one of the first EU jurisdictions to implement the Alternative Investment Fund Managers Directive (AIFMD) and currently is host to over 100 AIFs. Maltese AIFs are one of the island’s favourite fund vehicles.
Alternative investment funds are defined as collective investment undertakings raising capital from a number of investors in accordance to the fund’s defined investment strategy.
The investor base of Maltese AIFs consists of Retail or Professional, whilst AIFs that are authorised in terms of the Investment Services Act can be marketed to Professional Investors (as defined by MiFID), and to Qualifying Investors with a minimum required investment of €100,000.
Maltese AIFs can be managed either by a third party (an authorised Alternative Investment Fund Manager (AIFM)), or be self-managed, assuming that the AIF complies with the AIFMD directive.
Under Malta’s Notified Alternative Investment Fund (NAIF) Framework, Alternative Investment Fund Managers (AIFM) are able to set up and launch AIFs just within 10 working days through a fast track registration process.
NAIFs are not subject to the standard licencing procedure; instead, they undergo a notification process, where the board of directors of the NAIF passes a resolution to certify that the Offering Prospectus of the NAIF fulfils all the minimum criteria as indicated by the MFSA. Following submission of a completed notification request and filing of the notification pack by the AIFM, the MFSA must respond within 10 days, by including the NAIF on its online “List of Notified AIFs held in good standing”.
Qualifying investors of NAIFs should be Professional Investors (as defined by MiFID), and must invest a minimum of €100,000 (or currency equivalent), in the AIF.
Investors are also required to submit a written declaration to the AIFM, stating that they understand and accept the risks associated with the investment and that he/she is either a corporate body, an unincorporated body, a trust, or an individual whose net worth is in excess of €750.000.
PIFs are collective investment schemes designed for professional and high net worth investors with a certain degree of expertise and knowledge in their respective positions.
PIFs are often used for hedge fund structures with their underlying assets ranging from transferable securities, private equity, immovable property and infrastructure. They are also commonly used by funds engaging in cryptocurrency trading.
PIFs have many benefits, including:
Qualifying investors must either (a) invest a minimum of €100.000 or its currency equivalent in the PIF, (b) provide a written declaration that he/she is aware and accepting of the investment risks and (c) is either a corporate body, an unincorporated body, a trust or an individual whose net worth is in excess of €750.000.
Maltese Undertaking for Collective Investment in Transferable Securities (UCITS) Funds, are retail fund products that can operate throughout the EU/EEA based on the EU UCITS Directive. They can be passported and marketed across EU and EEA without any additional licensing requirements, provided that they follow certain notification procedures. UCITS Funds can be marketed to both retail and institutional investors.
UCITS normally invest in transferable securities, money market instruments, financial derivative instruments and other collective investment schemes. Such funds may also apply for listing on the Malta Stock Exchange.
UCITS schemes can be offered to the general public in Malta as well as any other EU/EEA member state.
A custodian is required for UCITS and must be a licensed institution or other such body acceptable to the MFSA.
We offer complete solutions for fund administration.
Our middle and back office services are geared to service a wide range of investment funds and private vehicles operating predominantly in the alternative investment sector.
Our one-stop shop approach gives fund sponsors more time to focus on asset growth and management. We comprehend the investment fund industry and our experience and expertise help you to enhance your fund’s operations and build a secure relationship with your investors and counterparties.
We offer expert support throughout the whole process.
From choosing the right jurisdiction for you, to day-to-day administration and annual management of the fund.
Contact us today for an initial complimentary consultation and find out how we can help you achieve your investment goals!