Malta Based Funds

The MFSA’s regulatory regime for collective investment schemes caters for two principal classes of schemes, namely,

• Retail Schemes and

• Professional Investor Funds (PIFs).

Retail Schemes are further sub-divided into two principal categories:

• Maltese non-UCITS Schemes and

• Maltese UCITS Schemes.

Similarly, professional Investor Funds are further sub-divided into three principal categories:

• Experienced Investor Funds,

• Qualifying Investor Funds and

• Extraordinary Investor Funds.

A Maltese Scheme may be set up as:

• an investment company with variable share capital (SICAV);

• an investment company with fixed share capital (INVCO);

• a limited partnership divided into shares;

• a unit trust or

• a contractual fund.

MFSA’s regime applicable to Retail Schemes is set out in the Investment Services Rules for Retail Collective Investment Schemes, whilst MFSA’s regime applicable to Professional Investor Funds is set out in the Investment Services Rules for Professional Investor Funds.

Maltese non- UCITS Schemes (Undertakings for Collective Investment and transferable Securities Schemes)

A Maltese non-UCITS Scheme may be set up as an open ended or closed ended Scheme and may market its units to the general public in Malta without any limitation. The marketing of Maltese non-UCITS Schemes to investors outside Malta is subject to compliance with the relevant authorisation or other regulatory requirements applicable in the jurisdiction where such investors are based. A Maltese non-UCITS Scheme is required to appoint an Investment Manager unless it is set up as a self managed Maltese non-UCITS Scheme.

The Custodian or depositary of a Maltese non-UCITS Scheme should be based in Malta and licensed by the MFSA. The Custodian of a Maltese Non UCITS Scheme is required to keep under custody the asset of the Scheme and to carry out a monitoring function over the activities of the Investment Manager. The Administrator of a Maltese non-UCITS Scheme should be based in Malta.

Maltese UCITS Schemes

A Maltese UCITS Scheme is an open ended Scheme and is subject to the requirements of the EU UCITS Directive (Directive 85/611/ EEC). Like Non UCITS Schemes, Maltese UCITS Schemes may also market their units to the general public in Malta without any limitation. A Maltese UCITS Scheme is required to appoint a Maltese UCITS Management Company as its designated Investment Manager unless it is set up as a self managed Scheme. The Custodian or depositary of a Maltese UCITS Scheme should also be based in Malta and licensed by the MFSA. The Custodian of a Maltese UCITS Scheme is required to keep under custody the assets of the Scheme and to carry out a monitoring function over the activities of the Investment Manager. The Administrator of a Maltese UCITS Scheme should preferably be based in Malta, although the MFSA may accept in exceptional circumstances a foreign based Administrator provided that the said Administrator is

regulated in a Recognised Jurisdiction. Unlike a Maltese non-UCITS Schemes, a Maltese UCITS Scheme is automatically eligible for marketing its units to the general public in any EEA State (other than Malta) provided that it follows the notification procedure stipulated in the UCITS Directive.

Professional Investor Funds promoted to Experienced Investors

An “Experienced Investor”, is a person having the expertise, experience and knowledge to be in a position to make his own investment decisions and understand the risks involved. The minimum investment threshold is €15,000 or equivalent in another currency and applies to each individual “Experienced Investor”. Before an Experienced Investor Fund may accept any investment, it should obtain a completed “Experienced Investor Declaration Form” in which the investor confirms that he/she has read and understood the mandatory risk warnings and describes why he/she is an “Experienced Investor”. PIFs promoted to Experienced Investors are not subject to any investment restrictions. Whilst borrowing on a temporary basis for liquidity purposes is permitted and not restricted, borrowing for investment purposes or leverage via the use of derivatives is restricted to 100% of NAV (same as Maltese UCITS Schemes).

A PIF promoted to Experienced Investors may appoint any Service Provider as it may deem necessary provided that a PIF promoted to Experienced Investors should always appoint a Custodian responsible for safekeeping the assets of the Fund and carrying out a monitoring function over the activities of the Investment Manager. Ordinarily, Service Providers of a PIF may include, amongst others, a Manager, an Administrator, an Investment Adviser and/or a Custodian/Prime Broker. All Service Providers appointed by an Experienced Investor Fund are not required to be based in Malta provided that they are established and regulated in a Recognised jurisdiction.

Professional Investor Funds promoted to Qualifying Investors

A “Qualifying Investor”, is required to meet one or more of the following criteria:

i. a body corporate which has net assets in excess of €750,000 or which is part of a

group which has net assets in excess of €750,000;

ii. an unincorporated body of persons or association which has net assets in excess of €750,000;

iii. a trust where the net value of the trust’s assets is in excess of €750,000;

iv. an individual, or in the case of a body corporate, the majority of its Board of Directors or in the case of a partnership its General Partner who has reasonable experience in the acquisition and/or disposal of :-

a. funds of a similar nature or risk profile;

b. property of the same kind as the property, or a substantial part of the property, to which the PIF in question relates;

v. an individual whose net worth or joint net worth with that person’s spouse, exceeds €750,000;

vi. a senior employee or Director of Service Providers to the PIF;

vii. a relation or close friend of the promoters limited to a total of 10 persons per PIF;

viii. an entity with (or which are part of a group with) €3.75 million or more under

discretionary management, investing on its own account;

ix. the investor qualifies as a PIF promoted to Qualifying or Extraordinary Investors;

x. an entity (body corporate or partnership) wholly owned by persons or entities

satisfying any of the criteria listed above which is used as an investment vehicle by

such persons or entities.

The minimum initial investment applicable to Qualifying Investor Funds is €75,000, or equivalent in another currency. Prior to accepting any investment, the PIF should be in receipt of a completed “Qualifying Investor Declaration Form” in which the investor confirms that he/she has read and understood the mandatory risk warnings and describes why he/she is a “Qualifying Investor”. PIFs promoted to Qualifying Investors are not subject to any investment or borrowing (including leverage) restrictions other than those which may be specified in their Offering Document.

Professional Investor Funds promoted to Extraordinary Investors

An “Extraordinary Investor” is required to meet one or more of the following criteria:

i. a body corporate, which has net assets in excess of €7.5 million or which is part of a group which has net assets in excess of €7.5 million;0

 ii. an unincorporated body of persons or association which has net assets in excess of €7.5 million;

 iii. a trust where the net value of the trust’s assets is in excess of €7.5 million;

 iv. an individual whose net worth or joint net worth with that person’s spouse,

exceeds €7.5 million;

 v. a senior employee or Director of Service Providers to the PIF;

 vi. the investor qualifies as a PIF promoted to Extraordinary Investors;

 vii. an entity (body corporate or partnership) wholly owned by persons or entities satisfying any of the criteria listed above which is used as an investment vehicle by such persons or entities.

 Minimum initial investment is €750,000, or equivalent in another currency. Prior to accepting any investment the PIF should be in receipt of a completed “Extraordinary Investor Declaration Form” in which the investor confirms that he/she has read and understood the mandatory risk warnings and describes why he/she is an “Extraordinary Investor”. PIFs promoted to Extraordinary Investors are not subject to any investment or borrowing (including leverage) restrictions other than those which may be specified in their Offering Document/ Marketing Document.

 PIFs promoted to Extraordinary Investors are subject to the minimum level of supervision for a Fund regulated in Malta.

This entry was posted in Publications. Bookmark the permalink.

Comments are closed.