Malta: a leading hub for funds
With hundreds of hedge funds, retails funds and UCITS schemes choosing the country as their home every year, Malta is no longer seen as an 'emerging' funds domicile, and is now regarded as a well-established jurisdiction of considerable depth and sophistication. A number of important factors have contributed to this success:
Sound and sensible regulation which takes into account the needs of businesses whilst safeguarding the interests of investors;
A low cost and favourable fiscal base, rendering business models feasible where they would be unworkable elsewhere;
An approachable regulator, willing to discuss innovative ideas whilst requiring compliance with the highest standards;
Ease of access to the European market for investment;
Quick application turnaround times;
Flexibility as to the choice of service providers, e.g. local fund administrators not being required;
Availability of self-managed structures;
Sub-fund (protected cell company) legislation, permitting the creation of ring-fenced pockets of assets and liabilities within the same legal entity.
Investment Services Law in Malta
Malta funds: Collective Investment Schemes
Malta offers fund managers a variety of vehicles that can cater for a broad range of investment strategies and investor types. Most funds are structured as SICAVs, investment companies with variable share capital. However, a Malta fund can also be structured as an INVCO (an investment company with fixed share capital), a unit trust, a contractual arrangement or a partnership. These legal structures serve as vehicles for a variety of fund types, including Professional Investment Funds, UCITS funds, retail funds and private collective investment schemes.
Malta Hedge Funds: Professional Investor Funds
The Maltese hedge fund product is the Professional Investor Fund (PIF), which has proven to be the most popular fund type that Malta offers. The PIF is highly flexible, providing fund managers with a product which is generally subject to no leverage and investment restrictions. A PIF can thus be used as a vehicle through which to conduct highly innovative or unorthodox investment strategies. The flipside of this flexibility is that PIFs can only be sold to investors meeting certain minimum investment and sophistication criteria. Having said that, Malta also offers an interesting, 'quasi-retail', variant of the PIF, the Professional Investor Fund sold to 'Experienced' Investors, which can be sold to investors with a low minimum investment threshold of EUR 10,000, as long as certain leverage restrictions and broad investment limitations are adhered to.
Investment Funds Practice
Our funds practice focuses on the structuring and setting-up of funds and the provision of on-going advisory services at post-licensing stage. We assist our clients with the drafting of all regulatory documentation, including offering memoranda and ancillary agreements. We also manage relations with regulatory authorities. From a practical perspective, we connect clients to high quality personnel and service providers in the jurisdiction and generally act as primary reference point for all aspects of the project. Our firm has a particular focus on the creation of funds which follow unorthodox investment strategies or which use unconventional structures. Every client benefits from a dedicated team of lawyers and other professionals who provide advice which is not staid and legalistic and which instead centres around the practical, real-world needs of the applicant.
Malta Financial Services Lawyers
Our lawyers work closely with other practitioners in the firm to provide an ‘all-in-one’ service to our financial services client portfolio. We are responsible for the set up and maintenance of a large portfolio of investments services companies and funds, where we assist the client on various aspects including jurisdictional selection, choice of legal vehicle, and ensuring that such structures comply with all local company law and regulations. Ancillary services we provide include corporate compliance and company secretarial services for private and public companies, setting up of brick-and-mortar or online business operations, assistance with the selection of external service provides, real estate advisory services and restructuring or redomiciliation assistance.
Our firm handled the licensing of the first fund set-up as a unit trust in Malta. In Malta collective investment schemes are generally structured as investment companies with variable share capital i.e. SICAVs. This is a tried and tested structure around which significant expertise and experience exists. In this case, an alternate structure, the unit trust, was chosen in order to satisfy the requirement of a tax transparency. Our firm successfully guided the promoters through this previously uncharted regulatory space; a process which involved significant, high level discussions with regulators. In addition, assistance was also provided with respect to the sourcing of local service providers and local personnel of high calibre.