Financial Services & Fintech

Financial Services Law 720X242

The scope behind our Financial Services & Fintech Practice is to assist and advise our international clients on a plethora of issues, including investment funds and fund administration, custodian services, listing on the capital markets and Prospects, PSPs and EMIs, credit and financial institutions law, as well as various Fintech related services. While continuing to offer the highest level of service in more traditional fields of financial services law, our Practice has branched into Fintech in past years and was one of the pioneers in Malta who sought to assist clients and entrepreneurs seeking to set up shop in Malta. Malta now vaunts the world’s first fully-comprehensive legal framework for blockchain technology and cryptocurrency which has made the island one of the top locations in the world for Fintech businesses to relocate.

Malta Financial Services Law

In the past 20 years, Malta has worked tirelessly to become the jurisdiction of choice for renowned financial businesses that seek to establish themselves in a secure and well-regulated EU domicile. Regulated by the Malta Financial Services Authority (MFSA), the sole regulator for Financial Services in Malta, Malta’s financial services industry has grown thanks to the regulator’s open-door policy which allows interested businesses to conduct informal meetings to determine whether Malta would be the ideal jurisdiction to set up shop. Malta’s body of financial services regulations transposes all EU directives, and includes, among others: the Banking Act, the Investment Services Act, the Financial Institutions Act and the Insurance Intermediaries Act.

Malta Fintech Law – the first of its kind globally 

The Maltese government and the regulator have recently embraced the potential of blockchain and cryptocurrencies as disruptive technologies which could alter the financial services sector as we know it. To this extent, Malta has committed itself to become a true Blockchain Island and is one of the first countries in the world to have drafted in-depth legislation which shall regulate cryptocurrencies, the issuing of ICOs, the setting up of Cryptocurrency Exchanges and service providers of Distributed Ledger Technology (‘DLT’). The aim of the legislator was to give such companies a legal framework within which they can ensure they are operating in a manner that is fully compliant with the state’s regulations while maintaining a flexible approach that does not stifle innovation. 

The Malta Digital Innovation Authority Act & Innovative Technology Arrangements and Services Act 

The body of laws regulating Fintech is made up of three acts, namely the Malta Digital Innovation Authority (‘MDIA’) Act which envisages the creation of the MDIA which shall be responsible for the certification of Technology Arrangements and the registration of Technology Service Providers as provided for in the Innovative Technology Arrangements and Services Act. 

The Virtual Financial Assets Act (VFAA) 

The VFAA regulates the issuing of initial coin offerings (‘ICOs’) and provides detailed instructions on how a white paper is to be drafted. The act also distinguishes between different categories of DLT assets in order to determine which law shall govern the asset, or if it will be exempt from all laws and creates the Financial Instruments Test to facilitate the classification of DLT assets. 
More Information on Fintech in Malta

Cryptocurrency Funds (Professional Investor Funds (‘PIFs’) Investing in Crypto)

The MFSA has also issued a regulatory framework whereby qualified investors have the option to invest in cryptocurrencies by adopting the PIF Regime to cryptocurrency investments. For more information, please refer to our factsheet. 

Our Fintech Practice is made up of individuals who are passionate about the possibility of fusing traditional notions with bespoke technologies. We have already assisted individuals and entities seeking to set up shop in a jurisdiction that has embraced cryptocurrencies and blockchain technology and continue to assist and guide clients seeking to:
•    Set up an ICO in Malta
•    Set up a Cryptocurrency Exchange in Malta
•    Set up a Cryptocurrency Fund in Malta

Investment Funds 

Several investors and fund managers consider Malta as the fund domicile of choice owing to the fact that it is a cost-effective EU jurisdiction with an approachable and commercially-aware regulator. Our Financial Services team assists clients with the setting up of funds that suits their aims and investment strategy. Malta offers a variety of fund structures for various types of investors, including:

•    The Malta Professional Investor Fund (PIF) – The PIF is Malta’s most popular hedge fund and is an efficient and flexible vehicle which allows investors to conduct highly innovative or unorthodox investment strategies. Indeed, the PIF can even be used to invest in cryptocurrencies. This fund is open to qualified investors who can invest a minimum of €100,000. PIFs can now also invest in cryptocurrencies.
•    The Alternative Investor Fund (AIF) – The AIF is available to investors in Malta following the state’s transposition of the Alternative Investment Fund Directive. AIFs are generally controlled by less stringent requirements than UCITS which are targeted at retail investors and can be considered as collective investment undertakings which raise capital from several investors with a view of investing it in accordance with a defined investment strategy. AIFs benefit from EU passporting, thus can be offered to investors in any EU member state. 
•    Notified Alterative Investment Funds (NAIFs) – NAIFs are a Maltese product which aim at removing the double burden faced by fund managers and funds itself which are both subject to prudential regulation. The NAIF regime allows the Alternative Investment Fund Manager to assume full responsibility for the NAIF and for the fulfilment of its obligation. After notification of the AIF which falls within the remit of this regime, access to the market can be gained within just 10 days.
•    UCITS funds – UCITS funds are regulated under the UCITS Directive and are liquid and transparent retail products which are able to be marketed and distributed freely across the EU.

Investment Services

With long standing experience in the field of investment services, our Financial Services specialists are fully geared towards helping clients attain an investment services license in accordance with MiFID as well as the local Investment Services Act. Our service spans pre-licensing, licensing and post-licensing compliance, thus providing a one stop shop for MiFID firms.

Credit Institutions, Financial Institutions & Recognised Financial Entities 

Through our Credit Institutions Law , Financial Institutions and Recognised Financial Entitles practice, Chetcuti Cauchi advises banks and financial institutions such as Electronic Money Institutions (EMIs) and Payment Services Providers (PSPs) and recognised financial entities on regulatory, licensing, operational and traditional substantive law issues. The firm also provides expertise in the legal and regulatory aspects of online delivery of financial products and services, particularly internet banking and online payment systems.

Our Practice has ample experience in advising such businesses seeking to set up shop in Malta. We work closely with out Corporate department in this regard and assist the client in order to set up a company and to attain the relevant license. Our Financial Services team will also assist clients post-licensing or post-acquisition to ensure compliance at all times.

Our Practice also assists Recognised Financial Entities which are entities which do not need a licence to operate, but only a recognition from the local regulator, the MFSA. Two of these entities are Fund Administrators, who carry out activities in support of the actual process of running a collective investment scheme, and Recognised Incorporated Cell Companies (ICCs) which are a modern and flexible alternative to insurance businesses. Our specialists have a longstanding experience in communicating with the regulator, thus we will make sure our clients’ recognised financial entity will be fully compliant at all times.

Capital Markets 

Corporations seeking to list on the Malta Stock Exchange (MSE) will need to first consult the Listing Authority within the MFSA in order to attain admissibility to list and later on list on one of the four capital markets on the MSE. Our Financial Services practice is fully geared to assist businesses seeking to raise finance, be it large corporations or small to medium size enterprises. The available markets are the following:

•    Malta Official Listing – this is Malta’s main capital market and serves as an ideal international platform for stocks due to the possibility of EU passporting. The minimum share capital needed to list on this market is €1 million.
•    Malta Alternative Companies List – ideal for smaller companies and investors who have the potential for growth but do not fulfil the rigorous requirements of the MSE Official Listing. Such companies will also benefit from EU passporting but only require a minimum share capital of €50,000.
•    The Institutional Financial Securities Market - this market has been specifically designed for institutional investors. A minimum denomination of financial instruments quoted on the IFSM is €100,000. 
•    Prospects SME Listing – this is an EU compliant multi-lateral trading facility tailored for small to medium sized businesses which would not be able to satisfy the requirements of the above lists but show potential for growth. Prospects offers cost-effective and facilitated access to capital, allowing small enterprises to raise up to €5 million with only €46,588 needed as minimum share capital. 

Insurance Law

Our Insurance practice provides project management solutions to clients who choose Malta as their Centre, HQ or branch of their insurance activity.  We also offer legal advisory services related to insurers, reinsurers, insurance agents, insurance brokers, captive insurance, the exercise of EU passporting rights, the re-domiciliation of insurance companies, various legal structures that Malta offers in the field of insurance. We also assist insurance managers and tied insurance intermediaries which seek authorisation from the regulator. 

Structured Finance 

Our Financial Services and Fintech Lawyers have garnered significant on-the-ground experience in assisting clients seeking structured finance solutions be it through acquisition and leveraged finance, asset-based lending, asset finance, capital markets, corporate lending, derivatives, public finance, real estate finance, structured trade and commodity finance, project finance, Islamic investment and financial restructuring and insolvency. 

Securitisation services are also offered by Financial Services team whose seasoned members are able to assist clients in even the most complex transactions. Our team will communicate with the regulator to obtain a license if the securitisation vehicle is a public one or notify the regulator if the vehicle is a private one.  We assist clients with the drafting and compiling of the necessary offering documentation. Our advisors will assist clients in identifying the best structure which suits their needs, such as the setting up of Private Securitisation Cell Companies which may be used for all kinds of securitisation transactions.

Crowdfunding is another increasingly popular method of raising finance. Our lawyers will be able to walk clients through the legal maze surrounding this new method of raising finance which remains vastly unregulated. 

Trustees and Company Service Providers 

Our Financial Services a& Fintech team has also garnered longstanding experience in assisting Trustees and Company Service Providers seeking to set up in Malta. We assist clients by liaising with the regulator to obtain the relevant license. To this extent, we assist clients with the drafting, collection and competition of all necessary documentation, and also offer compliance services post-licensing.

Forex

Our Financial Services specialists also assists individuals seeking to acquire or hold foreign exchange (forex) for investment purposes attain a license from the MFSA. Our advisors would be able to walk you through the relevant category license that would suit you and your business needs.  

Ancillary services 

•    We work closely with our Corporate department to set up the most advantageous company structures which suits our clients’ needs, also taking into account tax considerations depending on the client’s situation. We can also assist clients with the winding down of their businesses in contemplation of redomiciliation to Malta.
•    We also work closely with our Real Estate department to locate office space for companies and provide registered head office services for businesses which do not require a presence in Malta.
•    Our Tax department is also closely involved and assists us to help our clients find the most cost-effective option in terms of tax optimisation. 
•    Our long-standing, on the ground experience also allows us to aid our clients in finding the ideal candidates for their company, which includes executive and non-executive directors with prior experience in the relevant field, company secretaries, compliance officers or Money Laundering Reporting Officers, third party external auditors etc.

Our Financial Services & Fintech Practice 

Our Financial Services Practice brings together a group of lawyers, accountants, and advisors hailing from different backgrounds which allows us to provide results-driven commercial advice to our clients. Our team works closely with other departments in the firm, including our banking, tax, insurance, corporate and real estate practices to provide our clients with a one-stop-shop solution that is tailored to their needs. We handpick professionals of an unrivalled breadth and depth of experience and work with a broad range of financial services institutions, credit institutions, insurance companies, funds and investment services companies to provide the best advice and assistance possible to our esteemed clients.

If you are interested in any of the services which we offer, we welcome you to contact our financial services experts at fsu@cclex.com. 

Testimonials


I chose Chetcuti Cauchi for their reputation of being knowledge in both local and international aspects of financial services. They exceeded my expectations.

Chetcuti Cauchi and their Financial Services Team have been excellent in meeting our legal needs in Malta. They have been highly responsive and a pool of knowledge and guidance. Throughout the process we have been able to liaise with other specialist teams within Chetcuti Cauchi in order to gain a broader picture of the effects of our structuring choices and also of various options open to us as we grow our business. They have been very flexible in meeting our changing needs, a quality which we value. We have no hesitation in recommending Chetcuti Cauchi to other firms

A business minded and client oriented attorney. I worked with Jean - Philippe between 2007 and 2009 as the legal director of an Irish property fund.  Jean-Philippe assisted us in relation our group's operations in Malta.


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Key Contacts

Mr Colin B German

Chief Executive Officer

+356 22056442

Dr Jean-Philippe Chetcuti

Global Managing Partner & Founder

+356 22056411

Dr Priscilla Mifsud Parker

Senior Partner, Tax & Corporate

+356 22056422

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