In the last decade, Malta
has distinguished itself as a serious and extremely
adaptable jurisdiction in the field of financial services.
The Investment Services Act, 1994 (as further revised) (the
“ISA”) presented various types of
collective investment schemes or funds (Schemes) which
may be registered with the Malta Financial Services
Authority (MFSA), and may be targeted at both domestic and
international markets.
The development of Malta as the jurisdiction of choice for
various types of collective investment schemes has been
greatly aided by the efforts of the local financial services
authority, the MFSA, which adopts a prudent but flexible
approach, providing a solid regulatory framework whilst
encouraging progress and innovation.
The
development of Malta as the jurisdiction of choice for
various types of collective investment schemes has been
greatly aided by the efforts of the local financial services
authority, the MFSA, which adopts a prudent but flexible
approach, providing a solid regulatory framework whilst
encouraging progress and innovation.
The Investment Services Act (ISA)
Collective Investment Schemes (CISs)
have been defined by the ISA as arrangements having as their object (or as one
of their objects) the collective investment of capital acquired by means of an
offer of units for subscription, sale or exchange, and which have the following
characteristics:
-
they
operate according to the principle of
risk spreading,
and
-
the
contributions by the participants, and the income payments
made to them, are pooled;
or units are
re-purchased or redeemed continuously or at short
intervals, out of the assets of the Scheme at the request of
the unit holders; or
units are issued continuously or at short
intervals.
A Scheme
which does not actively spread its risk may still be allowed
to operate if its units are offered only to licence holders
and/or persons who deal in similar investment instruments or
property as part of their ordinary business, or who are
themselves exempt from an investment
services licence.
Legal Structures of CISs
The law provides that a scheme may be set up as either:
·
A
Maltese CIS can be formed using various legal
structures, specifically:
·
SICAV:
a collective investment company with variable share
capital
·
INVCO:
a collective investment company with fixed share capital
·
Unit
trust
·
Mutual
fund: established by means of contractual agreement
·
Limited partnership
Types of Schemes
Professional Investor Funds (PIFs)
Such funds target either extraordinary investors or
qualifying investors or experienced investors, in
accordance with their minimum investment threshold. These types of funds are
classified as non-retail
type funds and are therefore not subject to any restrictions on their investment or
borrowing powers.
PIFs may be sold solely to investors who satisfy the
minimum investment threshold: ‘experienced investors’ are subject to a
minimum threshold of US$ 20,000; ‘qualifying investors’ are subject to a
minimum investment threshold of US$ 100,000; whilst 'extraordinary investors’ are subject to a
minimum investment threshold of EUR 1,000,000 (or equivalent in any
convertible currency) (click here for more info).
Private Schemes
The law defines a ‘private
collective investment scheme’, as that scheme which limits the total
number of participants to 15 persons. In such cases, the Regulator has to be satisfied that
the participants are close friends or relatives of the promoters, that the
scheme is essentially private in nature and purpose, and that it does not
qualify as a professional investor fund. It is interesting to note that such private Schemes do not require
a licence under the Investment Services Act, however one finds the
requirement that the promoters apply to the MFSA for recognition. One would
also need to pay special recognition and
annual fees. Since such Schemes are not considered as being licensed, the
special income tax rules applicable to other types of Schemes do not apply.
Specialist Schemes
These schemes would target special sectors such as venture capital or development funds; money
market funds; property funds; and futures and options funds.
Retail Funds
As implied from the title itself, these Schemes collect funds from the general public
and therefore, it goes without saying, that these are the most highly
regulated funds from all those listed above.
(click here for more info)
See also:
Favourable tax system for Investment Services Expatriates in Malta
.
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