Commercially Focused Regulation
As an ex-British colony the commercial laws of Malta are modelled on English law and with Malta joining the European Union (EU) in 2007, Malta has integrated the applicable EU directives, making the laws of Malta in relation to Professional Investor Funds (“PIFs”), up to date, flexible, consistent and comforting to both scheme managers and investors alike. Further with some of the most beneficial tax and fiscal treatments of PIFs, Malta is a very attractive, legitimate, onshore jurisdiction – as a fund domicile and for the financial services sector in general.
Collective investment schemes that qualify as Professional Investor Funds (“PIFs”) are subject to a significantly lighter and more flexible regime than retail funds. Hedge funds, funds of funds, private equity funds, and property funds, would be typical examples of funds that may benefit from being set up as a PIF in Malta.
The Investment Services Rules for Professional Investor Funds, issued by the Malta Financial Services Authority (“MFSA”), cater for a regulatory framework that is both robust and adaptable, allowing managers and promoters to innovate and to develop new products to meet the changing needs of the market. The level of regulation depends on the type of investors targeted, a distinction being made between PIFs promoted to ‘Experienced Investors’, PIFs promoted to ‘Qualifying Investors’ and PIFs promoted to ‘Extraordinary Investors’.
Advantages of Malta as a Fund Domicile
The principal advantages which give Malta a competitive edge in terms of choice of fund domicile are:
- Costs of set up, establishment and management including professional fees, are relatively low and very competitive;
- The MFSA operates as a ‘one stop shop’, is approachable and provides a timely and efficient service;
- PIFs can be self‐managed – there is no need to appoint a third party manager.
Furthermore, PIFs do not need to appoint a manager, custodian, administrator or any other service provider who is licensed in or who has otherwise exercised passport rights into Malta – if all underlying investments are held abroad and such services will be provided from outside of Malta. A service provider can be appointed that is authorised in a recognised jurisdiction for this purpose – including EU/EEA States and jurisdictions with which the MFSA has entered into bilateral or multilateral MOUs). As a result, clients have the flexibility of continuing to use the services of any external service provider licensed in any such jurisdiction with which they are accustomed to work.
Nevertheless, there are a multitude of options, located in Malta, which can provide all necessary human and other resources that adequately cater for and provide such fund‐specific services and generally all legal, accountancy/audit and other professional services which may be required by funds are also available locally, with a number of local and foreign credit institutions, fund administrators and investment firms having a presence and operating in Malta.