Maltese Alternative Investment Funds and Professional Investor Funds
The Malta Financial Services Authority (MFSA) is the single financial services regulator in Malta. The MFSA regulates and supervises credit and financial institutions, investment funds and services, trust and insurance business and also houses Malta’s Registry of Companies and International Tax Unit.
Malta is a full member of the European Union and Euro Zone.
The Investment Services Act, Chapter 370 of the laws of Malta, establishes the principal regulatory framework governing investment services and investment funds (“Funds”). As such, any Fund operating in or from Malta is required to procure an appropriate licence from the MFSA.
The current MFSA Investment Services Rules set out a regulatory framework governing the following types of investment funds:
- retail Funds (including UCITS and non-UCITS schemes); and
- non-retail Funds, including Alternative Investment Funds (AIFs) and Professional Investor Funds (PIFs) which are, as such, subject to a relatively “lighter” regulatory regime and more flexibility given that they are not available to the public generally.
A Maltese Fund must be established as a scheme or arrangement which has, as its object, the collective investment of capital acquired by means of an offer of units for subscription, sale or exchange and which, additionally, also possesses any one of the following characteristics:
- the scheme or arrangement operates according to the principle of risk spreading; and either:
- the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; or
- at the request of the holders, units are repurchased or redeemed out of the assets of the scheme or arrangement, continuously or in blocks at short intervals; or
- units are, or have been, or will be issued continuously or in blocks at short intervals.
The risk spreading requirement does not apply in respect of AIFs marketed to professional investors, and no longer applies in respect of PIFs targeting Qualifying Investors and Extraordinary Investors – as defined below. Risk spreading remains mandatory in respect of retail Funds, AIFs marketed to retail investors, and PIFs targeting Experienced Investors.