Collective Investment Funds
Retail Mutual Funds
Malta is fast emerging as an ideal jurisdiction within the EU for the registration and licensing of Mutual Funds in general, including Retail Mutual Funds. A competent regulatory environment, an efficient and very cost-effective licensing procedure, and quality and competitive professional services, coupled with a tax neutral environment for ‘non-prescribed” mutual funds (i.e. not targeting the local market), renders Malta an attractive and increasingly sought after alternative to Luxembourg, Ireland and the surviving Caribbean fund jurisdictions. Retail Mutual Funds can be registered and licensed as Single or Umbrella Funds and some of this jurisdiction’s attractive features include a low initial capital requirement, very competitive licensing costs, competent service providers, the possibility of using foreign Custodians and Fund Managers, the possibility of listing shares on the Malta Stock Exchange, and of course the possibility of passporting to the EU member States.
Professional Investor Funds (PIF)
Malta’s rapidly increasing appeal as a Mutual Fund jurisdiction can be said to have really kicked off with the emergence of the Professional Investor Fund regime. PIFs are for all intents and purposes regular Mutual Funds, but with certain defining characteristics that render them subject to minimal regulation. Like any Mutual Fund, a PIF can take the form of an incorporated open or closed ended investment company – in the form of a SICAV or INVCO or a unit trust. But unlike normal Retail Mutual Funds they can only take one of two forms, either a PIF promoted to Qualifying Investors where the investors must meet certain criteria and must invest a Minimum initial investment of USD100,000, or other currency equivalent, and a PIF promoted to Experienced Investors where the investors must also meet certain criteria and must invest a minimum investment of USD20,000 or equivalent in foreign currency.
In both cases PIFs are not subject to any restrictions on their investment or borrowing powers with the exception of PIFs investing in immovable property, but in the case of PIFs promoted to Experienced Investors no leverage is allowed at the PIF level, but up to 100% leverage is allowed at lower holding company levels. All Functionaries of PIFs, i.e. custodian, fund manager, fund administrator, investment advisor (if applicable) etc do not need need to be licenced in Malta, however every PIF must have a Judicial Representative based in Malta who acts as the liason between the Fund’s promoters and the Regusltor.
The Licensing procedure is very swift and cost-effective, initial share capital requirements are minimal and maintenance costs are low. Moreover, units of a PIF can be listed on the Malta Stock Exchange. The PIF mutual fund alternative is indeed an extremely interesting and useful tool for various scenarios….for banks and asset managers who may wish to rationalise their portfolios; for banks and asset managers who may wish to set-up in-house funds for their best clients; for asset managers and dealers who may wish to set-up specialty funds; for consultants who may use it as an alternative, or indeed in conjunction, with companies and trusts for family wealth planning reasons or for strategic business planning reasons…….the appeal and scope of the PIF is indeed very wide…..and with good reason. For good measure…..PIFs that are non-prescribed funds (not aimed at the local market) are completely tax neutral.
For further information on Professional Investor Funds please contact us
