Licensing of Investment Schemes (Malta)

All CISs, including PIFs, are in the scope of the Investment Services Act (Chapter 370 of the Laws of Malta) and therefore require a collective investment scheme license to issue or create any units or carry on any activity in or from within Malta.

A promoter may create a PIF in various ways, e.g., an investment company with variable share capital (SICAV), an investment company with fixed share capital (INVCO), a limited partnership, a unit trust, or a common contractual fund.  However, by adopting clear structures and rules while keeping utmost flexibility, the corporate form (SICAV) is the one that is usually preferred by promoters. By the Maltese Companies Act (SICAV Incorporated Cell Companies) Regulations, it is also possible for a SICAV to be formed or constituted as an incorporated cell company and establish incorporated cells.

It is possible to establish a PIF with just one sub-fund. More common, however, is a structure containing a multi‐fund (umbrella) scheme, with several sub‐funds constituted by one or more different classes of shares. The advantage of an umbrella scheme is that it would be possible to have different sub-funds pursuing other investment objectives, policies, and restrictions, most probably denominated in foreign currencies. It is essential to point out that sub-funds do not have separate legal personalities from the scheme. However, the assets and liabilities of each sub-fund constitute a separate patrimony from the assets and liabilities of other sub-funds. This segregation of assets and liabilities is a safety valve to the scheme’s viability. The negative performance of one sub-fund shall have no bearing on any other sub-funds established by the CIS.

All applications for licensing of any Collective-Investment-Scheme (CIS) – including PIFs – must be made to the MFSA and shall only be accepted if such application is drawn up in proper form and compliant with the relevant legislation, regulations, and rules. The directors and officers are fit and proper persons to carry out the functions they require concerning the scheme.

Following the in-principal approval of the directors and officers of the scheme, the applicant must submit the following documents, in draft form, to the scrutiny of the MFSA.

A draft version of the constitutive document of the scheme or the memorandum and articles of association in the case of a SICAV or INVCO);

• A draft copy of the Offering Memorandum;
• A draft copy of the Offering Supplement;
• A draft board resolution confirming:
• The directors’ intention to apply for a license in favor of the PIF;
• Identifying the person(s) responsible for signing the application documents;
• Identifying the person(s) responsible for acting as a point of liaison with the MFSA;
• Identifying the persons responsible on behalf of the board for the compliance and anti-money laundering regulations;
• Approving and assuming responsibility for the contents of the Offering Memorandum and the Marketing Document (the Offering Supplement)

The applicant may be asked to provide additional information or to amend the documents accordingly to comply with the Standard Licence Conditions (“SLCs”) established by the MFSA.  When the final tweaks, if any, have been undertaken in conformity with such SLCs, the applicant shall be asked to submit the original documents.

A PIF may appoint any service provider (e.g., investment manager, adviser, administrator, custodian, or prime broker) it deems necessary. Any external service providers appointed by a PIF must not be established in Malta.  However, where all service providers are based outside Malta, and the PIF has not specified a resident director, the MFSA shall require a local representative as a liaising and reporting officer.