Over the past twenty years, Malta has gone through a complete reform in its corporate legislation and regulatory framework. Two of the key initial initiatives included the introduction of the Companies Act in 1995 and later the introduction of a single regulator – the Malta Financial Services Authority (MFSA).
The reform program was carried out in line with best practice observed in the Organisation for Economic Co-operation and Development (OECD) countries. In anticipation of Malta’s accession to the European Union, the reform was done in a way to ensure the Maltese legislation will be modeled on EU regulatory policy. This resulted in a well- designed, robust and familiar legislation where non-Maltese investors could feel at ease.
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The regulator also ensures that EU laws are transposed to Maltese law in a timely manner and at times earlier than other member states. The strong legal and regulatory framework in Malta together with our accession into the European Union in 2004 and the more recent adoption of the Euro have resulted in an accelerated growth in the financial services industry especially in the fund industry.
Government backs industry push
Now with a stable and robust regulatory framework in place, the government and the rest of the industry are committed to make financial services a key pillar for the Maltese economy. This is part of the government’s strategy which aims at doubling the financial services sector’s contribution to Malta’s GDP to 25% by 2015. This target is definitely achievable.
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By GlobalDataFund managers have two options to choose from when setting up a fund in Malta:
1. Funds compliant with the European Directive for Undertakings for Collective Investments in
transferable securities known as “UCITS”
2. Professional Investor Funds (PIF)
So far, fund managers have shown more interest for the PIF regime. As its name suggests this regime caters for professional investors with minimum investment thresholds ranging from
€10,000 to €750,000 (depending on the type of PIF chosen). These investors are classified as non -retail investors and therefore the PIF regime is less restrictive in terms of asset classes, asset allocation and leverage when compared to retail funds which usually opt for a UCITS regulatory framework.
The reduced restrictions and flexibility on asset allocation, leverage and other matters make the PIF regime suitable for a variety of funds including private equity and real estate funds, hedge funds structures, fund of funds and feeder funds, as well as specialty funds, in-house funds for banks, asset managers, traders/dealers and ‘private label’ funds for wealthy families and wealth planning.
Collective investment schemes in Malta are exempt from income tax and capital gains tax at the level of the fund and/or at the level of the non-resident shareholder.
Attractive to new funds
Malta has not only attracted newly set up funds but has also attracted investors who wanted to operate in an onshore jurisdiction as opposed to offshore jurisdiction leave that are commonly associated with hedge funds and other alternative asset funds.
Such transfer from offshore jurisdictions to Malta was made possible through effective legislation relating to the redomiciliation process which has been in place since 2002. Redomiciliation results in time and cost savings while the management, ownership and structure and assets of the legal entity (i.e. a fund, company, etc…) remain largely unaffected. The actual change that occurs is in the entity’s domicile, relevant legal system, regulatory and taxation framework.
The attractive landscape for funds has attracted a large number of international players which in turn also attracted international high calibre service providers, such as Alter Domus. Such service providers are getting prepared to constant changes and challenges in the industry. Alter Domus being a key player in the alternative asset industry has thoroughly reviewed its processes and infrastructure to be proactive in terms of clients’ requests and preparedness for new regulatory requirements such as the Alternative Investment Management Directive (AIFMD).
Besides offering a sound legal and regulatory framework, in particular, the efficient legislation for Collective Investment Schemes, Malta also offers a number of other advantages when compared to other fund domiciles including:
- A hard working workforce with an excellent work ethic
- English is the business language
- Cost competitive jurisdiction
- The only EU member state to apply the full imputation system
- A reliable and strong communication network
- Strategic location in Europe
- Fast and efficient redomiciliation process for funds
- Access to passporting regulations
- Robust money laundering regulations
- Company law provisions dealing with SICAVs and limited partnerships
Malta’s robust regulatory environment, market flexibility and cost effectiveness together with its operational advantages, such as high quality human resources and reliable world known service providers, make Malta an attractive alternative fund jurisdiction which ticks all the boxes.
Alter Domus is a leading global provider of Fund and Corporate Fund Services, dedicated to private equity houses, real estate firms, multinationals and private clients. Founded ten years ago, the Luxembourg based firm continually has expanded its global service offering and today operates 28 offices and desks across four continents. This international network enables clients – including 11 of the 20 largest private equity houses and 12 of the largest real estate firms in the world – to benefit from the expertise of more than 600 experienced professionals active in fund administration, corporate secretarial, accounting consolidation, tax and legal compliance and debt administration services.
Subject to regulatory approval, Alter Domus is launching new depositary services in Luxembourg and is in the course of preparing its application to provide such services in the United Kingdom. The firm will continue to monitor the evolution of AIFMD and, as needs and opportunities arise, will leverage its experience to provide such services in other relevant jurisdictions.
Alter Domus has offices in Belgium, China, Cyprus, Guernsey, Hong Kong, Ireland, Jersey, Luxembourg, Malta, Mauritius, The Netherlands, New York and Singapore and UK.
Chris Casapinta is managing director of outsourced administration provider Alter Domus Malta.
