Malta Hedge Fund Lawyer Interview: HFM Week speaks to Chetcuti Cauchi Advocates
HFM Week, a leading hedge funds industry publication, recently interviewed Dr Charles Cassar with respect to the prospects and challenges faced by the local hedge funds industry. The original interview can be accessed by following the link here.
The full text of the interview is reproduced below:
Focus on Malta Funds: Interview
The European fund industry is undoubtedly going through an unprecedented period of change. Not only is regulatory change sweeping the continent in many shapes and forms, the most notable being the Alternative Investment Fund
Manager Directive (AIFMD), but the eurozone crisis has also thrown many managers into a state of flux. However, healthy and solid fund domiciles still exist within the EU. Dr Charles Cassar, of Chetcuti Cauchi, discusses the strengths of one of these domiciles – Malta.
HFMWeek (HFM): What benefits does Malta hold over other jurisdictions such as Gibraltar and the Isle of Man?
Charles Cassar (CC ): First, Malta is a full EU member state, meaning that fund managers established in Malta can benefit from the passporting rights established by the relevant European directives (Ucits and AIFMD, which will soon come into force). The country can also boast of a highly accessible regulator, a well developed fund servicing ecosystem and a very competitive cost and fiscal basis.
HFM: Malta has long had a solid reputation as a destination for fund managers and their investment vehicles – how has this strengthened?
CC: Throughout this year the jurisdiction has attracted plenty of positive press, with Bloomberg, Business Insider, HFMWeek and the Financial Times all making very positive statements about Malta. The country is now a well-established fund jurisdiction that can host a variety of investment strategies and a broad range of fund sizes and structures. I think this is the key change we’ve seen over the past couple of years – whereas before it was commonplace for people to speak about Malta as an emerging domicile, nowadays it is pretty much tried and tested.
HFM: What would be the advantages for afund manager if they were to relocate a firm to Malta?
CC: Thanks to the passporting opportunities that exist under Ucits and AIFMD, Malta is an entry point into the European market for non-EU fund managers, and is also a very good option for EU managers who are looking for a solid jurisdiction to serve as a hub. The country is cost and tax efficient, English speaking, easily accessible from Zurich, London and Dubai, and has a regulator you can talk to. Malta is keen to grow its industry further, and has recently introduced a very exciting incentive: a 15% flat rate of tax for highly qualified professionals earning €75,000
per annum or more. And it goes without saying that the weather is better than London’s.
HFM: How would a fund manager go about making the move to Malta? Is such a transition to the island easy?
CC: As you would imagine from an EU member state, there is a due diligence process that must first be undergone in order to be to conduct fund management activities. The Malta Financial Services Authority (MFSA) is accessible and willing to consider unusual ideas, but does not shy away from rigorously enforcing the highest standards. The applicant’s levels of preparation and professionalism are, therefore, a key factor. Although very unorthodox proposals can take longer, it is quite feasible to complete a project of this sort in less than three months. Of course, the quality of advice and guidance sourced from local professionals is another important factor here.
HFM: What does the future hold for Malta and its attractions for fund managers?
CC: Initially it was feared that the AIFMD would stifle the growth of the local industry, but now the industry consensus in Malta is that the directive represents an important opportunity rather than a threat. We know various boardrooms are already talking about Malta as an option. The authorities also remain committed to growing the sector, as can be seen from developments like the incentive for highly qualified people. We will continue seeing growth over the next few years. The challenge will then be to ensure that local human resources and regulatory infrastructure are able to cope with the increased demands of the industry, but there are signs that these issues are being addressed.
