Retail Collective Investment Schemes are funds that are made available to the general public and thus are regulated in a greater level of detail than other funds which are offered to more experienced investors. The MFSA’>s regulatory regime for retail funds caters for three principal categories (apart from UCITS funds):
Maltese Non-UCITS Schemes
Maltese non-UCITS schemes can be either open-ended or closed-ended and they can take a number of legal forms:
- investment company having variable share capital
- investment company having fixed share capital
- unit trust
- common contractual fund.
A Maltese non-UCITS scheme needs to appoint at least one local director. It is also required to appoint an Investment Manager unless it is set up as a self-managed Maltese non-UCITS Scheme. In the case of a self-managed scheme, the initial paid up share capital should not be less than EUR 125,000, while the NAV of the Scheme is expected to exceed this amount on an on-going basis. In the case of a non-UCITS scheme managed by a third party manager and set up as a company, the minimum capital should be not less than 1,250 EUR.
A Maltese non-UCITS scheme needs to appoint a local Custodian and it can also appoint a local administrator. In the case that the Scheme does not appoint an administrator, the manager would need to carry out the functions of an administrator as well. The scheme also needs to appoint a Compliance Officer and a Money Laundering Reporting Officer.
Once a Maltese non-UCITS scheme is licensed in Malta, it can freely promote its units in Malta after publishing the relative prospectus. In order for the scheme to be able to promote its units in any other state, the scheme needs to satisfy the regulatory framework of that particular state. Due to the fact that Malta is a highly regulated jurisdiction and enjoys an excellent reputation, foreign regulators tend to look favourable as such businesses.
Overseas based Non-UCITS Schemes
Overseas based Non UCITS Schemes are schemes formed in accordance with the laws of any state other than Malta and can be both of the open-ended and of the closed-ended type. The requirements for such scheme to be allowed to operate in Malta need to be negotiated directly with the MFSA. The license conditions will be specific to such scheme, and in practice would depend a lot on the extent of supervision exercised by the competent authority of the home state of such a scheme.
An Overseas based Non-UCITS Scheme is required to ensure that it has a local point of contact both for investors as well as for MFSA regulatory and compliance purposes. This requirement may be satisfied as follows:
- through the appointment of an Investment Services Licence Holder as Local Representative; or
- through the appointment of an EEA investment firm providing services in Malta through the establishment of a branch as Local Representative; or
- directly by the Scheme itself through the opening of an office in Malta to be manned by officials / employees of the Scheme (in this case, however, the activity undertaken is to be limited to promotion and execution-only sales of the Scheme’s units without the provision of investment advice which would need to be provided by an Investment Services Licence Holder or appropriately authorized European investment firm passporting into Malta).
European UCITS Schemes
European UCITS schemes are schemes that have their registered office and head office situated in an EU or EEA state other than Malta and that are authorised by the competent authority of that state. If such schemes desire to actively promote their units in Malta, whether directly or through intermediaries, they can make use of their passport rights by notifying the MFSA of their intention to do so. A European UCITS Scheme is required to satisfy the MFSA that adequate measures have been taken to ensure that facilities are available in Malta for making payments to unit holders, repurchasing or redeeming units and making available the information which European UCITS Schemes are obliged to provide.
