Malta's Banking System
Malta's banking system has through the decades supported the growth of various sectors of the Maltese economy. Adherence to capital requirements are amongst the highest in Europe and solvency ratios are almost double those of the EU average. Coupled with this success is a booming fund industry with Malta becoming a domicile of choice for the establishment of UCITS, Alternative Investment Funds (‘AIFs’) Professional Investor Funds (‘PIFs’) as well as Notified AIFs. The market is now ripe for highly specialised custody services in relation to financial and other assets for funds as well as the provision of monitoring and oversight functions over the portfolios of funds and fund managers alike.
Custody & Depositary Regulation in Malta
The Investment Services Act, 1994 is the main legislative framework for the regulation and supervision of custodians and depositaries providing custody services to collective investment schemes. The law and regulations provide two types of licences for custody services.
A fully-fledged custodian shall require a Category 4a Investment Services Licence whilst a depositary (depositary lite) will require a Category 4b Investment Services Licence.
A Category 4a licence holder may be either one of the following entities:
- a credit institution;
- a branch of a credit institution in Malta and established and authorised in the EEA;
- an investment firm in Malta; or
- a branch of an investment firm established in another EEA state; or
- a company established in Malta wholly owned by a credit institution being it Maltese or foreign which is subject to similar prudential supervision requirements applicable to Malta credit institutions.
The holder of a Category 4a licence shall be authorised to provide custody services for any type of collective investment scheme.
A Category 4b licence holder may be any one entity as mentioned above or alternatively a Recognised Fund Administrator as well as MIFiD entities excluding fund managers.
The holder of a Category 4b Investment Services Licence shall be able to service AIFs which:
- invest in non-listed companies in accordance with Article 26 of the AIFM Directive;
- AIFs which do not have any redemption rights for a period of five (5) years, which assets are not generally required to be kept under custody in accordance with Article 21(8)(a) of the AIFM Directive; as well as
- third country AIFs managed by an EU AIFM, when such AIFs are marketed in the EU / EEA.
Our Custody & Depositary Practice
Our custody services practice focuses on the structuring and setting-up of custodians and depositaries and the provision of on-going advisory services at post-licensing stage. We assist our clients with the drafting of all regulatory documentation and ancillary agreements. We also manage relations with regulatory authorities. From a practical perspective, we connect clients to high-quality personnel and service providers in the jurisdiction and generally act as the primary reference point for all aspects of the project. Every client benefits from a dedicated team of lawyers and other professionals who provide advice.
Malta Custody & Depositary Lawyers
Our regulatory lawyers work closely with other practitioners in the firm to provide an ‘all-in-one’ service to our financial services client portfolio. We are responsible for the setup and maintenance of a large portfolio of investments services companies and funds, where we assist the client on various aspects including jurisdictional selection, choice of legal vehicle, and ensuring that such structures comply with all local company law and regulations. Ancillary services we provide include corporate compliance and company secretarial services for private and public companies, setting up of brick-and-mortar or online business operations, assistance with the selection of external service providers, real estate advisory services and restructuring or re-domiciliation assistance.
