Malta Funds

Malta’s fund industry is a major success story showing continued growth throughout global recession. Since Malta’s accession to the EU in 2004 around seven hundred funds holding around €8bn in assets have been licensed in Malta and Malta now competes with industry-leading countries as a centre of excellence for fund registration. In addition to the above it is estimated that around €80bn of assets are controlled by Maltese registered funds operated elsewhere and this sector makes up about 10% of Malta’s economy. In recent years Malta has seen an influx of funds from more traditional destinations such as the British Virgin Islands, Luxembourg and the United Kingdom. Malta’s tax free funds, streamlined regulatory process and membership of the EU makes fund registration highly desirable in a global climate showing increased hostility towards offshore financial centres.

Scope of Fund Licensing in Malta
Malta is an extremely well regulated country. The fund industry regulates both local registered funds and foreign funds operated from Malta. Under Maltese law a fund is any Collective Investment Scheme (CIS) that involves risk spreading or asset pooling or has redeemable units (such as shares). There is very little scope in Malta therefore for the operating of unlicensed CIS however licensing is simple and straightforward. Professional funds in Malta must apply for a licence however this will be granted with very little scrutiny provided that the roles of the fund (such as investment managers, administrators, advisors and custodians etc.) are outsourced to service providers who are themselves regulated already (whether in Malta or abroad). This approach encourages a fast turnaround of licence applications and a straightforward and affordable application process since in most cases the service providers applying on behalf of the fund will already be known to the regulator. The regulator refers to operators in a professional fund as ‘functionaries’ and which operations must be handled by which functionary varies depending on the business model of the applicant. The various roles are explained in much greater detail below but the regulatory concept of a functionary is fairly flexible allowing the regulator to ensure proper oversight has been given to all involved parties. In cases where the functionary roles are to be filled by Maltese pre-approved service providers the licensing process of the fund should be quick and simple and limited in scope to investigation of any unknown parties such as the founders of the fund and their background. The fund sector in Malta is setup to strongly encourage the use of local providers and in the case that none are appointed in any other capacity the local regulator will require the nominating of a local service provider as a point of interface (see below, judicial representative). The above notwithstanding most Maltese registered funds use non-Maltese providers to some extent, such as non-Maltese investment advisors, however in this case licensing is likely to take longer.

Professional Funds
The vast majority of funds registered in Malta by foreign clients are professional funds as opposed to retail funds (for a discussion of the difference between these two concepts please see our main article on fund services in the products section). Professional funds are funds aimed at experienced investors and as such have a minimum threshold for investments and various other checks to ensure that the investors are suitable and able to understand the risks of the investment (see below for details). From a consumer protection point of view these sorts of funds require considerably less regulation than retail schemes and the regulation in Malta of funds themselves is minimal, the regulator instead ensures that the persons operating the scheme are themselves licensed and subjects them to a higher level of scrutiny (see above for more details).

The following comments on taxation makes two assumptions 1) the fund does not have 85% or more of its assets in Malta and 2) the fund does not have Maltese nationals as investors. If these assumptions are incorrect then a withholding tax may apply at the rate of 15% on bank interest and 10% on other income as well as other taxes.

Taxation for International Funds
Unless the fund has Maltese shareholders or at least 85% of its assets are in Malta then it is exempt from all local taxes including tax at fund level, corporation tax, withholding tax, stamp duty (on share issues and transfer) Net Asset Value (NAV) based taxes and Capital Gains Tax. Funds in Malta are therefore extremely attractive as an 0% tax EU vehicle.

Minimum Threshold for Professional Funds
Given that they are much less strictly regulated than retail funds professional funds are much more popular and affordable. The minimum amount of each investment required for a fund to be considered professional rather than retail (and therefore subject to less stringent regulation) in Malta is one of the lowest in the world at 10,000 EUR for Experienced Investor Funds (for an explanation of the difference between the three types of funds and restrictions as to their use please see below).

Types of Professional Investment Fund (PIF) in Malta
There are three types of Professional Investment Fund (PIF) in Malta and their differences are explained below and summarized in the following table. In general all PIFs in Malta are free to invest in whatever they wish with the exception of Maltese property for which a separate body of rules apply. Since Maltese property funds are unlikely to be relevant to foreign investors they are not discussed in this article.

PIFs for Qualifying Investors
These PIF have few restrictions on their activity and can use leverage. However they have a higher minimum investment requirement of EUR 75,000 than PIFs for Experienced Investors where the amount is EUR 10,000 (please see below for more details). A qualifying investor PIF is open to investors who can fulfill one of the following criteria: 1) any person, company, trust or other entity with EUR 750,000 or more in net assets; 2) service providers with at least 3.75m EUR under discretionary management; 3) a person with reasonable experience of the same kind of fund; 4) relations or close friends of promoters (limited to a maximum of ten entities); and, 5) employers and directors of PIF. The above is determined by declaration and this can be prepared either by the investor directly or their advisor but must be signed by the investor and reviewed by the fund operators and these records are subject to inspection by the local regulator.

PIFs for Experienced Investors
This type of PIF has the lowest professional investment threshold in Malta (and one of the lowest in the world) at 20,000 EUR . Since the criteria for Experienced Investors is lower than for Qualifying Investors consumer protection considerations mean that these PIFs are subject to more regulation but still have a great deal of freedom however they cannot leverage their position and the custodian is expected to take a more active role in their operation. A PIF for experienced investors is permitted for investors who fulfill one of the following criteria: 1) has worked in a professional position in financial services for at least one year; 2) a person with reasonable experience of the same kind of fund; 3) someone who has carried out a reasonable amount of investment transactions ; or, 4) any other reasons which demonstrate a sufficient understanding of the risks of the investment. The suitability for this type of PIF is made by declaration prepared either by the investor directly or their agents or advisors must be signed by them.

PIFs for Extraordinary Investors
This is the least regulated form of PIF in Malta and is open to investors who can fulfill one of the following criteria: 1) any person, company, trust or other entity with 7.5m EUR or more in net assets; 2) senior employers and directors of the PIF. The above is determined by declaration and this can be prepared either by the investor directly or their advisor but must be signed by the investor and reviewed by the fund operators and these records are subject to inspection by the local regulator. PIFs for extraordinary investors can leverage their position and have lower documentary obligations including a less strict requirement for the preparation of offering material and do not need to appoint a custodian.

Comparison Table


Professional Investment Fund

For Qualifying Investors

Professional Investment Fund

For Experienced Investors

Professional Investment Fund

For Extraordinary Investors

Minimum Investment

75,000 EUR

10,000 EUR

750,000 EUR

Minimum net worth of Investor

750,000 EUR (or have 3.75m EUR under discretionary management)

Not applicable, no direct minimum net worth but experience must be demonstrated.

7.5m EUR

Open or Closed




Restrictions on underlying investments

None except restrictions relating to real estate.

Leveraging is not permitted. Also there are restrictions relating to real estate.



Investment Manager

Compulsory but the directors may be competent to fulfill this role.

Compulsory but the directors may be competent to fulfill this role.

Compulsory but the directors may be competent to fulfill this role.

Investment Administrator

May be appointed or function may be fulfilled by Investment Manager.

May be appointed or function may be fulfilled by Investment Manager.

May be appointed or function may be fulfilled by Investment Manager.

Custodian /Prime Broker

Expected but not compulsory. Role usually limited to safe custody.

Compulsory and must have a monitoring role.


Investment Advisor




Money Laundering Reporting Officer (MLRO)




Judicial Representative

Compulsory only if both Investment Manager and Investment Administrator are outside Malta.

Compulsory only if both Investment Manager and Investment Administrator are outside Malta.

Compulsory only if both Investment Manager and Investment Administrator are outside Malta.

Offering Document



Can be reduced to a Marketing Document.

Roles Within Maltese Professional Funds

Applications to the Maltese regulator is made by funds directly but their approval is usually subject only to running diligence on the founders since in most cases local service providers will be appointed who have already been regulated to a high standard and who are known to the regulator. The following is an explanation of the roles within a Maltese professional fund, the extent to which these roles are separate or to which they overlap will depend on the business plan of the applicant fund’s size and intended operation.

Role of Investment Manager
This role will normally be provided by an external service provider (which may be Maltese or licensed elsewhere) if it is not provided by a licensed service provider it may be possible to demonstrate sufficient competency at board level by appointing a person with sufficient experience and licensing to be a director of the fund (though this is likely to incur greater costs). If an applicant fund wishes to internalise this function it will need to make a separate application as investment services manager which is a considerably more complex and expensive undertaking. In most cases therefore this role will be filled by a local service provider or an investment service provider licensed elsewhere. In any case the investment managers’ role is to have overall control over the PIF, its operations and investments and to ensure compliance with local legal requirements such as restrictions on local advertisements. The investment manager may also choose not to appoint an investment administrator in which case all of the their role would also be included in the role of investment manager (see below for details of the role of Investment Administrator). In the case of straightforward funds with Maltese service providers it is likely that the same firm will provide both functions. The role of a separate investment administrator becomes relevant where the investment manager is located outside Malta and the appointment of a different administrator will avoid the requirement for a local judicial person (see below).

Role of Investment Administrator
The role may either be a separate role from that of investment manager or it may be that the investment manager does not appoint an investment administrator and takes on this role himself. Where an Investment Administrator is appointed he is responsible to the Investment Manager. The Investment Administrator takes responsibility for all administrative matters including: pricing the portfolio; preparing accounts; determining the Net Asset Value (NAV) of the fund;  preparing investor reports; and, maintaining compliance records and compliance reporting. Some or all of the above may be outsourced but the Investment Administrator and Investment Manager remain responsible.

Role of Custodian/Prime Broker
In Qualifying Investor funds the custodian merely has to handle safe custody arrangements whereas in Experienced Investors funds the custodian may also be expected to take a monitoring role too.

Role of Investment Advisor
The fund may also chose to appoint an investment advisor. If this role is not fulfilled separately then investment advice will be provided by the investment manager. If an investment manager is appointed then he must also receive regulatory approval as a functionary of the fund.

Role of Judicial Representative
This is a catch-all provision which requires the appointment of a local licence holder, accountant or lawyer, to interface with and receive direction from the regulator, to keep compliance records and to receive compliance inspections. The role only comes into play where neither the Investment Manager nor the Investment Administrator are Maltese service providers and is also relevant where a fund is applying to be listed on the Maltese stock market (for more information on flotation please see below).

Role of Money Laundering Reporting Officer (MLRO)
Although not specific to the fund application PIFs are subject to the local money laundering rules which implement the EU standard money laundering requirements. There is an obligation for an MLRO to be appointed, to prepare a suitable Know Your Client (KYC) procedure, to comply with local KYC and Anti Money Laundering (AML) rules and to liaise if necessary with the local Financial Intelligence authorities.

Licence Application

Vehicle for Application
The choice of vehicle will depend on the nature of the fund. Closed funds can be operated as investment companies and open funds as SICAVs (companies with variable share capital based on the Luxembourg vehicle of the same name). For more information about the difference between open and closed funds please see our main article in the products section. In addition to investment companies (Invcos) and SICAVs Maltese funds can also take the form of limited partnerships and unit trusts. The local service provider handling the licensing will be able to help identify the correct vehicle which in more cases will be either an Invco or a SICAV which are the tried and tested vehicles for this purposes.

The following is a table of fees payable to the regulator but this does not include other services which may be necessary or desirable such as the handling of the application process, the drafting of the offering documentation and compliance procedures, the appointment of investment manager, administrator, advisor, custodian, directors or Money Laundering Reporting Officer (MLRO) etc or any other services.

One Off Fees


Application for ‘in principle’ approval

600 EUR

Application for final approval (issue of licence)

1,500 EUR

...Each Additional Sub fund

1,000 EUR

Annual fees


Annual fees (due in January)

1,500 EUR

...Each additional Sub fund

1,000 EUR

Timescale to licence approval depends on undertaking background checks and also depends on many factors including to what extent local providers known to the regulator are involved in the fund, how many beneficial owners (such as founders) are behind the fund and how complex is their holding arrangement, how busy the regulator is, what type of underlying investments are involved and how quickly the references and background checks can be completed. Timescale for approval in the case of a straightforward PIF can be a few weeks but it is better to allow a period of three to six months.

Documents Submitted with Application

The following is a general guide as to the documents the regulator will expect to see and is non-exhaustive since the regulator will request additional information in almost all cases depending on their initial review.

Offering Document
The offering document forms part of the licence application and must contain a prepared wording including risk warnings specified by the local regulator depending on the type of PIF as well as details of: the name of the PIF; the investment objectives, policies and restrictions of the PIF; a statement prevent change of the above without a notice procedure; details of auditors and year end; where the investment comprises non voting shares a disclosure of the holders of voting shares or their nominees must be made (see below for more details on the use of nominees); the procedure for the creation, issuing, sale, redemption and repurchase of units or shares; the rules to be used for valuation; a disclosure of any potential conflicts and various other information specified by the regulator.    

Qualifying, Experienced or Extraordinary Investor Form
This is a standard form document adapted from a regulatory template whereby the investor declares he is a suitable investor for the fund in question (please see above for comparisons of the different types of investors and their various requirements).

Functionaries’ Consent Letters
Letters from directors, managers and other functionaries confirming willingness to act.

Constituent Documents of Applicant Vehicle
The Memorandum and Articles of Association in the case of a company, the Partnership Agreement in the case of a partnership and the Trust Instrument in the case of a trust must be submitted.

Personal Questionnaires (PQs)
The regulator needs to undertake a thorough review of the background of every involved party in the application including any shareholder with at least 10% and any other person or company involved in the fund. If a local provider is used then this process will be expedited since the majority of involved parties will have already received authorisation. It is this process which usually takes the most time, whilst the regulator performs their checks and awaits for the return of references.

Details of Judicial Representative
If the fund has no presence in Malta, no Maltese Investment Manager and no Maltese Investment Administrator then it needs to appoint a Judicial Representative who must be a Maltese licence holder, lawyer or accountant. For more information on this role please see above.

Administration and Other Considerations

Use of Nominees
Investments can be made by licensed nominees subject to normal diligence. For a discussion on the pros and cons of nominees please see our main article on Maltese nominees. The use of nominees may be beneficial in the case of a PIF to simplify the registration of new investors as well as conceal their identity. In the case that founder shares retain voting rights the owners of these shares must be disclosed in the offering document. The use of nominees can conceal the identity of the beneficial owners and prevent its inclusion in the offering document.

Maltese funds must prepare annual audited accounts and an annual return but the costs for doing so are some of the lowest in Europe.

Maltese Infrastructure
Apart from its 0% tax rate on funds and membership of the EU Malta has several other benefits. The below list includes the most common reasons given by fund managers for moving their funds into Malta.

Human Resources
Malta’s work force is natively English speaking with an ‘Anglo-Saxon’ work ethic and salaries are amongst the lowest salaries in Europe. All of this means that Malta compares favourably to, for example, Luxembourg.

Financial Services Infrastructure
Malta enjoys a strong and stable financial services infrastructure of local experts who are known to the regulator and in most cases have pre-existing approval making fund registration fast and efficient.

Regulatory Access
Malta enjoys unparalleled access to the regulator for an EU member and Malta’s size and status as a recent player on the top table of fund registration may mean that smaller funds which might find registration in larger member states much slower and more expensive are able to seek approval in Malta. Malta’s straightforward regulatory process, low fees, limited bureaucracy and faster licensing timescales make it very attractive in comparison with Luxembourg.

Currency and Banking
Malta’s currency is the Euro but all major world currencies can be used. Malta has an excellent banking sector which has weathered the recent global recession and remains conservative and stable.

Malta’s timezone is GMT +1 which may be a relevant consideration depending on where the clients and service providers are based.

Termination of Professional Investments Funds
PIFs may be wound up with at least two weeks’ notice to the regulator.

Listing on the Malta stock exchange may be desirable to increase the reputation and extend the saleability of a fund to include investors who will only invest into listed funds such as some pensions. If a foreign fund wishes to list in malta it will need to first apply for a PIF licence.  Where a licence application is made simply to allow registration on the stock market then it will be necessary to appoint a judicial representative (for details of this role please see above). There are two types of listing possible in Malta: primary and secondary. Primary listing is where an initial application is made on the Maltese stock market and secondary is where a company which is already listed on a foreign stock exchange applies for a secondary listing in Malta. In order to be eligible for flotation the fund must be in the form of an investment company and have a net asset value of at least 1.2m EUR. In addition there is an application fee of around 1,200 to apply for flotation, approximately 1,000 EUR per year and an additional 1,000 EUR per class of shares.

Undertaking for Collective Instrument in Transferable Securities (UCITS)
Undertakings for Collective Instrument in Transferable Securities (UCITSs) is a measure to allow the free operation within the EU of open ended funds which invest in transferable securities without the need for local regulation in each country and bypass requirements relating to the appointment of local investment managers. The scope of UCITS is limited to open PIFs dealing in transferable securities and suitable Maltese PIFs can be UCITS.