Fund management companies are investment services providers under Maltese legislation, typically licensed as Category 2 investment services providers. Malta is an attractive domicile for fund managers: the same arguments that apply broadly to all investment services providers apply for fund managers, plus, the country is now a bona fide international centre for both PIFs and AIFs .
The Malta Financial Services Authority (MFSA) under The Investment Services Act, 1994 (and later revisions) regulates Maltese funds. There are several different types of collective investment schemes or funds that can be registered in Malta, each suited to different sorts of funds or levels of investment.
Collective Investment Schemes in Malta can be set up under a number of legal structures: a collective investment company with fixed (INVCO) or variable share capital (SICAV); a unit trust; a mutual fund; or a limited partnership.
The fund itself usually takes one of two forms – either a Professional Investor Fund (PIF) or a Private Scheme. Private schemes are, according to Maltese law, those that have no more than 15 participants. PIFs are open to ‘extraordinary investors’, ‘qualifying investors’ or ‘experienced investors’, depending on the minimum investment and net assets of the investors.
Experienced investors must have the knowledge and experience to be able to make their own decisions regarding investment, and recognize the risks involved.
PIFs offer low set-up costs and tax-saving advantages – funds based in Malta are exempt from income and capital gains tax. For funds where less than 85% of their assets are situated in Malta, no withholding tax is imposed on investment income.