Monday 25 July 2016

An Update on Malta's Fund Industry

Mr Nicholas Warren, from Chetcuti Cauchi Advocates talks about the fund industry in Malta in the LATEST VIDEO in Finance Malta’s series of podcasts.  As a prime advisor who has been providing council to international clients with regards to the Fund Industry in Malta for the last 10 years, Mr Warren gives an excellent overview of Malta as a fund jurisdiction, going into the reasons why Malta has matured into such a favourable jurisdiction for funds, what it can offer to promoters of funds and what type of fund structures can be offered in Malta.

The Fund industry in Malta – how has Malta evolved into a fund jurisdiction? 

Mr. Warren starts off by outlining Malta’s EU accession back in 2004 as the launch pad which truly allowed the fund industry in Malta to take off and start thriving. He also credits the Malta Financial Services Authority (MFSA) for Malta’s success in the funds industry and for fostering an excellent regulatory environment which gives scope for larger funds and fund managers to thrive, but concurrently provides a good platform for starting managers. MFSA’s approachable and flexible attitude and its adoption of an 'open door' policy has encouraged many to set up their fund or licensable activity within Malta's shores. Unlike other regulators around the world, the MFSA distinguishes itself by giving potential fund managers the chance to meet the regulator before sending an application for submittal in order to carry out an open and frank discussion and receive informal guidance on what one should do and how one should approach the application process.

What does the Fund Industry in Malta offer to promoters of funds?

Mr Warren outlines a number of reasons why promoters of funds are continually choosing Malta as their jurisdiction of choice to set up a fund or licensable activity. Apart from an accessible regulator, Malta offers a safe haven, peace of mind and political and regulatory stability, and thus promoting continuity within the industry. The facts speak for themselves; the funds industry has recorded a rapid growth, with over 550 funds, including sub-funds amounting to an asset value of over EUR 10 billion. The Maltese financial sector has continued to prove its stability through the resilience it showed during times of financial crisis, registering growth year on year when other jurisdictions around the world struggled. Fund promoters can rest assured, knowing they are investing within a stable industry where business is done in a sound manner which safeguards everybody’s interests. In addition, Mr Warren points out how Malta’s double taxation treaties with different jurisdictions, which now add up to over 70 treaties, including a treaty with the US, can be used by promoters of funds and fund managers in order to have tax efficient structures. Moreover, Malta has fostered excellent relations with its European, Middle Eastern and North African neighbours thus allowing Malta to serve as a gateway to these markets. Investors may tap into newer markets which remain widely unexplored and which could provide a multitude of opportunities waiting to be ventured.

The Fund industry in Malta - What type of fund structures can be offered in Malta? 

Mr Warren explains what kind of funds can be set up which are various and include investment companies with variable share capital, investment companies with fixed share capital, trusts, partnerships and as of 2012 we have seen the introduction of the Recognised Incorporated Cell Company structure. The Professional Investor Fund (PIF) remains the most popular Maltese hedge fund to date, but with the introduction of the Alternative Investment Fund Managers Directive (AIFMD), Alternative Investment Funds may be attained as well. Funds can be managed by a third party or be self-managed, allowing for a degree of flexibility.

Malta's legislation and regulation - is it onerous? 

With regards to legislation and regulation in Malta, the fact that all legislation is in English helps foreign investors to better understand the requirements. The Fund Industry in Malta thrives thanks to Malta's flexible, non-draconian legislative framework and its approachable legislator who is always willing to listen and understand queries or concerns about potential investors coming to Malta to set up their structures and see whether potential exemptions may apply.