Showing posts with label Malta hedge funds. Show all posts
Showing posts with label Malta hedge funds. Show all posts

Monday, 12 November 2012

7 Reasons Why Fund Managers are Setting Up Hedge Funds in Malta

We've often spoken about the remarkable growth that the Maltese hedge funds sector has experienced over the last few years. In this post we will touch upon what we believe are the seven main reasons underpinning this growth.

An accessible regulator: one of the key drivers behind Malta's growth in this sector has been the attitude  of the local single regulator for financial services, the Malta Financial Services Authority. As an EU country, Malta adheres to all the required regulatory and anti-money laundering standards, however the jurisdiction differentiates itself by adopting an open door approach. This means that while the rules are the same, the regulator's attitude is one of working hand in hand with entrepreneurs to identify solutions that can work within the existing framework. This makes the jurisdiction particularly interesting for innovative products. In addition, face to face meetings are very easy to organize, and the regulator is sensitive to matters of urgency.

Low costs: while Malta isn't the cheapest fund jurisdiction available, it has a good claim to being the cheapest fund jurisdiction within the EU. Regulatory, legal and fund administration fees are highly competitive, and significantly lower than those in EU competitors. Set-up and maintenance costs often work out at circa 50% of what they would in other EU domiciles. This makes Malta attractive for smaller fund managers and start-ups for whom such costs are of vital importance.

A stable EU Domicile: Malta became a full EU member state in 2004. This means that the jurisdiction is regulated at the high level that one would expect in an onshore EU domicile. In addition, EU membership means that licenses issued in Malta enjoy a high level of international recognition, making marketing of products significantly simpler. This aspect will be further strengthened once AIFMD comes into force and passporting rights are introduced for EU managers. In addition, Malta also enjoys a sound track record of political stability and broad agreement about the jurisdiction's policies with resoect to financial services.

Tax: licensed funds which have more than 15% of their assets located outside of Malta (a threshold which is easy to reach for most funds) pay zero Malta tax at the fund and the investor level. In addition, Maltese fund managers benefit from a refunds system which can allow shareholders to benefit from a 5% rate of net effective tax. Tax-efficient fund and fund manager structures can therefore be set-up within the jurisdiction. Moreover Malta is FATF and OECD compliant. 

Sound legal infrastructure: Malta's legislative framework has been designed in order to be ale to accommodate the needs of the industry whilst protecting the interests of investors. Thus the jurisdiction offers all the structuring options that managers require, such as a broad selection of legal vehicles (including SICAV, INVCO, partnership, contract and unit trust), sub-funds with separate assets and liabilities and incorporated cell companies. All financial legislation is freely available in English and in many cases the binding version for interpretational purposes is the English version.

No need for local service providers: generally speaking, no Maltese service providers need to be engaged; overseas fund administrators can be used, for example. This can encourage managers to make use of the jurisdiction without severing well-established relationships. Nevertheless, it is worth noting that many funds do in fact choose to work with a local service provider, probably due to the low cost base and high levels of professionalism available.

Flexibility: Malta permits a number of useful flexibilities within its regulatory framework. Perhaps the key flexibility is that funds sold to Qualifying and Extraordinary investors are not required to adhere to any investment or leverage restrictions. This is an important factor which makes possible a number of innovative strategies. Malta also offers a low-ticket hedge fund product, the experienced investor fund, which has a minimum investment threshold of EUR 10,000. This can allow managers to attract smaller, more experimental investments.

Tuesday, 2 October 2012

Side Pockets in Malta Hedge Funds

We've put up a detailed publication dealing with side pockets under Maltese legislation on our website www.ccmalta.com. The material should be of interest to any Malta fund manager looking to use side pockets, as well as to anyone who is interested in learning more about the flexibility which Maltese hedge funds can afford.

In essence, side pockets are a mechanism which allows for the segregation of problematic assets e.g. assets which cannot be valued in an accurate manner. A side pocket involves the transfer of problematic assets to a new class of shares within the fund, i.e. a side pocket, and are thus separated from the main pool of assets.

You can find a lot more about the topic on our website 

Charles Cassar
Financial Services Lawyer, Malta
Chetcuti Cauchi Advocates, Malta Law Firm

Monday, 16 April 2012

What is a 'recognized jurisdiction'?

The term 'recognized jurisdictions' features quite broadly in the Maltese funds regulatory regime. The term may sound innocuous enough, but it has a number of important implications which need to be taken into account when structuring funds in Malta. We've just uploaded a detailed publication on our website analyzing the term in extensive detail. You can find the publication here. As usual, get in touch if you have questions about hedge funds in Malta, Maltese investment services set-ups, or any other aspect of Malta's financial services sector.

Dr Charles Cassar
Financial Services Lawyer
Chetcuti Cauchi Advocates

Friday, 13 January 2012

Malta hedge funds generate more press buzz

It's very encouraging to see the hard work put in by local professionals and regulators being rewarded by a string of positive reviews focusing on the Malta hedge funds centre. It is indeed no longer correct to speak of Malta as a fledgling financial services jurisdiction; the country is very much a bona fide mature centre that can cater for the needs of a variety of industries and hosts some top names and professionals.

Thus, following hot on the heels of the Bloomberg article mentioned in a previous post, we now have a Business Insider article highlighting a number of reasons for opting for the Malta hedge fund solution. The reasons highlighted by the article include the country's excellent climate, competitive tax rates, sound regulatory infrastructure and EU membership. You can read the article here:

http://www.businessinsider.com/10-reasons-to-move-your-hedge-fund-to-malta-2012-1

Bloomberg has also followed up its article with an interview with the article's author. While warmly praising the domcile, the author sounds a warning note about the possibilities of the jurisdiction losing its edge as growth reduces the available human resources and dents competitiveness, but reassures viewers that this certainly won't be a problem in the short term. Indeed, with the various incentives and projects that are underway in this regad, I would say that the country appears to be very well aware of this challenge and is doing plenty to address this scenario even in the medium and long term. You can view the interview here:

http://www.bloomberg.com/news/2012-01-05/malta-lures-connecticut-hedge-funds-with-300-days-of-sun-aided-by-eu-rules.html

Dr Charles Cassar
Financial Services Lawyer
Chetcuti Cauchi Advocates