How is a Professional Investor Fund (PIF) managed in Malta?
The simplest option would be a self-managed De Minimis licence and thus having an Investment Committee involved in the portfolio management of the Professional Investor Fund (PIF). The Investment Committee will be subject to the terms of reference as agreed and must be composed of, at least, three (3) members. Although the Investment Committee may act as a whole, on the other hand it may delegate the day-to-day investment management of the Fund to a portfolio manager (such as an individual, De Minimis Management Company or a MiFID licenced firm). The investment committee may also appoint independent experts, consultants and advisors to assist in the ongoing operation of the structure. The latter is mostly common in Private Equity and Real Estate Funds which underlying investments are hard to value investments.
Another alternative would be an externally managed structure. In such a scenario, the investment committee would lie at the level of the manager and not appointed by the Board of the Fund. It should be noted that the External Manager should fall within the category of a De Minimis licence holder. A Full-Scope AIFM is not eligible to act as External Manager for Professional Investor Funds (PIFs).
What are the Initial Share Capital requirements for a Professional Investor Fund in Malta?
The initial share capital would depend on whether the Fund is a self-managed or externally managed. A self-managed structure is subject to an initial share capital of €125,000 and, should its NAV fall below such amount, the MFSA must be notified. An Externally Managed Fund may, on the other hand, have as minimum initial share capital €1,165.
What are the main Laws governing a Professional Investor Fund (PIF) under Maltese Law?
The main legislations governing PIFs are the Investment Services Act (Cap. 370 of the Laws of Malta) and, depending on the corporate form of the Professional Investor Fund, the Companies Act (Cap. 386 of the Laws of Malta). Additionally, Professional Investor Funds are also subject to the Standard Licence Conditions (SLC) in Part B of the Rules whereby outlining the ongoing conditions in the operation of a PIF. Should the PIF be also listed on the Malta Stock Exchange, then the Fund is also subject to the Admissibility requirements for Collective Investment Schemes (Chapter 8 of the Listing Rules).
Are there any investment restrictions for Professional Investor Funds (PIFs) under Maltese Law?
Prior to the revamp of the target investors for a Professional Investor Fund in mid-2016, PIFs targeting Experienced Investors carried some investment restrictions due to their quasi-retail nature. Following this, Professional Investor Funds are catered for Qualifying Investors and thus investment restrictions would be subject to the Fund’s Offering Documents.
It is noted that Real Estate Funds applying for a PIF licence are subject to the investment restrictions as laid by the Property Funds Policy as issued by the MFSA.
What Fund Strategies can be adopted within a Malta Professional Investor Fund (PIF)?
Malta has made steady progress following the introduction of the PIF regime back in 2004. Due to its flexibility, the regime applies to a number of fund strategies in the likes of Hedge Funds, Real Estate, Private Equity, Venture Capitals, Loan and Mezzanine. As noted above, Professional Investor Funds should be targeted to Qualifying Investors.
What are the minimum requirements permitted by Maltese Law for a Professional Investor Fund (PIF)?
The Malta licensed PIF must be composed of, at least, three (3) Board Members and, where applicable, an Investment Committee of at least three (3) members of which one is local. The PIF is not obliged to appoint an administrator and a custodian (except for Real Estate Funds) but must have a Compliance Officer and an MLRO at all times. The Fund must also be subject to an annual audit and thus an Auditor is required. The PIF may also have unlimited counterparty agreements in the process of operating the Fund. Where none of the above providers are local, the Fund must appoint a local representative who will be the main point of contact with the MFSA. The Fund must also have a Maltese registered office.
What are the liabilities of investors within a Professional Investor Fund (PIF) in Malta?
In terms of Maltese law, the liability of members is restricted up to their invested capital should the SICAV undergo insolvency and thus subject to the pari passu ranking of creditors proceedings. In the case of a Limited Partnership (LP), the limited partners are limited to the amount contributed in the LP.
What are the requirements for the licensing of a Professional Investor Fund (PIF) in Malta?
When applying for a PIF licence, the applicant should provide the MFSA with a duly filled application form together with a Memorandum and Articles, Offering Memorandum (and Offering Supplement/s in the cases of sub-Fund/s), the applicable fee, PQs of Directors, Compliance Officer, MLRO and, where applicable, Investment Committee members. The MFSA must also be provided with Competency Forms of the acting Compliance officer, MLRO and, where applicable, the portfolio manager.
What is the licensing time-frame for a Malta Professional Investor Fund (PIF)?
Subject to the complexity of the structure and the completeness of the application pack, the MFSA would usually issue an “in principle” approval within a period of two to four months.
How can CSB Group assist with Malta Hedge Funds?
With offices in Malta, Switzerland and the UK, CSB Group has been into the financial services industry for over 30 years with investment services professionals available to assist in any enquiries. Our investment services team can help you advance your fund from concept to launch through the advisory, licensing and incorporation, ongoing administration and accounting.