UCITS Schemes are retail Collective Investment Schemes that comply with the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive. In addition to bespoke advisory services, CSB Group offers wealth of experience in the licencing and ongoing administration of a Malta UCITS Fund.
Legal Structures of a Malta UCITS Scheme
The Investment Services Act (Cap. 370 of the Laws of Malta) establishes the below legal forms when structuring a Malta UCITS Scheme:
- An investment company with variable share capital (SICAV);
- A Limited Partnership (LP) whose share capital is divided into shares;
- A Unit Trust in terms of the Trusts & Trustees Act ; or
- A Contractual Fund, otherwise referred to as fond commun de placement in Civil Law jurisdictions.
Malta UCITS Schemes may also be set up as Incorporated Cells (ICs) within a Recognised Incorporated Cell Company (RICC). Should this be the case, the UCITS IC may benefit from the flexibility of such a platform as outlined by the Companies Act (Recognised Incorporated Cell Companies) Regulations of the Laws of Malta.
Marketing and Passport of a Malta UCITS Scheme
UCITS Schemes are subject to the UCITS Directive marketing benefit. In fact, UCITS Schemes are able to be freely marketed across Europe and their units distributed cross-border by following the notification procedure set out in the UCITS Directive.
A Malta UCITS Scheme is subject to draw up an Offering Document (and an Offering Supplement for each sub-Fund where applicable) together with a Key Investor Information Document (KIID). The KIID replaced the requirement of a simplified prospectus and thus offering prospective investors the key information regarding the Scheme in a more clear and simplified layout.
Management of a Malta UCITS Scheme
The management of a Malta UCITS Scheme may be either through an External Manager or through an Investment Committee within a Self-Managed structure.
In an externally managed structure, the External Manager (being duly licensed as a UCITS Management Company) will handle the investment management of the Fund. On the other hand, within a self-managed scheme, the Board of Directors of the Fund would appoint an Investment Committee with the object of the investment management of the Fund. The Investment Committee, which is composed of at least 3 members (one of which should be local) will operate in terms of the Fund’s Offering Document and the governing Terms of Reference. The Investment Committee may also delegate the day-to-day portfolio management of the Fund to an individual, Management Company and/or MiFID Firm.
Capital requirements will depend on whether being structures as Externally Managed or Self-Managed. The initial capital required for an Externally Managed UCITS Scheme is €125,000 whereas the capital requirements for a Self-Managed structure amount to €300,000.
Key Features of a Malta UCITS Scheme
Following the transposition of the UCITS IV and UCITS V Directive in 2004 and 2016 respectively, the main legislation governing Maltese UCITS Funds are the Investment Services Act (Cap. 370 of the Laws of Malta) and, depending on the corporate form of the Scheme, the Companies Act (Cap. 386 of the Laws of Malta). Additionally, Malta UCITS 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 the Collective Investment Scheme. Should the Fund be listed on the Malta Stock Exchange, then the Admissibility requirements for Collective Investment Schemes (Chapter 8 of the Listing Rules) would also apply.
Minimum requirements of a Malta UCITS Scheme:
- A minimum of three (3) Directors;
- A UCITS Management Company (if Externally Managed);
- An Investment Committee composed of, at least, three (3) members, of which one local (if Self-Managed);
- Maintain a risk-management function;
- A Custodian;
- A Compliance officer;
- A Money Laundering Reporting Officer (MLRO);
- An Auditor;
- A Maltese registered office;
- Appoint a Local representative.
Taxation on Malta-Registered UCITS Schemes
Malta-registered UCITS Schemes are generally not subject to Malta tax. UCITS Funds would therefore benefit from the following:
- No income or company tax is imposed on UCITS Funds having more than 85% of their underlying assets situated outside Malta;
- No tax on the Net Asset Value of the UCITS Fund;
- No withholding tax on dividends paid to non-Maltese residents;
- No taxation on capital gains on the sale of units by non-Maltese residents;
- No stamp duty on issues or transfers of units.
The Application Process for a Malta UCITS Scheme Licence
Upon submission of an application for a Malta UCITS Scheme, the below are the main documents duly required to form part of the application pack as provided to the Malta Financial Services Authority (MFSA):
- Application form accompanied by the applicable fee (€2,000 for the Scheme, €600 per sub-Fund);
- The Scheme’s Memorandum and Articles of Association;
- The Scheme’s Offering Document together with the Offering Supplement for each sub-Fund (if applicable);
- A KIID for each sub-Fund;
- Marketing plan of the Scheme.