UCITS (Undertakings for Collective Investment in Transferable Securities) are a category of retail fund products that can operate throughout the EU on the basis of a single authorisation from one member state, provided that it follows certain notification procedures. UCITS offer a high degree of investor protection and are recognised by regulators worldwide. They can be marketed to both retail and institutional investors. UCITS may also be listed on the Malta Stock Exchange.
What are the benefits of a Maltese UCITS?
- EU passporting rights:UCITS established in Malta can be marketed in all EU/ EEA member states.
- Up-to-date regulatory framework:Malta is ranked first for transposing EU directives into national law.
- Structuring opportunities:Possibility to set up umbrella funds, allowing different sub- funds and share classes.
- Flexible regulator:The MFSA combines a high standard of regulation with an efficient response to industry needs.
UCITS funds are exempt from income and capital gains tax (excluding investment in immovable property) and they are registered as exempt without credit under Maltese VAT law.
A UCITS can be set up as an open-ended SICAV, a limited partnership, a unit trust or a contractual fund.
The fund’s head office and registered office must both be established in Malta. The scheme must have a minimum of two (2) directors, at least one of which is independent from the manager and the custodian. Self-managed schemes on the other hand must have at least one (1) Maltese resident director.
The UCITS’ structure must also clearly outline the roles to be played by the Service Providers below and ensure that they are legally authorised and/or approved by the MFSA to carry out such role.
|Service Provider||Role & Requirements||Required|
|Custodian||Has custody of the UCITS’ assets. Must be a licensed institution or such other body or association acceptable to the MFSA, with a place of business in Malta||Yes|
|Administrator||Responsible for the administration of the scheme (including valuation, transfer agency and registrar, corporate secretariat and listing agent) when a third-party administrator is not appointed.
Need not be based in Malta.
|Fund manager||Must have satisfactory financial resources and liquidity and demonstrate sufficient and relevant experience||Yes (unless the fund is self-managed)|
|Compliance Officer||Required to ensure compliance with the UCITS obligations and requirements||Yes|
|Money Laundering Reporting Officer||Required to ensure compliance with the AML/CFT obligations and requirements||Yes|
|Auditor||Responsible for certifying the fund’s annual report and accounts. Must be approved by the MFSA||Yes|
|Investment Advisor||Must have satisfactory financial resources and liquidity and demonstrate sufficient and relevant experience||Optional|
The MFSA is the authority responsible for issuing a UCITS licence in terms of the Investment Services Act.
When considering a CIS application, the MFSA will consider:
- The track record of all the parties involved (including directors, founder shareholders and promoters of the scheme); and
- The ongoing adherence to the fit and proper test (integrity, competence and solvency).
Phase One – Preparatory
Preliminary meetings are held with the MFSA to discuss the details of the structure with the promoters and present a copy of the draft application. This should take place in advance of the submission of the application.
Phase two – Pre-Licencing
The MFSA will issue its ‘in-principle’ approval. The licence is issued as soon as all pre-licensing issues are resolved.
Phase three – Post Licencing
The Applicant may be required to satisfy a number of post-licensing conditions prior to formal commencement of business.
For more information or if you have any questions, please feel free to contact Dr Cherise Abela on firstname.lastname@example.org
Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.