Funds Managers
AIF Managers & De-Minimis Managers
Fund management is regulated by the Investment Services Act (Chapter 370 of the laws of Malta) and other rules issued by the Malta FSA. A fund manager is a legal person whose regular business is the management of one or more funds' this including the management of the portfolio of investments, risks, marketing and administrative roles including accounting, valuation of investments, tax, regulatory compliance, maintenance of the share register of investors, issuance and redemption of shares, record keeping and other. Typically the administrative task is delegated to a licensed administrator however the obligations still remain within the Fund Management company.
An Alternative Investment Fund Manager ("AIFM") is any legal person whose regular business is managing one or more alternative investment funds ("AIFs").
An AIFM is considered as a de-minimis AIFM if it:
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Manages a portfolio of AIFs whose assets under management, including any assets acquired through use of leverage, in total do not exceed a threshold of Eur100 million, or
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Manages a portfolio of AIFs whose assets under management in total do not exceed a threshold of Eur500 million when the portfolios of AIFs consist of AIFs that are unleveraged and have no redemption rights exercisable during a period of five years following the date of initial investment in each AIF.
A de-minimis AIFM is exempt from the full provisions of the AIFMD, retaining some applicable reporting, including those relating to investment strategies, main trading instruments, principal exposures and concentration of the funds under management. Companies which do not exceed the aforementioned thresholds may still opt to be treated as a full scope AIFM which would render applicable all obligations set under the AIFMD framework, and a reason to opt for this would be to have the passporting rights, otherwise not available to de-minimis AIFMs.
AIFMs are also be subject to the following requirements:
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Remuneration: The AIFM shall have remuneration policies and practices for those categories of staff, including senior management, whose professional activities have a material impact on the risk profile of the AIFM or the AIF and that are consistent with and promote sound and effective risk management and do not encourage risk taking which is inconsistent with the risk profiles, fund rules or instruments of incorporation of the AIFs it manages;
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Conflict of Interest: The AIFM shall have in place conflict of interest rules in order to prevent them from adversely affecting the interests of the AIFs and their investors and to ensure that the AIFs it manages are fairly treated;
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Risk Management: The risk management function shall be separated from the investment management function. Furthermore, the AIFM shall have in place risk management policies relevant to each alternative investment fund investment strategy to which each AIF is or may be exposed to; and
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Liquidity Management: For each AIF it manages which is not an unleveraged closed-ended AIF, the AIFM shall employ an appropriate liquidity management system and adopt procedures which enable the Licence Holder to monitor the liquidity risk of the AIF.
UCITS Managers
Undertakings for the Collective Investment in Transferable Securities (“UCITS”) Managers undertake the management of a UCITS and shall not engage in activities other than the management of UCITS, with the exception of the additional management of other schemes which are not UCITS but the units of which cannot be marketed in other Member States.
Tax
Fund Management companies operating in Malta are entitled to avail themselves of Malta’s full imputation tax system and refunds (same procedure applicable to a company, partnership or trust).
On an individual basis, fund managers may also avail themselves of the Malta Highly Qualified Persons Rules allowing them a flat tax rate of 15% and tax exemption when income exceeds a threshold amount.
Where the service provide to a fund is specific to and essential for the core activity of the scheme (example: management and administration), no VAT is applicable. Other services will incur VAT at 18% and this is not recoverable.