
Marketing itself as a premier destination for investment funds, Malta attracts international fund managers with its regulatory framework, favorable tax conditions, and strategic location. This guide highlights why Malta is a preferred choice for launching investment funds and its advantages over competing jurisdictions.
A Strong Financial Services Industry
Malta’s financial services sector has experienced remarkable growth, underpinned by a strong regulatory framework and proactive government initiatives. The Malta Financial Services Authority (MFSA) ensures that the regulatory environment is robust while fostering innovation in finance.
Several fund structures are available through Malta, including Professional Investor Funds (PIFs), Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs).
As at 2023, Malta had registered over 1,500 investment funds with various structures, demonstrating the versatility of options available to fund managers, particularly those for professional and insitutional investors.
Strategic Location in the Mediterranean
Malta's geographical location in the Mediterranean places it at the crossroads of Europe, Africa, and the Middle East. This central position and business conduct in English allows fund managers easy access to various markets, facilitating effective diversification of investment portfolios and attraction of international investors.
Being a member of the European Union strengthens this advantage. Some funds based in Malta can tap into the EU's single market, which includes over 450 million consumers, enhancing the potential for growth and investment.
Favorable Tax Regime
One of Malta's most persuasive features for fund managers is its tax-friendly landscape. While the standard corporate tax rate is 35%, Malta operates a full imputation system that allows shareholders to receive significant tax refunds. This attribute can reduce the effective tax rate on profits to 5% for qualifying companies.
Additionally, funds structures see minimized taxation on income and capital gains. This means that investors can potentially enjoy higher returns, something that is crucial for attracting funding.
Regulated Fund Structures
Malta offers a variety of regulated fund structures suitable for different investment strategies and audiences:
Professional Investor Funds (PIFs):
Designed for experienced investors, these funds allow greater investment strategy flexibility and are the mostly used funds type in Malta. For example, they can employ leverage and short selling, appealing to sophisticated investors aiming for higher returns.
Alternative Investment Funds (AIFs):
Tailored for institutional and accredited investors, AIFs maintain strong regulatory oversight while promoting creative investment methodologies.
Undertakings for Collective Investment in Transferable Securities (UCITS):
These funds are suitable for retail investors and offer a high level of investor protection. The UCITS framework is favored globally, however are not Malta's are of strength.
This diversity empowers fund managers to match their offerings to specific investor interests, further highlighting Malta’s appeal.
Fund Launch Process
Fund managers are drawn to Malta for its quick and efficient fund launch process. The regulatory framework facilitates a smooth setup, often allowing fund managers to start operations within just a few weeks.
The approval timeline for establishing a PIF or AIF can be as swift as 4 to 8 weeks, significantly faster compared to other jurisdictions like Luxembourg or Ireland, where the process might take several months and requiring a higher starting NAV size to justify the higher costs. This efficiency is largely thanks to the MFSA's risk-based regulatory approach, which streamlines compliance without compromising investor protection.
Establishing an investment fund in Malta involves several key steps as follows:
Choose the Right Fund Structure: Assess your target investors and operational goals to determine the most suitable structure.
Assess if a Funds Platform is for you: Look at the pros and cons of establishing your own structure as compared to utilising an existing SICAV platform (Axion).
Prepare and Submit Documentation: Work with local experts to draft required documents such as a prospectus and fund regulations.
Obtain MFSA Authorisation: Submit your application to the MFSA for approval. This process is typically streamlined for experienced fund managers.
Launch and Operate: Once approved, you can begin operations, leveraging Malta’s infrastructure and professional services.
Ensure Regulatory Compliance: Funds will have a number of regulatory and governance requirements to fullfill and you can leverage Fiduscorp and Axion's expertise.
Access to a Skilled Workforce
Malta boasts a highly skilled and diverse workforce, especially in finance, law, technology and compliance. The local education system prioritises financial services, ensuring that graduates are well-prepared to meet industry needs, with business documentation done in English thus widening the investors petential and facilitating communication between different parties.
Strong Reputation and Credibility
Malta's commitment to high governance standards and regulatory compliance helps cultivate a strong reputation as a respected financial hub.
The country has been recognized for its transparency and investor protection measures, contributing to the trust fund managers and investors place in the jurisdiction. As of 2023, Malta ranks in the top 30 globally for ease of doing business in the financial sector, reassuring investors about the integrity of investment funds established there.
Investor-Friendly Regulations
The MFSA focuses on maintaining a favorable regulatory environment for investors and fund managers alike. Tailored frameworks enable fund managers to meet investor needs without getting bogged down by excessive administrative burdens.
The emphasis on transparency and accountability also reassures investors looking for secure investment options.
Innovative Fund Solutions
Innovation is vital for long-term growth in finance, and Malta is embracing this trend. The introduction of regulated crypto asset funds illustrates its progressive approach to emerging markets and technology.
For example, Malta is one of the first countries in Europe to regulate such funds, positioning itself favorably to tap into the burgeoning demand for digital asset investments. This flexibility allows fund managers to explore new frontiers in investment strategies, aligning with evolving investor interests.
SICAV Structure Appeal
The Société d'Investissement à Capital Variable (SICAV) is the most popular fund structure in Malta. Its flexible capital structure is supported by a robust regulatory framework.
Fund managers benefit from the SICAV’s variety of share classes, allowing them to attract different types of investors. This adaptability makes the SICAV highly appealing for those creating customized offerings to meet distinct investor needs and market trends.
Partner with Local Experts
Navigating the fund setup process in Malta is facilitated when you collaborate with experienced professionals. Fiduscorp is a leading firm specialising in funds' structuring, formation and ongoing operational and governance support. Our team of experts ensures a smooth and efficient setup process, following which and different from other, we can also support the day-to-day work of the fund manager.
Through Axion we provide fund managers and promoters the option to utilise a regulatory approved and licensed SICAV, including a pool of experts on directorship, investment operations, fund management, governance & control, accounting, administration, tax and clients’ relations.
By combining the strengths of Fiduscorp and Axion, you gain a comprehensive solution for your fund setup and ongoing support in Malta, without the need to having multiple service providers.
A Bright Future for Fund Managers
As opportunities for growth and innovation continue to arise, Malta remains on the cutting edge of the financial services industry. With its commitment to investor-friendly regulations and support for innovative solutions, Malta is poised to maintain its role as a crucial player in the global investment fund landscape for years to come.
How We can Assist
At Fiduscorp and Axion we form and manage companies, investment funds and other type of business entities, and can fill in the necessary roles you would need as a fund manager or promoter.
Let's arrange an appointment by contacting us on: https://www.fiduscorp.com/contact
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Disclaimer
Copyright Notice: ©2018 FIDUSCORP Limited. The contents of this blog have been prepared for informational purposes only and do not constitute or contain any type of advice. Neither the publication of such information nor your receipt of it will create a commercial or legal relationship. Consequently, you should not act or rely upon the information contained in this article without seeking professional council. All rights reserved
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