[e.g. Maltese]

UCITS  are a harmonized European retail fund product that can operate throughout the EU on the basis of a single authorization from one member state provided that it follows certain notification procedures. UCITS offer a high degree of investor protection and are recognized by regulators worldwide. They can be marketed to both retail and institutional investors.rycerz2

UCITS usually invest in transferable securities such as:

  • Shares in companies and other securities equivalent to shares in companies.
  • Bonds and other forms of debt securities.
  • Any other negotiable securities which carry the right to acquire any such transferable securitiesby subscription or exchange.

Benefits of Malta-based 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.
  • Economies of scale: Larger distribution network that can be achieved through a UCITS scheme results in a reduction in costs for investment.
  • Structuring opportunities: Possibility to set up umbrella funds, allowing different sub-funds and share classes.
  • Competitive fiscal structure: No tax on a UCITS income or capital gains, unless investeed in immovable property situated in Malta. Investors are not taxed, unless they are resident in Malta (in which case there is a 15 per cent tax on income and realized capital gains).
  • Lower costs: Cheaper set-up and running costs.
  • Flexible regulator: The MFSA combines a high standard of regulation with an efficient response to industry needs. Every license is subject to standard conditions. These standard conditions can be adapted to suit specific circumstances as long as standards are not compromised.

Key Features of UCITS based in Malta

Structures:

Mostly open-ended investment companies, but unit trusts, contractual funds and limited partnership can also be used.

Regulated by:

Investment Services Act

Permitted business:

Schemes may offer units to the general public in Malta and any other EU or EEA state.

Fund Promoter:

The promoter (generally the Investment Manager) is responsible for the fund`s structure, set up, strategy and distribution. There are no eligibility requirements on the promoter of a Malta UCITS.

Corporate Requirements:

  • The scheme`s head office and registered office shall both be established in Malta;
  • The board of directors must be composed of a minimum two directors, at least one independent from the manager and the custodian. Self-managed schemes shall have at least one Maltese resident director;
  • There is a requirement for local substance depending on the fund structure.

Custodian:

Required.

  • Must be a licensed institution or such other body or association acceptable to the MFSA with an established place of business in Malta.

Administrator:

Optional.

  • Where an administrator is not appointed, the manager is responsible for the administration of scheme;
  • Where appointed, the administrator must be a recognized administrator;
  • May be different from the custodian;
  • Services may include valuation, transfer agency and registrar, corporate secretariat and listing agent.

Found manager:

Optional.

  • Fund may be self-managed or may appoint a management company approved by the MFSA;
  • Must have sufficient financial resources and liquidity at its disposal;
  • Must demonstrate sufficient and relevant experience;
  • Roles, responsibilities and experience must be described in the fund prospectus.

Investment Advisor:

Optional.

  • Must have sufficient financial resources and liquidity at its disposal;
  • Must demonstrate sufficient and relevant experience.

Compliance Officer:

Required.

Money Laundering Reporting Officer:

Required.

Auditor:

Required.

  • Must be approved by the MFSA.
  • Responsible for certifying the fund`s annual report and accounts, which should include an audit report.

Licence application:

Documents required, amongst others:

  • Constitutional documents;
  • Prospectus and marketing documents to be provided to investors. From July 2012 Maltese UCITS will be required to draw up a Key Investor Information Document (KIID) in accordance with UCITS IV rules;
  • Details on all service providers involved;
  • Agreements with the fund`s service providers;
  • Personal Questionnaire and curriculum vitae of the directors;
  • Business plan covering 3 years;
  • Marketing plan;
  • Other documents affecting rights of members.

Approval time:

Exact approval time depends on a number of factors such as the complexity of the fund and the submission of complete applicants. However, the MFSA will review the draft application and the supporting documentation and provide feedback within three weeks from submission of the application.

Listing:

Licensed schemes may apply for a listing to the Malta Stock Exchange.

Capital Requirements:

Third-party managed:  € 125,000 (if forms as a company)

Self-managed: not less than  € 300,000

Reporting Requirements:

  • Monthly statistical return to the MFSA;
  • Half-yearly compliance reports;
  • Annual reports.

Regulatory Fees:

Application for a licence:

  •  € 2, 000 per scheme
  •  € 450 per sub-fund up to 15 sub-funds
  •  € 250 per sub-fund up to 16 sub-funds or more
  •  € 2,000 sub fund in the form of an IC

Supervisory Fees:

  •  € 2,500 per sceme
  • € 400 per sub-fund up to 15 sub-funds
  •  € 150 per sub-fund up to 16 sub-funds or more
  •  € 2,500 sub fund in the form of an IC

Taxation:

Exempt from income and capital gains tax as long as they do not invest in immovable situated in Malta.

VAT:

Exempt without a credit.