[e.g. Maltese]

There are three different types of PIFs:

  • PIFs promoted to experienced investors
  • PIFs promoted to qualifying investors
  • PIFs promoted to extraordinary investors

Benefits of PIFs in Maltarycerz1

  • Greater flexibility. Since PIFs are not intended for the general public but for professional or wealthy investors, they are not burdened with the restrictions usually imposed on retail funds, therefore offering greater flexibility.
  • No investment restrictions. PIFs benefit from not being subject to investment restriction (apart from PIFs sold to experienced investors, which have certain investment restrictions).
  • Number of tax planning opportunities. The fund can invest in the underlying assets itself or through special purpose vehicles (SPVs). The use of SPVs may be particularly useful for tax planning, enabling the PIF to reap the full benefit of Malta’s extensive network of around 60 double tax treaties.
  • Fast-track licensing process. Provided all documents are submitted to the MFSA, the authority shall issue an ‘in principle’ approval to the proposed promoters of the fund within a reasonable time period, usually between two to three months, depending on the complexity of the structure.
  • Possibility of self-management. PIFs may be self-managed without the need to appoint a third-party manager. The means promoters have the option to use a self-managed fund without the need to have a presence in Malta. The management of the fund would be undertaken by an investment committee. Self-managed funds are subject to particular rules regarding the composition of the board members and the investment committee, as well as share capital requirements.
  • Free choice of service providers. Contrary to other fund jurisdictions, PIFs do not need to appoint a manger, custodian (except for PIFs targeting experienced investors), administrator or any other service provider who is licensed in or who has otherwise execised passport rights into Malta. The MFSA also accepts any service provider licensed in a recognized jurisdiction (EU, EEA and OECD members as well as some other countries that are considered as having EU equivalent rules). This allows clients to continue using the services of any external service provider with whom they might already have a professional history.
  • Low qualification entry levels. 10,000 euro for experienced investors.
  • Shariah-compliant funds. Malta offers PIFs compatible with Islamic funding  structures and financing vehicles, e.g. Ljarah and Marabahah funds.

Key Features of PIFs

Structures:

 

 

 

 

 

 

Regulated by:

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

 

Investment Services Act

 

Condition

Experienced

Qualifying

Extraordinary

Service provider

Must be based in Malta or in a recognised jurisdiction

Must be based in Malta or in a recognised jurisdiction

Must be based in Malta or in a recognised jurisdiction

Fund manager

Optional. Self-managed PIFs allowed.

Manager may also act as administrator.

Optional. Self-managed PIFs allowed.

Manager may also act as administrator.

Optional. Self-managed PIFs allowed.

Manager may also act as administrator.

Fund administrator

Optional.

Optional.

Optional.

Custodian/prime broker

Required. Must be independent from fund manager.                                                                          

Optional. Provided there are adequate safekeeping arrangements. Where appointed, custodian does not need to be based in Malta.

Optional. Provided there are adequate safekeeping arrangements. Where appointed, custodian does not need to be based in Malta.

Investment advisor

Optional.

Optional.

Optional.

Compliance officer

Required. May also act as money laundering reporting officer (MLRO).

Required. May also act as MLRO.

Required. May also act as MLRO.

Money Laundering Reporting Officer

Required – Not required if fund does not promote and market its own units/shares.

Required – Not required if fund does not promote and market its own units/shares.

Required – Not required if fund does not promote and market its own units/shares.

Local Representative

Required if all officials and service providers are established abroad.

Required if all officials and service providers are established abroad.

Required if all officials and service providers are established abroad.

Auditor

Required.

Required.

Required.

Net worth of investors

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EUR 750K (or other conditions)

EUR 7.5 milion (or other conditions)

Offering and marketing documents

Must prepare an offering document.

Must prepare an offering document.

Must prepare either a brief offering document or a brief marketing document.

Listing

Optional.

Optional.

Optional.

Borrowing limits

100% of NAV in respect of borrowing used for investment purposes and leverage through derivatives. Unlimited borrowing for temporary liquidity.

 

 

 

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Diversification

Fund of hedge funds must invest in at least five hedge funds.

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Minimum entry level

EUR/US$/GBP 10K

EUR/US$/GBP 75K

EUR/US$/GBP 750K

Annual report

Must be submitted with a Custodian’s report.

Must be submitted. Custodian’s report is not required.

Must be submitted. Custodian’s report is not required.

Setup time

Approximately two to three months.

Approximately two to three months.

Approximately two to three months.

Other features applicable to all PIFs

Reporting Requirements

  • Half-yearly Reporting
  • Annual Report
  • Compliance Report

Application for a licence of a PIF

  • EUR 1,5K per scheme
  • EUR 1K per sub-fund
  • EUR 1,5K per incorporated cell

Taxation

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

 

Application fees and expenses

Application fee for a preliminary indication of acceptability

  • EUR 600

Supervisory Fee

  • EUR1,5K per scheme
  • EUR 0,5K per sub-fund
  • EUR1,5K per incorporated cell

VAT

Exempt without credit