UCITS Based in Malta

What are UCITS?

Undertakings for Collective Investment in Transferable Securities, or “UCITS” are a group of European Union Directives that aim to allow collective investment schemes to operate independently throughout the EU on the basis of a single authorisation from one-member state.

Setup of UCITS

Structures – Mainly open-ended. However, unit trusts, contractual funds and limited partnerships can also be used.

Regulator – Investment Services Act.

Permitted Business – Schemes may be offered to the Malta general public and in any other EU/EEA state.

Fund Promoter – The promoter is responsible for the fund’s structure, set up, strategy and distribution. No eligibility requirements apply for the promoter of a Malta UCITS.

Corporate Requirements:

  • The scheme’s head office and registered office are to be both established in Malta;
  • There must be a minimum of two directors, at least one independent from the manager and the custodian;
  • Self-managed schemes shall have at minimum one Maltese resident director;
  • Local substance is a requirement, yet depends on the fund’s structure.

Custodian – Must be a licensed institution or such other body or association acceptable to the MFSA, with a place of business in Malta.

Administrator – Optional:

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

Fund Manager – Optional:

  • The fund may either be self-managed or managed by a company approved by the MFSA;
  • Must have satisfactory financial resources and liquidity at its disposal;
  • Managers must demonstrate sufficient and relevant experience;
  • All roles, responsibilities and experience must be described in the fund prospectus.

Investment Advisor – Optional:

  • Must have satisfactory 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;
  • Held responsible for certifying the fund’s annual report and accounts, which should include an audit report.

License Application – Documentation required includes:

  • Constitutional documents;
  • Prospectus and marketing documents to investors. (Note: From July 2012 Maltese UCITS were required to draw up a Key Investor Information Document (KIID) in accordance with UCITS IV rules);
  • Details on all services providers involved;
  • Agreements with the fund’s service providers;
  • Personal questionnaire and curriculum vitae of the directors;
  • Three-year business plan;
  • Marketing plan;
  • Other documents which have an effect on the member’s rights.

Approval Time – The approval time is dependent on factors such as the fund’s complexity and the submission of complete applications. Nevertheless, the MFSA will review the draft application and the sup- porting documentation, whilst providing feedback within three weeks from submission of the application.

Listing – Listing schemes may apply for a listing on the MSE.

Capital Requirement:

  • Third-party managed: €125,000 (if formed as a company);
  • Self-managed: €300,000.

Reporting Requirements:

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

Regulatory Fees – Application for a License:

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

Supervisory Fees:

  • €2,500/scheme;
  • €450/sub-fund up to 15 sub-funds;
  • €150/sub-fund for 16 sub-funds or more;
  • €2,500/sub-fund in the form of an IC.

Taxation – Exempt from income and capital gains tax, subject to not investing in immovable property in Malta.

VAT – Exempt without credit.

Benefits of UCITS Based in Malta

  • EU passporting rights: UCITS established in Malta can be advertised in all EU/EEA member states;
  • Up to speed regulatory framework: Malta is ranked top for transposing EU directives into national law;
  • Economies of scale: larger distribution network that is achievable through a UCITS scheme, resulting in a reduction in costs for investment;
  • Structuring opportunities: interested parties are given the option to set up umbrella funds, allowing different sub- funds and share classes;
  • Competitive fiscal structure: there is no tax on UCITS income or capital gains, unless it is in- vested in immovable property situated in Malta;
  • Investors are not taxed, unless they are resident in Malta, in which case there is a 15% tax on income and realised capital gains;
  • Lower costs: cheaper set-up and running costs;
  • Flexible regulator: the Malta Financial Services Authority is Malta’s sole regulator and has developed a global reputation of being dynamic and flexible.

For more information on how Zeta can assist you please contact our Business Development department on bd@zeta-financial.com.