Fund Formation and Management

Zeta aims to ensure that our clients achieve their objectives. We accomplish this with the vast experience and hands-on approach that our advisors can offer across the Zeta platform. Our delivery is practical and efficient, ensuring that it is tailored to our clients’ requirements.

At Zeta, our specialist advisors can provide you with sound practical advice on funds, our managers, service providers, as well as our investors. With our extensive experience advising on a wide variety of funds and related investment vehicles and products, we are well-positioned to guide client within this sector.

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Malta Fund Structures

The Investment Services Act (1994), Chapter 370 of the Laws of Malta, establishes the principal regulatory framework governing investment services and investment funds. As such, any fund operating in or from Malta is required to procure an appropriate licence from the Malta Financial Services Authority (MFSA).

The current MFSA Investment Services rules set out a regulatory framework governing the following principal types of investment funds:

  • Retail funds (including Undertakings for Collective Investment in Transferable Securities [UCITS] and non-UCITS schemes);
  • Non-retail Funds, including Alternative Investment Funds (AIFs), Professional Investor Funds (PIFs) and Notified Alternative Investment Fund (NAIFs).

A Maltese fund must be established as a scheme or arrangement which has, as its object, the collective investment of capital acquired by means of an offer of units for subscription, sale or exchange and which, additionally, also possesses the following characteristics:

  • The scheme or arrangement operates according to the principle of risk spreading, and either:
  • The contributions of the participants and the profits or income out of which payments are to be made to them are pooled; or
  • At the request of the holders, units are repurchased or redeemed out of the assets of the scheme or arrangement, continuously or in blocks at short intervals; or
  • Units are, have, or will be issued continuously or in blocks at short intervals.

The risk spreading requirement does not apply in respect of AIFs marketed to professional investors and in consideration of PIFs targeting Qualifying Investors and Extraordinary Investors. Risk spreading remains mandatory in respect of retail funds, AIFs marketed to retail investors, and PIFs targeting experienced investors.

Malta Funds Structure

Under Maltese law a fund may be constituted in the form of:

  • An investment company with variable share capital (Société d’Investissement à Capital Variable, or “SICAV”);
  • A limited partnership divided into shares;
  • A unit trust;
  • A common contractual fund.

The overwhelming majority of funds established in Malta to date have been licensed as PIFs and typically in the form of open-ended public or private limited liability investment companies with variable share capital.

As indicated above, a fund may be constituted as a standalone fund or as an “umbrella” type structure, whereby the assets and liabilities of each sub-fund are treated as a patrimony separate from the assets and liabilities of each other sub-fund of the fund itself, thereby segregating risks and rewards.

A SICAV can be formed as a private or a public company. The number of shareholders in a private company is limited to 50 such that promoters typically establish SICAVs in the form of public limited liability companies at the outset. A SICAV established as a public limited liability company must include the designations “SICAV plc.” as part of its registered company name.

Retail Funds

  • Retail Funds are characterised as such insofar as such funds are promoted to retail investors. There are two main categories of retail funds in Malta, namely Undertakings for Collective Investment in Transferable Securities (“UCITS”) and retail non-UCITS schemes.
  • UCITS schemes are characterised as such in light of Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, or the “UCITS Directive”.
  • Whilst retail non-UCITS schemes are not regulated by the UCITS Directive, insofar as such schemes are promoted to retail investors, retail non-UCITS schemes are nonetheless subject to a stringent level of regulation which is relatively similar to that which is applicable to UCITS schemes.
  • The units or shares of a Maltese UCITS scheme may be marketed to retail investors in any another EU or EEA member state by virtue of passporting entitlements arising pursuant to the UCITS Directive. These passporting entitlements do not extend to Maltese retail non-UCITS schemes so that they are not freely marketable across the EU/EEA.

Alternative Investment Funds (AIFs)

Alternative Investment Funds (“AIF”) are essentially funds characterised as such in light of the EC Alternative Investment Fund Managers Directive (‘AIFMD’). Accordingly, and in principle, any fund targeting professional investors and which is managed by an Alternative Investment Fund Manager (in terms of the AIFMD) or which, in the case of a self-managed fund, holds more than €100 million assets under management or which opts-in to benefit from EU/EEA passporting entitlements, would be characterised and regulated as an AIF.

The units or shares of a Maltese AIF may be marketed to professional investors in any other EU or EEA Member State by virtue of the said passporting entitlements.

Professional Investor Funds (PIFs)

Professional Investor Fund is a  type of CIS that can be used for setups known as “hedge funds” or “alternative investment funds”. A PIF is a non-retail CIS that can be either private or public and is generally used to attract high net worth investors. PIFs benefit from the fast processing of licensing procedures. The Malta Financial Services Authority (MFSA) does not apply heavy obligations to these types of CISs.

PIFs are divided into three broad categories, largely depending on participating investors’ wealth and experience. As such, PIFs may be promoted to:

  • Experienced Investors – subject to a minimum investment threshold of €10,000 or the equivalent in any other currency;
  • Qualifying Investors – subject to a minimum investment threshold of €75,000 or the equivalent in any other currency; or
  • Extraordinary Investors – subject to a minimum investment threshold of €750,000 or the equivalent in any other currency.

Notified Alternative Investment Fund (NAIFs)

Malta set up a NAIF framework in 2016, whereby AIFMs can market their fund in Malta within ten days from notification to the MFSA. The AIF Manager (AIFM) assumes full responsibility for the NAIF by undertaking due diligence on the promoters and service providers. A NAIF operates through a notification by the AIFM to the competent authority. NAIFs are restricted to Qualified and Professional Investors as defined in MiFID.

Re-domiciliation of Funds to Malta

A foreign investment fund may also be re-domiciled and continued to Malta, provided that this foreign fund is incorporated as a body corporate that is similar to a Maltese company, in a jurisdiction that allows the re-domiciliation and continuation of companies to Malta. The licence application process outlined above would typically run concurrently with the re-domiciliation process which would be undertaken by the foreign fund for the purposes of its continuation from its current jurisdiction of the establishment to Malta as a licensed fund.

Gibraltar is a member of the European Union by virtue of its relationship with the UK. As a member of the EU, Gibraltar benefits from full passporting rights in respect of insurance, investment services and in consideration of investment funds under the UCITS and AIFMD directives.

Private Funds

A private fund is a collective investment scheme (“CIS”) that is offered privately to an identifiable group of no more than 50 investors. Private funds have no restrictions to the type of investor that can subscribe, as long as they belong to an identifiable group. In most cases, the group is friends or families that are looking to run their investments in a fund structure. Private funds are not regulated or authorised by the FSC. As long as the appointed directors follow the investment objectives stated in the offering document of the private fund, there are no other statutory investment restrictions. Private funds are exempt from any licensing requirements and must remain private for a year from the date of the offer.

Experienced Investor Funds (EIFs)

The Experienced Investor Fund (EIF) allows for experienced or high net worth investors to set up funds quickly and with minimum regulatory intervention. Typically, an EIF is formed as a limited company or as a Protected Cell Company (PCC) and can be open-ended or close-ended. One of the main attractions to EIFs is the fund can be set up and operational running within 14 days of finalising the offering document. As the directors and investors of the EIF will have sufficient experience there are no statutory investment restrictions or limitations on borrowing or leverage.

The EIF Regulations are, in effect, a self-contained piece of secondary legislation dedicated to EIFs which establishes a streamlined process for authorising and establishing open-ended or closed-ended funds where the investor is an experienced investor based on a system of self-certification by the investor, the fund’s Administrator and its lawyers.


UCITS funds are regulated by the FSC and have investment restrictions. The funds must comply with the Financial Services (Collective Investment Schemes) Regulations 2006. As Gibraltar is within the European Union, locally based UCITS funds may passport their services within the European Union on the basis of their UCITS licence, provided they are managed by an authorised UCITS manager. UCITS funds are generally for investment by retail investors.
UCITS funds are desirable when the primary investment is in ‘transferable securities’ listed on a recognised EU or other recognised stock exchange. In this case, a fund in Gibraltar can be licensed in compliance with the European Directives on Undertakings in UCITS.

Non-UCITS Retail Funds

These are licensed by the FSC and can be distributed to retail investors. These funds can be structured as:

  • Umbrella funds;
  • Hedge funds;
  • Feeder funds;
  • Fund of funds;
  • Mutual funds.

Protected Cell Company (PCC)

A Protected Cell Company (PCC) allows a fund to separate it’s business into different ‘cells’ through a segregated portfolio.This allows the assets and liabilities of each cell to be separated from the assets and liabilities of other cells and also the main assets of the fund. This allows for various clients to use separate investment strategies.

Re-domiciliation of Funds to Gibraltar

There are many factors that are attracting funds to re-domicile to Gibraltar, these being the same factors that are also attracting newly established funds to the jurisdiction. These factors include the high regulatory standards, fiscally effective legislative framework for funds and managers, accessibility, economic stability, European time zone as well as the high-quality professional services infrastructure. With the entry of AIFMD and the subsequent harmonisation of fund regulation across Europe, AIFs located outside the EU wishing to market to EU-based investors will find it useful to establish a European feeder fund structure in jurisdictions such as Gibraltar. This factor will address the restrictions in place on fund managers marketing non-EU domiciled funds in Europe and provide funds with an EU marketing passport based on AIFMD.

In order for a fund to re-domicile to Gibraltar the following criteria must be met:

  • The entity meets the provisions of the legislation;
  • The fund is established in a form recognised under Gibraltar Law and is approved by the FSC;
  • The fund’s by-laws, as well as the laws and regulations of the home jurisdiction, must also allow for the re-domiciliation to take place.

It must be noted that the re-domiciliation process does in no way operate to create a new legal entity, prejudice or affect the property of the company or affect the continuity of the company.

The 2012 EIF Regulations include provisions within the definition of an ‘Experienced Investor’ to allow for participants in funds that are re-domiciling to Gibraltar to automatically qualify, under definite circumstances, as “Experienced Investors for the purposes of Gibraltar Law”.