The regulatory framework of collective investment schemes is established in the Investment Services Act (ISA), which vests the responsibility for the licensing, regulation and supervision of collective investment schemes in the Malta Financial Services Authority (MFSA). A collective investment scheme licence is required to be obtained under the ISA in order to set up a collective investment scheme. Special regulatory regimes exist for professional investor funds, retirement funds, private funds and fund administrators.
Legal Form of Collective Investment Schemes (CIS)
A CIS can be set up in any of the following forms:
Types of CIS
Being a CIS that is available to the general public, this is the most highly regulated CIS for investor protection.
Professional Investor Funds:
These funds are non-retail funds that target professional investors that fall within any of three categories being experienced, qualifying, or extraordinary investors. The category applicable would depend on the experience, knowledge and expertise of the investor eligible to participate and a minimum investment requirement is linked to each category. As a result, professional investor funds, are not subject to some of the usual restrictions on investment or borrowing that would be applicable to a retail CIS.
Private Collective Investment Schemes:
These are essentially of a private nature and limit the number of investors to a maximum of 15 persons. These are regulated by the ISA (Recognition of Private Collective Investment Schemes) Regulations and recognition by the MFSA is sufficient without the requirement to obtain a licence subject to the satisfaction of certain criteria being met.
Alternative Investment Funds (AIF):
These are funds that do not qualify as a UCITS scheme in terms of the UCITS directive and form a special class of funds.
Management of CISs
Funds managers that intend to manage a CIS are required to obtain a Category 2 licence.
With special reference to AIFs, following the implementation of the Alternative Investment Fund Managers Directive (AIFMD), fund managers that intend to manage an AIF (Manager) may potentially fall under the AIFMD. There are however limited exemptions in the sense that certain Managers may remain outside the scope of AIFMD if they fall within any one of the two criteria listed below:
Apart from falling within the criteria mentioned above, the Manager must comply with certain requirements in order to fall outside the scope of the AIFMD, in which case, the Manager will not benefit from any rights under the said directive.