Our fund lawyers have built up an excellent reputation within the industry, and we have set up several of the largest and most complex schemes in Malta. Dr. James Muscat Azzopardi has also advised the Malta Financial Services Authority on sharia-compliant investment funds.

Apart from the legal setup of funds and asset management companies, Credence also offers a comprehensive yet bespoke service to fund managers – we set up funds in Malta, redomicile funds to Malta and we offer full project management services, coordinating third party service providers such as administrators, custodians, prime brokers and auditors.

As a full EU member state, Malta is becoming an increasingly popular choice of fund domicile and is achieving triple-digit annual growth in the fund industry, offering an onshore jurisdiction without the relatively high costs associated with other EU jurisdictions. Managers are choosing Malta when setting up new funds and are also re-domiciling existing funds to the island.

The advantages offered by Malta include;

• An EU Member State since 2004;

• Highly reputable financial services centre;

• Single regulator for Banking, Securities and Insurance– highly accessible and pro-business;

• Service-driven environment;

• Relatively low overall costs;

• Multilingual and professional work-force – an English speaking country with professionals usually speaking four languages;

• Ideal for UCITS III schemes as well as non-retail funds;

• The most competitive tax structure within the EU, yet fully OECD compliant and not a tax haven;

• An excellent network of double taxation agreements.

Under Maltese legislation, non-retail funds are set up as Professional Investor Funds (PIFs) – this includes a wide range of funds including hedge funds, master-feeder funds, property funds as well as a wide range of funds investing in diverse asset classes.

There are three categories of PIFs, ranging from quasi-retail PIFs targeting Experienced Investors where the minimum entry level amounts to €10,000 to PIFs targeting Qualifying or Extraordinary Investors, where the minimum investment amounts to €75,000 and €750,000 respectively. In the last two categories, there are no restrictions on leverage or diversification, and a fund need not appoint a Custodian.

Malta is also attracting a number of UCITS schemes, whereby funds can be freely distributed throughout all EU Member States without the need for a licence in any other state. Malta is also attracting alternative UCITS schemes – we have seen that hedge fund managers are increasingly re-packaging hedge funds as UCITS schemes. These include long/short equity funds, equity market neutral or quantitative as well as managed futures, among others.

A recent development has been driven by the rise in demand for Islamic financial products – Malta offers the possibility of setting up sharia-compliant funds as UCITS schemes or as PIFs.

As opposed to Luxembourg and Dublin, under Maltese legislation the fund’s service providers need not be located in Malta – funds can be set up in Malta but managed and administered elsewhere. However, fund managers usually choose to have a presence in Malta, since Malta offers the most competitive tax system within the EU, based on refunds to non-resident shareholders.

Indeed, tax and cost advantages are driving fund managers to move their operations to Malta, and around twenty-five fund managers have recently moved to Malta from London.

Credence is setting up umbrella funds in Malta for institutional clients such as banks and financial institutions as part of the wealth management strategy offered to their clients – in some cases, the top level of the fund is managed by the bank or financial institution and a separate sub-fund is set up per client or group of clients, who prefer to have their assets managed through a regulated entity.