Flexibility of Malta Fund Structures
Undoubtedly, Malta’s variety in fund structures has been instrumental in attracting start-up managers as well as fully-fledged Alternative Investment Fund Managers (AIFMs). Despite the introduction of the AIFM Directive which has wholly redesigned the hedge fund industry, Malta has still retained its popular Professional Investor Funds (PIFs) regime, which now serves as a niche market for funds which do not exceed EUR100m. The PIF is considered as the ‘start-up’ fund, aimed at three differ- ent types of investors of differing wealth and experience. Whist still fully compliant with EU law, the PIF is an alternate hedge fund that is very similar to an AIF but which does not fall within the scope of the AIFMD when it is structured as a self-managed fund which satisfies the de-minimis thresholds.
Nonetheless, the Alternative Investment Fund (AIF) Regime is still a popular option for AIFM’s seeking to market their products to investors from all over the European Union in virtue of the AIFM Directive which provides for EU Passporting. Self-man- aged AIFs which manage over EUR100 million, or unleveraged AIFs managing over EUR500 million will be subject to more onerous regulatory requirements.
Since 2016, AIFMs can also benefit from the Notified Alternative Investment Fund (NAIF) regime which provides a cost-effective and quick route to the market regulat- ing the fund manager rather than the fund itself.
Malta also offers retail investment funds, including UCITS which may be passported to any EU member state, as well as non-UCITS and private funds. Private funds only require a recognition by the MFSA but are subject to a number of restrictions.
The Recognized Incorporated Cell Company is another innovative fund structure. The RICC platform provides for the standardization of fund documents. This platform is highly versatile since it is used by larger funds, as well as start-ups or smaller funds since it offers an ‘incubation’ style set off. The RICC platform can be an ideal alterna- tive since it allows funds to co-exist under one service-providing platform, thus circumventing the increased cost and resources which were brought about by the AIMFD and other EU-wide regulatory reforms.