Company in Malta

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Fund Managers

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Malta Fund Managers – Licensing Process and Requirements

The regulatory framework in Malta permits the licensing of the following Maltese management companies:

1. Maltese UCITS management companies

Maltese UCITS Management Companies are subject to the rules of the UCITS Directive, as implemented in Malta, and may exercise their passporting rights within the EU / EEA, following the prescribed notification procedure.

A Maltese Management Company may not engage in activities other than the management of Maltese and European UCITS except the additional management of other collective investment undertakings which are not covered by the UCITS Directive (i.e. non-UCITS schemes) and for which the management company is subject to prudential supervision but which cannot be marketed in other Member States or EEA States under the Directive pursuant to the Directive’s passporting rights (and would need to comply with the relevant marketing rules and procedures – including possibly authorisation requirements – in the relevant foreign jurisdiction/s).

Apart from the investment management per se, the activity of management of UCITS includes also the additional functions of Administration and Marketing.

However, the management company, may, subject to the approval of the MFSA, be allowed to provide the following additional services (as permitted by the Directive):

  • discretionary portfolio management services on a client-by-client basis, in relation to one or more instruments as defined in the ISA; and where so  authorised to provide the discretionary portfolio management service described above):
  • investment advice in relation to one or more instruments as defined in the ISA;
  • safekeeping and administration in relation to units of collective investment schemes.

2. Maltese non-UCITS management companies

The activities of a non-UCITS fund management company shall be limited to the management of collective investment schemes. However, the Licence Holder may also, subject to the approval of the MFSA, be allowed to provide other Investment Services contemplated by the ISA (including investment advice and/or portfolio management services to retail and/or Professional Clients and/or to Eligible Counterparties).  Managers of Non-UCITS Schemes (whether retail or Professional investor funds) are subject to a more flexible regulatory regime, however, they cannot “passport” into other EU/EEA Member States.

3. Licence Holders carrying out Portfolio Management services

Licence holders of portfolio management services are subject to the rules of the MiFID Directive 2004/39/EC  as transposed under Maltese law, and are entitled to exercise their European passport rights in terms of the MiFID regime by complying with the prescribed notification procedure.  Such Licence Holders may again be authorised by MFSA to provide other Investment Services contemplated by the ISA.

The issuance of multi-disciplinary licences, covering different types of management activities and/or other investment services, would ultimately remain in the discretion of MFSA but the Maltese regulator would favourably consider such an application if the particular circumstances of the case so warrant (after taking into account, inter alia, the size and extent of services to be provided by the applicant in each field and the resources, organisation, systems, qualifications and expertise of the applicant, to make sure that the interests of investors are adequately protected).

In this respect, it is always advisable for an applicant to first identify its own operational set-up, plans and needs and the nature and location of its targeted clients and their needs in terms of services and passporting flexibility at least in the initial years of the licence, to be able to apply for the most suitable and appropriate licence. It should also be noted that a licence issued by the MFSA may subsequently be upgraded to include other services and/or other financial instruments subject of the relevant services. It is always for the applicant to approach the MFSA at an early stage of the licence application process and to submit and discuss with them a brief programme of operations for the initial years of operation. It is MFSA’s declared commitment to address such proposals with an open and flexible approach, to assist the applicant in identifying and implementing a licensing and regulatory set-up which best suits his plans (to the extent such flexibility is allowed by law and the primary need to adequately protect investors).

Categories of licences

Managers of collective investment schemes (UCITS or non-UCITS) as well as investment services firms providing individual portfolio management services, in or from Malta, must hold a licence in accordance with article 3 of the Investment Services Act (Chapter 370 of the Laws of Malta) (“ISA”).  However  portfolio management investment firms established and licensed in other EU / EEA States in terms of the MiFID Directive may, use their passporting rights, through the adequate notification procedure, to provide services in Malta and shall not require such a licence in Malta).

Fund managers and portfolio managers are expected to hold (at least) a Category 2 licence, which would in turn entitle them to hold or control Clients’ Money or Customers’ assets, but not to (inter alia) deal for their own account.  Each applicant for a management licence should identify the type of management services (portfolio management or fund management services and, in the latter case, the type of fund/s) and the instruments in respect of which it is to provide management services for which it is applying for authorisation. The licence issued by Malta Financial Services Authority (“MFSA”) will specify such items in the licence.

Local Presence Requirements

The Licence Holder is required to have an established place of business in Malta and shall have adequate financial resources so as to enable it to conduct its business effectively and to meet its liabilities.  A Portfolio Manager authorised to provide investment services in accordance with MiFID, is required to have its registered office as well as its head office in Malta (unless it is established and authorised in another EU / EEA State and provides portfolio management services in Malta through the establishment of a branch or through cross-border provision of services pursuant to the MiFID passporting regime).  A UCITS Manager needs to have an established place of business in Malta, and its head office and registered office must both be located in Malta.

However, the MFSA has extended the flexibility permitted to fund administrators and custodians, also to fund Managers.  Where a Manager wishes to start operating in and from Malta on a small scale, the MFSA will be minded to accept a grace period for small set-ups with reliance on outsourcing/ delegation arrangements, until the volume of business to be carried out by the fund manager grows, thereby necessitating increased resources.

Such delegation may be made to Managers established outside Malta, whether in the EU or not, provided that where the delegation concerns the investment management core activity, the mandate may only be given to undertakings which are authorised or licensed for the purpose of asset management and subject to prudential supervision (and such delegation shall be in accordance with investment-allocation criteria periodically laid down by the Licence Holder in Malta). The delegated entity may also be the parent undertaking or a group or affiliated undertaking of the Maltese delegating entity.

Where the Manager proposes to delegate the management function to a third party manager (Maltese or foreign) the MFSA would generally accept the following minimum staffing arrangement:

  • one (1) Maltese resident Director;
  • at least (1) one full time employee who has a strong management background responsible for Compliance, Anti-Money Laundering and monitoring the activities of the delegated entity.

The Board of Directors of the Manager is expected to be made up of at least three (3) Members (one of whom should be resident in Malta) and the majority of Board meetings to be held in Malta.  The Licence Holder’s business is to be effectively directed or managed by at least two (2) individuals in satisfaction of the four-eyes principle, good repute and sufficiently experienced so as to ensure sound and prudent management of the Licence Holder.

The Manager will generally be required by the MFSA to have an office space dedicated to its activities, within Malta. The Manager may opt to have its own offices in Malta or alternatively to share offices with other entities, provided that such office space be equipped with an independent telephone line, a facsimile machine connected to a direct telephone line, an internet connection and filing space.  If the Manager makes use of shared offices, then the MFSA must be satisfied that the managers satsifies the criteria for confidentiality and has adequate safe-keeping arrangments at all times.  It is clear that the intention of the MFSA is to give value to the substance requirements of the fund manager and circuvmenting the creation of brass-plate offices.

Managers of Professional Investor Funds (“PIFs”) and non-UCITS retail schemes

Unlike UCITS, Maltese PIFs are not required to appoint a Manager with an established place of business in Malta and such Manager could be foreign-based and is specifically exempted from the requirement to obtain a management investment services licence under the ISA, insofar that the MFSA is satisfied that such custodian is of sufficient standing and repute.

Managers of retail non-UCITS funds are however still required to have an established place of business in Malta in terms of the MFSA Rules applicable to them (notwithstanding that they may be exempt from the requirement to obtain an investment services licence by MFSA in Malta).

The Alternative Investment Fund Management Directive, may however open different scenarios, when it comes into force (and depending on the final text thereof).

Licensing Process

The licensing process may be summarised as follows-

(i) Phase One – Preliminary: preliminary meeting and discussions with MFSA regarding the proposal (which clients wishing to set up business in Malta are strongly encouraged to do); submission of draft application form and supporting documentation; the MFSA will consider the nature of the proposed activity and the type of investors to whom and the markets to which the investment services restrictions and other provisions of the UCITS Directive) and the definition of “Maltese Management Company” under article 2(1) of the Undertakings for Collective Investment in Transferable Securities and Management Companies Regulations (Legal Notice 207 of 2004, as subsequently amended) (which Regulations transpose the passporting provisions of the UCITS Directive) are to be provided and will decide which “Standard Licence Conditions” (SLCs)  should apply.

(ii) Phase Two – Pre-Licensing: once the review of the draft application and supporting documents has been completed and the draft licence conditions have been agreed, the MFSA will issue its ‘in principle’ approval for the issue of a licence. The licence will be issued once the outstanding matters are resolved, including the incorporation of the company, submission of signed copies of final application and final supporting documents and any other issues raised during the Application process.

(iii) Phase Three – Post-Licensing/Pre-Commencement of Business: the MFSA may require the applicant to meet certain post-licensing requirements prior to formal commencement of business (e.g. adhering to the licence requirements, submitting of financial statements).

The application for an investment services licence must be submitted to the MFSA and should include the following documents:

  • the completed form “Application for an Investment Services Licence”;
  • covering letter (template included in the Application form);
  • auditor’s Confirmation (template included in the Application form);
  • supporting Board Resolution;
  • a completed financial resources statement form;
  • projected profit and loss account and balance sheet for the three years after the licence is issued;
  • where appropriate, copies of the last three years audited accounts of the applicant and other relevant related companies;
  • Memorandum and Articles of Association of applicant;
  • specimen copies of the insurance policies and draft schedule/cover note (where applicable), and ‘Insurance Checklist’;
  • completed Personal Questionnaire forms for each shareholder, director, and senior officer of the applicant (the PQs should include a certified copy of the person’s passport and a conduct certificate);
  • Memorandum and Articles of Association of corporate shareholders of the applicant;
  • a chart which illustrates the internal operational structure of the applicant’s business (this should show names, reporting lines and roles);
  • where the applicant Company forms part of a Group, a diagram showing the relationships between the applicant and other members of the Group. The “family tree” submitted should give details up to the ultimate beneficial owner(s), showing percentage sizes of holdings in each entity; unless (a) the entity has one ultimate beneficial owner with a holding of over 50% of the voting rights or (b) no less than fifty ultimate beneficial owners who between them account for over 50% of the voting rights. If (a) or (b) apply, it will only be necessary to give details of the ultimate beneficial owners with holdings of 10% or more;
  • Detailed Business Plan (which should include background details about the promoters, the applicants’ target clients, the operational set up as well as the applicant’s plans for the future).

Share Capital Requirments

Holders of a Category 2 licence (whether a Maltese UCITS or Maltese non-UCITS Management Company or Portfolio Management Licence Holder) are required at all times to maintain own funds which are equal to or in excess of their Capital Resources Requirement, and this constitutes their Financial Resources Requirement.

In the case of  Licence Holders of such Category, the components of the Capital Resources Requirement can be summarised as being the higher of (i) and (ii) below:

i. Initial Capital as defined hereunder (comprising (a) equity capital (i.e. paid up share capital plus share premium accounts but excluding cumulative preferential shares) and (b) reserves (i.e. revenue reserves, interim net profits/retained profits for the year, unrealised fair value movements in held for trading financial instruments and other reserves)); and

ii. the higher of the following:

a. the sum of the non-trading book business risk components, the trading book business risk components, the commodities instruments – risk component, the large exposures risk component and the foreign exchange risk component; and

b. the Fixed Overhead Requirement.

The Initial Capital for Management Companies, other than UCITS Management Companies, shall be €125,000.

The Initial Capital for UCITS Management Companies shall (in terms of the UCITS Directive) be the sum of the following:

  • Initial Capital of €125,000;
  • An additional amount of Own Funds equivalent to 0.02% of the amount by which the value of the portfolios under management exceed  €50,000,000: provided that the Maltese UCITS Management Company may be exempted from providing up to 50% of this additional amount of Own Funds, if it benefits from a guarantee of the same amount given by a credit institution or insurance undertaking (which credit institution or insurance undertaking must have its registered office in a Member State provided that it is subject to prudential rules considered by the MFSA as equivalent to those laid down in Community Law).

For these purposes, portfolios of the Maltese UCITS Management Company shall be deemed to include:

(a) unit trusts/ common funds managed by the Manager including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation; (b) investment companies for which the Manager is the designated management company; (c) other collective investment schemes managed by the Manager including portfolios for which it has delegated the management function but excluding portfolios that it is managing under delegation.

Maltese UCITS Management Companies wishing to avail themselves of this exemption should contact the MFSA for guidance in this regard.

- The summation of (a) and (b) above shall not exceed €10,000,000.

The Own Funds and Capital Resources Requirements for investment services licence holders and the methodology for calculating same and a licence holder’s Financial Resources Requirement are set out in the MFSA’s Investment Services Rules for Investment Services Providers (Appendix 1 thereto) and are based on the EU’s Capital Requirements Directives (Directive 2006/48/EC and 2006/49/EC).

Furthermore, the Licence Holder is required to, by not later than the end of one month from its accounting reference date, assess whether it forms part of an Investment Services Consolidation Group, in which case, consolidated financial resources requirements will apply.

Licensing and supervisory fees

An application fee of €1,500 is payable to the MFSA upon submission of the draft application. Upon obtaining a licence, a licence fee of €3,000 is payable to the MFSA.  Thereinafter, upon submission of the annual audited financial statements, a supervisory fee shall be payable to the MFSA on an annual basis, as follows:

  • For revenue up to €250,000: €3,000 fee;
  • For further tranches of €250,000 (up to a maximum of €5,000,000): an additional fee of €350 per tranch or part thereof.


Typically, provided a properly documented application form together with all other supporting documentation is submitted to MFSA, the time to licence will usually vary from 7 to 10 weeks, as from date of submission of the application form.

Ongoing requirements

Investment Services Licence Holders (including UCITS or non-UCITS Management Companies and Portfolio Management Licence Holders) are subject to the Standard Licence Conditions (“SLCs”) set out in the Investment Services Rules for Investment Services Providers issued by MFSA , which reflect the current MiFID regime. The SLCs prescribe, amongst others, organisational requirements, conduct of business obligations, disclosure requirements, outsourcing rules, financial resources requirements, accounting and record keeping requirements, and rules on transaction reporting. The MFSA Rules also contain supplementary conditions specifically applicable to managers of collective investment schemes.

The extent to which the SLCs are applicable to a Licence Holder, depends on the nature of licensable activity which the Licence Holder is authorised to provide. At this stage, it should be pointed out that, whilst the local legislator and regulator has opted to treat the management of collective investment schemes (an activity which is not covered by the MiFID Directive) as a core investment service under domestic investment services legislation (namely the ISA) and to apply the MiFID provisions (as transposed into Maltese law, principally the MFSA Rules) to such activities for the purpose of investor protection, yet not all MiFID rules will apply to such activities. Thus, Managers of Collective Investment Schemes that are not licensed to provide any investment services in terms of the MiFID, are subject in particular to the following conduct of business rules only:

  • General requirements;
  • Client Reporting: statement of client financial instruments or client money;
  • Record keeping;
  • Safeguarding of client assets;
  • Conflicts of interests;
  • Staff dealing;
  • Provision of services through the medium of another Licence Holder;
  • Conduct of business rules for Licence Holders producing and disseminating investment research (where applicable);
  • Conditions applicable to the provision of information; and
  • Complaints Handling.

Investor Compensation Scheme

Licence holders in possession of a Category 2 licence are required to participate in and contribute to the Investor Compensation Scheme established under the Investor Compensation Scheme Regulations except where they provide investment services solely and exclusively to persons who do not fall within the definition of “investor” in terms of regulation 2 of the same Regulations. The term “investors” does not include,  collective investment schemes. Therefore, as a general rule, UCITS and non-UCITS Fund Managers are not required to participate in such investor compensation scheme, except where they are authorised to provide other investment services to other clients.  However, Individual Portfolio Management licence holders are required to participate in such investor compensation arrangements.


Fund managers based in foreign jurisdictions as corporate entities can transfer their operations to Malta without the need to wind up their operations, by re-domiciliating the company to Malta, through the procedure set forth in the Continuation of Companies Regulations.  Re-domiciliation allows the corporate entity to retain its legal personality and corporate existence (as well as its rights and liabilities under contracts and at law) without having to start afresh.

Click here for a detailed explanation of the Re-Domiciliation of Corporate Entities

Taxation of Fund Management Companies

Like all companies resident in Malta, fund management companies would be subject to income tax on company profits at a rate of 35%. However, this is subject to Malta’s full imputation tax system, wherein tax paid by a company in Malta is, on the distribution of a final dividend, imputed to the shareholder as a tax credit against the shareholders’ tax liability. Therefore, a shareholder will, upon a distribution of the dividend, be entitled to a refund in part or in full of any advance tax levied on the distributing company. The full imputation tax credit thereby renders Maltese companies highly efficient tax vehicles, with a number of applicable refunds to shareholders possible. The default refund applicable to a fund management company in respect of active trading income, is a refund of 6/7ths. These tax benefits essentially consist of a net tax leakage of just 5% on income and gains deriving from trading activities (or as low as 0% when grossed up with foreign income tax), as set forth in the table below:

Maltese Company No Foreign Tax With Foreign Tax
Net Foreign Income 2000 2000
Grossing up with Foreign Tax 0 105
Chargeable Income 2000 2105
Tax at 35% 700 737
Credit- Double Tax Relief 0 105
Malta Tax Payable
(tax at 35% less tax credit)
700 632
Shareholder of Maltese Company
Refund on distribution
(6/7 of Malta Tax Payable)
600 632*
Effective Tax Paid in Malta 100 0
Effective Tax leakage in Malta on Net Income 5% 0%

*632 (6/7ths of 737)

Click here for a more thorough understanding of the TAX TREATMENT OF THE MALTA COMPANY

Contact one of our officers to initiate the licensing process for a Malta Management Company and start reaping full benefits of a reputable, low-tax EU jurisdiction. Simply fill in the contact box below or contact us by email on or by calling at +356 2338 1500

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