Collective Investments Scheme

Malta’s success in financial services is founded on a series of legal reforms that took place in the mid-1990s. Today Malta is a member of the European Union and forms part of the EU single market for financial services. The hedge fund sector in Malta is one of the fastest growing in the industry and is attracting a growing number of operators and professionals.

The Investment Services Act 1994 (“ISA”) establishes the regulatory framework for investment services and for Collective Investment Schemes (“CIS”) including Professional Investor Funds (“PIF’s”).

The ISA provides for two types of licences - an Investment Services Licence and a Collective Investment Scheme Licence.  

A CIS may be set up as a:

1)    SICAV (investment company with variable share capital - i.e. open-ended fund);
2)    Investment company with fixed share capital (i.e. closed-ended fund);
3)    Mutual Fund;
4)    Investment Partnership;
5)    Unit Trust.

A PIF may be set up as an incorporated open or closed-ended investment company – in the form of a SICAV or INVCO, or a limited partnership or a unit trust and the PIF regime consists of three categories:

1)    PIFs promoted to Experienced Investors (or Experienced Investor Funds) where the minimum investment is €10,000

2)    PIFs promoted to Qualifying Investors (or Qualifying Investor Funds) where the minimum investment of €75,000; and

3)    PIFs promoted to Extraordinary Investors (or Extraordinary Investor Funds) where the minimum investment is €750,000

PIF’S are lightly regulated funds with few investment restrictions and whose service providers can be situate outside Malta. As a result of this flexibility, PIF’s have proved to be a highly popular vehicle. Additionally, with the exception of Experienced Investor Funds, PIF’s can invest freely in whatever they wish and therefore they can take both long and short positions, use arbitrage, trade undervalued securities options and derivatives and invest in any market opportunity.

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