UCITS (Undertakings for Collective Investment in Transferable Securities) are a category of retail fund products that can operate throughout the EU on the basis of a single authorisation from one member state, provided that it follows certain notification procedures. UCITS offer a high degree of investor protection and are recognised by regulators worldwide. They can be marketed to both retail and institutional investors. UCITS may also be listed on the Malta Stock Exchange.
What are the benefits of a Maltese UCITS?
UCITS Requirements
A UCITS can be set up as an open-ended SICAV, a limited partnership, a unit trust or a contractual fund.
The fund’s head office and registered office must both be established in Malta. The scheme must have a minimum of two (2) directors, at least one of which is independent from the manager and the custodian. Self-managed schemes on the other hand must have at least one (1) Maltese resident director.
The UCITS’ structure must also clearly outline the roles to be played by the Service Providers below and ensure that they are legally authorised and/or approved by the MFSA to carry out such role.
Service Provider | Role & Requirements | Required |
Fund Manager | Responsible for the management of the assets of the fund Must have satisfactory financial resources and liquidity and demonstrate sufficient and relevant experience | Yes (unless the fund is self-managed) A third-party fund manager must be authorised in Malta or the EU |
Fund Administrator | Responsible for the administration of the scheme (including valuation, transfer agency and registrar, corporate secretariat and listing agent). Need not be based in Malta. | Yes Function can be carried out by the fund manager or delegated to third-party administrators. |
Custodian | Has custody of the UCITS’ assets. Must be a licensed institution or such other body or association acceptable to the MFSA, with a place of business in Malta | Yes |
Investment Adviser | Responsible for the provision of investment advice to the fund. Must have satisfactory financial resources and liquidity and demonstrate sufficient and relevant experience | Optional |
Financial Auditor | Responsible to audit the UCITS annual financial statements To be approved by the MFSA | Yes |
Compliance Officer | Required to ensure compliance with the UCITS obligations and requirements in terms of Maltese law and MFSA rules Individual to be approved by the MFSA following submission of PQ | Yes |
Money Laundering Reporting Officer (MLRO) | Required to ensure compliance with the AML/CFT obligations and requirements Individual to be approved by the MFSA and FIAU following submission of PQ | Yes |
Licensing Stages:
The MFSA is the authority responsible for issuing a UCITS licence in terms of the Investment Services Act. When considering a fund licence application, the MFSA will consider:
The MFSA’s authorisation process is initiated through the submission of a statement of intent
providing a general outline of the applicant and the plans in submitting the licence application. The MFSA may request a meeting with the licence applicants. This meeting is intended to assist the MFSA in understanding the applicant’s strategy and business model and for the authority to explain its processes and requirements.
Pre-Authorisation Stage
The applicant is then invited to submit an application pack which contains the complete set of required documents in accordance with the licence application being sought. The MFSA will commence the application process once the complete application pack is submitted. The assessment here aims to ensure that the applicant is able to satisfy regulatory requirements in relation to the business model being applied for on an ongoing basis.
As part of the process, the MFSA will request clarifications and additional information through
feedback letters. Once the applicant’s replies are received these can be followed by further engagement through correspondence or meetings as may be required until the criteria for authorisation are satisfied.
Authorisation Stage
Once the MFSA’s assessments are satisfactorily concluded, a decision to proceed to authorisation is taken. Prior to formal authorisation, an applicant is notified of an in-principle decision and a list of conditions to which the authorisation will be subject. At this stage of the process the applicant will address matters such as incorporation and capitalisation of the company and provide confirmation that it will be in a position to comply with its conditions of authorisation.
Post Authorisation Stage
After the applicant proves he has satisfied all of the MFSA’s requirements, the certificate of authorisation is issued.
For more information or if you have any questions, please feel free to contact Dr Cherise Abela Grech.