MFSA AIF/ PIF Licence Application

Malta Funds - Collective Investment Schemes - AIF/PIF Licence Application
Regulated by the Malta Financial Services Authority

What is the MFSA AIF/PIF Licence?

The Malta Financial Services Authority (MFSA) is the single regulator for financial services activities in Malta. It regulates and supervises credit and financial institutions, investment, trust and insurance business.

The Investment Services Act, Chapter 370 of the laws of Malta (“ISA”), establishes the principal regulatory framework governing investment services and Collective Investment Schemes (“CISs”) and any CIS operating in or from Malta is required to procure a CIS licence from the MFSA.

The current MFSA Investment Services Rules provide a regulatory framework for the following types of investment funds:
  • retail CISs (including Maltese UCITS schemes and retail AIFs);
  • non-retail CISs including Alternative Investor Funds (AIFs) and Professional Investor Funds (PIFs).
When properly structured, Malta-registered CIS schemes would benefit from:
  • No income or company tax is imposed on hedge funds having more than 85% of their underlying assets situated outside Malta;
  • No tax on the Net Asset Value of the scheme;
  • No withholding tax on dividends paid to non-residents;
  • No taxation on capital gains on the sale of units by non-residents;
  • No stamp duty on issues or transfers of units.

Malta-registered Collective Investment Schemes are generally not subject to Malta tax. 

A lighter and more flexible regulatory regime

Collective Investment Schemes

A CIS may be licensed in accordance with the provisions of the Investment Services Act, 1994 and the applicable regulations and rules issued by the MFSA as an Alternative Investor Fund or a Professional Investor Fund.

Both these funds provide a “lighter” regulatory regime and more flexibility than UCITS and other retail funds which are also licensed by the MFSA.

AIFs and PIFs must satisfy the requirements set for a Collective Investment Scheme (“CIS”) as defined by Maltese law. In the first place, this means that the AIF/PIF must be established as a scheme or arrangement which has as its object the collective investment of capital acquired by means of an offer of units for subscription, sale or exchange and which, additionally, also possesses any one of the following characteristics:


  • the scheme or arrangement operates according to the principle of risk spreading; and either:
  • the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; or
  • at the request of the holders, units are repurchased or redeemed out of the assets of the scheme or arrangement, continuously or in blocks at short intervals; or
  • units are, or have been, or will be issued continuously or in blocks at short intervals.

However, the MFSA may grant a CIS licence to any scheme or arrangement which does not operate on the principle of risk spreading, where the units in such scheme or arrangement are to be offered for subscription, sale or exchange to:

  • holders of investment services licences; or
  • persons whose ordinary business involves the acquisition and disposal of instruments or property of the same kind as those in which the scheme or arrangement invests; or
  • persons who are exempt by regulation from the requirement of an investment services licence provided that the scheme or arrangement invests in instruments or property in respect of which such persons are exempt.

Notwithstanding the above, the risk spreading requirement has ceased to be applicable to collective investment schemes licensed as PIFs targeting Qualifying Investors (as defined below) and is not applicable to AIFs.

Nonetheless, risk spreading continues to be mandatory for UCITS Retail Schemes.

Looking to setup a Fund in Malta?

Alternative Investor Funds (AIF)

Any CIS which is to be targeted to professional investors and which is managed by an AIFM or which, in the case of a self-managed fund, surpasses the de minimis threshold or opts-in to benefit from the passporting procedure would be required to apply for an AIF licence rather than its PIF counterpart.

The units or shares of CISs duly licensed as AIFs may be marketed to professional investors in another Member State or EEA State by means of the passporting procedure provided in the applicable rules as transposed from the AIFMD.


Professional Investor Funds (PIF)

PIFs are subject to minimal regulation compared to regular investment schemes provided that their only activity is operating as a PIF and, accordingly, does not itself carry out any investment services licensable activity.  References to “PIFs”, “funds” and “schemes” below should be read and construed as interchangeable terms. The information set out hereunder is intended as generic guidance, supplementary to the MFSA’s “A Guide to the Establishment of Professional Investor Funds”, and should not be construed as customised advice. We would be happy to advise once we have been provided with the relevant facts pertaining to the proposed structure.

A lighter regulatory touch

The PIF Regime - Investor Profiles

The PIF regime provides a lighter regulatory touch on the basis of the participating investors’ wealth and experience.

Accordingly, PIFs may only be promoted to Qualifying Investors with a minimum investment threshold of EUR 100,000 or equivalent in any other currency.

The total amount invested by each investor may not fall below this threshold at any time during the operation of the fund unless this is the result of a fall in the net asset value. The minimum investment threshold applies to each individual investor. In the case of an umbrella fund comprising a number of sub-funds the threshold is applied on a “per scheme” basis rather than on a “per sub-fund basis”, thereby enabling the investor to spread the investment requirement across the various sub-funds. Where the fund’s base currency is not denominated in Euro, exchange rate fluctuations do not affect the minimum investment threshold provided that, at the time the investment is placed, the threshold was satisfied on the basis of the exchange rate prevalent on the date of such investment.

Before any fund may accept any investment from any investor holding himself/ itself out as a ‘Qualifying Investor’, the fund is required to obtain a completed Declaration Form in which the investor confirms that he/she/it has read and understood the mandatory risk warnings and describes why he/she/it satisfied the applicable requirements, thereby excluding retail investors. The fund may rely on the declaration provided by the investor, unless it has any information to the contrary.

PIFs are not subject to investment or borrowing (leverage) restrictions, unlike retail funds. 


The Legal Forms AIF can take on Under Maltese Law

Whilst the forms indicated in (01) and (02) below represent the corporate forms, those in (03) and (04) represent the non-corporate forms.

  1. Investment Company

    An investment company constituted by Memorandum and Articles of Association (i.e. SICAVs and INVCOs).

  2. Commercial Partnership

    A commercial partnership constituted by means of a partnership deed.

  1. Unit Trust

    A unit trust constituted by a trust deed between a management company and a licensed trustee (regulated by the Trusts and Trustees Act).

  2. Mutual Fund

    A mutual fund established by way of contract (otherwise referred to in civil law jurisdictions as “fond commun de placement”).

Of the vehicles outlined above, the most common legal form for a Scheme in Malta is the SICAV (multi class or single class open ended investment company), due particularly to the structural and operational flexibility associated with such forms of companies- Maltese closed ended investment companies (INVCOs) could be somewhat more restrictive insofar as choice of investments and dividend distribution considerations are concerned.

In the case of a SICAV, the AIF/ PIF may be constituted as a standalone fund or as an “umbrella” type structure, whereby the assets and liabilities of each sub-fund are treated as a patrimony separate from the assets and liabilities of each other sub-fund of such Scheme, thereby containing the risks associated with each investment made by the class of shares within the respective class.

The SICAV can be formed as a Private or a public company. Since the number of shareholders in a private company is limited to 50, it is typical for the promoters to establish a public limited liability company from the outset. A SICAV established as a public limited liability company must include the designations “SICAV plc” as part of its registered company name.

Whilst the structuring of any fund will depend upon the client’s intentions and preferences, typically the creation of “Founder Shares” or “Voting Shares” issued to the fund’s promoters provides them with the effective control over the structuring and general operation of the fund, whilst the “Investor Shares” or “non-Voting Shares” are issued to investors in the fund.  Any changes to the rights attaching to the Founder Shares, redemption of such shares, and/or issue of additional Founder Shares will require the prior approval of the MFSA in each case.

The fit and proper requirements

Composition of a Fund’s Board of Directors

The Board of Directors of the AIF/ PIF must be composed of one or more Directors being independent from the Manager and the Custodian. As a matter of policy, however, the MFSA’s preference is to have at least three Directors having experience in the financial services industry, with at least one Director who is an individual resident in Malta.


The proposed Directors of an AIF/ PIF would need to be approved by the MFSA after satisfying the Authority’s “fit and proper” requirements. 


In approving prospective Directors of an AIF/ PIF, the MFSA will, as a matter of procedure, consider:

  • their collective expertise in matters relating to AIFs/ PIFs;
  • prior experience of the prospective Directors on fund boards; and
  • knowledge on matters relating to principles of good corporate governance and regulatory issues.

Does your Fund need a Director residing in Malta?

How to structure a Malta Fund?

Management of the AIF / PIF

Insofar as the management of the AIF/ PIF is concerned, the fund may be structured in one of two ways:

Managed by an external fund manager
A self-managed fund
Managing a Malta Trust

An External Manager

Where an external manager is appointed to manage the PIF, such manager may be established in any reputable jurisdiction provided that it is subject to regulation, evidence of which must be submitted to the MFSA at the licence application stage.

If the manager is established outside Malta, the MFSA will conduct its “fit and proper” test in respect of the manager to ascertain whether it possesses the business organisation, systems, experience and expertise deemed necessary by the MFSA for it to act as Manager. If, on the other hand, the manager is established in Malta, the proposed manager should be in possession of a Category 2 Investment Services Licence and be duly licensed and authorised by the MFSA to provide management services to collective investment schemes.

The manager appointed for an AIF must be duly authorised in Malta or other European Member or EEA State in terms of the AIFMD. If established in Malta, such manager must be in possession of a Category 2 Investment Services Licence issued in terms of the Investment Services Act.


It is noteworthy that shareholders in a Malta-based fund management companies could benefit from a net effective Malta tax rate of 5%, subject to proper tax structuring, whereas top-level personnel relocating to Malta and employed by the fund management company may benefit from a favourable personal income tax rate of 15% for income up to Eur 5m and 0% for income in excess of Eur 5m.

Managing a Malta Trust

Self-Managing A Malta Fund

It is also possible for a fund to be established as a “self-managed” fund. Doing so would effectively vest responsibility for the portfolio and risk management of the assets of the fund in the Board of Directors. In the case of a self-managed AIF, these functions would be required to be kept separate from each other.

In proposing this structure, the fund will need to satisfy the MFSA that the fund is capable of organising and controlling its affairs in a responsible manner and shall have adequate operational, administrative and financial procedures and controls to ensure compliance with all regulatory requirements and shall provide the MFSA with all the information it may require from time to time.

Where the fund is self-managed, the Board of Directors should appoint an Investment Committee which must be composed of at least 3 persons (who shall be expected to satisfy a full “fit and proper” probity check and competence assessment by the MFSA and one of whom must be resident in Malta) and which committee shall be collectively responsible for the day-to-day investment management of the assets of the scheme according to the Terms of Reference established by the Board of Directors and approved by the MFSA.

The Investment Committee meetings must be held at least quarterly and the majority of such meetings are to be physically held in Malta. Such meetings are deemed to be physically held in Malta if the minimum number of members that form a quorum necessary for a meeting are physically present in Malta. The Board of Directors and the Investment Committee may be effectively composed of the same persons, who will act in their respective capacities depending on the function/s being performed. As advised above, we will be happy to identify any person/s that may be willing to consider taking on this role once we have a clearer understanding of the proposed structure/s.

If the self-managed fund route is followed, the NAV of the scheme should not be less than EUR 125,000 for PIFs and EUR 300,000 for AIFs, or the equivalent in any other currency, on an on-going basis.


Self-managed AIFs are also subject to additional disclosure requirements vis-à-vis the MFSA and the investors.

Service Providers to Malta-regulated AIFs/ PIFs should be established and regulated in a “Recognised Jurisdiction”

The application process

Applying for a Fund in Malta

The application process initially involves the completion of a specific application form which serves the purpose of outlining all relevant details pertaining to the proposed fund, including the objectives of the scheme, the identity and competence of each of its directors and officers, the type of investors to whom the fund is expected to be marketed.

In considering applications for AIF/ PIF licences, the MFSA is principally required to give due regard to the following in considering a licence application:

  1. the degree of protection afforded to the investors;
  2. the degree of protection to the reputation of Malta taking into account Malta’s international commitments;
  3. the promotion of competition and choice; and
  4. the reputation and suitability of the applicant and all other parties connected with the scheme.

For the purposes of considering the experience, standing, competence and track record of all parties who will be involved with the AIF, the MFSA  requires substantial disclosure in the Personal Questionnaires (PQs) and (where applicable) Competency Form for each of the following persons involved in the fund, that is:

  • Directors;
  • Members of the Investment Committee; and
  • Founder Shareholders holding 10% or more of the voting shares in the proposed fund.


We will provide you with detailed guidance in relation to the completion of PQs and Competency Forms once we have been engaged and have commenced our work.

The application process can be broken down into three distinct phases as follows

Phase 1


  • Submission of preliminary outline of proposal by promoters to the MFSA;
  • Submission of a draft Application Form, together with supporting documentation and payment of the non-refundable application fee/s. The draft Application form and the supporting documentation will be reviewed by the MFSA and comments provided to the Applicant within 3 to 4 weeks from submission of the application documents
  • “Fit and proper” checks begin at this stage. This entails following up all the information which has been provided in the Application documents submitted. This includes contacting overseas regulators (where applicable) and referees.
  • The applicability of the relevant Standard Licensing Conditions is determined by the MFSA depending on the nature of the proposed scheme. These licence conditions are very important since they represent the ongoing requirements to which the Applicant will be subject, once licensed.
Phase 2


  • Authority issues its “in principle” approval for the issue of a licence;
  • Submission of signed copies of the revised application form together with supporting documentation in their final format;
  • Finalisation of any outstanding matters, and resolution of any other issues raised during the application process.


A licence will be issued as soon as all pre-licensing issues are resolved.

Phase 3

Post Licensing / Pre-Commencement
of Business

The Applicant may be required to satisfy a number of specific post-licensing matters prior to formal commencement of business.

From submission of a complete application


Ordinarily, the licensing of a fund in Malta may take between 8 to 12 weeks from submission of a complete application. Naturally, this would also depend on response times to requests for any clarification/s and/or additional information, whether from our end or from the MFSA. 

In the case of a self-managed AIF, the MFSA will inform the applicant in writing whether the not the licence has been granted within 3 months of the submission of the complete application.