Reporting and disclosure obligations of UCITS in Malta

A Maltese UCITS (or its investment manager) is required to draw up:

(i) a prospectus, which needs to include the information required in terms of the MFSA Rules, must be approved by the MFSA. In the case of SICAVs and limited partnerships, a signed copy of the prospectus must be filed with the Registrar of Companies in Malta which will make the same available for inspection by the public. In all other cases (non-corporate schemes) a copy of the prospectus, authenticated by an authorised person on behalf of the UCITS, is to be lodged with the MFSA and the Registrar of Companies who will make the necessary arrangements to retain the documentation in an appropriate file for public access. The prospectus is to be offered to investors free of charge upon request:

(ii) a Key Investor Information Document (“KIID”), which should include information about the essential characteristics of the UCITS as prescribed by the MFSA Rules and must be submitted to the MFSA. The KIID must be provided to investors free of charge. If the UCITS or the manager sells units in the UCITS directly or through intermediaries acting on its behalf and under its responsibility, the KIID must be provided to investors in good time before their proposed subscription of units in the UCITS; otherwise the KIID must be provided to product promoters and intermediaries selling or advising investors on potential investments in the UCITS or in products offering exposure thereto, upon request;

(iii) annual reports for each financial year (which must be audited) and half-yearly reports: these must be published and submitted to the MFSA within four months and two months respectively of the end of the period concerned;

(iv) statistical returns to be submitted to the Central Bank of Malta.

The MFSA’s approval is required before any amendments are made to the constitutional document and any other document affecting the rights of participants in the UCITS, the annual and interim report, the Prospectus, the business plan and marketing plan submitted to MFSA at licence application stage, and the agreements between the UCITS and certain of its service providers.

The UCITS is also required to publish the issue, sale, repurchase or redemption price of its units each time it issues, sells, repurchases or redeems them, and at least twice a month, which frequency may be reduced to once a month with the permission of the MFSA, on condition that this does not prejudice the interests of unit holders.

Promotional activities and marketing communications must be carried out and issued in accordance with the applicable rules on investment advertisements, and contain the disclosures prescribed by the MFSA Rules. In case of cross-border promotion of a Maltese UCITS, the relevant rules in the jurisdiction/s concerned would need to be observed (see also section 7 below).

Marketing and Distribution of the UCITS

A UCITS authorised in an EU Member State or EEA State may be distributed and marketed to prospective investors in other EU Member States or EEA States without the need to obtain an additional authorisation in the host State/s, subject to a standard notification procedure which has been streamlined under the UCITS IV regime, with the aim to remove administrative obstacles and delays to cross-border distribution of UCTIS, thus improving time to market and reducing costs.

Where a Maltese UCITS markets its units in another Member State or EEA State, it has to provide investors within the territory of such Member State or EEA State with the KIID (translated, as may be required), as well as the Prospectus, the annual report and half-yearly report, free of charge and upon request, in the manner prescribed by the European regulatory authority of the Member State or EEA State in which the Maltese UCITS is marketing its units.

UCITS IV also sought to introduce an effective passport for UCITS management companies authorised under the UCITS Directive. If a UCITS management company authorised in a Member State or EEA State other than Malta, wishes to act as the investment manager of a Maltese UCITS on a cross-border basis, either by establishing a branch in Malta or in exercise of the freedom to provide services, it would need to follow the passporting procedure prescribed by the Directive (as transposed locally), and would need to ensure compliance with certain requirements related to the Maltese UCITS applicable under Maltese law.

Ongoing Requirements for UCITS setup in Malta

A UCITS needs to ensure compliance on an ongoing basis with the relevant standard licence conditions set out in the MFSA Rules, including rules concerning, for instance:

- permissible investments and investment and borrowing restrictions

- the risk management process;

- repurchase or redemption of units;

- allocation and distribution of income; and

- disclosure and reporting requirements.

The structure for fees payable to the MFSA is as follows:

  Application Fee Annual Supervisory Fee*
The Scheme € 2,000 € 2,500
Up to 15 SUB-FUNDS (per sub-fund) € 450 € 400
16 sub-funds and over (per sub-fund) € 250 € 150

Note: the fees due to the MFSA set out below are given for information purposes only and are the current fees chargeable by MFSA at the time of writing and are subject to change from time to time.

(*) The supervisory fee is payable when the licence is first issued and annually thereafter.

The registration fee payable to the Registrar of Companies for SICAVs is €1,750 payable upon incorporation; the fee for registration of the annual return of a SICAV is fixed at €1,000.

Redomicile a UCITS to Malta

Foreign funds and their service providers established as companies in jurisdictions permitting redomiciliation, may apply to be registered as being continued in Malta under the Companies Act (Chapter 386 of the Laws of Malta), without the need to wind-up the company and to create a new entity. The process of redomiciliation will be conducted in parallel with the application procedure for the relevant licence, where required. A foreign fund may apply for a licence to operate as a Maltese UCITS, provided that it satisfies the relevant requirements.

Taxation for UCITS in Malta

Malta offers a favorable tax regime for CISs and has a comprehensive Double Tax Treaty network. For tax purposes, a distinction is made between prescribed and non-prescribed funds. Essentially, a fund in a locally based scheme that has assets situated in Malta constituting at least 85% of its total asset value is classified as a Prescribed Fund; other licensed funds, including funds in an overseas-based scheme, are Non-prescribed Funds.

In the case of Prescribed Funds, the CIS qualifies for exemption from tax on income “other than income from immovable property situated in Malta and investment income” earned by the Prescribed Fund. The withholding tax on local investment income is 15% for bank interest and 10% for other investment income.

There is no withholding tax on investment income received by non-prescribed funds (including overseas based CISs), which are exempt from tax on income and capital gains realized on their investments and also enjoy a blanket stamp duty exemption on their transactions. There is also no wealth or Net Asset Value Tax in Malta.

Foreign investors are not subject to Maltese tax on capital gains or income when they dispose of their investment (through redemption by the Fund or disposal to a third party) or when they receive dividend or other income from the Fund. These would be entitled to benefit from the stamp duty exemption obtained from the fund in connection with the acquisition or disposal of their units in the fund.

The incidence of tax will depend on the type of transfer whether the Fund is prescribed or non-prescribed, and the tax residence of the investor. Since the withholding tax on prescribed funds is charged at fund level, any capital gains made by investors from the redemption, cancellation or liquidation of securities in a listed fund are not subject to further tax in the hands of the investor.

The scope of this document is to highlight the main issues relating to UCITs setup in Malta. Detailed information relating to Professional Investment Funds may be found in other documentation prepared by Calamatta Cuschieri.

Calamatta Cuschieri Fund Services is a leading fund administrator based in Malta

Find out more information contact Mr. Michael Galea – Head of Calamatta Cuschieri Fund Services.