• Malta - redefining Collective Investment Schemes
  • June 21, 2013
  • Law Firm: CSB Advocates - Swatar Office
  • The Investment Services Act (CHAP. 370 of the laws of Malta) currently definescollective investment schemes as arrangements which, inter alia, “operate according to the principle of risk spreading”. By virtue of this definition, the requirement of risk spreading has been imposed on all licensed collective investment schemes alike and this irrespective of the type of collective investment scheme licence.

    By means of the consultation document issued by the MFSA on the 24th May 2013 on the proposed implementation of the Alternative Investment Fund Managers Directive, it is now being proposed that, following the transposition of the AIFMD, the risk spreading requirement will cease to be applicable to collective investment schemes licensed as professional investor funds (PIFs) targeting Qualifying and Extraordinary Investors. Furthermore the said requirement would not be applicable to AIFs which target professional investors. Nonetheless, risk spreading would continue to be mandatory for UCITS, Non-UCITS Retail Schemes and, due to their quasi retail nature, for PIFs targeting Experienced Investors.

    To this end, as part of the transposition process relating to the AIFMD, the MFSA is proposing to make the required amendments to the definition of collective investment schemes as is currently enshrined in the Investment Services Act and also to all the applicable rules issued by the MFSA.

    This proposed change will undoubtedly be welcomed by all fund managers currently/to be appointed as investment managers to hedge funds licensed in Malta as it gives them further flexibility when structuring and/or implementing the investment objectives and policies of such funds.