The principal body of laws establishing a comprehensive regulatory framework for the provision of investment services in Malta is The Investment Services Act¸ 1994 and subsidiary legislation enacted under that Act. The Malta Financial Services Authority (MFSA) requires the highest levels of probity and honesty by operators and applies the Fit and Proper test to its licensees. This test requires key staff within an investment service provider together with any licensees to demonstrate solvency¸ competence and integrity in their dealings at all times. The Act lists a number of activities that require a licence from the MFSA. These activities include Dealing as Principal or Agent; Arranging Deals; Management of Investments; Trustee¸ Custodian or Nominee Services; Investment Advice and Stock broking.
The Act also requires that an investment scheme would have a collective investment scheme licence before offering its units to investors. The Act defines a collective investment scheme¸ the main investment setup in Malta¸ as any scheme or arrangement which has as one of its objects¸ the collective investment of capital acquired by means of an offer of units for subscription which operates according to the principle of risk spreading¸ the contributions and the profits out of which payments are to be made are pooled¸ units can be repurchased¸ redeemed our of the assets of the scheme and units are issued continuously or at short intervals. The legal structure of the scheme may be in the form of a SICAV (Sociétés d’Investissement à Capital Variable)¸ INVCO (Investment Companies with Fixed Share Capital)¸ a mutual fund¸ an investment partnership or a unit trust.
The different types of schemes available under the Maltese investment regulatory structure¸ in which the level and strictness of regulation depends on the type of scheme being set-up¸ with investor and market protection as a whole being the underlying principle. These types include Professional Investor Funds; Private Schemes; Specialist Schemes and Retail Funds.
Professional Investor Funds can be promoted either to Qualifying Investors or to Experienced Investors. Professional Investment Funds for Qualifying Investors may be promoted to entities or individuals with net assets in excess of USD1.0 million and persons with reasonable experience in the acquisition and/or disposal of funds of a similar nature or property of a the same kind in which the fund deals. The minimum initial investment in such a fund is of USD100¸000¸ and the amount of invested funds may not be lower than this level except if it is a result to a fall in the NAV of the fund. Professional Investment Funds for Experienced Investors may be promoted to persons who have the expertise¸ experience and knowledge to be able to make their own investment decisions and understand the risks involved. The minimum initial investment in such a fund is of USD20¸000¸ and the amount of invested funds may not be lower than this level except if it is a result to a fall in the NAV of the fund.