A legal person whose regular business is managing one or more funds is called a Fund Manager. The purpose of the Fund Manager is to manage the portfolio and risks of the fund, together with other marketing functions and administrative functions, including the following:
An Alternative Investment Fund Manager (“AIFM”) is considered as a deminimis AIFM if it:
Manages portfolio of Alternative Investment Funds (“AIFs”) whose assets under management, including any assets acquired through use of leverage, in total do not exceed a threshold of EUR 100 million; or
Manages portfolio of AIFs whose assets under management in total do not exceed a threshold of EUR 500 million when the portfolios of AIFs consist of AIFs that are unleveraged and have no redemption rights exercisable during a period of five years following the date of initial investment in each AIF.
In this regard, a Company applying to be licensed as a de minimis AIFM is exempt from the full provisions of the AIFMD. However, certain reporting requirements would still be applicable, including those relating to investment strategies, main trading instruments, principal exposures and concentration of the funds under management. Companies which do not exceed the aforementioned thresholds may still opt to be treated as a full scope AIFM which would render applicable all obligations set under the AIFMD framework, including the use of passporting rights.
A Maltese licensed AIF shall have a manager who is responsible for ensuring compliance with the Investment Services Act (“ISA”), the Regulations, and the Investment Services Rules. This manager can either be an external manager appointed by or on behalf of the AIF, also known as an AIFM, or the AIF itself, if permitted. The activities of the AIFM consist of investment management including portfolio management and risk management and other ancillary activities such as administration and marketing.
A Maltese licensed AIFM shall carry out its activities from Malta and shall have in place sufficient financial resources and liquidity in order to conduct its business effectively. If externally managed, the minimum capital requirement of an AIFM is EUR 125,000, whilst if it is internally managed the minimum capital is that of EUR 300,000. However, where the value of the portfolios of the AIFs managed by the AIFM exceeds EUR 250 million, an additional amount of own funds of 0.02% of the amount exceeding EUR 250 million is required. However, it is provided that the total amount of own funds shall amount to at least one quarter of the fixed overheads of the preceding year.
Besides the general organisational requirements, AIFMs are also subject to the following requirements:
Remuneration: The AIFM shall have remuneration policies and practices for those categories of staff, including senior management, whose professional activities have a material impact on the risk profile of the AIFM or the AIF and that are consistent with and promote sound and effective risk management and do not encourage risk taking which is inconsistent with the risk profiles, fund rules or instruments of incorporation of the AIFs it manages;
Conflict of Interest: The AIFM shall have in place conflict of interest rules in order to prevent them from adversely affecting the interests of the AIFs and their investors and to ensure that the AIFs it manages are fairly treated;
Risk Management: The risk management function shall be separated from the investment management function. Furthermore, the AIFM shall have in place risk management policies relevant to each alternative investment fund investment strategy to which each AIF is or may be exposed to; and
Liquidity Management: For each AIF it manages which is not an unleveraged closed-ended AIF, the AIFM shall employ an appropriate liquidity management system and adopt procedures which enable the Licence Holder to monitor the liquidity risk of the AIF.
As the name implies, Undertakings for the Collective Investment in Transferable Securities (“UCITS”) Managers undertake the management of a UCITS normally in the form of investment companies and whose activity includes investment management, administration, and marketing.
Such Licence Holder shall not engage in activities other than the management of UCITS, with the exception of the additional management of other schemes which are not UCITS but the units of which cannot be marketed in other Member States or supervision.
The Notified Alternative Investment Fund (“NAIF”) regime was introduced in Malta in 2016. It provides an attractive framework for the establishment of alternative funds through a streamlined notification process rather than a full licensing procedure. This regime was specifically designed to enhance Malta’s competitiveness by offering a faster and more cost-effective route to market.
Unlike fully licensed funds, a NAIF is not subject to direct authorisation by the Malta Financial Services Authority (“MFSA”). Instead, the responsibility for ensuring compliance with all relevant requirements under Maltese and European law rests entirely with the appointed Alternative Investment Fund Manager (“AIFM”). In this respect, only a full-scope AIFM licensed under the AIFMD may manage a NAIF, thereby ensuring that investor protection, risk management, reporting obligations, and governance standards are upheld.
A key advantage of the NAIF regime is its fast-track approval. Once all documentation is submitted to the MFSA by the AIFM, the notification is processed within 10 business days, allowing for an efficient time-to-market compared to traditional licensing processes. Additionally, NAIFs benefit from the passporting rights of the AIFM, which enables their marketing across the European Union under the AIFMD framework. This makes NAIFs an ideal vehicle for managers seeking to launch products quickly while still benefitting from the EU-wide distribution framework.
The Notified Professional Investor Fund (“NPIF”) regime is a more recent development within Malta’s investment funds landscape. It was introduced to provide a light-touch regulatory option specifically aimed at investors who qualify as Professional Investors under the Markets in Financial Instruments Directive II (“MiFID II”). The focus of this regime is on efficiency and flexibility, reflecting the MFSA’s recognition that professional investors require fewer regulatory safeguards than retail investors.
NPIFs are subject to a notification process rather than a full licensing process, allowing them to be established in a more cost-efficient and time-effective manner. Although the MFSA does not authorise NPIFs directly, the fund must still comply with applicable rules and standards under Maltese and European law. This ensures that the fund is properly structured and administered, even though it is not subject to the same degree of regulatory oversight as fully licensed collective investment schemes.
Importantly, NPIFs may only be marketed to Professional and Qualifying Investors, which ensures that participation is limited to investors with the experience, knowledge, and financial capacity to assess and bear the risks of such investments. NPIFs are highly flexible and can be structured to pursue a wide range of strategies, including private equity, venture capital, real estate, and alternative investment strategies, making them a suitable vehicle for sophisticated investment projects where speed of launch is critical.
The NPIF regime is particularly attractive for high-net-worth families seeking to establish a Single Family Office (“SFO”) in Malta. Under the MFSA’s November 2024 Guidance, an SFO managing only one family’s assets can leverage the NPIF structure for efficient wealth pooling and investment management without raising external capital. Key benefits include:
By combining an NPIF with other Maltese vehicles like trusts or foundations, families can create a robust, tax-efficient platform for succession planning, asset protection, and philanthropy, all within Malta’s cost-effective and EU-regulated environment.
Another option within the Maltese fund framework is the Private Collective Investment Scheme (“PCIS”). Unlike NAIFs or NPIFs, a PCIS is intended to cater to small, private investment arrangements and is therefore subject to very limited regulatory oversight. Its design reflects the principle of proportionality, allowing for private schemes where participants are few in number and generally well-known to one another.
A PCIS may not have more than 15 participants at any given time, and it must remain a private arrangement rather than a public offering. While it is exempt from the requirement to obtain full MFSA licensing, a PCIS must still notify the MFSA of its existence. This ensures a degree of regulatory awareness and oversight, albeit without imposing the extensive requirements applicable to larger or publicly marketed investment schemes.
PCIS structures are commonly employed for family offices, joint ventures, or closely held investment clubs, where participants wish to pool resources for collective investment without incurring the regulatory and administrative burdens of more formal fund structures. This exemption from licensing provides considerable flexibility, while still ensuring a minimal level of regulatory compliance and investor protection.
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