We have extensive experience in the Fund industry and we have licensed a number of funds, ranging from private equity funds to hedge funds and AIFs. Malta offers a vast choice of legal structures that may be used as bases for collective investment schemes, including UCITS, AIFs, PIFs and Recognised Incorporated Cell Companies (RICCs).

We will not only advise you on the most suitable structure for your needs but we will guide you throughout the application process, we will assist you in your daily compliance and anti-money laundering needs and would be more than willing to introduce you to local service providers. We have no affiliations with any entities and therefore we would be able to guide you from an objective point of view.

Malta has proven to be an attractive jurisdiction for the setting up of any type of Funds.  Local expertise, spurred onwards by a solid Financial Services sector provides the perfect setting for your business.

Our Services

Zerafa Advocates can provide you with:

  1. Setting up and aiding in the process of licencing of Collective Investment Schemes;

  2. Drafting any required Agreements or documents ;

  3. Contacting the MFSA – Malta Financial Services Authority and liaising with the authority on your behalf;

  4. Drafting of official documentation;

  5. Drafting the Memorandum and Articles of Association of the fund;

  6. Negotiation agreements with service providers;

  7. Providing company secretary service;

  8. Providing compliance and regulatory advice.

Alternative Investment Funds

Alternative Investment Funds (“AIFs”) are non-retail collective investment undertakings which are regulated by the Investment Services Act, Chapter 370 (“Act”) of the Laws of Malta, following the transposition of the Alternative Investment Funds Managers Directive (“AIFMD”).  The Act defines an AIF as an entity raising “capital from a number of investors to invest it according to a defined investment policy, for the benefit of those investors, and which does not qualify as a UCITS Scheme in terms of the UCITS Directive.”

Whilst having similar attributes to PIFs, AIFs are more strictly regulated.  They target professional investors, retail investors and where permitted qualifying investors, which include large undertakings, national governments and others whose main activity is investing in financial instruments. 

An AIF can either be managed by an Alternative Investment Fund Manager (“AIFM”) or else it can be self-managed.  For the first, an EUR 1200 initial capital requirement is imposed and as for self-managed AIFs, there is a EUR 300,000 initial capital requirement. 

Additional sub-funds of an existing AIF can also be constituted as an umbrella fund subject to the submission of a number of documents.  Marketing activities in relation of such funds are also regulated in the Act, where the latter imposes a number of criteria to be followed.

Additionally, the framework for AIFMs opens up the EU as a single market place for alternative funds, creating a single marketplace within the EU for the marketing of AIFs, known as a marketing “passport”.  Marketing under the AIFM Directive includes “any direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM, of units or shares in a fund it manages to or with investors domiciled in the EU”.  Also, once the AIFM is authorized in one EU member state, it does not require further authorization in any other EU member state to market its EU AIFs to professional investors in other member states.    

If you would like any further information on what types of AIFs exist, details on its setup and whether setting up an AIF could help you with your enterprise, please do not hesitate to contact us for any assistance.

Professional Investor Funds

Professional Investor Funds (“PIFs”) are another special class of collective investment schemes which are however less regulated than AIFs.  PIFs are not set up for the general public but rather for qualifying investors.  In fact, the minimum investment threshold in the PIFs is EUR 100,000 or its currency equivalent, and such investment may not be reduced below such a minimum at any time.  PIFs are considered to be more flexible and have less restrictions. The underlying assets normally include a number of traditional and non-traditional investments for instance; derivatives, real estate and collectibles such as art.

A qualifying investor is a person who:

  1. Declares in writing to the fund manager and the PIF that it is aware of and accepts the risks associated with the proposed investment; and

  2. Satisfies at least one of the following :

    • It is a body corporate which has net assets in excess of EU 750,000;

    • An unincorporated body of persons or association which has net assets in excess of EUR 750,000 or the currency equivalent;

    • A trust where the net value of the trust’s assets is in excess of EUR 750,000;

    • An individual whose net worth or joint net worth with that of the person’s spouse exceeds EUR 750,000; or

    • A senior employee or director of a service provider to the PIF.

Ordinarily, the main service providers required by a PIF are a manager, an administrator, an investment adviser and/or a custodian/prime broker.  A PIF can either be self-managed or it may appoint a third party manager.  The appointment of a custodian or an investment adviser are not a strict requirement.  Service Providers need not be established in Malta, and therefore promoters of PIFs set up in Malta can continue to make use of their services regardless.   

As for the granting of a collective investment scheme licence itself, the MFSA will only grant it if it is satisfied that the scheme will comply with the provisions of the Investment Services Act and the MFSA rules on PIFs.  A PIF promoted to qualifying investors may be established as an investment company with variable share capital (“SICAV”), an investment company with fixed share capital, an incorporated cell company  (“ICC”) or an incorporated cell of a recognised incorporated cell company, a limited partnership, a unit trust or a contractual fund.

A PIF that has been granted or has applied for a collective investment scheme licence in terms of the Act may apply for admissibility to listing with the Listing Authority (MFSA).  

The Application fee is payable on submission of the application for a PIF licence and it is not refundable.  In respect of an application for a PIF licence, the application fee is EUR 2000 with an annual supervisory fee of EUR 2000.

PIFs are also commonly used as hedge funds, private equity funds and real estate funds.

Undertaking for the Collective Investment in Transferable Securities

UCITS is a regulatory framework of the European Commission that creates a harmonised regime throughout Europe for the management and sale of funds.  UCITS funds providers who meet the standards are exempt from national regulation in individual European countries. These funds are flexible and have tax efficient features in Malta in turn making Maltese UCITS schemes quite popular.  UCITS funds are exempt from income and capital gains tax (excluding investment in immovable property) as long as they do not invest in Malta.

UCITS offer the highest possible levels of investor protection and in fact, this category of investment funds accounts for a large percentage of all collective investments by small investors in Europe. 

Management of this fund can be carried out internally, or otherwise a UCITS management company may be appointed.  The minimum capital requirement for self-managed UCITS is EUR 300,000.

Retail AIFs

A Retail Alternative Investment Fund is a fund promoted to investors who are not professional investors.  In this case, the Retail AIF is still subject to the Investment Services Rules.  The same licensing procedure applies as an AIF however a number of supplementary conditions to AIFs sold exclusively to retail investors then apply.

Due to the fact that retail investors are deemed to be less experienced than professional ones, the AIFMD imposes some investment and borrowing restrictions on retail AIFs, as opposed to AIFs marketed to professional investors.

Retail AIFs may not be marketed automatically throughout the European Union and each member state and each has the right to impose its own restrictions on marketing of retail AIFs within its jurisdiction.

Loan Funds

In Malta rules establishing and regulating loan funds were launched in 2014 enabling collective investment schemes to invest through loans.  Fund Managers can establish loan funds either as PIFs or as AIFs, depending on whether the fund manager is a de minimis AIFM or and AIFM licensed in terms of the Investment Services Act.  In fact, laws, regulations or standard licence conditions which already apply to PIFs and AIFs also apply to these loan funds.

Units of these collective investment schemes shall only be marketed to professional investors, as defined by MiFID and investors who on request, elect to be treated as professional clients and who commit to investing a minimum of EUR 100,000.  A Fund manager, custodian, auditor, compliance officer, a money laundering reporting officer, a valuer and a Local Director are all required service providers.

A number of investment restrictions of such a scheme include not investing more than 10% of its capital in another loan fund, and not investing more than 10% of the fund’s capital in a single undertaking, amongst other restrictions.


NAIFs which stands for Notified Alternative Investment Funds were introduced by the MFSA in 2016, and some of their advantageous characteristics include the fact that new funds will be able to come into the market faster, where such NAIFs need not be licensed, authorised or approved by the MFSA unlike existing Maltese fund regimes, nor will they be subject to any ongoing regulation.  Therefore AIFMs can establish these notified AIFs without MFSA’s authorisation, subject to a notification mechanism and subject to the AIFM retaining all reporting and obligations. 

Previously, under the AIFMD, fund managers were facing a ‘double regulatory burden’ since both the fund managers as well as the funds were subject to intense regulation, leading to inefficiencies and irregularities.  Therefore the NAIFs were created, in line with the AIFMD, but with an innovative twist.

NAIFs can offer their units to professional investors as according to Directive 2004/39/EC and/or qualifying investors; be it either open-ended or closed-ended.  Both must need to invest a minimum of €100,000 in the NAIF and satisfy particular criteria.  They can also be established in any form permitted under Maltese law, therefore they can be either SICAVs (investment companies with variable share capital), INVCOs (investment companies with fixed share capital), limited partnerships, unit trusts, common contractual funds or incorporated cells.  

NAIFs are quicker, easier to understand and they allow increased flexibility especially since the time frame within which an AIFM markets its funds has been reduced.  Additionally, NAIFs have access to other EU jurisdictions through the European passport. One particular restriction is that NAIFs cannot be self-managed but require an AIFM.   

NAIFs take approximately 10 working days to set up from notification date to the MFSA.


European Long-Term Investment Fund Regulations came into force in June 2015.  The European Commission’s aim of strengthening the European economy by focusing on sustainable growth and boosting long-term investment in the ‘real economy’, has led to the establishment of such type of fund.  The asset classes in which such fund can invest are infrastructure projects, small and medium sized enterprises and development and education.  Basically, classes requiring a long-term commitment from investors.

To qualify as an ELTIF, a collective investment scheme is required to be an AIF and managed by an AIFM, where the latter must apply to the MFSA for approval to manage the ELTIF. 

An ELTIF is only permitted to invest in ‘eligible investment assets’ and assets that are eligible for investment by UCITS, such as equities, bonds, money market instruments, and at least 70% of the capital ELTIF is required to be invested in eligible assets.  Certain borrowing restrictions include the prohibition on any borrowing that represents more than 30% of the value of the capital of the ELTIF.  The long-term qualities of the ELTIF are safeguarded through, for instance, the prohibition of short selling of assets. 

Institutional and private investors, including both professional and retail investors can invest in this fund.  ELTIFs can avail themselves of the marketing passport available to EU AIFs according to the AIFMD.

What distinguishes ELTIFs from AIFs is that the first may be more appealing for investors aiming to achieve a steady flow of income and long-term returns. 

EuSEFs and EuVECAs

Both the European Social Entrepreneurship Funds (EuSEF) Regulations and the European Venture Capital Funds (EuVECA) regulation came into effect across the EU in 2013.

The aim of the establishment behind these funds is the creation of new opportunities for market participants to raise and invest capital in innovative small and medium-sized enterprises (SMEs) and social undertakings throughout Europe, as well as protecting venture capital from certain AIFMD rules that are unsuited for the sector, such as high capital requirements.  For a fund to qualify either as a EuVECA or a EuSEF it must be established in the EU, be a collective investment undertaking qualifying as an AIF.  Additionally, either of the funds may ‘opt in’ to an EU-wide marketing passport, where an AIFM registered in one Member State may market these funds in all other Member States.


EuSEF funds are only allowed to invest in certain types of assets, such as equity or debt instruments issued by or loans granted to qualifying portfolio undertakings.  The latter are undertakings not admitted to trading on a regulated market with the primary objective of achieving positive social impacts, whilst using their profits to reach their primary social objective such as providing commodities to vulnerable or marginalised, disadvantaged or excluded persons or providing financial support.

Similar to EuVECAs, these funds must invest at least 70% of their capital contributions in qualifying investments and not use more than 30% for the acquisition of assets other than qualifying investments. 


More precisely EuVECAs are funds which place a percentage of the investments supporting young and innovative companies.  In fact every fund wanting to use this label must show that a minimum of 70% of the capital received from investors will be spent in supporting these companies – qualifying investments, and consequently not use more than 30% for the acquisition of assets other than qualifying investments.  This satisfies the objective that economic growth takes place throughout Europe through the financing of such SMEs.  Qualifying portfolio undertakings imply permitted investment in unlisted undertakings which employ up to 499 persons or SMEs listed on a SME growth market. 

EuVECA venture capitalists can market their funds to investors across the EU through a voluntary EU-wide passport without having to meet all AIFMD requirements.  Recently, in 2018, amendments to the original EU Regulation addressed issues to promote greater flexibility on potential investments as well as reducing costs.


There are mainly two aspects to a re-domiciliation process: ensuring that all the requirements are met from a legal and corporate point of view and ensuring that the Fund can keep its track record, net asset value (“NAV”) and performance history. 

The Investment Services Act, Cap. 370 of the Laws of Malta, lays down the whole process required for the re-domiciliation of a fund to Malta.  As long as the set up of the body corporate fits within the requirements of a collective investment scheme under the Act, subject to the MFSA’s authorisation, the foreign body corporate could then be continued as a collective investment scheme in Malta. 

Such continuation would require all investments as well as investors to stay the same following the re-domiciliation.  One must note that if the fund to be re-domiciled is an AIF, any agreements with custodians or depositories not residing in Malta must be discontinued.

Malta has been a pioneer in several aspects of financial services due to local expertise especially in the fund industry.  This is coupled with good governance, favourable taxation schemes (by obtaining access to Malta’s extensive double taxation and benefiting from the Participation Exemption) and tried and tested legislation regarding re-domiciliation of companies from many countries worldwide.  The fact that that the foreign company need not wind-up and set up newly in Malta is also a considerable advantage, where the same Memorandum and Articles of Association can be utilized.

Private Funds

Private Collective Investment Schemes in Malta are regulated by the Recognition of Private Investment Schemes Regulations under the Investment Services Act in Malta.  The main characteristic of this Fund is that it limits the total number of participants to 15 persons, as long as they are close friends or relatives of the promoters, the scheme is private in nature and purpose, and it does not qualify as a Professional Investor Fund.  It is good to note that one of the participants may be a company, subject to a number of restrictions, which include the requirement that the company is not connected to the management of the scheme in any way and the ultimate beneficial owners of the company are still close friends or relatives of the promoters.

Unlike other Funds this Scheme is not subject to an MFSA licence, but it must simply apply for recognition by the MFSA.  Nonetheless, due to their nature, such Schemes cannot be listed on the Malta Stock Exchange. 

Several benefits for setting up a Private Scheme include the absence of investment or borrowing restrictions except as may be specified in the recognition certificate and the relatively quicker procedure to obtain registration rather than licensing.   

Under Maltese Law, a Private Scheme may be set up as a Contractual Fund, a Unit Trust, a Commercial Partnership, a Public or Private Limited Liability Company (plc/ltd), a SICAV or an INVCO. 

Incorporated Cell Companies

Incorporated Cell Companies (ICC) are a relatively recent addition to the fund industry in Malta and provide a unique facility whereby the promoter can establish a fund platform for his clients and they can each be allocated an Incorporated Cell within the ICC.  First there was the launch of the SICAV ICC, which was very much in demand and then there was the development of the Recognised ICC (RICC).

An ICC is very similar to a protected cell company, except that each separate cell within an ICC is a separate legal entity.  The Board of the Company has ultimate responsibility for all cells and assets.  The ICC is a secure structure to segregate assets and liabilities within each cell.

An incorporated cell is created by virtue of a resolution of the Board of Directors which approves the name of the incorporated cell being established, the terms of the memorandum and articles of association and  authorises, if applicable, the subscription by the incorporated cell company of a share or shares in the incorporated cell.  Once the resolution has been passed the memorandum and articles of association adopted by the resolution of the Board are filed with the Registrar of Companies and a certificate of registration is issued in terms of the Companies Act.

Additionally, an ICC or a similar structure domiciled outside Malta may continue as a SICAV ICC or RICC in Malta.  A limited liability company (“Ltd”), may, by extraordinary resolution and provided it is authorized to do so by its memorandum and articles of association, go through a transformation.  An Ltd can be transformed from a non-cellular company into an ICC or into an incorporated cell, from an ICC having no incorporated cells or from an incorporated cell into a non-cellular company.  Such transformations must take place with the prior written consent of the MFSA.

The directors of an ICC are duty bound to keep the assets and liabilities of the ICC separate and separately identifiable from the assets and liabilities of its incorporated cells.

Recognised Incorporated Cell Companies

The RICC just provides administrative services to incorporated cells licensed as collective investment schemes (CIS) within the platform structure.  Therefore in terms of the RICC Regulations, the latter is required to obtain a recognition certificate to operate as a pure platform not carrying out any activity amounting to a licensable activity. On the other hand, the SICAV ICC, operates as a collective investment scheme and carrying out activities accordingly.

The RICC is not a Recognised Fund Administrator and the range of activities that may be carried out by an RICC include providing administrative services related to the establishment of incorporated cells, negotiating service provision agreements and providing ancillary services as may be approved by MFSA, amongst other activities.  Additionally, the Rules require that the Board of Directors of the RICC and the Board of the Incorporated Cells have a director in common.

Differences between the two include that the SICAV ICC must structure the ICC itself and has to be in possession of a CIS licence and must actually function as a fund.  As an RICC, the ICC can only be a limited liability company and cannot perform licensed activities.

PIFs investing in Virtual Currencies

The Maltese regulatory framework provides the possibility for the Professional Investor Funds (“PIFs”) to invest in Virtual Currencies (“VCs”). The Investment Services Act (Cap. 370 of the laws of Malta) regulates this flexible investment vehicle, where the PIFs investing in VCs may only be constituted in the form of (i) an investment company, generally in the form of investment company with variable share capital (SICAV); (ii) limited partnership; or (iii) unit trusts.

As for the key legal requirement of the PIFs, this fund must be promoted only to those individuals or entities which are classified as a Qualifying Investors and the latter always need to maintain a minimum investment amount of €100,000 . Moreover, in order to operate as PIF investing in VCs, a licence shall be issued by the Malta Financial Services Authority (“MFSA”) which authority requires to fulfill further criteria in relation to VCs investment.

In that case, the licence holder of the PIFs must ensure that their parties and the service providers have the relevant knowledge and experience in the field of information technology and VCs as well as its underlying technology. Furthermore, applicants must also include adequate risk warnings associated with both direct and indirect investment in VCs.

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