Investment Services Act in Malta

The Investment Services Act is the main law regulation investment schemes in Malta. The legislation was first enabled in 1994, last amended in 2014 and enforced last year. The latest version of the Maltese Investment Services Act also encompasses the provisions the EU Directives 2011/61/EU on Alternative Investment Fund Managers (AIFM) and EU No. 1095/2010 on Alternative Investment Fund (AIF). The first directive allows foreign investors outside the EU to set up investment funds in Malta by granting them passporting rights.

Our lawyers in Malta can provide you with more information about the EU legislation applicable to investment funds in Malta.

The content of the Investment Services Act in Malta

The Maltese Investment Services Act provides for the establishment of collective investment schemes which are required one of the two available licenses for carrying out this type of activity:

• -          the investment services license;
• -          the collective investment scheme license.

The law also provides for the authority issuing the special license for Maltese companies and their supervision once they start operating – the Malta Financial Services Authority (MFSA).

The first section of the Investment Services Act stipulates that the financial license grants the right to:

• -          receive and issue orders related to various financial instruments;
• -          execute order on behalf of third parties;
• -          manage investment funds;
• -          provide trustee, nominee and custodian services;
• -          offering investment advice;
• -          operate through trading platforms.

In order to obtain a license for any of the services above, one must pass a “fit and proper” test.

Applying for an investment license in Malta

Foreign investors setting up an investment company in Malta and applying for an investment services or a collective investment scheme license must follow three main steps:

• -          prepare the documentation for obtaining the license;
• -          going through the pre-licensing stage which implies a verification from the MFSA;
• -          starting to operate.

The instruments a Maltese investment scheme can use are:

• -          transferable securities;
• -          units;
• -          money;
• -          futures;
• -          derivatives.

For more information about the Investment Services Act, please contact our Maltese law firm.