Defining Collective Investment Schemes (“CIS”)

The Investment Services Act defines a Collective Investment Scheme (“CIS”) is a scheme or arrangement which have as their object the collective investment of capital acquired by means of an offer of units for subscription, sale or exchange and which, additionally, also possesses any one of the following characteristics:

  1. The scheme or arrangement operates according to the principle of risk spreading; and either
  2. The contributions of the participants and the profits or income out of which payments are to be made to them are pooled;
  3. At the request of the holders, units are or are to be repurchased or redeemed out of the assets of the scheme arrangement, continuously or in blocks as short intervals; or
  4. Units are, or have been, or will be issued continuously or in blocks at short intervals.



Malta’s investment services rule books distinguish between the following main types of Collective Investment Schemes:

  • Professional Investor Fund (“PIF”)
  • Alternative Investor Fund (“AIF”)
  • Retail Collective Investment Schemes (Retail-UCITS / Retail non-UCITS)
  • Private Collective Investment Schemes

Any of the above mentioned types of CISs, established or carrying activities in Malta, are in principle required to obtain a licence from the Malta Financial Services Authority (“MFSA”). The MFSA is Malta’s regulator for the financial services industry.



Under the Maltese legal framework, a CIS may be established in various legal forms as outlined below.


Open Ended Investment Companies (SICAV)

The objects of the SICAV is that of an investment company with variable share capital in terms of the Companies Act (Chap 386 of the Law of Malta). Such company include the collective investment of its funds in securities and other movable and immovable property with the aim of spreading investment risk.

The SICAV may take the form of either a Public or Private Company and the end shareholder may realise his investment through the sale or redemption of shares. SICAV companies may be constituted as an “umbrella” or multi-fund company whereby the share capital may be divided into different classes of shares, where one class or group of classes of shares constitute a district sub-fund of the company. In this way, the scheme may operate a number of separate sub-Funds having different investment policies and objectives.

Furthermore, in such structures it is possible for the Memorandum and Articles of Association to provide that the assets and liabilities of each sub-fund are treated as a patrimony separate from the assets and liabilities of each other sub-fund of the company. In such scenarios, the directors of an umbrella company are required to hold separate records, accounts, statements and other documents to evidence the assets and liabilities of each sub-fund of the company. Thus the shareholders in each individual sub-fund will benefit from varying dividend returns, depending upon the performance of each particular sub-Fund.


Closed Ended Investment Companies (INVCO)

A INVCO is an investment company with fixed share capital in terms of the Companies Act (Chap 386 of the Law of Malta). Such company aims at giving its shareholders the benefit of the results of the management of its funds. It should be noted that the activities within an INVCO are restricted by the following requirements:

  1. The company’s holdings in any other company not being an investment company with fixed share capital should not exceed 15% by value of its investments;
  2. Distribution of the company’s capital profits is prohibited by its memorandum and articles of association; and
  3. The company does not retain more than 15% of the income derived from securities.

These restrictions have caused the INVCO to become a less popular form of investment company in Malta when compared to the SICAV.


Recognised Incorporated Cell Companies (RICC) & Incorporated Cells (ICs)

In addition to the multi-Fund SICAV structures, the Maltese regulations applicable to RICCs are listed in the Investment Services Rules in terms of article 9A of the Investment Services Act. This is a supplement to the Investment Services Rules for Recognised Persons and are applicable to Recognised Cell Companies and to Incorporated Cells. The regulations define a RICC as a limited liability company.

A RICC may apply for and be issued with a Certificate of Recognition to provide administrative services to the following Scheme Categories:

  1. Retail UCITS Schemes,
  2. Retail non-UCITS Schemes,
  3. Professional Investor Funds (“PIFs”),
  4. Alternative Investor Funds (“AIFs”),
  5. Private Collective Investment Schemes

It should be noted that although the Authority will consider applications for recognition of RICCs with different types of Incorporated Cells (“ICs”) having different compliance, competence and service provision requirements, every application will be considered separately taking into consideration all relevant factors including how the structure will fit within the RICC framework and any other relevant local and international rules and regulations. The following is a list of activities that may be carried out by the RICC:

  1. The provision of administrative services related to the establishment of ICs;
  2. Procurement of external service providers and approval of any changes thereto;
  3. Negotiation of service provision agreements to be used by ICs of the RICC to the competent authority;
  4. Advice to the competent authority of any changes or amendments to model agreements and submission of new model agreements negotiated with service providers;
  5. Signature of tripartite agreements between service providers, the RICC and the IC based on the model agreements;
  6. Standardisation of any other documentation to be used by ICs;
  7. Approval and joint signature of any applications for licences (including variations and extensions thereof) to be submitted by ICs; provision of written declarations identifying any changes to model agreements already submitted to the competent authority, including a NIL declaration;
  8. Provision of ancillary services as may be approved by the competent authority.

Each IC of a RICC is constituted as a collective investment scheme and must obtain a licence to operate as such from the MFSA. An incorporated cell is endowed with separate legal personality and is not a subsidiary of its RICC solely by virtue of the fact of it being an incorporated cell of its RICC.


Limited Partnership

This form of commercial partnership has its obligations guaranteed by the unlimited, joint and several liability of one or more partners (called the “general partners”) and by the liability, limited to the amount unpaid on the contribution, if any, of one or more partners (called the “limited partners”). At least one of the general partners shall be either an individual or a body corporate which has its obligations guaranteed by the unlimited and joint and several liability of one or more of its members.

A partnership deed for a partnership en commandite must specify which partners are general partners and which are limited partners. In default, the partnership shall resolve itself into a partnership en nom collectif, meaning that all partners will have unlimited, joint and several liability. In addition, the deed must also specify:

  1. The name and residence of each of the partners;
  2. The name of the partnership;
  3. Registered office (in Malta);
  4. Objects, that is to say, whether the objects are trade in general or a particular branch of trade, and in the latter case, the nature of the trade;
  5. The contribution of each of the partners, specifying the value of the respective contribution of every partner;
  6. The period, if any, fixed for the duration of the partnership.


Unit Trust

According to the Trust and Trustees Act (Chap 331 of the laws of Malta), a Unit trust is “any trust established for the purpose of, or having the effect, of providing, for persons having funds available for investment, facilities for the participation by them as beneficiaries under the trust, in any profits or income arising from the acquisition, holding, management or disposal of any property whatsoever, being a collective investment scheme as defined in the Investment Services Act.” 

The main advantage behind a unit trust is that investors may obtain direct access to wealth creation and profits. In addition, it is sometimes considered to be inconvenient to adhere to the strict provisions laid down in the Companies Act. Thus, such structure permits the possibility to structure it as being tax-transparent leading to favourable results in certain investments.


For more information kindly contact us for a non-committal professional advice or complete our Fund Establishment Worksheet which provide a summary of the administration services that we offer.