Licensing of a Collective Investment Scheme

Investment Services in Malta are regulated by the Investment Services Act (“ISA”) (Cap. 370 of the Laws of Malta) as amended by Act XVII of 2002. This law sets out the regulatory framework for the licensing of Collective Investment Schemes (“CISs”). This process will fall under the scope of the Malta Financial Services Authority (“MFSA”) which, besides having the responsibility for the licensing process, is also responsible for the regulation and ongoing supervision of Collective Investment Schemes.

CISs are schemes or arrangements 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:

“The scheme or arrangement operates according to the principle of risk spreading, and either:

  1. The contributions of the participants and the profits or income out if which payments are to be made to them are pooled, or
  2. At the request of holders, units are repurchased or redeemed out of the assets of the scheme or arrangement, continuously or in blocks at short intervals, or
  3. Units are, or have been, or will be issued continuously or in blocks at short intervals.”

A Scheme which does not actively spread its risk as described above may still be permitted to operate if its units are offered only to license holders and/or persons who deal in similar investment instruments or property as part of their ordinary business, or who are themselves exempt from having to possess an investment services licence.


The ISA lays down the broad criteria to be applied by the MFSA when considering grants or refusal of a licence. In doing so, the MFSA will have to ensure that the below criteria are met:

  1. Investors within the CIS are protected;
  2. The reputation of Malta, and Malta’s international commitments, are protected;
  3. The promotion of competition of choice

A licence is issued by the MFSA only if it is satisfied that the applicant is “fit and proper” and will ensure that the applicant will comply and observe the Investment Services Rules and Regulations. Through the fit and proper test, the MFSA will ensure that the licensees are solvent, competent, and hold integrity in all their dealings. Thus, the MFSA will only grant a licence if it is satisfied that the applicant and other related parties are fit and proper to provide the investment services concerned and that they will comply with all the applicable rules and regulations.


Irrespective of the CIS’s form, type, and structure, a promoter who is interested in selecting Malta as a jurisdiction of choice for his Scheme will have to undergo the below three-stage process with the Maltese regulator as set out below.


It is recommended that the promoters will hold a preliminary meeting with the MFSA to outline their proposal. This meeting should be held in advance of submitting an application for a licence. Following such meeting, the applicants will submit a “draft” application form together with any required supporting documentation as specified in the application form itself.

The MFSA will review the documentation and may ask for supplementary information to be provided. The MFSA’s assessment of the applicant’s ‘fit’ and ‘proper’ credentials will also commence at this stage. The expected turnaround time for the MFSA to review the documentation provided to it and for it to provide feedback will generally take around three weeks. A number of license conditions are communicated to the applicant at this stage, adherence to which is required throughout the life of the fund.

Moreover, during such stage, the MFSA will consider the nature of the proposed activity and the kind of investors to whom and the market to which the investment services are to be provided. On the basis if this analysis, a decision will be made regarding which Standard Licence Conditions (“SLCs”) should apply. The MFSA may allow some derogation from the SLCs where the circumstances justify such treatment, as long as there is adequate protection to investors.

The Application Documents

The supporting documentation as mentioned in the first phase of the application process are reproduced hereunder.

  1. Application Form;
  2. Application Fee;
  3. A near final draft of the Offering Document;
  4. A copy of the appropriate approval of the Offering Document by the Board of Directors of the Fund;
  5. A near final draft of the Memorandum and Articles of Association of the Fund, or other constitutive document if the Fund is not in corporate form;
  6. Personal Questionnaires of each proposed Director of the Fund;
  7. Personal Questionnaires of the Directors and Qualifying Shareholders of external service-providers (i.e. those shareholders holding more than 10% of the shares in such entities) BUT only if such service providers are operating from non-Recognised Jurisdictions;
  8. Details of the Fund’s proposed Local Representative (where applicable).


Once the draft application and supporting documents have been reviewed and the draft licence conditions have been met, the MFSA will issue an “in principle” approval for the issue of a licence. At this stage, the Application form and supporting documentation are provided to the MFSA in their final format.


The Applicant may be required to satisfy a number of post-licensing matters prior to the formal commencement of business.

Finanz Fund Services Ltd, a collaboration between CSB Group and Treppides Fund Services Ltd, is authorised by the MFSA to provide fund administration services. For more information about Licensing of Collective Investment Schemes kindly contact us for a non-committal professional advice.