UCITS Funds

UCITS Schemes are retail collective investment schemes that comply with the “Undertakings for Collective Investment in Transferable Securities” Directive. Finanz Fund Services, together with our affiliates, offer hands-on experience in the licensing process, administration and accounting of a Malta UCITS Scheme.

STRUCTURES

Maltese law distinguishes between the different types of structures in which a UCITS Scheme can take form, namely:

  1. A SICAV (an investment company with variable share capital),
  2. A Limited Partnership,
  3. A Unit Trust, or
  4. A Contractual Fund

PASSPORTING

UCITS schemes are harmonised European retail fund structures that can be passported within the EU/EEA on the basis of a single authorisation from one member state. Upon passporting, such Schemes would be subject to the host member states’ local marketing rules for UCITS funds.

KEY FEATURES

Malta was among the first countries to transpose the UCITS Directive and hosts a number of UCITS Schemes. According to the “Analysis of Collective Investment Schemes” as issued by the Malta Financial Service Authority, by June 2015, UCITS Scheme licences amounted to 26 having an aggregate of 71 sub-Fund licences. Below are the key features of UCITS:

  • Regulated by the Investment Services Act
  • The Scheme’s head office and registered office are to be based in Malta
  • Minimum of three directors, of which one must be a Malta resident
  • A custodian is mandatory with a Malta place of business recognised by the MFSA
  • Appointment of a Fund administrator is not mandatory
  • Appointment of an Investment Advisor is not mandatory
  • A Compliance officer and an MLRO must be appointed
  • An Auditor must be appointed
  • UCITS fund may be listed on the Malta Stock Exchange
  • Monthly Statistical Returns need to be submitted to both the MFSA and the Central Bank of Malta
  • Compliance reports are to be submitted to the MFSA on a half-yearly basis
  • For Third Party Managed UCITS, the minimum capital requirement amounts to €125,000 whereas for Self-Managed UCITS this amounts to €300,000

LICENSING

The licensing process for UCITS Schemes would generally take between eight to twelve weeks, by which period, the MFSA would issue an “in principle” approval. Nonetheless, is should be noted that such time is dependent on the complexity of the structure and will vary on a case-by-case basis.

In terms of the Investment Services Act and the Investment Services Rules, in submitting an application for a UCITS Scheme, the MFSA should be provided with the below documentation:

  • Application form including relevant application fee
  • Draft version of the Offering Memorandum & Supplements for the Scheme and the respective sub-Funds
  • A Key Investment Information Document (“KIID”) for each of the sub-Funds
  • Draft version of the Board of Directors’ Resolution/s
  • Draft Investment Committee terms of reference (applicable for self-managed schemes)
  • PQ forms of the proposed Directors
  • PQ forms of the proposed Investment Committee members
  • PQ forms of the proposed Risk Manager including a competency assessment (applicable for self-managed schemes)
  • PQ forms of the proposed Compliance Officer & MLRO
  • PQ forms of the proposed Founder Shareholders

In addition to the above, should the promoters decide to have a third-party managed UCITS Scheme, then the UCITS management company is required to submit the below documentation to the MFSA:

  • Application form including relevant fee
  • Business plan
  • Financial Resources Statement and three-year financial projections
  • Directors’ resolutions
  • Investment Committee terms of reference
  • Competency assessment of the proposed investment committee members of the management company
  • PQ forms of the proposed Directors of the management company
  • PQ forms of the proposed investment committee members of the management company
  • PQ forms of the proposed Founder Shareholders

It should be noted that the process for the license application for UCITS Schemes is identical as for the other investment services vehicles incorporated within the Investment Services Act and will involve the preparatory phase, pre-licensing phase and the post-licensing phase. For a more detailed approach for investment services licences kindly click here.

TAXATION

A UCITS Scheme registered in Malta is generally not subject to Malta tax. Such Schemes would therefore benefit from the below tax benefits:

  • Exempt from income and corporate tax should the Scheme be a non-prescribed fund
  • No tax on the Net Asset Value of the Funds
  • Exempt from WHT on dividends paid to non-Malta residents
  • Exempt from capital gains tax upon sale/redemption of shares/units by non-Malta residents
  • Exempt from stamp duties on the issue or transfer of shares/units

In addition, for VAT purposes, UCITS Schemes are treated as exempt without credit.

IMPLEMENTATION OF UCITS V

 One of the major regulatory events during 2016 will be the implementation of the UCITS V within Malta’s investment services rule books. Such implementation is required by the 18th of March 2016 and will aim to bring the UCITS directive more in line with Alternative Investment Fund Management Directive (“AIFMD”), mainly, in terms of:

  • The requirements applicable to management companies, including the remuneration principles and the transparency obligations towards investors,
  • Changes to the depository regime including the eligibility criteria for firms acting as depositories of UCITS and the capital requirements applicable to them.

For more information about setting up a UCITS Fund, 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.