ARTICLE
12 May 2015

Redefining Collective Investment Schemes

GA
GVZH Advocates

Contributor

GVZH Advocates is a modern, sophisticated legal practice composed of top-tier professionals and rooted in decades of experience in the Maltese legal landscape. Built on the values of acumen, integrity and clarity, the firm is dedicated to providing the highest levels of customer satisfaction, making sure that legal solutions are soundly structured, rigorously tested, and meticulously implemented.
The Investment Services Act (CAP. 370 of the laws of Malta) defines collective investment schemes as arrangements which, inter alia, "operate according to the principle of risk spreading".
Malta Finance and Banking

The  Investment Services Act (CAP. 370 of the laws of Malta) defines  collective investment schemes as arrangements which, inter alia, "operate according to the principle of risk spreading". By virtue of this definition, the requirement of risk spreading had been imposed on all licensed collective investment schemes alike and this irrespective of the type of  collective investment schemes licence.

However, following a consultation process by the MFSA on the proposed implementation of the  Alternative Investment Fund Managers Directive, collective investment schemes licenced as Professional Investor Funds (PIFs) and Alternative Investment Funds ("AIFs") targeting Qualifying and Extraordinary Investors became exempt from risk spreading requirement. Furthermore AIFs which target professional investors are also exempt from the said risk spreading requirement. Nonetheless, risk spreading continues to be mandatory for  UCITS, Non-UCITS Retail Schemes and, due to their quasi retail nature, for PIFs and AIFs targeting Experienced Investors.

To this end, as part of the transposition process relating to the  AIFMD, the definition of collective investment schemes in the Investment Services Act was amended and a specific exemption was enshrined in the Investment Services Act (Exemption) Regulations.

This change was undoubtedly be welcomed by all fund managers currently/to be appointed as investment managers to hedge funds licensed in Malta as it gives them further flexibility when structuring and/or implementing the investment objectives and policies of such funds. Indeed by virtue of the said amendments a PIF/AIF targeting Qualifying/Extraordinary/Professional Investors may now be fully invested in one position.

www.csb-advocates.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More