Although billed as a simple alignment of the Maltese Companies Act, the changes are seen as significant in terms of the jurisdiction’s efforts to compete with such other European fund centres as Luxembourg and Ireland.
Malta, a 316sq km (121sq mi) island nation off the coast of Sicily, joined the European Union in 2004.
The Amendment of the Tenth Schedule of Malta’s Companies Act, as the recent regulatory changes are known, may be viewed on the Malta Financial Services Authority’s website here.
A spokesman for the Malta FSA said that the newly-tweaked regulations provide “further detail on the operational features of limited partnerships (LPs)” under Maltese law, “and introduce important changes which allow LPs to set up multi-fund (umbrella) structures with different sub-funds investing in different strategies.
“In addition, complimentary changes to the Companies Act have brought in an important new feature for LPs that now allows them to have their capital not divided into shares”, seen as a potentially useful option for tax structuring.
Positive reaction from industry
Funds industry experts said the changes reflected Malta’s desire to accommodate their industry, which some likened to Dublin’s willingness to listen to the market when it was just getting off the ground as a financial centre in the 1990s.
Kevin Mudd, one of the founders and principals of KMG Capital Markets Luxembourg SA, said the changes were “another positive move on Malta’s part to make limited partnerships more accessible and cost effective”, and praised Malta’s efforts, as an EU country, in “aggressively adapting for new business".
“Enabling multi compartment limited partnerships makes sense, and brings these into line with their SICAV regulations.”
Because Malta’s SICAV rules already enable platforms, “probably this will be of more benefit to managers who currently have to form an additional company every time they want to establish a new fund”, added Mudd, whose company two years ago launched a master fund in Luxembourg for use by third parties interested in setting up their own sub-funds.
Dermot Butler, chairman of Custom House Global Fund Services (CHGFS), echoed Mudd’s observations.
“They [Malta] actually already are quite competitive now anyway,” he added. “I’ve been bullish on Malta now for about 10 years." Although Butler is still based in Ireland, Custom House moved its head office from to Malta from Dublin in 2008, when it merged with Malta-based Equity Fund Services.
As reported here last August, CHGFS in 2010 launched a Malta-domiciled umbrella fund for individuals, financial advisers, family offices and others eager to get a foothold in fund management at a competitive price.
The Custom House Global Fund Services Nascent Fund enables investors to launch a legally-segregated sub-fund and develop a track record that they can later export to a stand-alone structure.
Butler said he had found the Maltese regulators to be “very pragmatic” and accommodating, as the recent changes to their Companies Act suggested, but said some observers also had to remember that Malta was still developing as a funds centre in terms of scale.
“Yes, it is competing [with such other established jurisdictions as Ireland and Luxembourg], but when you are comparing the various jurisdictions, you must remember that you are not always comparing apples with apples."