The rules governing UCITS and UCITS management companies purport to implement the UCITS IV Directive, which was transposed into Maltese law with effect from 1 July 2011 by means of changes to the Investment Services Rules for Investment Service Providers and the Investment Services Rules for Retail Collective Investment Schemes issued by MFSA (the “MFSA Rules”) and the promulgation of new Regulations under the ISA.


In order to qualify as a UCITS, the CIS (or in the case of an umbrella scheme, the sub-fund) must:

(i) be open-ended: the units are, at the request of holders, repurchased or redeemed, directly or indirectly, out of the UCITS’ assets;

(ii) have as its sole object the collective investment in transferable securities and/or in other liquid financial assets as specified in the UCITS Directive, of capital raised from the public, and operate on the principle of risk-spreading.

Derogations from point (ii) are provided for so as to allow the operation of master-feeder structures as contemplated under the UCITS IV regime.


In Malta, a UCITS may be set up as:

(i) an investment company with variable share capital (“SICAV”) in terms of the Companies Act (Chapter 386 of the Laws of Malta) (the “CA”); or

(ii) a partnership en commandite or limited partnership (“LP”) whose share capital is divided into shares (with variable share capital) in terms of the CA; or

(iii) a unit trust in terms of the Trusts and Trustees Act (Chapter 331 of the Laws of Malta); or

(iv) a contractual fund, in accordance with the Investment services Act (Contractual Funds) Regulations (Legal Notice 3 of 2011).

A UCITS may be organised as an umbrella scheme with one or more sub-funds. Multi-fund SICAVs, LPs and contractual funds, may elect to have the assets and liabilities of each sub-fund comprised in them treated for all intents and purposes of law as a patrimony separate from the assets and liabilities of (and ring-fenced from the creditors of) each other sub-fund. Maltese law also caters for the setting up of a SICAV as an incorporated cell company (ICC), which may establish incorporated cells, whereby each incorporated cell is treated as a limited liability company with separate legal personality.

A Maltese UCITS may be structured as a fund of funds or as a master UCITS or feeder UCITS in a master-feeder structure, provided that the specific rules and supplementary standard licence conditions applicable to such types of UCITS transposing the relevant provisions of the UCITS IV Directive, are complied with.


The appointment and/or the replacement of any party who is to be the investment manager, investment adviser or custodian of a Maltese UCITS, the terms of that appointment, and the contents of the agreement to which the appointment is subject, must be agreed in advance with Malta UCITS Funds the MFSA. The MFSA retains the right to require the replacement of any of the aforementioned service providers.


The discretionary investment management of the UCITS’s assets needs to be entrusted to a UCITS management company, established in Malta or in another EEA State and authorised in accordance with the UCITS Directive (unless the UCITS is licensed and organised as a self-managed fund). If the Maltese UCITS appoints a European UCITS management company, the latter would need to ensure that it duly exercises its passport rights following the prescribed notification procedure in order to provide its services on a cross-border basis or through a branch in Malta. The collective portfolio management function in terms of the UCITS Directive includes investment management, fund administration and marketing of the UCITS.

The delegation by the investment manager of one or more of its functions, for the purpose of a more efficient conduct of its business is allowed, but requires the MFSA’s prior consent and is subject to specific requirements. Where the delegation concerns investment management, such requirements include (amongst others) that:

(i) the mandate may only be given to undertakings which are authorised or licensed for the purpose of asset management and subject to prudential supervision, and such delegation must be in accordance with investment-allocation criteria periodically laid down by the investment manager;

(ii) if the mandate is given to a third country undertaking, co-operation between the MFSA and the supervisory authority in that third country must be ensured;

(iii) the mandate may not be given to the custodian or to any undertaking whose interests may conflict with those of the investment manager or the unit-holders.


A UCITS or the investment manager may, but is not required to, appoint a third party investment adviser (it being understood that an investment adviser does not have any discretion with respect to the investment and re-investment of the assets of the UCITS). The investment adviser need not be established in Malta.


The assets of the UCITS must be entrusted to a custodian (depositary) for safekeeping. The custodian must have an established place of business in Malta and be a credit institution licensed under the laws of Malta, or such other body corporate, unincorporated body or association acceptable to the MFSA, providing the services of a custodian. The custodian is required to carry out a monitoring function over the activities of the investment manager (in particular to monitor the extent to which the manager is abiding by the investment and borrowing powers laid down in the Prospectus and otherwise in accordance with the provisions of the constitutional document of the UCITS and the applicable MFSA Rules/ licence conditions).

The custodian must be separate and independent from the investment manager (or the UCITS, if it is self-managed) and act independently and in the interests of the unit-holders. The custodian is also required to perform certain functions prescribed by the Investment Services Rules for Investment Services Providers to which it is subject, in line with the UCITS Directive.


The UCITS (in the case of a self-managed scheme) or the investment manager may appoint a fund administrator (if no fund administrator is appointed, the investment manager remains responsible for the administration function). The administration function as described in the UCITS Directive includes: legal and fund management accounting services, customer enquiries, valuation and pricing (including tax returns), regulatory compliance monitoring, maintenance of unit-holder register, distribution of income, unit issues and redemptions, contract settlements (including certificate dispatch), and record keeping. The administrator need not be based in Malta. The UCITS or the investment manager must submit the details of the appointment of the fund administrator to the MFSA.


The UCITS has to appoint an auditor approved by the MFSA, and the appointment or replacement of an auditor is subject to the MFSA’s prior consent.

Finally, it should be noted that a Maltese UCITS is required to appoint a compliance officer and a money laundering reporting officer (“MLRO”). The appointment or replacement of any person who is to act as compliance officer and/or MLRO is subject to the MFSA’s prior written consent.


A self-managed UCITS (set up as a SICAV) must satisfy the following licence conditions, which will apply on an ongoing basis:

(i) it must be operated in or from Malta, as agreed with the MFSA.

(ii) it must have an initial capital which is equivalent to EUR 300,000 (and its NAV is expected to exceed such amount on an ongoing basis);

(iii) the application for authorisation is to be accompanied by a programme of operations setting out at least the organisational structure;

(iv) the directors of the UCITS must be fit and proper to perform their functions, be of sufficiently good repute and be sufficiently experienced also in relation to the type of business pursued by the UCITS;

(v) the conduct of the business of the UCITS must be decided by at least two persons meeting the conditions stipulated in paragraph (iv) above to the satisfaction of the MFSA. Furthermore the MFSA must be notified of the names of the directors and of every person succeeding them in office.

The self-managed UCITS has to comply with the requirements on conflicts of interest and operational arrangements prescribed by the relevant provisions of the MFSA Rules, which essentially mirror certain conduct of business requirements applicable to UCITS management companies.

The UCITS is required to establish and maintain a permanent risk management function which must be hierarchically and functionally independent from the operating units. However, the MFSA may grant a derogation from this requirement where appropriate and proportionate in view of the nature, scale and complexity of the UCITS’s business.

The management of the assets of a self-managed UCITS is the responsibility of the Board of Directors, at least one of whom has to be resident in Malta. Unless otherwise agreed with the MFSA, the Board of Directors of the SICAV has to establish an in-house Investment Committee (the “IC”) made up of at least three members (possibly including directors). The Terms of Reference of the IC (and any changes thereto) must be approved by the MFSA. IC meetings are to be held as frequently as the nature of the investment policy would require, and at least quarterly. The majority of such meetings are to be physically held in Malta, which is deemed to be the case if the minimum number of members that form a quorum necessary for a meeting are physically present in Malta.

The IC may delegate the day-to-day investment management of the UCITS’s assets to at least two officials of the UCITS (referred to as the “Portfolio Managers”) or to a third party manager acceptable to the MFSA.


The MFSA will only grant a collective investment scheme licence to a UCITS if it is satisfied that the UCITS will comply in all respects with the provisions of the ISA, the relevant subsidiary legislation and the applicable MFSA Rules, and that its directors and officers (or in the case of a unit trust or limited partnership, its trustee(s) or general partner(s) respectively) are “fit and proper” persons. The MFSA will look into the experience and track record of all parties involved with the UCITS – such persons should be of good standing and be competent.


Essentially, the procedure for the application for a collective investment scheme licence follows three stages:


 Fund promoters prepare a detailed proposal of their activities and discuss the terms at meetings with the MFSA

 The MFSA will respond with guidance and clarifications as necessary

 A draft application form together with all the required supporting evidence is submitted by the promoters

 The documents will be reviewed by the MFSA and additional information may be requested.


When all review points noted in the draft application are resolved, the MFSA will issue an ‘in principle’ approval for license. The Fund promoters must:

 Finalise any outstanding issues

 Submit a signed final application form together with all supporting document

A license will be issued once all pre-licensing issues are resolved.

The MFSA may only license a UCITS if it is satisfied that the UCITS will comply in all respects with the relevant legislation, regulations and rules and that its directors and officers, or in the case of a unit trust or limited partnership, its trustee(s) or general partner(s) respectively, are fit and proper persons to carry out the functions required of them in connection with the scheme.


The MFSA will determine whether the applicant needs to satisfy any post-licensing matters before formal commencement of business can begin. The MFSA has the right to vary or revoke any service license conditions (SLC) or to impose new conditions.

The MFSA would ordinarily require the following documents in support of an application for a CIS license by a UCITS:

  • Application Form
  • Application Fee
  • A near final draft of the offering document
  • A copy of the appropriate approval of the Offering Document by the Board of Directors
  • A near final draft of the Memorandum and Articles of Association of the UCITS
  • Personal questionnaires of each proposed director of the UCITS
  • 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.

The time afforded by the UCITS Directive to the respective competent authorities of the Member States to approve (or refuse) an application for a UCITS licence is two months from submission of a complete application (six months for a self-managed UCITS).

A Maltese UCITS, that has been granted or has applied for a license may apply for admissibility to listing with the MFSA, acting in its capacity as the Listing Authority. An application for admission to listing must be submitted to the Malta Stock Exchange at the same time as application for admissibility to listing is made to the Listing Authority.