Legal Form
As in all other types of funds, a
Professional Investor Fund maybe be set up as either:
General
Such funds target investors in
accordance with their minimum investment threshold. The character of the fund is
non-retail and therefore not subject to some of the usual restrictions on their
investment or borrowing powers as normal retail funds.
Nomenclature usually used to refer
to these type of funds includes Professional Investor Funds, Hedge Funds, Expert
Funds & Institutional Funds. These are but a few names used to refer to funds
that target professional investors and/or high net worth individuals.
Maltese PIFs may be sold solely to
investors who satisfy the minimum investment threshold:
‘Experienced Investors’ are
subject to a minimum investment threshold of US$ 20,000, (or equivalent in any
convertible currency)
‘Qualifying Investors’ are
subject to a minimum threshold of US$ 100,000 (or equivalent in any convertible
currency) and
'Extraordinary Investors’
are subject to a minimum investment threshold of US$ 1,000,000, (or equivalent
in any convertible currency).
In all PIFs, the Board of
Directors nad Service Providers must satisfy the MFSA 'fit & proper' test. All
service providers may be established outside Malta provided that they are
established and regulated in a recognised jurisdiction and a local Judicial
Representative is appointed. Maltese PIFs may also benefit from self-management.
Experienced Investors
Besides the minimum investment
threshold of US$ 20,000 (which minimum investment threshold applies to each
single Experienced Investor) other conditions include that requirements that
show that the Experienced Investors are persons having the expertise and
knowledge to be in a position to make their own investment decisions and
understand the risks involved.
An investor must state the basis
on which he/she satisfies this definition, by confirming that he/she is a
person:
-
having relevant work
experience having at least worked in the financial sector for one year in a
professional position or having been active in this type of investment; or
-
having reasonable experience
in the acquisition and/or disposal of funds of a similar nature or risk
profile, or property of the same kind as the property, or a substantial part
of the property, to which the PIF in question relates; or
-
who has carried out
investment transactions in significant size at a certain frequency; or by
giving any other appropriate reason.
The Experienced Investor PIF must
appoint a Custodian with a safekeeping and monitoring role; the leverage
required is the same level as that of UCITS and the only specific investment
restrictions adopted are those that are self-imposed by the Manager.
Qualifying Investors
Besides the minimum investment
threshold of US$ 100,000 (which minimum investment threshold applies to each
single Qualifying Investor) other conditions include that the investor must
certify that he/she/it meets one or more of the following criteria:
-
a body corporate which has
net assets in excess of USD1.0 million or which is part of a group which has
net assets in excess of USD1.0 million;
-
an unincorporated bona fide
body of persons or association which has net assets in excess of USD 1.0
million;
-
a trust where the net value
of the trust’s assets is in excess of USD1.0 million;
-
a person having reasonable
experience in the acquisition and/or disposal of:-
- funds of a similar nature or risk profile;
- property of the same kind as the property, or a substantial part of the
property, to which the PIF in question relates;
-
an individual whose net worth
or joint net worth with that person’s spouse, exceeds USD 1.0 million;
-
employees and directors of
service providers to the PIF;
-
relations and close friends
of the promoters limited to a total of 10 persons per PIF;
-
entities with (or which form
part of a group with) USD 5.0 million or more under discretionary management
or advice, investing on its own account or for the account of its clients;
-
he/she/it qualifies as a PIF
promoted to Qualifying Investors.
A Custodian / Prime Broker need
not be appointed provided that there are adequate safekeeping arrangements;
there are no investment or borrowing restrictions and there is unlimited use of
leverage.
Extraordinary Investors
Besides the minimum investment
threshold of US$ 1,000,000 (which minimum investment threshold applies to each
single Extraordinary Investor), a few other conditions/criteria apply to PIFs
that target Extraordinary Investors:
-
the PIF has no investment or
borrowing restrictions;
-
there is unlimited use of
Leverage
-
a Custodian/Prime Broker need
not be appointed provided that there are adequate safe keeping arrangements
-
Prospectus is not necessary -
a marketing document is enough
-
the Fit & Proper test in
respect of Service Providers, Directors and Founder Shareholders need not be
concluded pre-licensing as MFSA will be relying on the information
declarations in the application documents and supporting documentation
-
When one or more service
providers are not regulated in recognised jurisdiction, the Fit & Proper
test in respect of such Service Provider (s) must be concluded pre-licensing
-
may be set up as a
self-managed fund
Offering Document
A PIF must issue an Offering
Document which is a document intended to provide sufficient information to
enable potential investors to take an informed investment decision. The Offering
Document must be approved by the PIF’s Board of Directors (or its external
Manager, if appointed) and a written copy of their approval must be provided to
the MFSA.
Listing on a Recognised
Investment Exchange
A PIF (provided that it is not a
private company) may apply to a Recognised Investment Exchange for a listing. A
PIF which is established abroad, marketed exclusively abroad and obtains a
licence from the MFSA solely for the purpose of obtaining a listing on a
Recognised Investment Exchange, must appoint a judicial representative in Malta.
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