Bringing you live news and features since 2006 

PIF to Ucits: the Maltese conversion


In recent years, the number of collective investment schemes licensed by the Malta Financial Services Authority has grown in a rapid and consistent manner.

In recent years, the number of collective investment schemes licensed by the Malta Financial Services Authority has grown in a rapid and consistent manner. At the end of 2008, the total number of licensed Malta-based funds and sub-funds amounted to 398, compared with 296 in 2007 and 200 in 2006.

The three main types of collective investment schemes licensed in Malta are Professional Investor Funds (PIFs), Retail Ucits Schemes and Retail Non-Ucits Schemes. While PIFs are the most popular type of collective investment scheme licensed in Malta, Retail Ucits Schemes allow access to a wider market through the EU passporting regime.

The larger distribution network that can be achieved through a Ucits scheme ultimately results in a reduction in costs for investment managers, which can then be passed on to the investors.

One of the factors that enhances Malta’s reputation as an investment fund domicile is the speed with which the Maltese regulator reacts to changes in the industry. For example, the MFSA has undertaken various initiatives that provide Ucits fund managers with access to less traditional portfolio management techniques and therefore bring closer long/short funds (typically PIFs) with long-only funds (typically Ucits).

These initiatives include the transposition of the EU Eligible Assets Directive into Maltese rules, the possibility for Retail Ucits Schemes to invest in hedge fund indices and the facility available to Ucits schemes to enter into repurchase and stock lending agreements. Adequate disclosure provisions in the Ucits rules ensure that the flexibility that may be achieved through these techniques does not run counter to investors’ interests.

It is also possible for a PIF licensed in Malta to be converted into a Malta-based Retail Ucits Scheme and therefore to benefit from the passporting regime. To convert a PIF into a Ucits, various documents must be submitted to the MFSA, including documentation of the board resolution approving the conversion, a duly completed Ucits application form, and evidence of investor approval of the conversion, if applicable.

In addition, there must be evidence of notification to investors of the proposed conversion, in the form of confirmation by the directors that such a notification has been made, as well as confirmation by the custodian or administrator that adjustment of the portfolio has been carried out in accordance with Ucits investment restrictions. The fund’s offering memorandum must also be updated in line with Ucits disclosure requirements.

Service providers must be appointed in accordance with Ucits requirements. If existing service providers are to be retained, they will have to comply with Ucits rules and agreements will need to be updated to bring these into line with their obligations under the Ucits regime. Finally, any performance fee structure applicable to the fund will have to comply with the Investment Services Act (Performance Fees) Regulations.

This list of requirements is not exhaustive. It is important to point out that the MFSA will examine each conversion on a case-by-case basis and may request additional information. Upon the completion of the conversion, the fund’s PIF licence will be cancelled and a new Ucits licence will be issued. The converted Ucits fund and its service providers will also be required to satisfy the obligations stipulated in the Ucits rules and licence conditions on an ongoing basis.

Dr Simon Tortell is senior partner with Simon Tortell & Associates

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by