B OV F U N D S E RV I C E S
Small is beautiful Interview with Rebecca Xuereb
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he funds industry in Malta has best positioned itself to attract business from fund managers falling out of the scope of the EU Alternative Investment Fund Managers Directive (AIFMD), managing portfolios within the small-to-medium sized space. This is the area of the industry expected to attract the majority of future investments. Managers looking to take advantage of opportunities arising during the global pandemic, also benefited from the quick time to market the jurisdiction offers through certain fund typologies unique to the Maltese domicile. . “The Professional Investor Fund (PIF), which is the structure Malta offers these smaller managers, is attractive for a number of reasons. The setup is flexible; managers have no investment or leverage restrictions and no diversification requirements. In addition, they have no need to appoint a depository, and can even set the fund up in a self-managed format, where there is no need to appoint or set up an external fund management company,” explains Rebecca Xuereb, Business Development Manager, BOV Fund Services. So essentially, under the PIF regime, fund managers have no requirement to appoint a custodian in the same jurisdiction in which they are domiciled. “Depending on the nature of the asset class they manage, the fund can decide to appoint a prime broker to safekeep their assets and execute the trades, in the case of equities or other such securities for instance. A real estate fund, on the other hand, may opt to appoint a notary to safekeep the contracts of the ownership of the properties invested in by the fund,” Xuereb outlines. The structure provides more flexibility for firms managing funds in Malta as they are usually based in other parts of the EU. If a fund manager is based outside of Malta and would like to appoint a lawyer or notary in their home country, the PIF provides for this. Insofar as service providers, it is only the auditor which must be based in 8
Malta, where funds have the option to choose between one of the ‘Big 4’ which are all present in Malta, as well as other mid-tier firms. Flexibility in a crisis Cost efficiency is touted as one of the key advantages of Maltese fund domiciliation. In Xuereb’s view: “Setting up a fund which is subject to less onerous regulation will equate to lower costs simply because there are fewer requirements to comply with. In addition, the cost of living in Malta is not as high as that in other jurisdictions. A UK fund manager, for instance, may find that setup and running costs such as fund administration would be lower than in other jurisdictions like London or other EU domiciles.” Another part of the Malta appeal is considered to be the financial regulator’s pro-business stance. The Malta Financial Services Authority (MFSA) demonstrated its belief in this position throughout the pandemic. Xuereb notes: “The regulator was quite understanding throughout the Covid-19 crisis. In normal times, there is usually a limit to how many times board members can dial-in to a meeting and not attend in person. The MFSA however identified the need to hold these meetings completely virtually and industry operators were able to maintain business as usual in this manner.” Xuereb highlights: “Operators were also granted some extensions on deadlines, where necessary. The MFSA is a strict regulator, having recently focused on enhancing its anti-money laundering procedures specifically. However, the Authority is still understanding and flexible enough to accommodate the needs of the industry.” Pandemic impact In the fallout of the pandemic, Xuereb identifies three main types of client reactions: “We had a handful of clients who MALTA FUND SERVICES IN FOCUS | Nov 2020
