The Malta Financial Services Authority (MFSA) is the single regulator of all financial services in Malta. The MFSA’s approach to regulation and supervision is based on principles rather than on rules and is proportionate to the size and nature of the business, without undermining investor protection. The country’s small size allows a direct contact with all licensees, which gives the MFSA a good understanding of the soundness of the licence holders. Fund promoters are encouraged to meet with the regulator prior to applying for the authorization of a fund to discuss the application of regulations. In particular, if fund structures are complex, promoters find the accessibility of the MFSA beneficial and value the opportunity of face-to-face meetings.
Investment Services Act
The Investment Services Act (ISA), and its subsidiary legislation, is the principal legislative enactment governing the fund industry in Malta. It provides and establishes the legal basis for the licensing and regulation of investment services and collective investment schemes. The regulatory framework is contained in the Investment Services Rules. They further explain the scope and contents of the ISA, set out the application procedure and highlight the standard licence conditions that will be applied to a licensed entity. All legislation and regulations are published in English.
Collective investment schemes domiciled in Malta require a licence from the MFSA. Similarly, managers, investment advisors, custodians and prime brokers establishing operations in Malta need to apply for the appropriate investment services licence under the Investment Services Act. On the other hand, fund administrators intending to provide administrative services need to apply to the MFSA for a recognition certificate. When considering an application for an investment services licence or a collective investment scheme licence, the MFSA takes into account the reputation and suitability of the applicant and of all other relevant parties closely connected with the scheme. A licence will only be issued if the MFSA is satisfied the scheme will comply with the relevant regulations and that its directors, officers, trustees, or general partners, are fit and proper persons to carry out the functions required of them.