Funds Regulation & Legislation

A constantly updated regulatory framework, reduced bureaucracy and streamlined prudential supervision are the foundations of Maltese regulatory landscape. With the motto ‘innovation through regulation’, Malta has standards and processes in place that are built on the industry’s best practice.

The Regulator

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 authorisation 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.

Types of Legal Forms

  • Investment Companies (SICAV and INVCO)

  • Incorporated Cells

  • A contractual fund

  • A limited liability partnership

  • A unit trust

Malta offers a wide range of funds structures, and the country is constantly updating its legislation as funds begin to use more complex structures and strategies. The fund may either be set up as:  an investment company with variable share capital (SICAV) or an investment company with fixed share capital (INVCO). Furthermore, the fund may also use non-corporate legal forms such as a limited partnership, a unit trust or a common contractual fund. The SICAV is the most widely used vehicle in Malta, and the island enacted regulations which make it possible for a fund to be constituted as an Incorporated Cell in an Incorporated Cell Company (ICC). The ICC may establish one or more funds as incorporated cells with each cell being a limited liability company (SICAV or INVCO) with separate legal personality and requiring a licence independently from the ICC. 

It is also possible to set up a Recognised Incorporated Cell Company (RICC); the RICC is constituted as a limited liability company, which may establish incorporated cells to which it provides administrative services. The RICC is required to obtain recognition from the Malta Financial Services Authority for the provision of administrative services, while each incorporated cell must obtain a full licence. Malta’s rules on ICCs and RICCs are designed particularly to accommodate investment fund platforms. The RICC structure presents certain advantages compared to the ICC, including the fact that the RICC itself must not be licensed as a collective investment scheme. Furthermore, the incorporated cells of an RICC may themselves be constituted as umbrella companies, with their own segregated sub-funds. Incorporated Cell Companies under the RICC may consist of a mix of externally managed and internally managed CISs, subject to different fund rule books, retail and alternative.


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.

MFSA Focus

  • The protection of investors and the general public
  • The protection of Malta’s reputation
  • The promotion of competition and choice
  • The reputation and suitability of the applicant and all other parties involved in the scheme
  • The experience and track record of all parties involved in the scheme


Once licensed, an entity is subject to ongoing supervisory requirements. A scheme is bound by general reporting requirements such as the filing of an annual return, audited financial statements and income tax return. Retail funds also have to submit half-yearly reports, an annual report (including audited financial statements), regulatory statistical returns and compliance reports.

Re-domiciliation of Funds

Malta has legislation in place allowing the redomiciliation of corporate bodies. This means that a fund established as an investment company in another jurisdiction may continue to exist in Malta under certain conditions and does not need to wind up in its country of incorporation. The process is seamless because the Maltese regime allows funds to have administrators and custodians based in other jurisdictions which are recognised by the MFSA. Unlike some other jurisdictions, Malta also provides a clear exit route and allows funds to domicile out of Malta should the promoters wish to do so.