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Licensing & The Application Process
Collective investment schemes are licensed by the Malta Financial Services Authority (MFSA). The appropriate CIS licence must be obtained before the scheme may begin issuing or creating any units or carrying on any activity, whether in or from within Malta or any other territory outside Malta.
Each fund and, in the case of umbrella companies, each sub-fund and incorporated cell requires separate licensing.
Obtaining a licence requires the completion of the relevant application form which essentially serves the purpose of identifying the objects of the scheme, the identity and competence of each of its directors and officers, the kind of investors to whom the CIS is expected to be marketed, and other information relating to the structuring and operation of the scheme.
The MFSA will only grant a Collective Investment Scheme Licence if it is satisfied that the fund will comply in all respects with the relevant regulations and that its directors or and officers, or in the case of a unit trust or limited partnership, its trustees or General Partner respectively, are fit and proper persons to carry out the functions required of them in connection with the PIF- the “Fit and Proper Test”. In the course of its considerations the MFSA will consider the experience, standing, competence and track record of all parties who will be involved in the fund and will require substantial disclosure in the form of detailed Personal Questionnaires which must be duly completed by each relevant person.
The application process can be broken down into three distinct phases as follows
Phase One – Preparatory
- The MFSA recommends that the promoters complete the application form and submit it with the supporting documents as specified in the application form itself. The application form must be signed by the promoter and shall be complete with all the information and documents required. The application form and the supporting documentation will be reviewed and comments are provided to the applicant generally within three weeks from submission of the application documents.
- The MFSA may ask for more information and may make such further enquiries as it considers necessary. Furthermore, the MFSA carries out the necessary due diligence checks at this stage.
Phase Two – Pre-Licensing
- Once the MFSA concludes the review of the application and supporting documents, it will issue its ‘in principle’ approval for the issue of a licence. The ‘in principle’ approval is valid for a period of three months during which, the applicant will be required to finalise any outstanding matters. Should the three months elapse without the satisfactory resolution of all pre-licencing outstanding issues; the ‘in principle approval’ issued will cease to have effect.
- Once any outstanding matters have been finalised, the application form and the supporting documentation are endorsed by the members of the governing body of the scheme and are resubmitted to MFSA.
- The MFSA will proceed with the issue of a licence as soon as all pre-licensing issues are resolved.
Phase Three – Post Licensing/Pre-Commencement of Business
The Applicant may be required to satisfy a number of specific post-licensing matters prior to formal commencement of business.
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