Malta expands fund frameworks with new regulatory updates

The Malta Financial Services Authority (MFSA) has launched two key initiatives aimed at enhancing Malta’s appeal as a jurisdiction for investment funds.

These regulatory updates introduce Special Limited Partnership Funds (SLPFs) and extend the Notified Professional Investor Fund (NPIF) framework to include self-managed structures. According to an MFSA official, these changes are expected to provide fund promoters with greater flexibility, cost efficiencies, and operational benefits.

No decline in other fund structures expected

The introduction of the SLPF framework and the extension of the NPIF framework will not diminish the popularity of existing fund structures, according to an MFSA official. Instead, these updates provide additional structuring options for non-retail funds, they tell BusinessNow.mt.

The SLPF, which allows collective investment schemes (CISs) to be structured as limited partnerships without separate legal personality, is particularly attractive for investment funds pursuing private investment strategies such as private equity and venture capital due to its flexible nature.

“The existing options in terms of fund structures will continue to exist and be available to fund promoters, including that of CISs structured as limited partnerships with legal personality,” the MFSA official states.

The extension of the NPIF framework to self-managed funds also enhances accessibility to lightly regulated structures. While the MFSA recognises an increasing appetite for regulatory-light options, the official noted that fully licensed fund frameworks remain valuable in certain instances.

Enhancing Malta’s attractiveness to investors

The MFSA believes these regulatory changes will further enhance Malta’s appeal as an investment jurisdiction by providing additional options in both fund structures and regulatory frameworks.

“With respect to the SLPF, the features inherent to the framework allow for a high degree of flexibility in the internal functioning of the fund, given that various aspects thereof are not explicitly mandated by the framework but are rather left in the hands of the contracting parties (the partners),” the MFSA official explains. This flexibility ensures alignment with different investor needs while maintaining investor protection by offering limited liability status to limited partners.

The self-managed NPIF regime also streamlines the regulatory process, allowing for a swift notification process that enables internally managed funds to launch more quickly than under traditional licensing models. According to the MFSA official, this lighter regulatory approach makes Malta more attractive for fund promoters looking to establish an internally managed de minimis AIFM structure in Europe with simplified compliance requirements.

Cost efficiencies and operational benefits for fund managers

The MFSA has highlighted that the new initiatives are expected to provide cost efficiencies and operational benefits for fund managers and investors. The SLPF framework offers flexibility in fund structuring, capital management, and profit distribution, allowing fund managers to tailor these elements to meet their specific needs.

“The extension of the Notified PIF framework to allow for internally managed funds allows the possibility for such funds to benefit from the streamlined and less onerous Notified PIF framework by setting up a fund with an internal portfolio management function,” the MFSA official states. This change is expected to reduce fees paid to third parties and offer funds greater control over governance structures.

Moreover, the NPIF regime’s streamlined nature ensures that fund promoters can establish non-retail investment vehicles efficiently while maintaining regulatory standards. “This operational efficiency allows funds to be launched expeditiously, ensuring that certain investment opportunities can be tapped into without unnecessary delays,” the official adds.

Strengthening Malta’s position in the EU

With these updates, Malta aims to position itself more competitively among European fund domiciles. The introduction of SLPFs aligns Malta’s offerings with leading EU jurisdictions where limited partnership vehicles are widely used and highly successful. Meanwhile, the expansion of the NPIF framework to self-managed funds reflects Malta’s commitment to regulatory efficiency and proportional oversight.

“The NPIF framework allows for faster time to market for the establishment of a particular type of non-retail fund, while ensuring a regulatory oversight that is appropriate and commensurate to these structures,” the MFSA official says.