A PIF may be set up as an open or closed-ended investment company – in the form of a SICAV or an investment company with variable share capital (INVCO), a limited partnership or a unit trust. A PIF may also be set up as a SICAV Incorporated Cell Company (SICAV ICC) or an incorporated cell (IC) of a Recognised Incorporated Cell Company (RICC).

Any scheme wherever set up, including a Scheme set up as a PIF, ought to be in possession of a Malta license to operate in or from Malta. Moreover, a scheme including a PIF, set up in Malta to operate in another country should likewise be in possession of a financial services license.

Malta financial services legislation provides that the preliminary steps in establishing a Scheme including a PIF, can be taken prior to the attainment of a licence. Nevertheless, the scheme may not deal with investors before it is licensed.

The MFSA will grant a licence if it is satisfied that the PIF will comply in all respects with the provisions of the law, the relevant regulations and the respective rules and that its directors and officers, or in the case of a unit trust/common contractual fund or limited partnership, its trustee(s) or general partner(s) respectively, are fit and proper persons to carry out the functions required of them in connection with the PIF.

In assessing an application for authorisation, the MFSA will consider the nature of investors to whom it will be marketed. It will also look into the experience and track record of all parties who will be involved in the PIF. Such persons should be of good standing and of a certain competence. When assessing whether to authorise or otherwise an applicant, the MFSA applies the standards relating to the ‘fit and proper’ status of the applicant and its service providers. This test is one which an applicant and a licence holder must satisfy on a continuing basis. In general terms there are three criteria which must be met to satisfy the “fit and proper” test namely integrity, competence, and solvency.

Foreign based schemes that are just listed on the Malta Stock Exchange, without having their units marketed/promoted in Malta, whether by the scheme directly or through investment service licence holders, are not deemed to be carrying on an activity in Malta. Therefore these schemes are not required to hold a collective investment scheme licence in terms of the Malta financial services legislation. The term carry on an activity, includes marketing, advertising and other promoting activities.

PIFs Promoted to Qualifying Investors

An investor may only be classified as a “Qualifying Investor” if he/she attests that he/she meets one or more of the following criteria:

  1. a body corporate which has net assets in excess of €750,000 or which is part of a group which has net assets in excess of €750,000;
  2. an unincorporated body of persons or association which has net assets in excess of €750,000;
  3. a trust where the net value of the trust’s assets is in excess of €750,000;
  4. a person who has reasonable experience in the acquisition and/or disposal of :-
    1. funds of a similar nature or risk profile;
    2. property of the same kind as the property, or a substantial part of the property, to which the PIF in question relates;
  5. an individual whose net worth or joint net worth with that person’s spouse, exceeds €750,000;
  6. senior employees or directors of service providers to the PIF;
  7. relations or close friends of the promoters limited to a total of 10 persons per PIF;
  8. entities with (or which are part of a group with) €3.75 million or more under discretionary management, investing on its own account;
  9. the investor qualifies as a PIF promoted to Qualifying or Extraordinary Investors;
  10. An entity wholly owned by persons or entities satisfying any of the criteria listed above which is used as an investment vehicle by such persons or entities.


In the case of joint holders, all holders should individually satisfy the definition attributable to Qualifying Investor.”

The minimum initial investment amounts to €100,000 or equivalent in another Currency. The total amount invested may not fall below this threshold unless this is the result of a fall in the NAV. Provided that the minimum threshold is satisfied, additional investments – of any size – may be made. It is fundamental to note that the minimum investment threshold applies to each individual Qualifying Investor. Moreover, in the case of joint holders, the minimum investment limit remains €75,000 or $ 75,000 or equivalent in another currency.

In the case of an umbrella fund comprising of sub-funds each of which is set up as a PIF, the €100,000 threshold may be applicable on a per scheme basis rather than on a per sub-fund basis. Thus effectively a Qualifying Investor may hold less than €75,000 in a sub-fund provided that his total holding in the scheme amounts to at least €100,000.

Prior to accepting any investment, the PIF must be in receipt of a completed Qualifying Investor Declaration Form in which the investor confirms that he/she has read and understood the mandatory risk warnings, while outlining why he/she constitutes a “Qualifying Investor”. In the case where the Qualifying Investor is a company or partnership, such declaration is required from the Directors/Partners, whilst in the case of a Trust, from the Trustee.

PIFs promoted to Qualifying Investors are not subject to any restrictions on their investment or borrowing powers (including leverage) other than those which may be specified in their Offering Document.

Prior to accepting any investment, the PIF should be in receipt of the pertinent completed Declaration Form in which the investor undertakes that he/she has read and understood the mandatory risk warnings and describes why he/she is an “Extraordinary Investor”. In the case where the Extraordinary Investor is a company, such declaration is required from the director(s)/general partner(s), whilst in the case of a trust, from the trustee.

Importantly, PIFs promoted to “Extraordinary Investors” are not subject to any restrictions on their investment or borrowing powers other than those which may be specified in their Offering Document/Marketing Document.

The Offering Document

A PIF targeting Experienced or Qualifying is required to draw up an Offering document. The Offering Document should be provided to prospective investors free of charge. A PIF targeting Extraordinary Investors may either draw up an offering document or else draw up a Marketing Document. Contact us for more information as to what such documents should include.

Listing on a Regulated Market

The term ‘regulated market’ refers to an investment exchange which has been granted a recognition order by the MFSA as competent authority. Currently, the only regulated market in Malta is the Malta Stock Exchange. A PIF (provided that it is not a private company) may apply to such regulated market for a listing.

WDM International, through its expertise and good standing with the MFSA can duly assist in all of the above stages, including the preparation of the offering document and other related documentation.