Tax Optimisation – Notified Alternative Investment Funds (NAIFs) in Malta

High value clients demand exceptional results and our Notified Alternative Investment Fund (NAIF) solutions will definitely meet your clients’ expectations.

In conjunction with a highly respected UK fund management group, which is both FCA and MFSA authorised, we can help you design and deliver a first class NAIF product.

We can accommodate the various options to create the perfect NAIF for your client.

Be it opening a new NAIF, piggy backing onto an existing structure by renting a NAIF or buying an existing NAIF, we can certainly help.

With regards to experience with NAIF structures, the fund manager has set up and manages MFSA approved Sicav PLCs. The company is a collective investment scheme and is structured under the laws of Malta as a multi-fund public limited liability company (PLC) with variable share capital (SICAV) pursuant to the Companies Act, with the ability to issue different classes of shares constituting distinct sub-funds. These are classified as Notified AIFs in terms of the Investment Services Act (List of Notified AIFs) Regulations and entered onto the List of Notified AIFs maintained by the Malta Financial Services Authority.

The investment management group is regulated by the UK’s Financial Conduct Authority as an Alternative Investment Fund Manager (AIFM) in terms of the Alternative Investment Fund Managers Directive (AIFMD) and is authorised to provide discretionary investment management services (portfolio and risk management) to collective investment schemes qualifying as AIFs in terms of AIFMD.

Whilst a NAIF does not require a licence, authorisation, approval or ongoing supervision from the Maltese Financial Services Authority (MFSA) it is fully compliant with EU law. What distinguishes the NAIF is the requirements for due diligence and ongoing supervision are the responsibility of the AIFM. Therefore, the quality and the experience of the fund manager is paramount.

The fund administration of the NAIF must be located in Malta as does the depositary custodian.

Additionally, the NAIF needs to have a prospectus or offering documents.

As an unregulated product there is the misconception that NAIFs can invest in and do whatever they like without adhering to MFSA rules and regulations. This is not the case. Funds that target assets that the MFSA deems risky and in need of regulation will be automatically excluded from being set up as a NAIF. Such exclusions include:

• Funds that are self-managed
• Loan funds
• Funds managed by non-EEA AIFM’s
• Funds investing in non-financial assets as specified by the MFSA

Speed to market is an obvious advantage. For an AIFM to commence marketing a NAIF or a sub fund of an existing NAIF, the AIFM submits the statutory documents to the MFSA as part of the notification procedures. The MFSA will then include the NAIF or its sub fund in the list of NAIFs within ten working days of filing.

This fast track NAIF registration depends on the regulated status of the AIFM in terms of the AIFM directive. As our partnering AIFM is already managing and running NAIFs this is a distinct advantage.

Investors in NAIFs are either professional investors (as described under MIFD) or qualifying investors who invest a minimum of €100,000 (or equivalent) and declare in writing to the AIFM they are aware of and accept the risk associated with the investment.

AIFs set up within the NAIF regime will benefit from the same fiscal treatment as licenced AIFs. That is, NAIFs will benefit from complete tax exemption.

The advantages of NAIFs include:

• Speed to market meaning up and running within a very short time frame
• The AIFM is fully responsible for supervision including due diligence, compliance, administration and anti-money laundering
• AIFMD regime provides investor protection
• Access to other EU jurisdictions
• Can be structured as an umbrella using ring fenced cells to segregate and minimise risk
• A reduced cost investment solution

Interested? Get in touch