Insights

January 2021 will go down in local fund set-up history. This is the year when the MFSA licensed the only retail AIF, established as a Unit Trust, in terms of the Investment Services Act.

This Unit Trust is only the second one to be authorised by the MFSA (with the first unit trust having been wound down). Although noteworthy, this fact in itself is hardly ground-breaking.

The really interesting part of this story is the fact that Unit Trust was already established in a foreign jurisdiction, and that it had sub-trusts. It was fully operational, with a substantial number of beneficiaries as investors and an equally substantial AUM. This Unit Trust was relocated to Malta on the basis of generally applicable legal principles and the contractual covenants set out in the original trust deed. The authorisation of Unit Trust with sub-trusts also marks the end of a longstanding debate in Malta regarding the permissibility of Unit Trusts with sub-trusts under local trust law.

The fund manager of the Unit Trust, which has been operating from Malta since 2014, and already managing two Maltese UCITS Funds, took the decision to relocate all its retail fund vehicles to Malta. In fact, the Unit Trust is only one of the five investment funds that have been relocated to Malta as retail AIFs, all of which having been redomiciled as SICAVs.

This is a real vote of confidence in the jurisdiction.