Investment Services

Investment Services in Malta

The Investment Services Act 1994, Cap. 370 of the Laws of Malta, (the “Act”) regulates Investment Services and Collective Investment Schemes in Malta. The Act implements ECD Council Directive 2004/39/EC (MiFID) and certain provisions of EC Council Directive 85/611/EC (UCITS) and provides the opportunity for a Licensed Maltese Investment Services company the possibility to offer its services in other EU member states by means of passporting rights, either through the establishment of a branch or through a services passport, i.e. the offering of cross border services.

Regulated Activities

Under the Act, the provision of the following investment services in or from Malta requires a license from the MFSA:

  • Reception and Transmission of Orders in relation to one or more instruments
  • Execution of orders on behalf of other persons
  • Dealing on own account
  • Management of Investments
  • Trustee, Custodian or Nominee Services
  • Investment Advice
  • Underwriting of instruments and, or placing of instruments on a firm commitment basis
  • Placing of Instruments without a firm commitment basis
  • Operation of a Multilateral Trading Facility

Any person carrying out any of the above-mentioned MiFID activities needs to obtain a licence under the Act from the MFSA.

Licences under the Act are classified under four distinct categories, split into a number of sub-categories. In the right-hand column of the table below we indicate the minimum share capital requirements for each category of licence. The initial capital must be paid up prior to issuance of the licence by the MFSA.

Investment Services Licences

CategoryDescriptionMinimum initial Capital Requirements
 1ALicence Holders authorised to receive and transmit orders in relation to one or more instruments and, or provide investment advice and, or place instruments without a firm commitment basis but not to hold or control Clients’ Money or Customers’ Assets (This Category does not include managers of Collective Investment Schemes).

Explanatory Note: This is the type of licence required by investment advisors/ independent financial advisors.

€50,000
1BLicence Holders authorised to receive and transmit orders, and, or provide investment advice in relation to one or more instrument and, or place instruments without a firm commitment basis solely for professional clients and, or eligible counterparties but not to hold or control Clients’ Money or Customers’ Assets.

Explanatory Note: This is the type of licence required by investment advisors/ independent financial advisors that provide services only to professional clients.

With PII €20,000

Without PII €50,000

2Licence Holders authorised to provide any Investment Service and to hold or control Clients’ Money or Customers assets, but not to operate a multilateral trading facility or deal for their own account or underwrite or place instruments on a firm commitment basis.

Explanatory Note: This is the type of licence required by portfolio managers, brokers, asset management companies, including UCITS Managers and AIFMs.

€125,000
3Licence Holders authorised to provide any investment service and to hold and control Clients’ Money or Customers’ Assets.

Explanatory Note: This is the type of licence required by Market Makers (including Forex providers) and Binary Options Providers (acting as prime brokers).

€730,000
4ALicence Holders authorised to act as trustees or custodians of Collective Investment Schemes€730,000
4BLicense Holders authorised to act:

(a)      As custodians of AIFs which have no redemption rights exercisable during the five year period from the date of initial investment and which generally do not invest in assets that must be held in custody in terms of the Investment Service Rules.

(b)      As custodians to AIFs marketed in Malta I terms of regulation 7 of the Investment Services Act (Alternative Investment Fund Manager) (Third Country) Regulations

€125,000

 

By way of clarification, investment services providers licenced under the Act that provide services in relation to instruments that have an insurance wrapper, such as unit-linked life insurance, require, in addition to a licence under the Act, an insurance brokers licence under the Insurance Intermediaries Act.

Application Process

The application process for an investment services licences in split into three stages.

  1. The Preparatory Stage – including a meeting with the MFSA, submission of a draft Application Form & supporting documentation, review by the MFSA, delineation of the Standard License Conditions to be applied to that particular Applicant by the Authority.
  2. The Pre-Licensing Stage – issuance of an ‘in principle’ approval for the license by the Authority, incorporation of the corporate vehicle, submission of final & signed application form & supporting documentation, other documents arising during the application process.
  3. The Post-Licensing/Pre-Commencement of Business Stage – satisfaction of ad hoc requirements arising post licensing but pre-commencement of business.

Licence Fees

The below table highlights the regulatory fees which applicants and prospective licence holders must pay to the MFSA in order to apply for a licence and to maintain a licence respectively.

Investment Services Licence CategoryApplication Fee (€)Licence Issue Fee (€)Supervisory Fee (€)
Category 1a2,5001,3002,000 (for revenue up to €50,000)

350 per tranche or part thereof (for further  tranches of €50,000 up to a maximum of €1,000,000)

 Category 1b3,0001,8002,750 (for revenue up to €50,000)

350 per tranche or part thereof (for further tranches of €50,000 up to a maximum of €1,000,000)

 Category 25,0003,0004,500 (for revenue up to €250,000)

400 per tranche or part thereof (for further tranches of €250,000 up to a maximum of €5,000,000)

 Category 37,0004,0006,000 (for revenue up to €250,000)

400 per tranche or part thereof (for further tracnhes of €250,000 up to a maximum of €5,000,000)

 Category 4a17,00015,000
 Category 4b7,500 5,000

Our Services

A|R|Q is an integrated, multidisciplinary organisation comprising a number of specialised companies within the A|R|Q Group, offering bespoke business solutions to its clients engaged in any of the special industries, particularly financial services. A|R|Q has a comprehensive service offering tailored to the needs of our international clients. The services include each of the following:

  • Corporate Services – including company incorporation, bank account opening, company administration, registered office services, secretarial services
  • Tax Services – including VAT and Tax Registration, DDT Exemption, ongoing tax compliance and tax advisory services in relation to optimal corporate structuring
  • Regulatory Services – including drafting of business plan, preparation of financial projections, completion of all application forms, assistance in the preparation of Policies and Procedures and representation of applicant on the licence application with the MFSA.
  • Directorship Services – acceptance of office to meet minimum requirements relating to local presence on the board
  • MLRO services – including setting up proper procedures in relation to the prevention of anti-money laundering, including drafting of tailored AML Manuals, reporting of suspicious transactions, AML on-site inspections and MLRO reports
  • Compliance & Risk Services – monitoring and assessing that the licence holder adheres to licence conditions on a continuous basis and delivers Compliance Reports on a bi-annual basis in line with the MFSA’s SLCs
  • Legal Services – Drafting and Review of agreements, legal representation, contract negotiation and transaction facilitation. (service provided by Fenech Farrugia Fiott Legal, an independent law firm closely working with A|R|Q Group.)
  • Accounting Services
  • Audit Services (service provided by Capstone Assurance Limited, an independent audit and assurance firm closely working with A|R|Q Group.)

For further information contact

  • David Borg

    Partner

    David is a Chartered Accountant and a Fellow of the Association of Chartered Certified Accounta... More

    T +356 2549 6000

  • Claudio Caruana

    Consultant

    Claudio Caruana began his legal career when he joined Fenech Farrugia Fiott Legal in 2011. He a... More

    T +356 2549 6000

Kindly fill in your details below and we will contact you.