IFLR 1000
The Guide to the World's Leading Financial Law Firms

CONTEXT AND TRENDS
The two key areas when considering trends in Malta are investment funds and the island's continued attempts to transform itself into a centre for aviation finance and leasing. In the former area, practitioners have been advising clients on the upcoming AIFMD (Alternative Investment Fund Manager's Directive), in regards to qualification criteria, obligations and the potential impact on business....

CONTEXT AND TRENDS

The two key areas when considering trends in Malta are investment funds and the island's continued attempts to transform itself into a centre for aviation finance and leasing.

In the former area, practitioners have been advising clients on the upcoming AIFMD (Alternative Investment Fund Manager's Directive), in regards to qualification criteria, obligations and the potential impact on business. Although the directive's impact is relatively substantial in the global arena, particularly for fund manager's based in offshore jurisdictions, most funds within the EU just need to familiarise themselves with the new regime. Firms themselves are relatively unperturbed: "We are excited, enthusiastic about it, it'll create more opportunities and we're taking a lot of initiatives," says one partner.

There is also regulatory and structuring advice to be provided regarding UCITs (Undertakings for Collective Investment in Transferable Securities). "The deadline for implementation is at the end of June this year – we had the launch of the UCIT IV directive and we have a number of clients in that area that we are advising on implementing new laws across our clientele," says one partner. Firms are also optimistic about the jurisdiction's ability to attract new fund formation work thanks to Malta's status. "There's interest in the product, especially the way Malta is positioned for the European market," says one funds lawyer, highlighting the island's status as a potential gateway into the EU funds market. "It's easier to start with a smaller fund because of the smaller costs; it's easier to start a fund with €20 million; so we still capture a lot of this," says one funds lawyer.

Across the funds space there is also optimism about work arising from re-domiciliation, partly driven by mangers' desire to be part of a regulated jurisdiction within the EU. "We're starting to see the increase of funds which are re-domiciling from offshore jurisdictions into Malta," says one partner. "In terms of regulation, since Malta is a truly regulated jurisdiction, there's nothing in there which causes difficulty in terms of compliance; all fund managers are fully licensed. There is nothing in the regulation which scares everyone."

This in truth is a message that firms are keen to stress. No jurisdiction wants to be tainted or black listed by international regulators and like many of its semi-offshore cousins, Malta is trying to stress that its business environment is in line with regulation and transparent where it needs to be. "Malta isn't really an offshore jurisdiction, it's quite a misconception and we are fully regulated," says one partner. "Our tax regime is secret but not offshore in that sense. It's actually quite looked down on Malta. I wouldn't really call Malta an offshore jurisdiction. It's onshore."

As mentioned above, the other growth area that firms see is in aviation finance. While not all firms act in this sector, many have dedicated teams and the Government is keen to encourage this area of the economy. "The next project is actually aviation. We have a new set of laws with a view of establishing Malta as centre for navigation and aviation which basically allows the taking of security and that was mainly intended to make lending banks in aircraft transactions more creditor friendly," explains one finance partner.

Finally, two other market developments are the recently signed double tax treaty enacted with Switzerland, which should encourage co-operation between the two countries, and the launch of the European Wholesale Securities Market (EWSM) for wholesale fixed-income debt securities, which is a joint venture between the Irish Stock Exchange and the Malta Stock Exchange.

MAJOR LEGISLATION CHANGES

Malta-Switzerland double tax treaty
In effect as of July 6 2012