Malta’s Financial Sector: A Hub of Robust Infrastructure and Regulation
Malta has made significant strides in attracting foreign investors and establishing itself as a leading financial hub by implementing stringent regulations and infrastructure to ensure the safety of its financial institutions.
Regulation
The Investment Services Act sets out specific requirements for Category 4b Investment Services Licence Holders, also known as Depositary Lite, which are eligible to provide custody services to alternative investment funds (AIFs). These AIFs must meet specific criteria, including:
- No redemption rights exercisable during a five-year period from the date of initial investments
- Investments in assets that do not require custody
Additionally, third-country AIFs managed by an EU Alternative Investment Fund Manager (AIFM) can be marketed in the EU/EEA under Article 36 of the AIFMD.
Licensing Requirements
The Malta Financial Services Authority (MFSA), the country’s financial regulator, has established strict criteria for granting licenses to investment services providers. To obtain a license, applicants must demonstrate a “fit and proper” test, which includes:
- Promoting competition and choice
- Protecting investors
- Protecting Malta’s reputation
License holders are also required to maintain effective corporate governance practices, including:
- A board of directors composed of individuals who are fit and proper
- A chairman with adequate experience and knowledge
Infrastructure
Malta has invested heavily in developing its financial sector, providing a range of institutions that offer services such as:
- Custody
- Administration
- Investment management
The University of Malta and other financial training centers have produced sufficient graduates to meet the demand for skilled professionals in the industry.
Best Practices Guidelines
The MFSA’s Corporate Governance Guidelines for Public Interest Companies and Corporate Governance Manual for Directors of Investment Companies and Collective Investment Schemes provide guidance on best practices for licensed entities.
Attracting Investors
Malta’s robust infrastructure and regulation make it an attractive destination for investors seeking a reliable and secure financial environment. The country’s competitive tax regime, highly skilled workforce, and strategic location position it well to continue growing as a major player in the global financial sector.
By providing a safe and regulated environment, Malta has established itself as a hub for foreign investment and a trusted partner for businesses looking to expand their operations globally.