Recognised Financial Entities

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Recognised Financial Entities are entities which do not require a licence, but require recognition from the regulator, the Malta Financial Services Authority. The main recognised financial entities in Malta are Fund Administrators and Recognised Incorporated Cell Company.

Recognised Financial Entities: Fund Administrators in Malta

Fund administrators are recognised financial entities which encompass a number of activities carried out in support of the actual process of running a collective investment scheme. In Malta, fund administrators are regulated by the Investment Services Act (Chapter 370 of the Laws of Malta). The Act specifies that any person who in Malta or from Malta provides to licence holders in Malta, or to equivalent authorised persons and schemes overseas, administrative services which do not themselves constitute a licensable activity under this Act, shall be required to apply for recognition by the MFSA.

There are several fund administration services which can be offered.

Typically the core services ordinarily performed by Fund Administrators are:

  • Preparation of Net Asset Value;
  • Reconciliations;
  • Pricing the Investment Portfolio;
  • Fund Accounting;
  • Preparation of Contract Notes;
  • Transfer Agency;

Other services, among several others, include:

  • Payment of Bills;
  • Preparation of Financial Statements;
  • Performance Reporting;
  • Compliance Reporting;
  • Registrar

The provision of any one of the aforementioned services or a limited number of other ancillary services does not necessarily trigger the recognition requirement under the Investor Services Act although ultimately this is an issue which can only be determined by the MFSA.

For more in-depth information regarding fund administrators, the exemption from the registration requirement, the recognition requirements and continuing requirements, outsourcing of functions, as well as compliance, please read our publication entitled Fund Administrators in Malta.

Recognised Financial Entities: Fund Administrators in Cyprus

Unlike Malta, Cyprus has not legislated with regards to recognised financial entities. Fund administration is not regulated as a distinct and separate category of licensable financial services. However, regulation is provided for under a number of separate yet interweaving regimes that can potentially be relevant to any player in the market. These regimes include the AIFM Law, Investment Firm law, the Administrative Services Law, as well as relevant EU directives.

Recognised Financial Entities: Recognised Incorporated Cell Companies in Malta

Recognised Incorporated Cell Companies (ICCs) are a new type of corporate vehicle which have been introduced in Malta as innovative and flexible legal structures in the field of insurance business. ICCs have been instrumental in helping Malta become an attractive domicile for insurance businesses.

The main legislative instrument which regulates ICCs is the Companies Act (Recognised Incorporated Cell Companies) Regulations (2010). The Malta ICC Regulations are flexible regulatory measures which allow the incorporation of distinct cells which may be licensed independently of the main company. Malta has also legislated with regards to Protected Cell Companies (PCCs), which makes it the sole EU member state which has established a legal regime for both cell companies. 

Malta ICCs have the ability to create cells for the purposes of segregation of the cellular assets and liabilities. Each incorporated cell of an ICC has its own separate legal personality which is distinct from that of a limited liability company. Thus it is able to transact and enter into contractual relationships with third parties in its own name. A Malta ICC also has the power to establish Incorporated Cells for the purpose of carrying out business of affiliated (captive) insurance. The Captive insurance field provides excellent opportunities which may be seized.

Chetcuti Cauchi offers legal advisory services relative to the set up of recognised financial entities such as Malta ICCs which may be set up by way of incorporation, continuation (re-domiciliation), conversion or division, the utilization of ICCs in the field of captive insurance and the exercise of EU passporting rights amongst others. Our firm also acts as a bridge between our clients and the MFSA at the pre-licensing stage and provides legal assistance throughout the regulatory process leading to the obtainment of a licence to carry on the business of insurance through the Incorporated Cell Company vehicle. At a post-licensing stage, Chetcuti Cauchi’s legal team provides a comprehensive compliance advisory service which ensures that all compliance matters are attended to.

 



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Key Contacts

Dr Maria Chetcuti Cauchi

Senior Partner

+356 22056412

Mr Nicholas Warren

Senior Manager, Financial Services

+356 22056415