Professional Investor Funds (PIFs) are collective investments schemes designed to target professional investors and/or high net worth individuals.

A PIF may take any of the following legal forms:

1. an open-ended or close-ended investment company with variable share capital (SICAV) (which could either be private company or public company);
2. limited partnerships;
3. a unit trust; or
4. a mutual fund.

The Maltese regulatory regime distinguishes between 3 categories of PIFs depending on the experience of the targeted investor:

(a)    the experienced investor (with an entry level of €10,000);

(b)    the qualifying investor (with an entry level of €75,000); and

(c)    the extraordinary investor (with an entry level of €750,000).

While there is no requirement that any of the directors of the PIF is a Maltese resident, it is advisable that, at least, one local resident director is appointed on the PIF’s board.

Any service providers appointed by the PIF should be established and regulated in a “recognised jurisdiction” (i.e. the EU and EEA Member States and signatories to a Multilateral or Bilateral Memorandum of Understanding with the MFSA covering the relevant sector of financial services) or is subject to an equal or comparable level of regulation and supervision in the jurisdiction concerned.

A PIF must ensure that its assets are subject to adequate safekeeping arrangements. PIFs targeting experienced investors must appoint a custodian who shall be separate and independent from the scheme’s manager and must act independently and solely in the interests of the investors. PIFs must appoint an auditor approved by the MFSA and must ensure that, at all times, a compliance officer and a money laundering reporting officer are appointed.

A PIF must draw up an Offering Document to be provided to prospective investors free of charge.

No restrictions are imposed on the investment objectives, policies and restrictions of PIFs targeting extraordinary investors and qualifying investors other than those outlined in the Offering Document. However, PIFs targeting experienced investors, apart from the investment objectives, policies and restrictions found in the Offering Document, are also subject to the restrictions contained in the Investment Services Rules for Professional Investor Funds issued by the MFSA.

No leverage restrictions apply to PIFs targeting extraordinary investors and qualifying investors (in the latter case, unless the PIF invests in immovable property). PIFs targeting experienced investors may leverage up to 100% of the scheme’s NAV (if for liquidity purposes, the scheme is allowed to leverage unlimitedly).