MALTA TYPES OF COLLECTIVE INVESTMENT SCHEMES

Transcription

1 MALTA TYPES OF COLLECTIVE INVESTMENT SCHEMES The Investment Services Act (Chapter 370 of the Laws of Malta) ( ISA ) defines the term collective investment scheme as follows: "collective investment scheme" means any scheme or arrangement which has as its object or as one of its objects the collective investment of capital acquired by means of an offer of units for subscription, sale or exchange and which has the following characteristics: (a) the scheme or arrangement operates according to the principle of risk spreading; and either (b) the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; or (c) at the request of the holders, units are or are to be repurchased or redeemed out of the assets of the scheme or arrangement, continuously or in blocks at short intervals; or (d) units are, or have been, or will be issued continuously or in blocks at short intervals: Provided that an alternative investment fund that is not promoted to retail investors and that does not have the characteristic listed in paragraph (a) hereof shall only be deemed to be a collective investment scheme if the scheme, in specific circumstances as established by regulations under this Act, is exempt from such requirement and satisfies any conditions that may be prescribed. For regulatory purposes, a distinction is made between the following main types of collective investment schemes ( CISs ), when established in Malta: (i) (ii) (iii) (iv) Professional Investor Funds; Alternative Investment Funds; Retail Collective Investment Schemes, including UCITS; Private Collective Investment Schemes. The salient features of each category mentioned above are summarised in the table attached. CISs established or carrying on activities in Malta are in principle required to obtain a CIS licence from the Malta Financial Services Authority (the MFSA ), Malta s single regulator for the financial services industry. Under Maltese law, CISs may be established in various legal forms (subject to certain regulatory restrictions applicable to Maltese UCITS), in particular the following: (i) (ii) (iii) (iv) (v) (vi) an investment company with variable share capital ( SICAV ) in terms of the Companies Act (Chapter 386 of the Laws of Malta), which may be either a public or a private limited liability company; an investment company with fixed share capital ( INVCO ) in terms of the Companies Act, which per definition is a public limited liability company; a SICAV formed or constituted as an incorporated cell company ( ICC ) in terms of the Companies Act (SICAV Incorporated Cell Company) Regulations (Legal Notice 559 of 2010), which may establish one or more incorporated cells (which would also be CISs) in the form of a limited liability company with separate legal personality (the incorporated cell may be a SICAV or INVCO); an incorporated cell of a recognised incorporated cell company ( RICC ) in terms of the Companies Act (recognised Incorporated Cell Companies) Regulations (Legal Notice 119 of 2012), which cell may take the form of a SICAV or INVCO; a limited partnership (or partnership en commandite) ( LP ) in terms of the Companies Act; a unit trust in terms of the Trust and Trustees Act (Chapter 331 of the Laws of Malta); Page 1 of 22

2 (vii) a common contractual fund in terms of the Investment Services Act (Contractual Funds) Regulations (Legal Notice 3 of 2011). A SICAV may be set up either as: (a) a multi-class (single fund) company, where in terms of its memorandum of association, its share capital is, or is capable of being, divided into different classes of shares not constituting any distinct sub-fund); or (b) a multi-fund (umbrella) company, where in terms of its memorandum of association, its share capital is, or is capable of being divided into different classes of shares where one class or a group of classes of shares constitute a distinct sub-fund of the company; provided that the initial share capital may or may not be organized in one or more sub-funds; pursuant to the Companies Act (Investment Companies with Variable Share Capital) Regulations (Legal Notice 241 of 2006, as amended) (the SICAV Regulations ). A multi-fund company may in its memorandum of association elect to have the assets and liabilities of each sub-fund comprised in that company treated for all intents and purposes of law as a patrimony separate from the assets and liabilities of each other sub-fund of such company. Where a multi-fund company makes such election, the assets and liabilities of each sub-fund of that multi-fund company shall, for all intents and purposes of law be deemed to constitute a patrimony separate from the assets and liabilities of each other sub-fund of such a company. Similarly, LPs and contractual funds may be constituted as multi-class / single fund or multi-fund / umbrella structures, and in the case of a multifund structure, opt for the segregation of assets and liabilities between each of the sub-funds, in accordance with the relevant provisions of the Tenth Schedule to the Companies Act and the Investment Services Act (Contractual Funds) Regulations respectively. At present, virtually all CISs are established in the form of a SICAV (standalone, or as part of an incorporated cell structure) in Malta, with very few exceptions. This document does not purport to give legal or tax advice. Should you require further information or assistance, please do not hesitate to contact Joseph Saliba (joseph.saliba@mamotcv.com) or Danièle Cop (daniele.cop@mamotcv.com). For information about Mamo TCV Advocates, please visit our website: Last updated: May 2014 Page 2 of 22

3 Professional Investor Funds ( PIFs ): PIFs targeting Experienced Investors: a person Experienced having the expertise, experience and Investors knowledge to be in a position to make his own investment decisions and understand the risks involved. An investor must state the basis on which he satisfies this definition, either (a) by confirming that he/ she is: (i) a person who has relevant work experience having at least worked in the financial sector for one year in a professional position or a person who has been active in these type of investments; or (ii) a person who has reasonable experience in the acquisition and/or disposal of funds of a similar nature or risk profile, or property of the same kind as the property, or a substantial part of the property, to which the PIF in question relates; or (iii) a person Certain investment and borrowing / leverage restrictions and diversification requirements apply, including the following: - direct borrowing for investment purposes and leverage via the use of derivatives is restricted to 100% of NAV; - the PIF may invest up to 20% of its total assets in securities issued by the same body and up to 30% of its assets in money market instruments issued by the same body; these limits may be increased subject to certain conditions; - the PIF may invest up to 35% of its total assets in deposits held with a single body; - the PIF may only invest up to 30% of its total assets in any single CIS which is not a UCITS or other open ended CIS subject to risk spreading requirements which are at least Investment Manager: the PIF may appoint an external investment manager, established in a Recognised Jurisdiction 1, or if the PIF is an investment company, it may be self-managed. the Investment Manager must be approved by the MFSA. The Investment Manager of a PIF is expected to be a fund manager which does not require authorisation under the AIFMD (e.g. a de minimis fund manager or, for the time being, a non-eea fund manager). 2 Fund Administrator: the PIF or the Investment Manager may appoint a fund administrator, established in a Recognised Jurisdiction. No 1 Recognised Jurisdictions include EU Member States and EEA States, and signatories to a Multilateral MoU or Bilateral MoU with the MFSA covering the relevant sector of financial services. 2 If the Investment Manager (or the self-managed fund itself) is or becomes an AIFM authorised under the AIFMD, then the MFSA seems to expect that the fund is licensed as an AIF or that the PIF s licence is converted to an AIF licence. Page 3 of 22

4 who has made investments amounting to EUR100,000 or USD100,000 within the past 2 years at an average frequency of 3 per quarter; or (b) by providing any other appropriate justification. Persons who qualify as Professional Clients in terms of MIFID, automatically qualify as Experienced Investors. Minimum investment: EUR10,000 or USD10,000 comparable to those applicable to the PIF itself; - a fund of hedge funds must invest in at least five hedge funds; - in OTC derivative transactions, exposure to a single counterparty must limited to 20% of total assets; - aggregate maximum exposure to a single issuer / counterparty must be limited to 40% of total assets; - for PIFs that are feeder funds, the underlying fund must satisfy the leverage restrictions applicable to the PIF. Specific restrictions apply to PIFs investing directly or indirectly in immovable property. the Fund Administrator must be approved by the MFSA. Investment Adviser: the PIF or the Investment Manager may appoint an investment adviser, established in a Recognised Jurisdiction. an Investment Adviser by the PIF must be approved by the MFSA. Custodian: the PIF is required to appoint a custodian responsible for the safekeeping of the PIF s assets, and for monitoring the extent to which the Investment Manager is abiding by the investment and borrowing powers laid out in the Offering Document and otherwise in accordance with the provisions of the Constitutional Document and the Licence conditions. The Custodian need not be established in Malta, but may be established in a Recognised Jurisdiction. the Custodian must be approved by the MFSA. Page 4 of 22

5 PIFs targeting Qualifying Investors Qualifying Investors: required to meet one or more of the following criteria: 1. a body corporate which has net assets in excess of EUR750,000 or USD750,000 or which is part of a group which has net assets in excess of EUR750,000 or USD750,000; 2. an unincorporated body of persons or association which has net assets in excess of EUR750,000 or USD750,000; 3. a trust where the net value of the trust s assets is in excess of EUR750,000 or USD750,000; 4. an individual, or in the case of a body corporate, the majority of its Board of Directors or in the case of a partnership its General Partner who has reasonable experience in the acquisition and/or disposal of: 4.1 funds of a similar nature or risk profile; 4.2 property of the same kind as the property, or a substantial part of the property, to which the PIF in question relates; 5. an individual whose net worth or joint net worth with that person s spouse, exceeds EUR750,000 or USD750,000; 6. a senior employee or Director of Service Providers to the PIF; No investment / borrowing / leverage restrictions (except for immovable property funds: for open-ended PIFs targeting Qualifying Investors a leverage restrictions of 50% of NAV applies). No diversification requirement: the Investment Manager and the PIF are not bound to comply with the principle of risk spreading. Cross-investment in sub-funds within the same umbrella structure is allowed, subject to certain conditions. Investment Manager: the PIF may appoint an external investment manager, established in a Recognised Jurisdiction, or if the PIF is an investment company, it may be self-managed. the Investment Manager must be approved by the MFSA. The Investment Manager of a PIF is expected to be a fund manager which does not require authorisation under the AIFMD (e.g. a de minimis fund manager or, for the time being, a non-eea fund manager). Fund Administrator: the PIF or the Investment Manager may appoint a fund administrator, established in a Recognised Jurisdiction. the Fund Administrator must be approved by the MFSA. Investment Adviser: the PIF or the Investment Manager may appoint an investment adviser, established in a Recognised Jurisdiction. No Page 5 of 22

6 7. a relation or close friend of the promoters limited to a total of 10 persons per PIF; 8. an entity with (or which are part of a group with) EUR3.75 million or USD3.75 million or more under discretionary management, investing on its own account; 9. the investor qualifies as a PIF promoted to Qualifying or Extraordinary Investors; 10. an entity whether body corporate or partnership wholly owned by persons or entities satisfying any of the criteria listed above which is used as an investment vehicle by such persons or entities. Minimum investment: EUR75,000 or USD75,000 an Investment Adviser by the PIF must be approved by the MFSA. Custodian: the PIF would generally be expected to appoint a Custodian / Prime Broker responsible for the safekeeping of the assets of the PIF, but alternative safekeeping arrangements may be adopted, with the MFSA s approval. The Custodian / Prime Broker is not required to perform a monitoring function. The Custodian / Prime Broker need not be established in Malta, but may be established in a Recognised Jurisdiction. the Custodian / Prime Broker must be approved by the MFSA. Page 6 of 22

7 PIFs targeting Extraordinary Investors Extraordinary Investors: required to meet one or more of the following criteria: 1. a body corporate, which has net assets in excess of EUR7.5 million or USD7.5 million or which is part of a group which has net assets in excess of EUR7.5 million or USD7.5 million; 2. an unincorporated body of persons or association which has net assets in excess of EUR7.5 million or USD7.5 million; 3. a trust where the net value of the trust s assets is in excess of EUR7.5 million or USD7.5 million; 4. an individual whose net worth or joint net worth with that person s spouse, exceeds EUR7.5 million or USD7.5 million; 5. a senior employee or Director of Service Providers to the PIF; 6. the investor qualifies as a PIF promoted to Extraordinary Investors; 7. an entity whether a body corporate or partnership wholly owned by persons or entities satisfying any of the criteria listed above which is used as an investment vehicle by such persons or entities. No investment / borrowing / leverage restrictions. No diversification requirement: the Investment Manager and the PIF are not bound to comply with the principle of risk spreading. Cross-investment in sub-funds within the same umbrella structure is allowed, subject to certain conditions. Investment Manager: the PIF may appoint an external investment manager, established in a Recognised Jurisdiction, or if the PIF is an investment company, it may be self-managed. the Investment Manager must be notified to the MFSA (which has the right to object). The Investment Manager of a PIF is expected to be a fund manager which does not require authorisation under the AIFMD (e.g. a de minimis fund manager or, for the time being, a non-eea fund manager). Fund Administrator: the PIF or the Investment Manager may appoint a fund administrator, established in a Recognised Jurisdiction. the Fund Administrator must be notified to the MFSA (which has the right to object). Investment Adviser: the PIF or the Investment Manager may appoint an No Page 7 of 22

8 Minimum investment: EUR750,000 or USD750,000 investment adviser, established in a Recognised Jurisdiction. an Investment Adviser by the PIF must be notified to the MFSA (which has the right to object). Custodian: the PIF would generally be expected to appoint a Custodian / Prime Broker responsible for the safekeeping of the assets of the PIF, but alternative safekeeping arrangements may be adopted, with the MFSA s approval. The Custodian / Prime Broker is not required to perform a monitoring function. The Custodian / Prime Broker need not be established in Malta, but may be established in a Recognised Jurisdiction. the Custodian / Prime Broker must be notified to the MFSA (which has the right to object). Page 8 of 22

9 Alternative Investment Funds ( AIFs ): 3 AIFs marketed Professional Investors: investors which to Professional are considered to be Professional Investors Clients or may, on request, be treated as Professional Clients, within the meaning of MiFID. No minimum investment requirement. No investment / borrowing / leverage restrictions. No diversification requirement: AIFs for Professional Investors are exempt from the requirement to operate according to the principle of risk spreading. Cross-investment in sub-funds within the same umbrella structure is allowed, subject to certain conditions. Investment Manager: the AIF is expected to appoint an EU AIFM authorised under the AIFMD, or if the AIF is an investment company, it may be self-managed (in which case the AIF itself will be authorised and regulated as an AIFM). the AIFM as well as the terms of the appointment / investment management agreement must be agreed with the MFSA. Yes, within the EU/EEA, under the AIFMD. Fund Administrator: the AIFM may delegate the administration function to a fund administrator, or the fund administrator may be appointed by the AIF. The fund administrator need not be established in Malta. Custodian: a single depositary with cash flow monitoring, safekeeping and oversight functions must be appointed. The depositary must be established in Malta, or, until 2017, 3 The ISA defines the term Alternative Investment Fund as follows: "Alternative Investment Fund or AIF" means a collective investment scheme, including subfunds thereof, which raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and which does not qualify as a UCITS Scheme in terms of the UCITS Directive. Page 9 of 22

10 may be a credit institution established in EEA State. The appointment and replacement of the depositary is subject to the MFSA s written consent. Prime Broker(s): the AIF may appoint one or more Prime Brokers or counterparties, selected by the AIFM, subject to certain conditions. AIFs marketed to Experienced Investors Experienced Investors: see under PIFs targeting Experienced Investors above. Minimum investment: EUR10,000 Certain investment and borrowing / leverage restrictions and diversification requirements apply: see under PIFs targeting Experienced Investors above. Same as for AIFs marketed to Professional Investors (see above). Yes, within the EU/EEA, under the AIFMD, but only for Professional Investors. 4 AIFs marketed to Qualifying Investors Qualifying Investors: see under PIFs targeting Qualifying Investors above. Minimum investment: EUR75,000 No investment / borrowing / leverage restrictions. Cross-investment in sub-funds within the same umbrella structure is allowed, subject to certain conditions. Same as for AIFs marketed to Professional Investors (see above). Yes, within the EU/EEA, under the AIFMD, but only for Professional Investors. 4 EU Member States / EEA States have the discretion to allow marketing of AIFs to investors other than Professional Investors in their territory, which may be subject to conditions. Page 10 of 22

11 AIFs marketed to Extraordinary Investors Extraordinary Investors: see under PIFs targeting Extraordinary Investors above. Minimum investment: EUR750,000 No investment / borrowing / leverage restrictions. Cross-investment in sub-funds within the same umbrella structure is allowed, subject to certain conditions. Same as for AIFs marketed to Professional Investors (see above). Yes, within the EU/EEA, under the AIFMD, but only for Professional Investors. AIFs marketed to Retail Investors Retail Investors: investors who are not Professional Investors (see definition under AIFs marketed to Professional Investors), in Malta. No minimum investment requirement. Stringent investment and borrowing / leverage restrictions and diversification requirements apply, as set out in the MFSA s Investment Services Rules for Alternative Investment Funds. For example: - The AIF shall not invest more than 10% of its assets in securities which are not traded in or dealt on a market which: (i) the Custodian and AIFM have agreed as being appropriate for the AIF; (ii) is listed in the Offering Document; (iii) is regulated, operates regularly, is recognised and is open to the public; (iv) has adequate liquidity and adequate arrangements in respect of the transmission of income and capital; and (v) is not the subject of an MFSA restriction. - The AIF shall not invest more than 10% of its assets in securities issued by the same body, but it may, Investment Manager: the AIF is expected to appoint an EU AIFM authorised under the AIFMD, or if the AIF is an investment company, it may be self-managed (in which case the AIF itself will be authorised and regulated as an AIFM). the AIFM as well as the terms of the appointment / investment management agreement must be agreed with the MFSA. Fund Administrator: the AIFM may delegate the administration function to a fund administrator, or the fund administrator may be appointed by the AIF. The fund administrator need not be established in Malta. Custodian: a single depositary with cash flow monitoring, safekeeping Yes, within the EU/EEA, under the AIFMD, but only for Professional Investors. Page 11 of 22

12 subject to approval from the MFSA, invest up to 100% of its assets in securities issued or guaranteed by any State, its constituent States, its local authorities, or public international bodies of which one or more States are members. - The AIF shall not hold more than 10% of any class of security issued by any single issuer. - No more than 10% of the assets shall be kept on deposit with any one body, but this limit may be increased to 30% in respect of money deposited with a credit institution licensed in Malta or in any other EEA State, or with any other credit institution which has been approved by the MFSA. - The AIF may acquire the units of other CISs subject to certain conditions, including that not more than 20% of the AIF s assets shall be invested in any one CIS. - The AIF may employ techniques and instruments for the purpose of efficient portfolio management, including the use of Financial Derivative Instruments, subject to certain conditions, but it shall not hold Financial Derivative and oversight functions must be appointed. The depositary must be established in Malta, or, until 2017, may be a credit institution established in another EU Member State / EEA State. The appointment and replacement of the depositary is subject to the MFSA s written consent. Prime Broker(s): the AIF may appoint one or more Prime Brokers or counterparties, selected by the AIFM, subject to certain conditions. Page 12 of 22

13 Instruments for investment purposes. - The AIF s maximum exposure to one counterparty in an OTC-derivative transaction shall not be more than 5% of value of its assets; this limit may be increased to 10% in respect of OTC-derivative transactions made with a counterparty which is a credit institution. - The AIF may not combine: (i) investments in securities issued by; (ii) deposits made with; and/or (iii) counterparty exposures arising from OTC-derivative transactions undertaken with, a single body in excess of 35% of its assets. - An AIF may borrow up to a maximum of 10% of its assets, provided that the borrowing is on a temporary basis and the AIF s overall risk exposure does not exceed 110% of its assets under any circumstances. Page 13 of 22

14 Retail Collective Investment Schemes: UCITS Retail Investors: retail CISs are available to the general public. No minimum investment requirement. Stringent investment and borrowing / leverage restrictions and diversification requirements apply, based on the UCITS Directive and as set out in the MFSA s Investment Services Rules for Retail Collective Investment Schemes. Investment Manager: the UCITS is required to appoint a Maltese or EU UCITS Management Company, or if the UCITS is an investment company, it may be self-managed. the Investment Manager as well as the terms of the appointment / investment management agreement must be agreed with the MFSA. Yes, within the EU/EEA, under the UCITS Directive Fund Administrator: the UCITS Management Company, or the UCITS (if it is self-managed) may appoint a Fund Administrator, which need not be established in Malta. Investment Adviser: the UCITS or the UCITS Management Company, may appoint an Investment Adviser, which need not be established in Malta. the Investment Adviser as well as the terms of the appointment / advisory agreement must be agreed with the MFSA. Page 14 of 22

15 Custodian: the assets of the UCITS must be entrusted to a custodian established in Malta, which is also responsible for monitoring the extent to which the UCITS Management Company is abiding by the investment and borrowing powers laid out in the Prospectus and otherwise in accordance with the provisions of the Constitutional Document and the Licence conditions. the custodian as well as the terms of the appointment / custody agreement must be agreed with the MFSA. Retail non- UCITS Schemes Retail Investors: retail CISs are available to the general public. No minimum investment requirement. Stringent investment and borrowing / leverage restrictions and diversification requirements apply, as set out in the MFSA s Investment Services Rules for Alternative Investment Funds (these are the similar to the restrictions and requirement applicable to AIFs available to Retail Clients in Malta; see above). Investment Manager: a Retail non- UCITS is required to appoint an Investment Manager established in Malta or elsewhere in the EU. If the Retail non-ucits is an investment company, it may be self-managed. the Investment Manager as well as the terms of the appointment / investment management agreement must be agreed with the MFSA. No (unless it qualifies as an AIF managed by an AIFM, or selfmanaged AIF, authorised under AIFMD, and in that case, Page 15 of 22

16 Fund Administrator: the Investment Manager or the Retail non-ucits may appoint a Fund Administrator. the Fund Administrator as well as the terms of the appointment / administration agreement must be agreed with the MFSA. Investment Adviser: the Retail non- UCITS or the Investment Manager may appoint an Investment Adviser, which need not be established in Malta. the Investment Adviser as well as the terms of the appointment / advisory agreement must be agreed with the MFSA. Custodian: the Retail non-ucits is required to appoint a custodian responsible for the safekeeping of the assets and for monitoring the activities of the Investment Manager. The Custodian must be established in Malta or be an EU credit institution with registered office in another Member State. only for marketing to Professional Investors). Page 16 of 22

17 the custodian as well as the terms of the appointment / custody agreement must be agreed with the MFSA. Other CISs: Private Collective Investment Schemes 5 The total number of participants must be limited to 15 persons and: (i) the participants must be close friends or relatives of the promoters; (ii) the scheme is essentially private in nature and purpose; and (iii) the scheme does not qualify as a PIF. No investment or borrowing restrictions. The appointment of any service providers is at the Private CIS s discretion. No 5 Private CIS do not require a licence issued by the MFSA, but must hold a recognition certificate granted by MFSA. The MFSA has indicated that Private CIS fall outside the scope of AIFMD. Page 17 of 22

18 Designation Loan Fund Types of CIS AIF or PIF 6, structured as a closedended fund, investing through loans, i.e. (i) the direct origination of loans by the fund, or (ii) the acquisition by the fund of a portfolio of loans or a direct interest in loans which gives rise to a direct legal relationship between the fund, as lender, and the borrower. Professional Investors: (a) investors which are considered to be professional clients in accordance with Section I of Annex II to MiFID; or (b) investors which, on request, elect to be treated as professional clients in accordance with Section II of Annex II to MiFID and commit to investing a minimum of EUR 100,000. Various conditions and restrictions apply, e.g.: - the fund may issue loans exclusively to unlisted companies and SMEs, excluding financial undertakings and individuals; - investment in liquid securities is allowed up to 30% of assets; - maximum 10% of capital may be invested in a single undertaking; - maximum 10% of capital may be invested in other loan funds provided that such funds operate within the same investment restrictions applicable; the fund may not acquire more than 25% of the units / shares of a single loan fund; - cash borrowing is subject to the following conditions: (a) it is short-term borrowing to bridge drawdown commitment dates; (b) it represents not more than 30% of capital; (c) it serves the purpose of acquiring units / shares in the fund s investments; (d) it is contracted in the same currency as the assets to be acquired; (e) it does not hinder the realisation of any asset held in the fund s portfolio; and (f) it does not encumber the assets held in the fund s portfolio; - the use of leverage and the reuse of collateral by the fund are not permitted. Cross-investment in sub-funds within the same umbrella structure is allowed, subject to certain conditions. Investment Manager: the fund may appoint an Investment Manager (Maltese or EU de minimis fund manager, Maltese or EU AIFM, or fund manager established in a Recognised Jurisdiction), or be selfmanaged. Fund Administrator: the fund or the Investment Manager may appoint a Fund Administrator. Custodian: a single custodian must be appointed, which must be established in Malta or be an EU credit institution. Only for AIFs marketed to Professional Investors (see above). 6 Excluding Retail CIS, AIFs marketed to Retail Investors and PIFs or AIFs marketed to Experienced Investors. Page 18 of 22

19 Designation Money Market Fund / Short- Term Money Market Fund Types of CIS PIFs, AIFs, UCITS and Retail non- UCITS, with the primary objective of maintaining the principal investment of the fund and which aim to provide a return in line with money market rates. The Fund must invest in high quality money market financial instruments which comply with the criteria prescribed by the MFSA, or in deposits with credit institutions. Various investment restrictions apply. Rules regarding service providers apply according to the type of CIS (see above). Only for UCITS, and AIFs for Professional Investors (see above). European Venture Capital Fund (EuVECA) PIF 7 ; a qualifying venture capital fund is a collective investment undertaking that: (i) intends to invest at least 70 % of its aggregate capital contributions and uncalled committed capital in assets that are qualifying investments, calculated on the basis of amounts investible after deduction of all relevant costs and holdings in cash and cash equivalents, within a time frame laid down in its rules or instruments of incorporation; (ii) does not use more than 30 % of its aggregate capital contributions and uncalled committed capital for the Qualifying investments are essentially: (i) equity or quasi-equity instruments issued by a qualifying portfolio undertaking; (ii) secured or unsecured loans granted by the fund to a qualifying portfolio undertaking in which the qualifying venture capital fund already holds qualifying investments, provided that no more than 30 % of the aggregate capital contributions and uncalled committed capital in the fund is used for such loans; (iii) shares of a qualifying portfolio undertaking acquired from existing shareholders of that undertaking; (iv) units or shares of one or several other qualifying venture capital funds, provided that those qualifying venture capital funds have not themselves invested more than 10 % of their aggregate capital contributions and Investment Manager: the fund may appoint a de minimis fund manager licensed in Malta or registered in another Member State in terms of the AIFMD, or, in the case of an investment company, may be self-managed. The manager / selfmanaged fund is required to comply with the conditions for the use of the designation EuVECA laid down in Regulation (EU) No 345/2013. Yes, marketing in other EU Member States / EEA States to Eligible Investors under Regulation (EU) No 345/ Regulation (EU) No 345/2013 on European venture capital funds applies to managers of AIFs as defined in the AIFMD that meet the following conditions: (a) their assets under management in total do not exceed the threshold referred to in point (b) of Article 3(2) AIFMD; (b) they are established in the European Union; (c) they are subject to registration with the competent authorities of their home Member State in accordance with point (a) of Article 3(3) AIFMD; and (d) they manage portfolios of qualifying venture capital funds. Page 19 of 22

20 Designation Types of CIS acquisition of assets other than qualifying investments, calculated on the basis of amounts investible after deduction of all relevant costs and holdings in cash and cash equivalents; (iii) is established within the territory of a Member State. Eligible Investors: (a) investors which are considered to be professional clients in accordance with Section I of Annex II to MiFID; or (b) investors which, on request, elect to be treated as professional clients in accordance with Section II of Annex II to MiFID; or (c) other investors that commit to investing a minimum of EUR 100,000 and state in writing that they are aware of the risks. uncalled committed capital in qualifying venture capital funds. A qualifying portfolio undertaking is essentially an undertaking that: (i) is not admitted to trading on a regulated market or on a multilateral trading facility (MTF), employs fewer than 250 persons, and has an annual turnover not exceeding EUR 50 million or an annual balance sheet total not exceeding EUR 43 million; (ii) is not itself a collective investment undertaking; (iii) is not a financial undertaking; (iv) is established within the territory of a Member State, or in a third country provided that the third country is not listed as a Non- Cooperative Country and Territory by the FATF and has signed an agreement with the home Member State of the manager and with each other Member State in which the units or shares of the fund are intended to be marketed. Certain (other) investment, borrowing and leverage restrictions apply (e.g. leverage at fund level may not increase the exposure of the fund beyond the level of its committed capital). Rules regarding service providers apply according to the type of CIS (see above). Page 20 of 22

21 Designation European Social Entrepreneurship Fund (EuSEF) Types of CIS PIF 8 ; a qualifying social entrepreneurship fund is a collective investment undertaking that: (i) intends to invest at least 70 % of its aggregate capital contributions and uncalled committed capital in assets that are qualifying investments, calculated on the basis of amounts investible after deduction of all relevant costs and holdings in cash and cash equivalents, within a time frame laid down in its rules or instruments of incorporation; (ii) does not use more than 30 % of its aggregate capital contributions and uncalled committed capital for the acquisition of assets other than qualifying investments, calculated on the basis of amounts investible after Qualifying investments are essentially: (i) equity or quasi-equity instruments that are issued by a qualifying portfolio undertaking; (ii) securitised and un-securitised debt instruments, issued by a qualifying portfolio undertaking; (iii) units or shares of one or several other qualifying social entrepreneurship funds, provided that those qualifying social entrepreneurship funds have not themselves invested more than 10 % of their aggregate capital contributions and uncalled committed capital in qualifying social entrepreneurship funds; (iv) secured or unsecured loans granted by the fund to a qualifying portfolio undertaking; (v) any other type of participation in a qualifying portfolio undertaking. A qualifying portfolio undertaking is essentially an undertaking that: (i) is not admitted to trading on a regulated market or on a multilateral trading facility (MTF); (ii) has the achievement of measurable, positive social impacts as its primary objective, where Investment Manager: the fund may appoint a de minimis fund manager licensed in Malta or registered in another Member State in terms of the AIFMD, or, in the case of an investment company, may be self-managed. The manager / selfmanaged fund is required to comply with the conditions for the use of the designation EuSEF laid down in Regulation (EU) No 346/2013. Rules regarding service providers apply according to the type of CIS (see above). Yes, marketing in other EU Member States / EEA States to Eligible Investors under Regulation (EU) No 346/ Regulation (EU) No 346/2013 on European social entrepreneurship funds applies to managers of AIFs as defined in the AIFMD that meet the following conditions: (a) their assets under management in total do not exceed the threshold referred to in point (b) of Article 3(2) AIFMD; (b) they are established in the European Union; (c) they are subject to registration with the competent authorities of their home Member State in accordance with point (a) of Article 3(3) AIFMD; and (d) they manage portfolios of qualifying social entrepreneurship funds. Page 21 of 22

22 Designation Types of CIS deduction of all relevant costs and holdings in cash and cash equivalents; (iii) is established within the territory of a Member State. Eligible Investors: (a) investors which are considered to be professional clients in accordance with Section I of Annex II to MiFID; or (b) investors which, on request, elect to be treated as professional clients in accordance with Section II of Annex II to MiFID; or (c) other investors that commit to investing a minimum of EUR 100,000 and state in writing that they are aware of the risks. the undertaking: provides services or goods to vulnerable or marginalised, disadvantaged or excluded persons, employs a method of production of goods or services that embodies its social objective, or provides financial support exclusively to social undertakings as defined in the first two indents; (iii) uses its profits primarily to achieve its primary social objective; (iv) is managed in an accountable and transparent way, in particular by involving workers, customers and stakeholders affected by its business activities; (v) is established within the territory of a Member State, or in a third country provided that the third country is not listed as a Non- Cooperative Country and Territory by the FATF and has signed an agreement with the home Member State of the manager and with each other Member State in which the units or shares of the fund are intended to be marketed. Certain (other) investment, borrowing and leverage restrictions apply (e.g. leverage at fund level may not increase the exposure of the fund beyond the level of its committed capital). Page 22 of 22