By Dr Louis de Gabriele (pictured), Camillieri Preziosi Advocates – In recent years, the Maltese jurisdiction has continued to consolidate its reputation as a fund domicile of choice for fund promoters and managers alike. Having emerged as a cost-effective jurisdiction for funds, Malta boasts a comprehensive yet flexible regulatory framework, together with attractive rates of taxation. The Malta Financial Services Authority ("MFSA") has also played a considerable role in the strengthening of Malta's position as a fund domicile, particularly due to its accessibility, responsiveness, and expediency in the processing of applications.
Malta's sophisticated fund sector provides a broad repertoire of structuring solutions; one of the more innovative – providing promoters with an increased level of flexibility – being the Recognised Incorporated Cell Company ("RICC"). Building upon the multi-fund SICAV and SICAV Incorporated Cell Company ("SICAV ICC") structures, the Maltese regulations applicable to RICCs (the "RICC Regulations") introduce a platform-type model, which enables the RICC to provide services of a purely administrative nature, against a platform fee, to its incorporated cells ("ICs"). The RICC will not require a CIS licence, but will need to obtain a recognition certificate from the MFSA. Each IC, however, will require a CIS licence in its own right.
Notably, ICs established under a RICC each enjoy separate legal personality – their assets and liabilities are thus ring-fenced from one another and accordingly creditors of each individual IC may not have recourse to the assets of any other IC. The RICC's ICs may comprise a mix of PIFs, UCITS and AIFs; the choice of which will depend, ultimately, on whether the promoters are after a retail product, or a hedge fund. Moreover, it is important to point out that the RICC's ICs may have segregated sub-funds; and, advantageously, the RICC can have ICs which are either self-managed or externally managed.
The RICC entertains further positive points. By way of the RICC Regulations, a body corporate carrying out similar activities to a RICC outside Malta may be continued as a RICC within Malta, thus allowing for uninterrupted business progression. It is also noteworthy that, because the RICC itself is a company, it will benefit from the favourable fiscal regime applicable to companies. Furthermore, the RICC model also provides for cost-savings that may be attained through centralisation and standardisation – indeed, standardised fund documentation with service providers will be in place upon the establishment of a RICC – this allows ICs to be incepted in shorter time periods as functionary agreements with service providers will already have been approved by the regulator.
In view of the enhanced compliance costs occasioned by new regulation under the umbrella of the AIFMD, the RICC model – due to its unique qualities, as explained above – is beginning to look increasingly attractive as a structure of choice for fund promoters.
The uptake of RICCs looks set to increase in 2015 and beyond