Family Offices Get Maltese Investment Law Exemption

Family offices which choose to manage their global investments from Malta have been given a new legal exemption through a recent amendment in the applicable investment services rulebook of the Malta Financial Services Authority (“MFSA”).

On the  27^th of November 2024, the MFSA issued a circular titled “Establishment of Single Family Offices in Malta”. The circular provides that a Notified Professional Investor Fund (“NPIF”) which is set up to solely manage the investment of a single family office (without raising external capital) does not require a licensed fund manager anymore.

This is a beneficial exemption which reduces cost and bureaucracy while retaining the advantages of a collective investment scheme structure that is registered by the MFSA. A number of NPIF reporting obligations are still required, but the most burdensome requirement of having a licensed fund manager has been removed for single family offices when managing family wealth.

By way of background, any investment activity provided “in or from within Malta” requires an investment service licence under Article 3 of the Investment Services Act, Chapter 370 of the Laws of Malta (the “ISA”). A collective investment scheme is an investment activity which requires licensing. A NPIF, albeit exempt from licensing, ordinarily requires official notification to the MFSA from a fully-licensed investment manager.   The exemptions under the ISA are found in the Investment Services Act (Exemption) Regulations, Subsidiary Legislation 370.02 of the Laws of Malta (“SL370.02”).

There are numerous exemptions in SL370.02. For example, Regulation 3(1)(g) says that “persons providing investment services consisting exclusively in the administration of employee-participation schemes” are exempt from the requirement to get an investment service licence.

The exemption mentioned by the MFSA’s circular on the 27^th of November 2024 does not change the law itself. It changes the MFSA’s rulebook with respect to Regulation 3(1)(f) and Regulation 3(1)(t) of SL370.02.  These two sub-regulations say that:

“3. (1) The following persons are hereby being exempted for the purposes of the requirement for a licence for investment services in terms of article 3 of the [ISA]:
[…]
(f) persons which provide investment services exclusively for their parent companies, for their subsidiaries or for other subsidiaries of their parent undertakings;
[…]
(t) an AIFM in so far as it manages one or more AIFs whose  only  investors  are  the  AIFM  or  the  parent undertakings or the subsidiaries of the AIFM or other subsidiaries of those parent undertakings: Provided that this exemption shall apply solely for the said  activity,  and  only  as  long  as  none  of  the  said investors is itself an AIF.”

The amendments for family offices introduced by the MFSA in November 2024 are found in:

• Section 6 of the MFSA’s ‘Part A of the Investment Services Rules for Notified Professional Investor Funds and Related Due Diligence Service Providers’ (“Part A of the NPIF Rules”) which now permits NPIFs to be managed by fund managers based in Malta who are already exempt from obtaining an investment services licence under Regulation 3(1)(f) or Regulation 3(1)(t) of SL370.02 when managing family wealth.
• Rule 3.03 of the MFSA’s ‘Part B of the Investment Services Rules for Notified Professional Investor Funds and Related Due Diligence Service Providers’ (“Part B of the NPIF Rules”) which now imposes specific reporting obligations on the exempted fund managers that are benefitting from the exemptions outlined in the previous point.
• A new addition in the ‘Supplementary Rules applicable to NPIFs’ (“Supplementary Rules”) which adds a whole section on supplementary rules applicable to NPIFs managed by exempt managers pursuant to Rule 6.01 of Part A of the NPIF Rules.

This means that if an EU (or non-EU) family office would like to set up an investment structure in Malta to manage its wealth, the process would be:

• Step 1: Get a legal opinion that the activity will fall under the exemption of Regulation 3(1)(f) or Regulation 3(1)(t) of SL370.02. The requirement to obtain the exemption in writing from the MFSA was removed in December 2023 for both exemptions discussed in this paragraph as per Legal Notice 290 of 2023, hence a legal opinion or an equivalent thereof would suffice this requirement.
• Step 2: Open a structure in Malta. This is usually a company, partnership or trust; but it can be any of the structures mentioned in Rule 2.05 of Part A of the NPIF Rules. The structure needs a Maltese resident in the governing body (usually, but not limited to, a non-executive director); and an MLRO.
• Step 3: Notify the structure to the MFSA to be registered as a NPIF. Following notification, the MFSA registers the NPIF within 10 working days of the full submission. Subsequently, the investment activity can commence immediately.

In addition to the amendments to the NPIF rulebook on investment services, the circular informed stakeholders that the MFSA updated the Trustees of Family Trusts Rulebook by amending the definitions relating to family wealth as well as Title 2 of Chapter 3 of the same trusts rulebook on the registration considerations of trusts when NPIFs for family wealth management are involved.

Anti-money-laundering (“AML”) compliance remains a fundamental element of the MFSA’s supervision and this was included in the amendments for single family offices. The circular emphasises that all structures operating under the family office framework must comply with AML obligations. As per Part A of the NPIF Rules, NPIFs require an MLRO – and this requirement has not been removed from the new exemption for family offices. In fact, the circular states that the MFSA’s framework “ensure[s] that a subject person in terms of the Prevention of Money Laundering and Funding of Terrorism Regulations forms part of the structure at all times.” This requirement reflects the MFSA’s emphasis on safeguarding the integrity of Malta’s financial sector while providing operational flexibility and financial regulatory supervision which is grounded in the EU’s principle of proportionality.

These updated rules enhance Malta’s attractiveness as a jurisdiction for single family offices by offering high-net-worth families a clear, structured pathway for establishing wealth management vehicles with investment capabilities but only minimal reporting requirements.

Malta’s broader regulatory ecosystem, including its EU membership, established financial services sector, world-renowned immigration programmes, hybrid legal system with English Common Law and favourable tax regime for global investments, further supports its suitability as a jurisdiction-of-choice for single family offices who want an EU base for their investment activities.