Acquiring an investment licence in Malta - YB Case 2024

Acquiring an investment licence in Malta

Acquiring an investment licence in Malta
Acquiring an investment licence in Malta presents a gateway to an extensive array of financial services, encompassing asset management, brokerage services, FOREX, and credit and payment solutions. Issued by the MFSA, this licence not only attests to your legitimacy and reliability according to clients and partners but also ensures adherence to the high standards of regulation and transparency upheld within the European Union. Such licensure stands as a cornerstone for successful and sustainable investment endeavours on the global platform.

Economic overview and investment appeal of Malta

A pivotal facet of Malta's allure lies in its provision for obtaining an investment licence, which unlocks opportunities across various financial sectors.

An investment licence in Malta serves as an official authorisation granted to a company or individual entrepreneur to engage in specific financial activities within the jurisdiction. This mandate is indispensable for operating within the financial services sector, encompassing asset management, provision of investment counsel, securities dealing, and other investment-related activities.

Compliance with designated regulations and standards imposed by Maltese regulatory bodies is requisite for securing an investment licence, thereby fostering a transparent and equitable investment milieu. The acquisition of such licensure represents a pivotal stride for enterprises aspiring to expand their operations within Malta and beyond, leveraging the advantages conferred by the nation's membership in the European Union.

The legal framework underpinning investment licensing in Malta is enshrined in a plethora of legislative enactments governing the operations of financial institutions. Functioning as the principal regulatory authority, the MFSA assumes responsibility for overseeing and regulating all facets of the financial services sector within Malta. Endowed with extensive powers, the MFSA is entrusted with tasks including the issuance of licences, monitoring compliance with regulatory standards, and taking remedial measures in instances of non-compliance.

The process of acquiring an investment licence in Malta

This is a meticulous, multistep process, necessitating thorough preparation and unwavering attention to detail. Collaboration with the MFSA is paramount throughout, ensuring compliance with their stringent criteria. Here's a structured guide to navigate you through:

Step 1

Preliminary consultation

Initiate by seeking guidance from the MFSA or a seasoned legal advisor proficient in investment licensing. This preliminary step aids in determining the suitable licence category and grasping the overarching requirements.

Step 2

Business plan preparation

Craft a comprehensive business plan delineating your business model, management framework, target markets, proposed products/services, and financial forecasts.

Step 3

Company formation in Malta

If not already established, register a company in Malta, a prerequisite for subsequent issuance of the Maltese investment licence.

Step 4

Document preparation

Compile a comprehensive set of documents, typically comprising:

  • Elaborate business plan.
  • Corporate constitutive documentation.
  • Identification and reputation validation of all pivotal stakeholders (owners, directors, senior management).
  • Proof of fund origin.
  • Protocols and regulations combating illicit income and terrorism sponsorship.
  • Professional profiles of key participants.
  • Audit reports, if applicable.
Step 5

Application submission

Complete and lodge your investment licence application with the MFSA, inclusive of all requisite documents and fee payments.

Step 6

Application evaluation

Upon submission, the MFSA scrutinises your application, potentially soliciting additional documents or clarifications. Compliance checks ensue, possibly culminating in face-to-face meetings with key project stakeholders.

Step 7

Pre-approval acquisition

Meeting all stipulated requisites warrants provisional approval from the MFSA, facilitating progression to fulfil specific conditions, if any.

Step 8

Final assessment and licence issuance

Comprehensive fulfilment of all conditions prompts a final evaluation by the MFSA. A positive assessment culminates in the issuance of the investment licence.

The MFSA endeavours to expedite application processing, albeit subject to the application's complexity and document volume. On average, the review duration spans three to six months. Timeliness hinges upon document completeness, accuracy, and prompt responsiveness to regulatory inquiries.

Upon securing approval for investment activities in Malta, strict adherence to established regulations is imperative. Regular submission of reports to the MFSA is requisite to uphold licence validity.

Obtaining a special licence is necessary to
  • Receiving and transmitting orders for financial instruments on behalf of clients. Investment company does not execute transactions.
  • Entering agreements to buy or sell financial instruments for clients. Investment company executes transactions.
  • Trading using own capital, involving one or more financial instruments. Strict monitoring of positions is crucial for capital coverage.
  • Managing assets based on client criteria, including authority to invest in financial instruments.
  • Providing personalised recommendations for financial transactions to investors based on client-specific criteria.
  • Assuming risk by purchasing new securities from issuer, guaranteeing sale of specified number of shares to investors.
  • Promoting newly issued or unlisted securities to specified persons without guaranteeing the sale of a specified number of shares.
  • Acting as trustee, custodian, or nominee.

It is crucial to consider that each licence entails specific requirements for minimum authorised capital, internal control levels, and management structure. During the initial stages of the licensing process, consulting regulatory experts in Malta is recommended to ensure compliance with all MFSA requirements and to determine the most suitable licence type.

Requirements for applicants to obtain an investment licence in Malta

Acquiring an investment licence in Malta necessitates adherence to stringent criteria mandated by the MFSA, encompassing financial prerequisites and organisational structure.

Financial conditions
The min. authorised capital requirement varies depending on the licence type, ranging from €125K to €730K. Additionally, applicants must demonstrate financial stability and adequate funding to cover operational expenses.
Incorporation of a company in Malta
Conducting investment activities in Malta mandates the registration of a company under local law. This entails drafting and filing articles of incorporation outlining the firm's objectives, corporate structure, and details of directors and shareholders. Establishing an entity in Malta validates its legal standing and underscores transparency and reliability for stakeholders.
Management structure
The competency and experience of the management team constitute a pivotal assessment aspect. Submission of CVs and professional references for key personnel evidences their proficiency in managing financial activities in accordance with regulatory standards. A well-defined corporate structure, including division of roles and responsibilities and a local director requirement, bolsters governance and facilitates market representation in Malta.
Policies and procedures
Applicants must develop and submit various policies and procedures, encompassing AML, Risk Management, and GDPR, to ensure compliance with Maltese and European law. These measures safeguard both customers and the financial system. Before commencing operations, applicants must enter into a licensing agreement with the MFSA, delineating terms and conditions governing future activities.

Conclusion

While the process of obtaining an investment licence in Malta is intricate, it signifies a pivotal step for companies seeking to operate in a jurisdiction with a robust financial infrastructure and favourable investment climate. Professional legal support is indispensable to navigate regulatory intricacies and ensure seamless licensing. At YB CASE, our seasoned experts specialise in providing comprehensive legal support, from initial consultation to documentation preparation, facilitating an efficient and risk-mitigated licensing process for your business.

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