New NPIF Framework will attract more private wealth to Malta

By Deputy Head of Policy, Strategy, and Innovation at Malta Financial Services Authority (MFSA), Gerd Sapiano

The recently amended Notified Professional Investor Fund (NPIF) has further enhanced Malta’s attractiveness to private wealth, enabling the country to continue to build its reputation as a sound destination for funds while maintaining robust regulatory standards. 

This approach is at the heart of Malta’s embrace of wealth and innovation coupled with effective regulatory reform, powering the island’s continued above average economic growth bucking current European trends. 

The NPIF is a lightly regulated collective investment scheme regulatory framework through which an option is provided to structure non-retail funds in Malta. Designed with regulatory efficiency and flexibility in mind, the framework benefits from a swift notification process enabling funds to be launched more quickly than other traditional licencing models. The core objective of the framework is to reduce regulatory complexity and operating costs, while boosting Malta’s appeal as a destination for funds. 

Investors welcome the ability to bypass the full traditional licensing procedure and are subject to a lighter-touch regulatory regime which takes the form of a notification to the Malta Financial Services Authority (MFSA) when they are formed. 

An NPIF can be structured in several ways, depending on the objectives of the fund and its investors. It may take the form of a limited liability company, an investment company with variable or fixed share capital, or an incorporated cell company. Alternatively, an NPIF may be legally structured as a limited partnership, a unit trust, or a contractual fund. 

Recent updates to the NPIF have provided additional flexibility for investors through encompassing self-management structures. Funds can now choose the governance framework best suited to their strategy and investor base, whether that be self-managed or third party managed. 

The development of the NPIF framework is consistent with the ongoing efforts of the MFSA to foster regulatory efficiency and take a proportionate approach to authorisation and supervision. The framework allows for a faster time to market for the establishment of a particular type of non-retail fund, while ensuring a regulatory oversight that is appropriate and commensurate to these structures. These efficient processes and strong regulation make Malta an attractive option for fund promoters who want both flexibility and reliable oversight. 

The MFSA remains committed to ensuring that Malta’s regulatory framework continues to evolve in response to market needs. Critically, the framework for the NPIF was also recently amended to enhance Malta’s offering for family office vehicles. These amendments enable an NPIF to be established in Malta and be managed by a fund manager but be exempt from a licencing requirement. This is provided the relevant NPIF is a family office vehicle and focused only on the investment of private wealth of the vehicle’s investors and not the raising of any external capital. 

Malta’s robust yet business-friendly regulatory environment is nowhere more evident than with this recent reform to the NPIF framework to enable it to apply to single family offices. Investors value certainty, efficiency, stability and the ability to proceed to market as speedily as possible. 

Added to the attractiveness of the framework is the advantage of Malta’s taxation system. Income derived by a fund or single-family office, excluding income from immovable property located in Malta, is exempt from tax. In addition, gains realised by the sale of units in an NPIF are not subject to tax. 

The regulatory focus on family offices is continuing to pay dividends. Between 2013 and 2023, Malta saw a 74% increase in its millionaire population and the trend is set to continue with a recent study finding that the number of multimillionaires will surge by 75% or more by 2040. The recent amendments to the NPIF will serve to attract more private wealth, accelerating this trend.  

Beyond the amendments to the NPIF, investors will value the ability to manage their wealth in a country that has political stability, a predictable legal system, English as an official language and an attractive lifestyle offering. 

The NPIF and its subsequent amendments are another example of how Malta as a jurisdiction pursues the most rigorous and forward-looking initiatives in the region, founded on trust, integrity and partnership.