European Commission’s Report for Malta: Malta and Cyprus: A Sea Apart (2013)

On the 10th of April 2013 the European Commission circulated its conclusions on Malta’s financial position in a report issued in accordance with Article 5 of Regulation (EU) No 1176/2011 on the Prevention and Correction of Macroeconomic Imbalances (the ‘Commission Malta Report 2013’).The exercise commenced last year after an Alert Mechanism Report in November (the ‘Alert Mechanism Report’) was issued, which Report showed signs of potential macroeconomic imbalances in 13 States, including Malta.

The latest happenings in Cyprus have generated a whole new set of questions related to ‘which country will follow suit’. Public attention has been drawn to other small eurozone nations with considerable banking sectors, since, in the event of a crisis, such countries could be more exposed to depositor/senior unsecured creditor bail-in. Malta has also been placed under the lens of scrutiny mainly due to its geographical location and relatively sizable banking industry when compared to its GDP.

Malta has now been declared by the European Commission as not having excessive fiscal imbalances. The imbalances that were found were deemed to emanate from the way the economy of the country is structured. Malta is one out of the thirteen countries assessed and is one of the eleven countries which have been declared as not having excessive fiscal imbalances. All this has now been further corroborated by Bloomberg Brief and Fitch Ratings in specific reports issued on the island’s financial position in April 2013.

The Commission adds that “the majority of the very large financial sector is internationally-oriented with very little link to the domestic economy, and therefore does not pose large risks for domestic stability.”

Having said that, despite the positivity of the Commission Malta Report 2013, room for improvement was still highlighted. The Commission Malta Report 2013 provides that potential imbalances for Malta in the financial sector are in particular related to its exposure to the real estate market.

Malta should take these suggestions / remarks on board and work on streamlining these key issues.

Amongst the various key findings, the Commission Malta Report 2013 concludes that “the Maltese economy demonstrated resilience throughout the crisis”. This could be attributed to the domestic macroeconomic circumstances, which have remained supportive of financial stability, and cautious banking methods characterized by healthy solvency and liquidity positions. These factors have jointly ensured that Malta remained resistant to the negative consequences which hit a number of other euro area jurisdictions over the past year. Therefore “Comparisons between Cyprus and Malta continue to appear misplaced” with even the European Commission issuing “a clean bill of health” to the Maltese banking system.

More detailed info at A Review of the 2013 European Commission s Report for Malta (MCC)

Alternative Investment Fund Managers Directive: Frequently Asked Questions

After what seems like an eternity of proposals and counter-proposals, the Alternative Investment Fund Managers Directive is finally due to come into force. In the run up to the big day, we've been getting an increasing number of queries from fund managers, service providers and fund directors with respect to various aspects of the directive. We've therefore put up a detailed FAQ page on our website. The FAQs deal with various key questions such as:

• Which entities fall within the scope of the directive?
• What are the directive's provisions on valuation?
• Will Malta's PIF regime be retained post-AIFMD?
• Are there any limits to the use of leverage?
• What are the regulatory reporting requirements under the directive?

We'll be updating this soon with more useful information, so check in from time to time.

You will find the FAQs here:

http://www.ccmalta.com/publications/malta_aifm_faqs

Dr Charles Cassar

Chetcuti Cauchi Advocates, Malta Funds Law Firm

All you need to know about setting up a Forex business in Malta

Forex in Malta continues to grow and this year we've seen a number of new entrants to the market as well as a number of new applicants. We've put up a detailed document analyzing the set-up process and addressing issues such as the formalities associated with licensing, the relevant licensing categories, certain high level developments in the sector, and what is making Malta an attractive jurisdiction for such business. You can find the full article by following the link here:

http://www.ccmalta.com/publications/malta_company_forex

Get in touch if you would like to discuss in further detail.

Charles Cassar
Chetcuti Cauchi Advocates, Malta Forex Law Firm
http://www.ccmalta.com/

MSI EMEA Regional Meeting 2013 held in Malta and hosted by Chetcuti Cauchi

An interesting event took place in Malta this weekend, between the 10 – 12 May 2013.

MSI, the Global Alliance of Independent Legal and Accounting Firms, held its EMEA Regional Meeting in Malta with the event being attended by over 70 delegates. The event held a very varied substantive Programme and presented a very interesting social and cultural Programme too. The Malta hosting firm was Chetcuti Cauchi, the law firm representing the region of Malta within the network.

The meeting was opened by Hon Dr Edward Zammit Lewis who confirmed the government’s objective to create more quality jobs in the ICT, iGaming and the financial services industries and remarked that the choice of Malta as the location to hold this conference certainly befits the role that Malta’s Financial Services sector has had over the past years. This was thanks to the country’s national policy that has bipartisanship support in the local political arena.

Franco Cini, managing partner of MSI audit member FG Audit commented “Malta is a thriving European financial centre and is attracting serious international players in financial services, aviation, maritime and online gaming sectors.”

Dr Jean-Philippe Chetcuti, managing partner of Malta legal and tax advisory firm Chetcuti Cauchi Advocates also commented: “Given the surge in foreign direct investment Malta is experiencing at this time, we are thrilled our network of international business advisors has chosen Malta for its international conference.”

Being part of such an exclusive network opens opportunities for firms to benefit from a pool of international expertise that would otherwise not be available. 

AIFMD Compliance: MFSA issues self-assessment forms

The post-AIFMD regulatory scenario in Malta has really taken shape over the last few months in Malta, with various consultation documents being circulated giving current and prospective licence holders a clearer picture of the practicalities associated with the transition. As part of this transition process, the MFSA has just issued self-assessment questionnaires intended to allow self-managed funds and fund managers to determine whether they fall to be regulated by the 'full fat' version of the directive or whether they fall under the de minimis provisions.

You can find a full a more detailed breakdown on our website by following the link.

Charles Cassar,
Malta funds lawyer
Chetcuti Cauchi Advocates