Leap of faith : launching the first Maltese unit trust

Abstract

While the unit trust is commonly used as a vehicle for collective investment schemes (CIS) throughout the world, particularly in common law jurisdictions, the unit trust structure is very much unfamiliar in the context of the local funds industry. Although structuring CISs in the form of unit trusts is permissible under local legislation, and a regime regulating such CISs does exist, until recently no such funds had been launched in Malta, and so far local funds have been almost invariably structured as SICAVs. However, the situation has now changed as the regulatory process leading to the licensing and launch of the first Maltese Professional Investor Fund (PIF) structured as a unit trust has just been completed. Unsurprisingly, the process has raised a number of legal and regulatory challenges and has highlighted a number of deficiencies in this previously 'untested' area of our local and legal regulatory regime. This paper will not attempt to wrestle with each and every legal and regulatory issue involved in the setting up of this structure. Instead, it will analyse some of the principal challenges raised by the use of the unit trust structure, identifying areas of weakness or ambiguity in the present regulatory regime, suggest improvement and, in conclusion, make the case for more widespread consideration of this alternative fund structure.