MALTA Trends and Developments Contributed by: Josef Cachia Fenech Gonzi and Cherise Abela Grech, GTG Legal
Notable Recent Developments Notable recent developments which have had an impact on the Maltese VC landscape include the following. • The launch of the EUR10 million VC co- investment fund: this is an initiative led by the government backing start-ups at the early stages of their business operations by afford - ing them private VC investments. • The Malta Start-up Residence Programme: This programme, which was introduced in 2023, aims to attract various non-EU inves - tors and skilled personnel. This is significantly aided by a streamlined visa process. • Various schemes introduced or renewed by the Malta Enterprise, with the aim of promot - ing start-ups and foreign direct investment in Malta. • Developments in the regulatory context: the Malta Financial Services Authority (MFSA) and the Malta Digital Innovation Authority (MDIA) continue their efforts to refine pro - cesses in order to ensure that start-ups are effectively and efficiently supported, attract - ing investments in innovative industries such as fintech and AI. The Maltese VC Legal Framework An overview of the regulations governing VC The Maltese regulatory landscape affords a busi - ness-friendly environment for the flourishing of VC investments. The legal framework encapsu - lates the following. • The 1995 Companies Act: this governs the incorporation, general management principles and the winding-up of companies and other commercial partnerships, together with the workings of corporate structures backed by VC.
• The 1994 Investment Services Act: this Act regulates fund managers, collective invest - ment schemes and investment advisors. It is the primary legislative framework regulating funds and fund managers. • Various sector-specific legislation, which regulates different sectors. This includes the local gaming laws and regulations, other financial services-related laws as well as the newly implemented Markets in Crypto-Assets Regulation (MiCAR) which regulates block - chain and general investments relating to crypto-assets. Through these laws, Malta has maintained its position as a market leader in this field. Malta’s VC landscape is regulated by a robust framework which aims to align with that adopted across the EU, while offering diverse incentives. The Maltese landscape is such that VC funds in Malta are built as investment vehicles and regulated by the MFSA. It is commonplace for VC funds to be legally structured as investment companies with variable capital (SICAVs). In this regard, these funds would normally operate as Alternative Investment Funds (AIFs), which target investors based on the offering documentation and investment strategy of the fund. To this end, fund managers are to comply with the provisions of the EU’s Alternative Investment Funds Man - agers Directive (AIFMD). Malta provides allows venture capital fund managers that operate on a smaller scale to benefit from de minimis registra - tion under the AIFM regime, provided that they fall below the AIFMD asset thresholds. They may also register under the EU VC Funds Regulation (EuVECA) to obtain a marketing passport which would be valid across the whole EU. In practice, a Malta-based VC fund manager is afforded the possibility of setting up in an efficient manner, by obtaining authorisation from the MFSA, and subsequently open the market for EU investors.
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