Malta’s RICC regime: the Honeycomb fund services platform (by Zeta)

8 years ago - Published by Lantern Fund Forum in Expert opinion, Finance, Fundamental Analysis

 

In recent years Malta has continued to evolve into an ever-stronger and robust financial domicile, attracting financiers and investors alike
This has been catapulted further by the island’s alluring and favourable tax schemes coupled by new approaches to fund management and investment schemes in its on-going determination to find innovative means to find dynamic, business-friendly solutions for business people.

In April 2012 the Companies Act established the “RICCs” platfom to enable a faster and more frugal means of establishing a fund in Malta. A RICC, or “Recognised Incorporated Cell Company”, enables multiple funds to be introduced onto one platform through a harmonised method thus paving the way for a more simplistic fund set up. The pre-curser to the RICC was the multi-fund SICAV (Société d’Investissement à Capital Variable) and the ICC SICAV (an investment company with variable share capital in the form of an Incorporated Cell Company) which in themselves generated a lot of interest in the funds sector. Due to the stringent laws maintained by the MFSA it is mandatory that any RICC be in possession of a Recognition Certificate. Moreover, any activity that would normally require a license cannot be undertaken under the Investment Services Act or any other legislation.

Each fund that sits on the platform is commonly referred to as a “cell” and sits on the platform as a “separate legal entity” that can house multiple funds. The added benefit of this means that should all but one of these funds be subject to liquidation, the remaining funds will not be influenced by the others’ decline; one cell has zero influence from or with another cell. Moreover, the platform can therefore cater for multiple fund types such as AIFs, PIFs and UCITS for instance, and can even cater for sub-funds within the fund. The cells themselves are far more fluid than before in the sense that the fund is not confined to the RICC upon which it was initially launched; the option to migrate onto other RICC platforms enables investors to have a greater level of flexibility than ever before. Prior to the conception of the RICCs platform applications were far more time-consuming and costly as each fund required its own documentation to be produced and potentially required constant reworking of the documents until it got the final approval from the MFSA. The RICC approach sought to revolutionise this process.

Naturally, each fund still requires the final approval from the MFSA before it is established, but the approval process is now proven to be far simpler. In the interest of efficiency, funds which are onboarding the RICC platform still require the same level of documentation and scrutiny but these procedures have now been standardised and pre-approved by the MFSA. This means that each fund follows a very similar approach when being moved onto the platform thereby making it more proficient and cost-effective. As a result of this fund set up companies can now have a number of pre-arranged Service Providers, such as Directors, Custodians and Compliance Officers for instance, which are fundamental to the management of the funds on the platform. With the regulatory credentials in place and a near-identical, systematic method implanted these Service Providers are able to offer their assistance with a pre-conceived structure already in place. A combination of the aforementioned has led to operational costs of the RICC platform being far more predictable due to their “template” approach.

In essence, the following points summarise the benefits of taking advantage of Malta’s RICCs platform:

  • Fund platforms can house multiple fund types, un-related to other and are thereby not impacted by the others’ “behaviour”
  • Funds are “non-static”, and can relocate from one platform to another
  • Initial documentation relating to the setup of the funds have been pre-approved by the MFSA
  • Onboarding Service Providers to manage the fund have therefore become far more expedient
  • Setup costs are better anticipated through a pre-moulded approach
  • Multiple fund types can be set up on each platform
  • RICC platforms are scrutinised and heavily regulated by the MFSA to maintain complete compliance

With multiple cells on one platform and a structured approach to the creation of each cell, the RICC platform does indeed have the Honeycomb effect.

Zeta is a Malta-based company offering a spectrum of financial solutions, which includes fund formation and management. In 2016 Zeta set up the Honeycomb Recognised Incorporated Cell Company platform in line with the new approach to fund investment.

Jonathan Duffy
Client manager – Zeta

What do you think about this article? Leave your point of view on Facebook