MFSA Category 3 and DFSA Category 3A – Comparison Chart Malta

MFSA Category 3 DFSA Category 3A

27 May 2015 MFSA Category 3 and DFSA Category 3A – Comparison Chart Malta

Comparison between licenses in the two jurisdictions: MFSA Category 3 and DFSA Category 3A

 

  Malta

 

United Arab Emirates
Regulator Regulated by the Malta Financial Services Authority (“MFSA”). Regulated by the Dubai Financial Services Authority (“DFSA”).
 
Approval Process License required prior to services being provided. Required prior to services being provided.
 
Organizational Structure of the Company Limited Liability Company. Company Limited by Shares.
 
Licensable Activities Authorised to:

 

  Reception and Transmission of Orders in relation to one or more Instruments.

  Execution of Orders on behalf of Other Persons.

  Dealing on Own Account.

  Management of Investments.

  Investment Advice.

  Underwriting of Instruments and, or Placing of Instruments on a Firm Commitment Basis.

  Placing of Instruments without a Firm Commitment Basis.

  Operation of a Multilateral Trading Facility.

  The Reception, Transmission, and Submission of a Bid relating to Emission Allowances.

  To Hold and Control Clients’ Money or Customers’ Assets.

 

 

Authorised to:

 

  Dealing in Investment as Matched Principal.

  Dealing in Investment as Agent.

  Managing Assets.

  Managing a Collective Investment Fund.

  Providing Custody (other than for a fund).

  Managing a Profit Sharing Investment Account.

  Providing Trust Services (where the entity is acting as trustee in respect of at least one express trust).

  Arranging Custody.

  Arranging Credit or Dealing in Investments.

  Advising on Financial Products or Credit.

  Insurance Intermediation and Insurance Management.

  Operating and Alternative Trading System.

  Providing Fund Administration.

  To Hold and Control Clients’ Money or Customers’ Assets.

 

 

Minimum Capital – Capitalisation ratio EUR 730,000; and

The highest of

i.  initial share capital and

ii. the sum of the non-trading book business risk components, the trading book risk components, the commodities instruments risk component, the large exposures risk component, the foreign exchange risk component, and the operational risk component.

The higher of the following:

i.  USD 500,000; or

ii. 18/52 of its annual expenditure in case the management company holds clients’ assets or insurance money; or

iii. 13/52 of its annual expenditure in case the management company holds clients’ assets or insurance money.

 

Key/Licensed Persons – Substance Requirement Management – At least 1 Malta resident director and 1 Malta resident manager providing the day-to-day operation.

 

Where the affairs of the company are significant in terms of their size, internal organisation and the nature, scope and complexity of their activities[1] shall establish a Nomination Committee composed of members of the Management Body who do not perform any executive function in the Licence holder concerned must be appointed.

 

Investment Management – Where applicable – Investment Committee shall consist of at least 3 persons (one of whom must be a Malta resident).

 

Risk Management – A Risk Manager shall be independent from the Investment Committee.

 

Where the size, internal organisation and the nature, scope and complexity of its activities are significant, a Risk Committee must be appointed. Risk Committee shall consist of members of the Management who do not perform any executive function within the company.

 

Compliance Officer and Money Laundering Reporting Officer – The same person can be appointed in both roles. The Money Laundering Reporting Officer must be an officer of the Licensed Entity.

Board – At least 3 board members (out which 1 must be a UAE resident) and the following key/licensed persons:

 

  Senior Executive Officer

  Chief Financial Officer

  Risk Manager/Officer

  Compliance Officer

  Money Laundering and Reporting Officer

 

The Senior Executive Officer, Compliance Officer and the Money Laundering and Reporting Officer must be UAE resident.

A waiver of the residence requirement for the Compliance and Money Laundering and Reporting Officer may be applied with the DFSA.

Any of the Board members may also carry out the function of the Senior Executive Officer and the Chief Financial Officer.

The Function of the Risk Manager/Officer may be tasked/carried out by the Chief Financial Officer.

The same individual can carry out the role of the Compliance Officer and Money Laundering and Reporting Officer.

The DFSA prefers but does not oblige a firm to have an investment or activity specific committee. If the company intends to set up an investment or activity specific committee, the DFSA has set no requirements for its composition.

 
Fit and Proper Test Carried out prior to license.

 

Fit and proper test will be carried out on the directors, shareholders (qualifying i.e. holders of 10% or more of the shares) and the Key Persons (including all Investment Committee Members and Risk Manager) – unless already approved by the MFSA.

 

  Full due diligence.

Carried out prior to approval.

 

Fit and proper test will be carried out on the directors, shareholders (qualifying i.e. holders of 10% or more of the shares), and members of the senior management and all other individuals carrying out key/licensed functions.

 

  Full due diligence.

 
Independence Requirements The MFSA has no strict rules on independence between Shareholding, Board Members and Management. Overall the DFSA has no strict rules on independence between Shareholding, Board Members and Management. However, if the company intends to appoint a Senior Manager then it needs to be ensured that the Senior Manager is not a Shareholder or a Board Member.

 

 
Segregation of Function and Exemption Segregation of function between :

 

  Operation (asset management/brokerage etc.).

  Risk Control and Monitoring.

 

An exemption may be granted by the MFSA where the requirement of segregation does not give rise to conflict of interest and where it is not appropriate and proportionate to the nature, scale and complexity of the company[2]. Policies and procedures must still be established and adhered to.

 

Segregation of function between:

 

  Operation (asset management/brokerage etc.).

  Compliance and AML.

  Risk Control and Monitoring (depending upon the nature and size of the business).

 

No exemption granted.

 

 

 
Issuance of License – Timeline 15 to 18 weeks from the date of submission of the application documents. 16 to 20 weeks from the date of submission of the application documents.
 
Running Costs – Total Expense Ratio

(based on personal experience on a ration of 100 – 100 being the most expensive)

40/100 80/100
 
European Passport– Cross Border Yes. Under MiFID. No Passporting – Cross Border
 

 

Taxation:

 

Income Tax

 

 

 

 

Withholding Tax

 

 

 

Number of Double Tax Treaties

 

 

Effective corporate tax of 5% as follows: Initial corporate tax rate of 35% subject to a 6/7 tax refund upon distribution of dividend.

 

 

 

No withholding tax on dividends, interest and royalties paid to non-residents.

 

 

Over 70 countries treaty.

 

 

 

No corporate income tax is applicable. All DIFC registered companies are issued a 50 years tax exemption certificate.

 

 

 

No withholding tax is applicable.

 

 

 

Over 45 countries treaty.

 

Fees and Expenses:

 

Registration Fee: EUR 1,460 (paid for incorporation of the Category 3 company).

 

Application Fee: EUR 7,000 (paid upon application).

 

License Issue Fee: EUR 3000 (paid once upon approval & licensing from the MFSA) – amount shall be proportionate to the period remaining between the date of the granting of the licence and the date of the submission of the annual audited financial statements.

 

Annual Supervisory Fee:

EUR 6,000 (for revenue of up to EUR 250,000)

EUR 400 per tranche or part thereof (for tranches of EUR 250,000 up to a maximum of EUR 50,000,000).

 

Filing Audit Fee: Approximately EUR 2,500.

 

No Notary Fee

 

Registration Fee: USD 20,800 (paid for the incorporation and commercial licensing of the Category 3A company).

 

License Application Fee: USD 25,000 (payable upon application).

 

No License Issue Fee.

 

 

 

 

Annual Fee:

(i)    USD 25,000, plus

(ii)   USD 1,000 for each complete USD 1, 000,000 of expenditure.

 

No Notary Fee

 

Licensed Category 3 & 3A companies Between 40 and 80 Between 40 and 80

 

[1] Licence Holder is considered significant in terms of size, internal organisation and the nature, the scope and the complexity of its Investment Services and activities, if it meets all of the following conditions:

  • its total balance sheet assets exceed EUR 43 million;
  • the annual turnover relating to its investment services activities exceeds EUR 50 million;
  • the clients’ money that it holds or controls exceeds EUR 100 million;
  • the assets belonging to its clients that it holds or controls in the course of, or connected with its investment services activities exceeds EUR 3 billion

[2] Refer to reference 1 above