Maitland, the legal and fund services firm, has been expanding its operations in Malta and sees further growth in the Mediterranean island.

When London’s early “summer” is characterised by windswept, Stygian
gloom and doing business in mainland Europe can cost the earth, a
multi-jurisdictional law and fund services firm is transferring significant
lumps of work to Malta, the Mediterranean island where the sun reputedly shines
for 300 days out of 365.

At Maitland, a provider of international wealth services
with a presence in 13 nations, the business’ Malta operations have been
expanding rapidly in recent times. It is transferring some of its trust and private client operations from
Geneva and Luxembourg to the island, to take advantage in part of the lower overhead costs  in the island, as well as the availability of skilled professional
staff, it says.

Mel
Roberts, consultant, and Anjelica Camilleri de Marco, a lawyer, both with the firm, spoke to WealthBriefing recently when this publication visited their
office in San Gwann, Malta. The offices are new - and Maitland is looking to take on even more space within the premises. The sense of a
business on a clear growth path was palpable. Maitland focuses on
serving the high and ultra high net worth individuals’ market, entities listed on various overseas bourses, and
international trust and corporate structures.

“We expect our 2013/14 financial year to mark the first positive return in Malta on our
investment here, having ploughed considerable
resources into the office over the last four years,” Roberts said. The Malta office
now employs 14 people, having started out with just two.

Maitland
currently, via its fund administration business, oversees around $145 billion of client money (which includes $25 billion of hedge fund assets),
Roberts continued.

To expand this area of the business, Maitland recently bought a Cayman Islands-based fund
administration business known as Admiral Financial
Group, with offices in Ireland, the US, and Canada.

Although
some business has been shifted to Malta,
Roberts pointed out that Maitland is keeping the balance of the operations in Geneva
and Luxembourg.

The South
Africa connection

Roberts,
a South African by birth, discussed Maitland’s history and the connection to
the Oppenheimer family of South
Africa, the founders
of  Anglo-American, the precious metals group, and DeBeers, the diamond mining and marketing group.

More
than 35 years ago, the Oppenheimer family requested its South African lawyers, Webber Wentzel, to
assist in setting up a structure in Luxembourg to cater for its
financial affairs, and so an office was established
there and a licence to operate was purchased
from Maitland, then a Swiss-based trust company.
The Oppenheimer family were the first Maitland clients, and the
association has continued until the present day, with the firm
acting as the advisors to the family in the recent sale of De Beers to Anglo
American for $5.3billion.

“We
have moved from just being a legal firm to expanding
into other areas, such as corporate and fiduciary services, investment
management, and fund administration,” Roberts said.

“We
are receiving a lot more interest from South
Africans who might have in the past looked
at Mauritius to set up a
structure,” he said, noting that this would be particularly useful for South
African firms doing business with Europe. “We
are also getting more enquiries about establishing funds, such as investment trusts and  private equity operations,” he said.

On
the other hand, Roberts said the firm was not looking at the QROPS area (offshore
pensions) as this was already a crowded and competitive field in Malta.

The Malta story

The
island, which was a former British colony and has been a member of the European
Union since 2004, caught some headlines recently when international rating
agency Standard & Poor’s concluded that the country was unlikely to
experience the kind of wrenching financial crisis that has hit Cyprus, another
eurozone member. (Malta
has a BBB+/A-2 sovereign rating from S&P as of this year.) The country also
recently had a change of government, with the right-of-centre Nationalist Party
ejected from office in a landslide result by the centre-left Labour Party,
ending a period when the former party had held power since the early 1990s.

The
EU status means that Maltese officials, such as its financial regulators, are
keen to stress that the island is not an “offshore” jurisdiction; it does
benefit from relatively low taxes and a dividend imputation system that attracts
overseas corporations to register in the island. (Being within the EU also means that the upcoming Alternative Investment Fund Managers Directive is something the Maltese are comfortable with.) There are 27 credit
institutions in Malta, some 59 insurance firms, 126 trust and fiduciary
companies and 578 domiciled investment funds, as of June last year, with 26
recognised fund administrators and around 70 fund managers. To put these figures in
context, Malta and the neighbouring, smaller island of Gozo have a total
population of 416,000 people and an unemployment rate of 6.9 per cent, compared
to the EU average of 10.7 per cent (source: FinanceMalta). Malta ranked as 12^th
soundest banking system by the world economic forum’s Global Competitiveness
Report for the period between 2011 and 2012.

With
such numbers in mind, a challenge for Malta is to continue producing a
stream of educated, skilled employees for the financial and related sector,
said Roberts’ colleague, Camilleri de Marco. “We have many qualified
people here in Malta
but the expansion of the financial services and the
i-gaming industries since joining the EU, and aviation services more recently,
is showing a significant need for additional highly-qualified workers. The
Maltese Highly Qualified Persons Rules have, in fact, been enacted to address
this,” she said.

Maitland Malta’s
trustee services business is a key line in Malta, she said.

“This
is the bulk of Maitland Malta’s operations. What it also
does, because of group restructurings involving the
setting up of holding and trading companies
and other vehicles in Malta,
is catering to the need for Maltese legal
advice, both in relation to their set-up and to
their ongoing activities. I am here to provide internal legal advice on
all relevant Maltese legal matters, ranging from
complex corporate law issues to tax advice.”

“I
am advising Maitland on its overall advice, in particular in relation to the structuring of
companies,” Camilleri de Marco continued.

She
explained that a firm or individual in
another country might engage another part of Maitland to
set up a structure in Malta,
and she then advises Maitland on how to do this in Malta.

“We
see growth in the trust and foundations area,” she said, and explained that Maitland is
looking to extend its licence to not only act as a
trustee, but also as an administrator of foundations.

Hybrid

Malta is one of the few civil legal systems to cater for both trusts – typical of Common Law legal systems – and foundations, typical of more continental
European-style foundations.

“This
is an area which we see as growing,” Camilleri de Marco continued.

Another
business area, she said, are companies holding intellectual property rights and
associated revenues from IP, not least due to a tax
exemption on royalties, advances, and similar income derived from
qualifying intellectual property.

Has
the Cyprus crisis had much
of an impact on Malta? 

“We
have received a number of requests to re-domicile
companies from Cyprus
or to set up companies in Malta,
which were originally planned to be established in Cyprus,” he said. “Of course, we must
look into these enquiries with greater vigilance and enhanced AML [anti-money
laundering] procedures, in line with new regulations that Malta has already put into place,”
she said.

(Editor’s note: the firm referred to in this article
should not be confused with Maitland, the public relations firm of the same
name.)