Malta's Charms Help Drive Business Moves At Maitland

Tom Burroughes

22 May 2013

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 , 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 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. 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. 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 . 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 procedures, in line with new regulations that Malta has already put into place,” she said.