Issue link: https://maltatoday.uberflip.com/i/620229
maltatoday, SUNDAY, 27 DECEMBER 2015 Finance III financial sector suspicious transactions on a yearly basis. These have in certain instances resulted in regulatory action being taken against persons who were found to have com- mitted market abuse. Financial markets are global and the MFSA also collabo- rates with competent authorities of other jurisdictions with regard to cross-border investigations of market abuse. In what manner has the MFSA involved itself in the IIP programme and what are the long-term benefits or concerns about this scheme? The MFSA has not involved itself in the IIP programme. The government simply asked for advice from the Chairman and there were discussions with Identity Malta on how the MFSA carries out the due diligence process. Why does Malta continue to consolidate its position as an investment services hub within the single market? The distinction between financial services and investment services is quite important because the various areas of areas of financial services have their ups and downs, so it is important to have a diversified sector and we need to keep consolidating this diversification by being innovative. The MFSA has always been forward looking and has been very pro-active in creating structures within the framework of existing regulations particularly in asset management and insurance. This has resulted in an extensive development of the cell company structure. Malta is the only member state of the EU to have introduced the Protected Cell Company for insurance business. A PCC is a single legal entity. It is structured in two parts namely, a non-cellular part (the core) and an unlimited number of cells. Despite the segregation of assets and lia- bilities that exists between protected cells and the core and among the protected cells themselves, a cell has no separate legal identity. Within a PCC structure, the cells are approved to write insurance and/ or reinsurance business. The core may or may not be authorised to write insurance and/or reinsurance business. The core maintains and controls all the activities of the PCC. The two most common types of PCC structures that can exist are: Type 1 - In a typical PCC structure, the core does not write any insurance or reinsurance business. Type 2 - The core and the cells write insurance and/or reinsurance business. The cell shall write all or a subset of the classes of insurance business underwrit- ten by the core. More recently, we extended the con- cept to Re-insurance Special Purpose Vehicles and to Securitization Vehicles for insurance and non-insurance busi- ness. The introduction of cells in the Securitization Vehicles instead of the traditional compartments is the first type of structure worldwide and has generated a lot of interest in Malta for the notification of Securitization Vehicles. The use of cell structure rather compartments give more robustness to the vehicle. In case of asset management, we have seen the setting up of the Incorporated Cell Company [ICC] and Recognised Incorporated Cell Company [RICC]. The launch of the ICC SICAV generated significant of interest across the fund sector generally, with the consequence that the MFSA started receiving enquir- ies based on business models, where the core would function as an investment company. Most of the requests revolved around a 'platform' type of model that would involve an incorporated cell compa- ny providing standardised administrative services to any number of Incorporated Cells licensed as collective investment schemes. These services, however, do not amount to the type of fund administra- tion services that would normally require the engagement of a Recognised Fund Administrator, but deal mainly with routine contractual matters and start-up support. The activities to be carried out by a Recognised Incorporated Cell Com- pany ("RICC") also differ from those of an ICC SICAV since the latter would also be licensed to carry out investment activity. The MFSA therefore introduced the RICC framework with a specific set of conditions to cater for these requests. An RICC may only provide services of an administrative nature for which it is issued with a Recognition Certificate in terms of article 9A of the Investment Service Act. Unlike the SICAV ICC structure, the new RICC structure provides promoters with a flexible ICC structure that may be used as a vehicle to achieve various objectives including the setting up of a fund platform. An RICC must be estab- lished as a limited liability company and may not carry out any licensable activity. The RICC will require a memorandum of association restricted to the provision of administrative services to its incorporated cells. The future for creating innovative regulation is currently difficult to predict. There have been so many new regula- tions - about 42 in investment manage- ment - since the financial crises that these have to be digested first and market prac- tice reviewed. There are areas where in 2016 the MFSA will be pro-active typically in the issue of debt instruments by private companies, new fund products etc. I also urge the industry to come forward and participate in the innovation process. RSM consolidates as a leading mid-tier firm in Malta The Accountancy firm Spiteri Bailey & Co is merging with the member firm of RSM in Malta with effect from 1 January 2016. As a result of this merger, RSM will rank as one of Malta's leading mid-tier firms. The new, combined RSM will em- ploy a unique talent pool of around 100 qualified full time professional staff in different disciplines includ- ing accounting, law, IT, tax and risk management. This enables RSM to provide holistic service solutions to its clients delivered by the best in class. The merged entity which will con- tinue to be an active member firm of RSM International will have 7 part- ners led by Managing Partner Maria Micallef and including Conrad Borg, Vladimiro Comodini, Joe Ellul Fal- zon, George Gregory, Karen Spiteri Bailey and William Spiteri Bailey. The partners will be supported by Gor- don Micallef and Dr Timothy Zam- mit, Divisional Directors within the IT Advisory, and the Tax and Corporate service lines, respectively. Commenting on the merger, Man- aging Partner Maria Micallef said, "In these past years RSM invested heavily in building in-house the necessary specialist competencies to provide holistic services of qual- ity to our clients. Merging with a firm like Spiteri Bailey & Co will enable us to expand our service portfolio to mid-tier companies that are seek- ing to expand their business both locally and abroad. It will also help to increase our staff base with compe- tent resources at a time when there is significant difficulty to recruit qualified staff. Very importantly, the cultures and work ethic of the respective firms are similar to each other, based on the ethos of delivering high quality work across all our assignments. We are looking forward to streamline the operation over the next few weeks, be of greater service to our clients and consolidate our position as one of Malta's leading mid-tier firms, within the RSM global network." William Spiteri Bailey said, "The choice to merge with RSM comes after a careful process to define our long-term objectives and select the best path to help us get there. Merg- ing with RSM feels like the natural step to take. The partners have known each other for a number of years. We enjoy a strong professional relationship based on mutual respect for our respective undertakings and we are joining a global network of like-minded professionals to service clients in a holistic manner." The majority of services and staff will continue to be housed at the RSM offices in Mriehel while the Spiteri Bailey offices in B'Kara will temporar- ily house the audit service line. The firm will be moving to larger modern premises in 2016. RSM International is the world's sixth largest provider of tax services, has the fifth largest firm in the US and the third largest in China. RSM Inter- national was the fastest growing top ten global network in 2014, posting an 18% increase in revenue, year- on-year, to US$4.4 billion for the year ending 31 December 2014. The firm has recently adopted a unified global brand that reinforces the network's global position as the adviser of choice to entrepreneurial, growth-focused organisations.