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Alter Domus

MALTA NEWSLETTERApril 2018

3ALTER DOMUS MALTA NEWSLETTER2 ALTER DOMUS MALTA NEWSLETTER

Disclaimer: Please note that this Update is not intended as a complete study on all applicable legislation nor has it been written with a view to providing legal advice on any matter. Edited April 2018

ALTER DOMUS UPDATEACQUISITION OF CORTLAND CAPITAL MARKET SERVICES LLC HAS NOW BEEN COMPLETED ...............................................................................04

ALTER DOMUS NOW OFFERS THIRD PARTY AIFM AND CHAPTER 15 MANAGEMENT COMPANY SERVICES .....................................05

MALTA UPDATEINTERNATIONAL CREDIT AGENCIES UPGRADING AND REAFFIRMING MALTA’S POSITIVE RATINGS AND OUTLOOKS ...............06

BENEFICIAL OWNERSHIP REGULATIONS COME INTO FORCE .............. 07

NEW HEAD OF DEPOSITARY SERVICES FOR ALTER DOMUS MALTA ...............................................................................................08

CO-SOURCING SERVICES GROWING FROM STRENGTH TO STRENGTH AT ALTER DOMUS MALTA ...............................................................09

STENGHTENING OF THE LOCAL MANAGEMENT TEAM ............................. 10

WHERE TO FIND US THROUGHOUT Q2 .............................................................. 11

CONTACT ......................................................................................................12

Chris CasapintaCountry Executive Malta

Alter Domus MALTA NEWSLETTER

The first quarter of 2018 has indeed been a very dynamic and an exciting one for Alter Domus. You will be able to read in this newsletter about the finalisation of two recent acquisitions. The first being the acquisition of a Super Manco in Luxembourg and other being the acquisition of a leading independent investment servicing company, Cortland Capital Market Services LLC in the US.

The acquisition of Cortland is expected to be very fruitful to our Malta office. It brings a significant amount of new expertise in areas that are new for us and more importantly, Cortland, is a key player in the United States. Through this additional specialist expertise in the US we will now be able to provide our clients and prospects access to Alter Domus’ global reach of offices and service lines for all of their U.S. and international needs.

We also provide you with an update on new areas of significant growth of our business including co sourcing and depositary services. Naturally these initiatives were made possible due to a continuous collaboration with clients, by discussing their needs and ultimately having the right talent to deliver our clients requirements. In fact we have continued to recruit new talent at all levels within our local organisation.

The beginning of the year was also characterised with significant work around the introduction of the Ultimate Beneficiary Register.

We hope you enjoy reading our latest newsletter and please do not hesitate to give us your feedback.


ALTER DOMUS UPDATE

All the necessary regulatory approvals have been obtained meaning that the announcement released by Alter Domus on the acquisition of Cortland Capital Market Services LLC is now complete and to all effects Cortland is now officially part of the Alter Domus Group.

Cortland Capital Market Services LLC is a leading independent investment servicing company providing third-party fund administration and middle back-office outsourcing to financial institutions including alternative investment managers, real estate private equity firms and credit funds.

Headquartered in Chicago and with offices in New York, London, Los Angeles, Austin, Indianapolis, and China, Cortland is a leading independent investment servicing company providing third-party fund administration and middle and back-office outsourcing to financial institutions, including alternative investment managers, real estate private equity firms and credit funds. It currently has over USD180bn of assets under administration. The firm was founded in 2008 by Doug Hart CEO, Tim Houghton, Lora Peloquin and Russ Goldenberg who are all former LaSalle Senior Executives and currently employs over 400 experienced professionals who are all expected to join Alter Domus as part of the acquisition.

Source: Press release by Alter Domus

Doug Hart, Chief Executive Officer of Cortland added, “This is a very compelling transaction for Cortland, its employees and its customers. Alter Domus has established itself as one of Europe’s premier fund administration and corporate services companies, and the firm’s service offerings and geographic footprint in Europe and Asia serve as an excellent complement to Cortland’s capabilities and client base. Becoming part of the Alter Domus Group gives us the ideal platform to expand our real estate and private credit service offerings and accelerate the expansion of our market leading loan services solutions deep into Europe and Asia Pacific. With the combination of these two companies, the Cortland team and I look forward to working alongside Laurent and the Alter Domus team to create the global leader in alternative investment servicing.”

Alter Domus completed its acquisition of Luxembourg Fund Partners, a Super Manco with Chapter 15 (UCITS) and AIFM authorisations.

Luxembourg, March 2018 – Alter Domus, the fully integrated fund and corporate services provider is now able to offer third party Alternative Investment Fund Manager (AIFM) services and therefore continues to develop its vertically integrated range of services for the alternative funds market.

The acquisition of Luxembourg Fund Partners, a Super Manco with Chapter 15 (UCITS) and AIFM authorisations, founded in 2009 and one of the first Luxembourg based independent management companies to comply with the Alternative Investment Fund Managers Directive (AIFMD), was completed on 28th December 2017 following approval from the Commission de Surveillance du Secteur Financier (CSSF).

Following the acquisition, the company changed its name to Alter Domus Management Company S.A., a wholly owned subsidiary of Alter Domus, providing solutions for international fund managers seeking

UCITS or AIFM services in an open architecture operating model. Services include providing portfolio management, risk management, oversight functions and marketing support for EU registration and distribution as well as offering investors regulatory reporting services in compliance with the UCITS and AIFMD regulations.

Chief Executive Officer of Alter Domus, Laurent Vanderweyen, commented “Thanks to this acquisition, Alter Domus is now able to offer an enhanced vertically integrated solution to asset managers looking to access the European Market for distribution of funds with alternative strategies in a homogenous and regulatory controlled environment. This has always been the aim and the spirit of the AIFMD. Furthermore, this acquisition consolidates Alter Domus’ position as the recognised leader in fund services and provides a compelling offer to asset managers seeking a “one stop shop” AIFMD solution across the European alternative funds market.”

Source: Press release by Alter Domus

ACQUISITION OF CORTLAND CAPITAL MARKET SERVICES LLC HAS NOW BEEN COMPLETED

Laurent Vanderweyen, Chief Executive Officer of Alter Domus said, “We are delighted to welcome the Cortland team to Alter Domus as a major step in our long-term strategy to develop the U.S. market as one of our key locations in offering vertically integrated services to our international client base. Cortland has an impressive track record of growth, a strong management team, and the same focus on quality and client service which has been at the core of Alter Domus’ own success over the years. Furthermore, this acquisition complements perfectly our recent acquisition of CARTA Fund Services in February 2017. Our combined services offerings will provide our clients and prospects with seamless access to Alter Domus’ global reach of offices and service lines for all of their U.S. and international needs.”

ALTER DOMUS NOW OFFERS THIRD PARTY AIFM AND CHAPTER 15 MANAGEMENT COMPANY SERVICES

INVESTMENT 1 INVESTMENT 3

INVESTMENT 2

SPV1 SPV3

SPV2

DEPOSITARY

AIF(RAIF, SIF, SICAR, SLP,UCI PART II, ...)

CENTRAL ADMINISTRATIONSERVICES

• Fund Accounting and Administration (NAV Calculation)• Investment Processing • Investor KYC AML• Investor Services• Statutory & Regulatory Reporting• Compliance Support• Consolidation, IFRS, Liquidation• Liaison with Regulators and AIF external partners (Audit, Legal, Distributors)• Tax Compliance• Middle O�ce Support

DEPOSITARY SERVICES

• Safekeeping of Assets• Cash Monitoring • Oversight of Main Processes

THIRD PARTYAIFM SERVICES

• Portfolio Management• Risk Management• Valuation• Compliance• Regulatory Reporting• Marketing and Distribution Services• Super ManCo Licences

CORPORATE SERVICES

• Implementation of Structures• Domiciliation Services• Director’s Mandate• Accounting & Reporting • Corporate Secretarial• Restructuring • Tax Compliance• Consolidation, IFRS, Liquidation• Property Company Services• Liaison with regulators and AIF external partners (Audit, Legal, Distributors)• Transfer Pricing • Secondments

AIFM CENTRALADMINISTRATION

COMPANYHOLDING

GENERAL PARTNER/BOARD

LIMITED

PARTNERS/

INVESTORS

DISCOVER OUR VERTICALLY INTEGRATED RANGE OF SERVICES


In the past few weeks Malta’s credit ratings have been upgraded by two separate credit agencies. DBRS (a global credit agency found in Toronto) has upgraded Malta’s economy from ‘A’ to ‘A high’, the highest ever rating for Malta, whilst Moody has modified its rating from ‘A3 stable’ to ‘A3 positive’, which is the first upgrade given by the agency to Malta since October 2013.

The upgrade by DBRS is complemented by the following positive comments: “Since DBRS’s latest review, the projection of the general government debt ratio has been materially revised downwards due to more favourable growth prospects and stronger primary balances in the coming years”.

“The Maltese economy continues to power ahead,” DBRS said, while Malta’s economy “remains one of the top performers in the euro area”. DBRS added that “Malta’s political environment is broadly stable” and “the government is making additional efforts to improve governance and strengthen its institutional framework”.

In its report, Moody’s said the reason behind the positive revision, is “Malta’s improving fiscal strength, due to a sustained pace of public sector debt reduction supported by prudent fiscal policy and containment of contingent liabilities”.

Malta’s long-term and short-term ratings have also been reaffirmed as ‘A-/A-2’ by Standards and Poor’s (S&P) credit rating whilst also reaffirming that the outlook of the Maltese economy is positive.

The ‘positive’ rating outlook is supported by the expected continuing strong growth performance coupled with consistent current account surpluses, together with the improving budgetary position and fiscal management.

The report also outlines that the Maltese economy has enjoyed another year of strong, economic expansion driven by net exports. Investments in energy and logistics were also important contributors.

S&P notes that the structural shifts in the economy have created new employment opportunities and the unemployment rate declined to 4 per cent in 2017. Reforms made by the government have improved participation rates, particularly among women.

The report acknowledges that the fast pace of growth of the new economic sectors and the implementation of recommendations from the spending reviews have allowed a consolidation of public finances. This led to the narrowing of the budget deficit leading to a surplus, and the reduction of the general government debt.

Minister for Finance Edward Scicluna comments: “I am pleased to welcome the comments passed by rating agencies since the ensuing recommendations help us in our stride to continue having a sustainable economy. Likewise, we will also continue to strengthen our regulatory institutions in their fight against money laundering”.

Source: MFSA February Newsletter & Press Release by the Ministry of Finance

During the first few months of 2018, the Registrar of Companies drew the attention of company directors and company service providers to the recently issued Legal Notice regarding information on the beneficial ownership of commercial partnerships.

The Companies Act (Register of Beneficial Owners) Regulations, 2017, which came into force on 1st January 2018 implements the relevant provisions on beneficial ownership information of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015.

The following important changes should be noted:• As from 1st January 2018, the documents

required for the registration of a new commercial partnership (company or partnership) must include a declaration - Form BO1 – concerning information on the beneficial owners of the proposed commercial partnership as is required by the regulations (unless the commercial partnership is exempt from such requirement in terms of the same regulations).

• Commercial partnerships are required to hold adequate, accurate and current information on their beneficial owner(s) in their own beneficial owners’ register which is to be set up for this purpose. Commercial partnerships registered before the coming into force of these regulations shall comply with these requirements by the end of June 2018.

• Commercial partnerships are obliged to submit information on, or changes of, their beneficial owners to the Registrar of Companies in the prescribed manner. The Registrar shall enter the information on beneficial owners in a register of beneficial owners kept for this purpose. Access to this register will be available to eligible persons as from 1 April 2018.

A “beneficial owner” is defined by reference to the definition assigned to it under the Prevention of Money Laundering and Funding of Terrorism Regulations.

The regulations do not apply to (i) a company which listed on a regulated market, and ii) a company whose registered shareholders are exclusively natural persons who are disclosed in the public records at the register of commercial partnerships maintained by the Registrar of Companies.

If you would like to know more about these regulations, please contact your person of trust at Alter Domus Malta.

Source: MFSA February Newsletter

MALTA UPDATEINTERNATIONAL CREDIT AGENCIES UPGRADING AND REAFFIRMING MALTA’S POSITIVE RATINGS AND OUTLOOKS

Chris Casapinta, Country Executive of Alter Domus Malta said “The international credit agencies are confirming Malta’s credit rating and positive outlooks, news that is very welcome by us service providers on the island. These ratings highlight Malta’s attractiveness as a jurisdiction, as the strength of the economy and the talent of employees working within the local financial services industry mean that Malta can compete with other and larger jurisdictions to attract business and investment.”

BENEFICIAL OWNERSHIP REGULATIONS COME INTO FORCE


Earlier this year the Malta Financial Services Authority (MFSA) has given its regulatory approval for Przemyslaw Koger to be appointed as the Head of Depositary Services for Alter Domus Malta.

Following the implementation of the Alternative Investment Fund Managers Directive (‘AIFMD’), effective from 22 July 2013, the Alter Domus group was one of the first professional services providers to uniquely position itself as an AIFMD compliant depositary. Initially these services were offered in Luxembourg, but then quickly extended to the UK and Malta.

The Directive allows non-banking entities to act as depositary for alternative funds, as long as they have an initial lock-up period of five years regarding redemptions, and invest mainly in non-financial assets. This was welcome news to the alternative investment funds industry, as it meant more choice of providers and fee reductions due to strong competition for the depositary business.

Przemyslaw Koger, has a wealth of experience in Depositary services as he launched this service in the UK Alter Domusoffice. Przemyslaw has been the of the Head of Depositary Services at Alter Domus UK for the last 4 years. Having recently relocated to Malta, Przemyslaw has brought with him a wealth of experience in this area, which provides our clients with comfort over the quality and efficiency of the delivery of this service.

Structures of alternative investment funds are often complex and the ownership of assets is normally established by looking through the chain of ownership of several investment vehicles often based in various jurisdictions. Therefore, many

alternative asset managers prefer to select a firm experienced in the real estate and private equity industry to act as a depositary.

The Alter Domus Group currently provides its depositary services to over 170 funds with a total value of c.$70 Billion Assets under depositary. Alter Domus’ strategy for depositary services is offer a tailored approach to each client, where following an initial assessment that involves the investment policy, the fund structure, the expected volume of transactions and the frequency of NAV calculation, a profile is chosen and an operating memorandum is established together with the client. Other advantages of engaging Alter Domus include:

• Working with a dedicated depositary team specialising in alternative asset class

• Use of efficient and well established IT system: eFront

• Use of a secure client portal for efficient sharing of the relevant documentation

• Working closely with the fund administrator to ensure streamlined flow of information

• No “Stop & Go” approach

Alter Domus recently launched its co-sourcing services in November 2017, and since then the service is already proving to be a great success with six clients benefiting from this service. Furthermore, certain clients have already indicated that they are interested in extending the length of the service and/or widening the scope of work. Clients who have opted for Co-sourcing services include an international asset manager, a government foundation and a securitisation vehicle.

WHAT IS CO-SOURCING?In simple words, co-sourcing involves the outsourcing of certain roles that an organisation does not want to completely allocate to an external provider. It normally covers a period of between six months to a year and ensures that the organisation retains control over the work performed. In reality, an external provider would provide an organisation / client with a resource with specific expertise and this resource would perform certain tasks under the day-to-day guidance of the organisation.

From Alter Domus’ perspective, co-sourcing services provides clients with a range of in-house, flexible and competent individuals and teams according to the client’s needs. Those individuals would be normally based at the client offices and work for the client during this stipulated period whilst still retaining ties to Alter Domus.

WHAT ARE THE BENEFITS?1. By opting for co-sourcing instead of recruiting

an in-house resource, organisations benefit from cost and time savings related to both recruitment and training. These are important considerations, bearing in mind that projects tend be short term and the resource is often required at a short notice. Recruitment for technical positions is a particularly challenging hence a resource from an external provider, working under the guidance of the organisation, is often the right answer.

MALTA UPDATENEW HEAD OF DEPOSITARY SERVICES FOR ALTER DOMUS MALTA CO-SOURCING SERVICES GROWING FROM STRENGTH TO STRENGTH AT

ALTER DOMUS MALTA

2. Organisations may prefer co-sourcing over full outsourcing in order to retain control over the work being carried out. When opting for co-sourcing, tasks can be adjusted as the work is being performed depending on the progress and other factors as long as they are within the capabilities of the individual. Full outsourcing involves specific scope and thus takes longer to agree on and it normally lasts over a longer period of time.

To summarise, the choice will depend on the specific circumstances the organisation would be facing in a particular period in time. Co-sourcing is especially useful in situations where organisations are facing pressures around having adequate resources, which can include:

• peak periods of work within an organisation’s yearly cycle,

• specific projects, • employees on maternity leave, • long term sickness or • in cases of departure during business growth.

The above list is not exhaustive and with such challenges often unforeseen, organisations can be left with an immediate and critical resource issue. Co-sourcing guarantees business continuity, an essential prerequisite in today’s fast-paced and competitive world, where falling behind on certain action plans due to under resourced teams can have a significant impact on business revenues, even in the long term.

OUR CO-SOURCING SOLUTIONWe provide specialists from within Alter Domus who can bring their expertise from our full range of corporate and fund services. These include: Accounting, Corporate Secretary, Consolidation, Tax, VAT, Legal etc.

What to expect when working with us:• Risk mitigation

Knowing that you are working with a successful and trustworthy service provider


MALTA UPDATEWHERE TO FIND US THROUGHOUT Q2

• High level of quality We continue to supervise our employee on your behalf

• An extension of your team We come to your offices and we work alongside your team

• Confidentiality Guarantee that your information will be valued and protected

• Efficiency Meeting strict deadlines and requirements

Alter Domus’ Co-Sourcing services includes employees from a junior level up to a senior manager and a typical co-sourcing agreement would last anywhere between one to twelve months. The arrangements vary from staff being available to clients daily to a couple of days a week depending on client needs.

Paul Rostkowski recently joined the Alter Domus Management Team as a Manager in the Private Client Team. Paul’s recruitment signals the intention of Alter Domus Malta to strengthen its local service offering for Private Clients, especially since Malta is proving to be such an attractive jurisdiction for High-Net-Worth Individuals (HNWI). Paul will be responsible for building and maintaining strong relationships with clients and business partners and he will also be supporting the local business development efforts.

Paul has over 10 years’ experience in the financial services industry both locally and internationally. Before joining Alter Domus, Paul spent 3 years working in Luxembourg with Intertrust, where he started as a Manager in Accounting services and he then took up the role of Business Development Manager where he focused on the on-boarding of new corporate and fund clients and he managed relationships with several strategic clients and business partners in Luxembourg.

STENGHTENING OF THE LOCAL MANAGEMENT TEAM

Building on the momentum of the first quarter, the second quarter is looking like another busy period for our Directors who will be attending conferences both locally and overseas. If you are interested in meeting up with Chris Casapinta or Przemyslaw Koger at one of these conferences, do not hesitate to personally e-mail them on [email protected] or [email protected] or even call on (+356 )2205 1000.

The conferences that we will participate during the next quarter:

• 2018 STEP Conference (12-13th April) in Malta will be attended by Przemyslaw

• Transcontinental Trust Conference (17th-19th April) in Geneva attended by Chris who participates in a panel discussion entitled: “Crystal Ball Gazing: What does the Future hold for the Trust World?”

• Cross Border Planning for Private Clients (23rd-24th April) attended by Chris in Dubai

• City Week – International Financial Services Forum (23rd April) in London attended by Przemyslaw

• SuperReturn Private Credit conference (24th-25th April) in London attended by Prezmyslaw

• Alter Domus Malta will be a Silver Sponsor at the 2018 Annual Finance Malta Conference (16th-17th May)

• Why Malta is a legitimate choice for UK-managers post Brexit (23rd May) in London will be attended by Przemyslaw

• FinDating Conference (21st June) in Geneva will be attended by Chris

• Global ABS Conference (5th-7th June) in Barcelona will be attended by Chris

To keep in touch with further updates: www.alterdomus.com/conferences

© A

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18OFFICE Alter Domus (Services) Malta LimitedVision Exchange Building Territorials Street Mriehel BKR 3000 Malta

T + 356 22 05 1000

[email protected]

www.alterDomus.com

WE’RE WHERE YOU NEED US.

CHRIS CASAPINTACountry Executive Malta

+356 22 05 10 [email protected]

Alter Domus (Services) Malta Limited Registered to act as a Company Service Provider by the MFSA. Alter Domus Fund Services (Malta) Limited is recognised by the MFSA in terms of Article 9A(1) of the Investment Services Act (the "Act") and has been granted a Category 4B licence in terms of Article 6 of the Act by the MFSA.

WE ARE WHERE YOU NEED US TO BE

CONTACT

PRZEMYSLAW KOGERHead of Relationship Management Malta Head of Depositary Services Malta

+356 22 05 10 [email protected]

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