Investment funds : a comparative analysis between investment companies with variable share capital (SICAV's) and unit trusts

Abstract

The scope of this thesis is to give a comparative analysis between the SICAV and the unit trust, two vehicles which can be used for the purposes of collective investment under Maltese law. This thesis will purport to examine and discuss the major similarities and differences that are present between these two schemes. CHAPTER 1 will introduce the fundamental principles of collective investment schemes. Therefore, it will explain the concept of collective investment, as well as the benefits. Furthermore, it will analyse and discuss the definition of a collective investment scheme as found under Maltese law. It will go into further detail distinguishing between open-ended and close-ended schemes. The legal structures used for an investment vehicle will be discussed, as will be the major players in collective investment schemes. This chapter will also discuss the different types of funds that can be set-up, as well as the different types of units that can be issued by a collective investment scheme. CHAPTER 2 will define the legal nature of the unit trust and the SICAV. It will discuss the way both schemes work, and their fundamental characteristics. It will also discuss separate legal personality, and determine whether such separate personality applies to both of these schemes, as well as the effects that such separate legal personality has on each scheme. CHAPTER 3 will discuss the nature of units in a unit trust, as opposed to the nature of shares in a SICAV. Therefore, it will analyse the process involved in creating, issuing, purchasing, re-purchasing, redeeming and cancelling of units and shares. Furthermore, it will analyse the rights that unit-holders and shareholders acquire through the units and shares in a unit trust and SICAV respectively. CHAPTER 4 will deal with certain fundamental characteristics of the unit trust and the SICAV. Hence, it will enter into detail regarding the segregation of assets in the unit trust and SICAV, in particular when the scheme is set-up as an umbrella fund. Re-domiciliation of a scheme in and out of Malta is also essential in this regard, and such a chapter will discuss the contrasting procedures pertaining to the two schemes. CHAPTER 5 will enter into the nature of the relationships present between the various parties to such schemes. Therefore, in relation to the unit trust, this chapter would examine the relationship present between the trustee and manager, the manager and the unit-holders, the trustee and the unit-holders, and the unit-holders inter se. Furthermore, in respect of the SICAV, such a chapter will analyse the relationship present between the SICAV and the custodian, the directors and the shareholders, the custodian and the shareholders, and the relationship of the shareholders inter se. CHAPTER 6 will discuss the advantages and disadvantages of choosing one scheme as opposed to another. Such a conclusion shall also answer the question as to whether the SICAV can be seen to resemble a unit trust in corporate form.