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The Discretionary Management Agreement is essential for investment managers operating in Malta who provide portfolio management services to clients. It is used when clients wish to delegate investment decision-making authority to a professional manager regulated by the MFSA. The agreement must comply with both local Maltese financial services laws and EU regulations, particularly MiFID II. It covers crucial aspects such as investment mandates, risk parameters, fee structures, reporting requirements, and regulatory obligations. This document is particularly important as it establishes the fiduciary relationship between the manager and client, setting clear boundaries for discretionary authority while ensuring appropriate client protections and regulatory compliance. It's typically used by licensed investment firms managing portfolios for both retail and professional clients, requiring careful consideration of client categorization and associated regulatory requirements.

1. Parties: Identification of the investment manager and the client, including regulatory status and contact details

2. Background: Context of the agreement and confirmation of client categorization (retail/professional/eligible counterparty)

3. Definitions and Interpretation: Key terms used throughout the agreement and interpretation rules

4. Appointment and Scope of Authority: Formal appointment of the manager and extent of discretionary authority

5. Investment Objectives and Strategy: Agreed investment objectives, strategy, and any restrictions

6. Manager's Obligations: Core duties, standard of care, reporting obligations, and compliance requirements

7. Client's Obligations: Information provision, cooperation requirements, and representations

8. Fees and Expenses: Management fees, performance fees, expenses, and payment terms

9. Conflicts of Interest: Disclosure and management of potential conflicts

10. Risk Disclosures: Mandatory risk warnings and acknowledgments

11. Reporting and Valuations: Frequency and content of reports, valuation methodology

12. Liability and Indemnification: Extent of manager's liability and mutual indemnifications

13. Term and Termination: Duration, termination rights, and consequences of termination

14. Confidentiality and Data Protection: Treatment of confidential information and personal data

15. General Provisions: Standard boilerplate clauses including notices, amendments, governing law