ACT No. XXXI or 1990 AN A CTlollmendfhe Ma/la In/una/wilD/ BU.fin~ss A cli~jti~ A ct, 1988.

CEN SU T A 80NE

(L.S.)

23rd October. 1990

ACT No. XXXI or 1990

AN A CTlollmendfhe Ma/la In/una/wilD/ BU.fin~ss A cli~jti~ A ct, 1988.

BE IT ENAC rED by Ihe President , by and with the advice and

consent of the Ho use o f Representatives, in this present Pa rliame nt

assembled, and by the authority of the s.a me, as follows :-

This Act may be ciled as Ihe Malta In ternational Busi ness Shon ' ide.

Activities (Amendment) Act. 1990. and shall be read and construed as

one wil h the Mah a Inte rnational BU$iness Acti vities Act , 1988. " .. XXXIV

011 988.

hereinafter referred \0 as Mlhe principal Ace.

Sectkm 2 of the principal Act shall be amended as follows

Amend_mol

-~,

01 lilt ph"";",,'

in subsoection ( I) thereof

(a)

M .

(I) im mediately afler Ihe definition of "bUlliness o f

insurance there shall be inse rted Ihe following new

M

defi nition

·· .. business of insu rance broking- has the meaning

assigned to it by paragrap h (b) of subsection (6) of section

23 of tile Insurance Business Act. 1981, and includes any A .... XVll

othe r business carried o n in connection therewith or as of 1\181 .

anci llary there to. or which is generally recognised as

insurance broki ng;";

(i i) immediately a fter the definit ion o f ~ i nternational

business aetivi tyM the re shall be inse rted the following new

defin ition

"'"' Malta - does not include any area which is a

freeport zone unde r the Malta Freeports Act. 1989;";

(i ii) for the first proviso 10 the definition of "offshore

activi ty- there shall be substitu ted th e foll owing

" I'rovided that an offshore company may nOI ca rry

on the busil\e$li of managing or servicing another offshore

company el<cept where such other company is a capti ve

insurance: offshore company or in sUch olhercasc:5 as may

be prescribcd ;~

(iv) immedialcly after the second proviso 10 the

definition of ~offshou activityM there sball be inserted the

following new provisos

- Provided furthe r that a n offshore bank may deal in

Maltese currency to service ils cU5lomers for their

requirements in that cu rrency;

Provided furthe r that an o ffshore company may

purchase for export, goods manufactured. assembled or

processed in Malla;ft;

(v) in the definition of "offshore company",

immediately afte r the words -"i nsu rance offShore company", -

there shall be inserted the words M" insurance broking offshore

oompany, ~~;

(b) for paragraph (b) of subsection (2) thereof there shall be

substituted the following

"(b) an offshore company may use a bank in Malta

which is not an ofbhore bank for the purposes of any

transaction in foreign currency whiCh it could lawfully carry

out with any other bank , and for the purpose of any such

transadion luch bank shall be deemed not to be resident in

Malta for the purposes of this Act

Provided that a loan, overdraft or ot her credit facility

may only be provided if such facility has been duly authorised

under the Exchange Cont rol Act .".

For the words wof trading offshore companies. " in subsection

(1) of section 11 of the principal Act . there shall be substituted the

following: "of trading ofbhore companies, or of offshore companies

having an interest in manufacturing or processing companies as are

referred to in the first proviso to paragraph (c) of subsection (2) of

section 22 of this Act.".

Section 22 of the principal Act shall be ame nded as follows;

(a) for the second proviso o f paragraph (f) of subsection (2).

there shall be subst ituted the following

" Provided fun her that a company of international

standing and repute and recog.nised as such by the Authori ty ,

being a manager of an insurance offshore company. o r an

insura nce offshore company being managed by such a

manager as aforesaid . or a captive insurance offshore

company being a subsidiary of a company of in ternational

standing and repute and recognised as such by the Authority .

may be c;o;empted by the Authority from complying with the

requirements of this paragraph;-;

(b) in paragraph (a) o f subsection (3) thereof. immediately

after the woros "an insurance company:' there shall be inse rted the

wo rds "or a n insurpnce brok ing company.";

(c)

in subsection (4) thereof -

(i)

immediately after the words "an insurance offshore

~ompany, ~ in paragraph (a), there shall be insened the words

~or the busi~of insurance braking as an insurance bro king

offshore company.M;

(ii) for paragraph (b) , there shall be substituted the

followin,,

"(b) is a subsidiary of a bank or a banking

ill5titution. o r of an insurance company o r an insurance

braki ng company. as the case ma y be , of international

standing and repu te, and recognised as such by the

Authority. or of a holding oompany of which a bank.

institution or oompany as aforesaid is abo a subsidiary or

which is itself of international standi ng and repute and

accepted as such by the Authorily;M;

(iii) immediately afte r the words "an insurance

company" in paragraph (c), there shall be inserted the words

"orofan ill5u rance brokingcompany .or ofa holding company

rdefled to in the preceeding paragraph M;

(d) immediately after subsection (7) thereof there shall be

added the following new subsections

"(8) No twith standing any other provision of this Act ,

or of the Offshore Trus ts Act , 1988, where the busincss of a A<1 xxxv

banking o ffsho re o versea or subsidiary company, or o f an olt\lll8.

insurance offshore ovcrsea or subsidiary oompany, or of a

trading offshore company which;s a subsidiary the reof, o r of

such trading o ffshore company as may be prescribed and is a

company a<:ceptable to the Authority for the purposes oftlUs

subsection , includes fiduciary o r lrust o r si milar businC5S, the

Authority may, subject to such conditions it may deem

appropriat e to impose, cxcmpt -

(a) any offshore company aforcsaid and any

offshore company managed by it or under its

responsibility, from the provisiQns of paragraph (f) of

subsection (2) of Ih is section;

(b) any offshore trust o f which any offshore

com pany aforesaid o r any o f the employees of such

company is a trustcc, from the provisions of sections 18

and 48 of the Offshore T ru sts Act, 1988 requiring a

no minee company to be a trustee of an offshore trust,

whether as sole trustee o r as one of more trustees

Provided that such exemptions shall have effect only, so long

as all conditionsim~d by the Authority are complied with ,

The compa ny aforesaid , managing or responsible for such

offshore companies and th e trustee aforesaid shall , upon such

exemption assume all the duti es, funct io ns and

respon sib ilities entrusted 10 a nominee by this Act Hnd the

Offs hore Trusts Act, 1988 ~nd shall be liable to the same

pcnaltie$ im~d by law on nominee companie$.

(9) 111e provisions of section 18520fthe Civil Code and

the provisions of tile same Code limiting compound interest.

shall not apply in respect to any loon or any debt, wlle re the

loan is made to o r by, or the debt is due by o r to any offsllore

company and it sllaU be perm issible for tile amount of in teres I

due in respect of any sucllloo n orof any sucll debt to exceed

tile amount of capital due in respect of a ny such other debt .

(10) Not",ithSlanding anything contained in this Act,

th e Authority may in particular cases waive th e requireme nt

that an offshore company be a private company subject to

such conditions as may be prescribed or as the Authority may

impqse.".

Section 2J of the princi pal Act sllall be amended as follows ;

(a) in suhscction (2) the reof for the words ~insurance

offshore company ~ there shall be subst ituted the words -i nsurance

ofbhore company, or an insurance broking ofbhore company-

(b) immediately afte r subsection (3) thereof there shall be

inserted the following new subsection;

'"(4) An insu rance broking offshore company is an

offshore company which expressly restricts its objects to the

business of insurance broking or is an offshore oveTSCa or an

offshore subsidiary company to which subsection (3) or

subsect ion (4) of section 22 of this Act applies. and restricts its

operations from Malta to the business of insurance broking. -

(c) for the words -of insu rance .'" in subsection (5) thereof

the re shall be subst ituted the wo rds "of insurance and of insurance

broking.'"

(d) subsection (6) thereof shall be amended as follows;

(i) for the words -of property of any kind o the r than -

there shall be substitutcd the words -of property belonging to

it of any kind. including patents. copyrights. trademarks and

similar property. but exchlding-;

(i i) for t he first proviso thereofthere shall be substituted

the followin g;

" Provided tha! a non -trading offshore cam p.my .may

upressly li mit its objet:ls to. or may also include in itsobjecls.

the ownership. man agement. administration. and operatiOfl of

a ship o r ships not be longing to it. and such company shall nOl.

the reby. cease!O be a non-t ruding offshore company.- ;

(iii) in the second proviso thereof the words "othe r tha n

assets held for the purposes of a pension. provident or sim ila r

(und acttpled as such by the Au t hority.~ shllll be dele ted;

(iv) after the sccond proviso thereof the re shall be

added the following

MProvided furthcr that if a non-trading offshore

company, d ireclly or indirectly. holds ten per ce nt or

morc of the shares. or is e ntitled to ten per cent or more

of th e vo ting or comrolling ri ght s, in any institution

engaged in the business of ba nking or of insurance or of

insurance broking or of providing fiduciary services or

any undertaking for CQJiective investments, the non-

trading offshore CQmpany shall fo r the purposes of this

Act he considered as a gene ral trading offshore

com pany.".

Section 24 of the principal Act Shall be amended as follows

(a) for subsectio n (4) thereof there shall be substituted the

following

M(4) Notwithstanding anything CQ ntained in the other

provisions of this Act -

(a) a bank ing offshore company, or an insurance

offshore company. or an insurance broking offshore

com pany, or any such other company as may be

prescribed. sha ll not be registered as a trading offshore

company, unle5S the Authority has fiT$t ascerta ined. in

accordance with guidclines as may be prescribed or as

may be cstablished by the Authori ty, the specific type o r

aspect of business intended to be carried on and the

manner and other relevant circumsta nces concerni ng the

conduct of that business. and unl ess the Authority is

satisfied th at the company -

(i) is capable of properly conducting and

supporting the business to be carried on and has the

e xpertise and the financial resources for such

purpose : and

(ii) will keep such resources in such assets.

and ma intain where appropriate such margi ns of

solvency, as may be required by the Authority to be

ke pt or maintained from time to time and as may

o tnerwise be prescribed ~ and

(iiil wi ll obse r."e and comply with the

condition s which the Authority may in the

circumstances 8nach to the ce rtificate of registration

of the company;

(b) a company whost'. business is or in d udes th e

management of insurance companies or the business of

insurance broking, shall not be R'gistered as an offshore

company unless it al$O satisfics the Authority th at it is

prope rly and adeq uately insu red against sueh liabiliti C$ as

may be required by the A uthority and as may be

prescribed.".

(b) immediately after subsect ion (8) thereof there shall be

added the following 5ubseclion

"(9) the Autho rity 511a1l nOI be bound logive reasons for

an y refusal to regislC~r a company as a n offshore company, or

for anyoondilions il may require (0 be mel befo re il accedes 10

an application for registration: and the decisions of the

Authori ty on any such mallC T shall be final and concl usi ve .~.

For subsection (3) of section 26 or the princi pal Act there shall

be substituted the following

"(3) If Ihc Authority. having carried OUI or caused 10 be

carried out in accordance with the provisions of Ihis Act such

investigations lIS il may dee m appropriate in respect of an offshore

company, is sa tisfied that -

(i) circu mstances uis! , or there has been such ~

change in the ci rcumstances of the com pany, Ihal, had they

been known 10 the Authori ty o r had they existed al the limeof

the company's registra tion, the company would not have been

registe red as an offshore compa ny ; or

(iil the company has biled to obscTlle, in any material

respect, a conditio n 0,.- requirement attached to the cenificate

of its registration; or

(i iil in the case o f a company referred !O in paragraph

(b) of subsectio n (4) o f section 24 of this Act, the company is

not insu red as required by that paragraph for a period

exceeding one month ,

the Authority may cancel the registrat ion of the company and

thereupon the company shall cease to be a n o ffshore company

Provided that the Authority sha ll IIOt cancel the

registrat ion of a co mpa ny unde r this subsection un less it has first

given the company the o pportunity of e~plaining the ci rcumstances

and making other representations; a nd the Autho rity may also,

when: the circumstances complained of are capable of remedy,

allow the oompany to take remedial action within 5uch time and

under such oonditions as the Aut hori ty may specify ....

In section 280ftlle principal Act , immediately afler subsection

(8) th ereof, there shall be added the following new subsection

"(9) Section 27 of the Act . Bnd any orde r or declaration

made the reunder. shaJl not apply.

M .

Section 29 o f the principal Act sha ll be ame nded as follows.

(a) for subsect ion (4) thereof there sh all be substituted the

following

"(4) Subsection ( I) of section 6 of the Act ~hall not

apply; sub~cct ion (3) of that section shall apply to the e~tc n t

only of requiring an insurance o ffshore company to give the

information therei n referred to ; and subsection (S) o f that

seclion shall apply to the e xtent it is applieable in view of the

fo regoing provisions of this subsection .".

(b) (o r subseetion (6) thereof the re shall be substi tuted the

following

~(6) S«tions 8. 9. 10. 11. 12. 13 and 14. and subsect ion

(I) of section 23 o f th e Act shall not apply. ~;

(c) for subsect ion (7) thereof. there shall be substitut ed the

following subsections

SeClion 16 o( tbe Act shall apply as follo ws

~(7)

(a) paragra phs (b) and (c) of subsection (1) and

paragraphs (b) and (c) of subseclion (2) thereof shall not

apply ;

(b) subsections ( I ) and (2) tht reof shall apply as if

the financi al year of an insurance offshore com pany

terminated on such dale as th e company may indieate by

notice in writing 10 the Autho ri ty. and subject to the

power of th e AUlhori ty 10 eXlend the pe riods o f four and

six months therein prescribed by such fun her period as it

may in the circum5tances deem reasonable .

(8) The Act shall not appl y -

(a)

10 an insurance broking offshore company;

(b) to a com pany who;;e business is exclusively the

management of insurance offshore com pan ies. ~.

In section 3 1 of the princi pal Act, im mediately after lhe word "-1ulllof

" Malta ." there shall be added the following words: " In no case. _ l l

however, shall section 41 of Ihe said Act apply to an o ffshore compan y, "~

whose o bliga tion shall be limited 10 informing the Commi ssione r of

Inland Reven ue of any chargeable tnIDsmission it has reaso n 10 believe

is liable to duty unde r the Act. with in one month o f the chargeable

transmission or of such lim e as it beeamt aware O(l he liabili ty of such a

duty . Failure 10 comply wilh its obligation unde r thisseC1io n shal l for a ll

intents and pUrpo5Csof the said ACI bedecmed 10 be a failure to comply

with the provisions of section 41 of th e said Acl.-.

11 . In subsection (I) o f sectio n 41 of the principal Act for the ... "",..:1 ... ", 01

words "or allo wed not to bene fitlhe refrom ." there shall be substituted

the words -or allowed not to benefit the refrom. or to benefit (rom any pri".;pol ......

such exe mption , privi lege o r any other benefil lo such extent only. as

may be acceptable to the Authority. -.

Subscelion (2) of sectio n 46 of the principal Act shall be ........ "" ... ft'oI

substituted as follo ws

R(2 ) A non·tradingoffshorecompany may be registe red with

the Authority under this Act only through the agency of a nominee

company authorised to act as such with respect to such company;

and a l'\Oll·trading offshore o:ompany shall be reprexnted legally and

jud icially by a nominee company c ither as its sole director or as its

secretary whet her alone or with such other persons as ma y be

provided in the articles of associa tion o r. in a particular case or

cases or classes of cases, and with th e consent of the nominee

company by such other person or persons as th c non·trading

offshore company may appoint fo r that purpose."'.

Section 52 of the principal Act shall be amended as follows

(a) paragraphs (c), (d). (e), (f) and (g) thereof shall be

re numbe red as paragrapm (e), ( f) , (g), (h) and (i) respee!ively;

(b) for paragraph (b) of subsection (I) thereof there shall be

substituted the following paragraphs

~(b)

regulate the conduct , duties and obli gations of -

(i)

nominee companies;

(ii)

insurance broking offshore companies;

(iii ) companies whose busi ness includes the

ma nagemen t o f insurance companies, or collective

invest ments. or such othe r bU.'liness which the Minister in

consultation with the Authority m~ y preseribe;

(c) prescribe infonn ation, that com panies referred to in

paragraph (b) of this subsection, are to submit to the

Authorit y;

(d) establ ish the fees Which, notwithstanding any other

provision of thi s Act, nomin ee companies may charge;"' ;

(c) in paragraph (e) as renum bered , of subsection (I )

thereof. immediately afte r the words -as the case may require.-

there shall be inserted the words "or exempt, or provide for the

exemption of an y class or classes of business carried o n by an

offshore company from anyof the provisions of a ny law at the time

in force,"";

(d) for paragraph (f) as ren umbered, o f subsection (I)

thereof, there shall be substituted the following

-(f) make

provi sion

allow ing the

Autho rit y,

notwit hsta nding any othe r provision of this Act , but subject to

sueh cond itions o f confidentiality and OIher condi tions as may

be prescri bed or as may be imposed by Ihe Authority. to give

sueh in formation concerning offshore banks or offshore

banking insl;lul ions o r insurance o ffshore companies o r

insurance broking offshore companies Or offs hore

undenakings for collective investments or offshore holding

companies o f which a bank, institution. company or

undenaking as aforesaid is a subsidi ary, or offshore companies

listed on an excha nge recognised by the Authority , as will

enable foreign ce ntral banks or similar financial supervisory

bodies, or self regulatory aut horit ies, having an interest in the

proper conduct in Malta of the affa irs of an offshore bank .

institution, insurance compa ny. insurance broking company,

undertak ing for collective invcstme nts, a holding company

above mentioned , or a listed company , to examine such

conduct.",

Immediately after subsection (3) o f sect ion 53 of the principal

Act the re ~ha ll be added the following new subsection

~(4)

No law, e nacted after 1st January, 1989 ..... hich , but for

the provisions of this section, would affect adversely the position of

an off5hore compa ny with regard to taxation , includi ng any dUly,

levy, dues o r other liabi lity of a similar nature, o r to any ot her

maller in respect of which such company is give n rights, privileges

or cxemplions under Ihis ACI. shall apply 10 such company except

and to the extent that that law specifica lly so providcs. ~.

15, The First Schedule of the principal Act shall be amended as

follows

(a) items (f) and (g) thereof shall be renumbered a~ items (g)

and (h) respectively; and

(b) immediately afte r it em (e) thereof there shall be insened

the following new item-

M(f) in respect of an insurance broking

I ,OOO~

offshore company

1,000

For sect ion 22 0fthe Insurance Busines5 Act , 1981, there shall

be substituted the following

M22 ( I) If a company in tends to cease to carry on the

business it is licensed 10carry on or ifils premium income in respect

o f a financial year is like ly 10 fall below eighty pe r centum of its

premium income in respect of the immediately preceding financial

year it shall without delay give notice thereof to the Minister, and

the company shall comply with such conditions as the Minister may

deem proper to impose .

(2) Any company which fails to co mply with a ny of the

foregoing provisions o f this section, includi ng any conditions

imposed thereu nder. shaH be liable. in respect o f each such failure.

to a penalty not exceeding ten thousand liri.

(3) For the purposes of this section Mpremium income-

rela tes to cont racts of insurance commenci ng during the financia l

year under ao:;:ount , or to those continuous contractS whose

anniversary dates fall during lhe financial year under ao:;:ount, and

me ans the aggregate of gross premiums due 10 the company afte r

deduction of discou nts, refunds o r rebates, hUI befo re deduct ion of

commissions and befo re deduction of prem iums for reinsurance

ceded.-.

Passed by the Ho use of Represe ntatives at Sitting No. 422 o f the 15th October,

\,.,.

~ WR ENCE GONZI

Speaker

P . M USCAT TERRlB l l.E

Clerk 10 Ihe HOU$t of Rep'ae" 'a'i~es.

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