ACT No. XX of 1994 AN ACT 10 enable Malla to rali/)' IM CQII~t"lion on the law app/;(;{;Iblt to Trusts and on IMlr rtcognition, OM 10 /Mkt certain amentimen/s ro the Offslwn Trusts Acr, Cop.13}.

I assent,

(L.S.)

Uoo MIFSUD B ONNIO

President

J3th Scptember, 1994

ACT No. XX of 1994

AN ACT 10 enable Malla to rali/)' IM CQII~t"lion on the law app/;(;{;Iblt

to Trusts and on IMlr rtcognition, OM 10 /Mkt certain amentimen/s ro

the Offslwn Trusts Acr, Cop.13}.

BE IT ENACfED by the President, by and with the advice and consent

of the House of Representatives. in this present Parliament assembled,

and by the authority of the same, lIS follows

<I)

This ACI may be cited as the Re<:ognitiOfl of Trosts

Act, I994.

(2) Thil Act shall come into force on such date as the

Minister n:sponsible for finance may by notice in the Gazetle appoint.

1. In this Aa unless the context Otherwise requi~,

(I)

"the Convention" means the Convention on the: Law applicable to trusts

aDd 00 their recognition which was adopted by the Hague Conference on

Private International Law on 20 October 1984. and which came into

force on 1 January 1992;

' trust ' means a tru!t as referred to in Article 2 o(lhc Convention.

(2) In this Act, if there is any connict between the English

and Maltese: tuts, the English text slla.ll pn:vail.

J.

(I) The provisM>.1s of Articles I to 12, 14, IS. 16 (the

tint paragraph only). 17, 18 and 22 (the rll$t paragraph only) of the

Convention as 5el OUt in the Fil'$l Schedule to this Act shall have the

force of law in Malta.

In aeconIanee with Article IS of the Convention,

(2)

where Malrese conflicts rules require the application of the laws of

Malta or of a foreign SUle with regard 10 any of the following matt£Q'

Ca)

the proI:eaion of minon and uw:apable patties;

the penooa! and propriewy effects of marriage;

(b)

succo'5ion righl5, testa1e and intestate, especially the

(c )

indefeasible shares of spouses and relatives;

Cd) the tnlrufcr of title to p operty and socurity intercst5

in property;

(e)

the pmlcaion of creditors in maners of insolvency;

(O

the prote<:tion, in other respe<:1$, of third patties acting

in good faith,

then, save as provided by the following subsection, such laws shall be

applied by the Maltese eoutU to the exclusion of the provisions of the

Convention in 50 far as such laws cannot be derogated from by

voluntary act and are incompatible with the Convention.

(3)

If a penon domiciled outside Malta lnlIlSfers Of

disposes of movable property during his lifetime to a trust

(a)

such person shall be deemed to have had capacity to

do so if at the time of such transfer or disposition he was of fuU age

and of souoo mind under the law of his domicile: and

no rule relating 10 inherilallCe or SUlXe5sion to such

(b)

movable popeit)' (i ncluding. but without prejudice 10 the genaality

of the r~oing, fon:ed heir.lbip, legitim or similar righlll) of the

Law of llis domicile or of any other .ystcm of foreign law applicable

under Maltese conflicloS rules shall affa;1 the recognition of such

trusl by the courts of Malta.

For the purposes of this subsection, "f~ heirship' means a legal rule

restricting the right of a person to dispose of his property during his

lifetime so as to preserve su::h property (or distribution at his d-slb, or

having simllJll" effect.

(4) In accordance with the fin! paragraph of Article 16 of

the Convention, the courts shall not give effect to a trust in so fill" as the

provisions of the UUSt are incompatible wllb the roles of MalleSe law

which are mandatory regardless of Maltese conf1icu rules.

(5) Without prejudice 10 the generality of Article 18 of the

Convention, the courts shall not give effecllo a trust to the extent that to

do so would be inconsistent with the fimdamental public policy of the

law of Malta.

(6)

[n Article J 7 of the Convention, the reference to a Stale

includes a reference to any country or terrilOf}' (whether or \K'It a patty 10

the Convention) which has its own system of Jaw.

(7)

Article 22 of the Convention shall nOl be construed as

affecting the law to be applied in relation to anything done or omitted

before the coming into force of this Act.

(8)

Nothing in the Convention shall have any effe<:1 on the

interpretation or application of the laws of Malla relating to fiscal

malteB.

4 . lbe Offshore Trusts Act. shall have effect subject to the

amendments &et 0111 in the Second Schedule 10 this Ac!.

A1S7

SCHEDULES

flRST SCHEDULE

(Stdioa 3)

~W

CONVENTION ON THE

APPLICABLE TO TRUSTS

AND ON THEIR

RECOGNITION

CHAPTER I . SCOPE

AltkIe 1

nw Convention specifies the law applicable to trusts and governs their<rccognition.

ArtJdo I

For !be p.upo6CI 01 this Convention.lhe tem1 "tn.aa" refers 10 the legal relationship aeIIed - in'~r

IIiYOS or on death • by a person. the settlor, when assets 1wIve been placed under the control of.

trustee for the benefit of a beneficiary or for a specified purpose.

A tnal has the foUowing charM:lcri"

the ,"ets constitute. scpar1llc: fund and are not. pan ollhe tI'uSlOC'1 own estate

(a)

title to the trust aucu Slpnlb in the name of the U"'II:: or in the name of another

(b)

perJOn on beha1f oftbe lI"st .... ;

the mister has the power and the duty, in respect of which he is .xountable, to

(c)

maneSC', employ or disp:ose of the asseLS in accordance with the temu of the trust and the special

duties im posed upon hlm by law.

The reservation by the KUJor of certain rigllg and powers. and the (Kt that the Im" ....

may himself have rights as I benefICiary, arc not ..... "'rily Inconsistent with the cJi,tence of •

(1

tnl5l.

.nkI<J

The Convention applies only 10 trusts created volwuarily and eYidenced in ""ritiq .

• nkI<'

The Convention does not apply to preliminary iutlCls reJatjna 10 the valM:1ity of wiUs or of other

acts by vinue of which assets are transfena.! 10 the U\I$ICC.

'nkI<'

The Convention does not apply to the almt that the law specuiCd by Chapter 11 does not provide

fo r trusts or the t alegory of trusts involved.

A

CHAYfER n· APPLICABLE LAW

A uust shall be governed by the law chosen by the settlor. 1be choice must be express or be

implied in the tenns of the inslnlment creating or the writing evidencing the trust, interpreted. if

necessary, in the light of the circuJnstances of the case.

Where the law chosen under the previous paragraph does not provide for IfUSts or the category of

trust involved, the choice shall not be effective and the law specified in Anicle 7 shall apply.

Artld.7

Where no applicable law has been chosen, a trust shall be governed by the law with which it is

most closely con.neo::led

In ascertaining the law. with which a lrUSt is most closely connected reference shall be made in

particular to:-

the place of administration of the trust designated by the settlor;

(a)

(b)

the situs oflhe assets of the trust;

(c)

the place of residence or business of the trustee;

the objects of the trust and the places where they are to be fulfilled.

(d)

Article 8

The law specified by Article 6 or 1 shall govern the validity of the trust, its cOII.'Itruction, its

effects, and the adminiSU'alion of the trust.

In particular !hat law shall govern-

the appointment, resignalion and removal of trustees, the capacity \0 act as a

(a)

trustee, and the devolution of the office of trustee;

(b)

the righf.'l and duties of trustees among themselves;

the right of trustees to delegate in whole or in part the discharge of their duties or

(c)

the eltcrcise of their powers;

the power of trustees to administer or 10 dispose of trust assets, 10 create security

(d)

interesf.'l in the trusl assef.'l, or 10 acquire new !iSsets;

the powers of invesunent of trustees;

(e)

A

ct)

restrictions upon the duration of the trust, and upon the power to accumulate the

income of the trust;

the relationships between the trustees and the beneficiaries including the personal

(g)

liability of the trustees to the beneficiaries;

the variation or Iemlination of the trust;

(h)

the distribution of the trust assets;

(i)

(j)

the duty of trustees to account for their administration.

Article'

In applying this Chapter a severable upcct of the trust, particularly matters of administration,

may be governed by a diffen:nt law.

Artk:le 10

!be law applicable to the validity of the trust shall determine whether that law or the law

governing a severable aspect of the trust may be replaced by anOlher law.

CHAPTER m· RECOGNITION

Article 11

A trust created in accordance with the law specified by the preceding Chapter shall be rs:ognised

lIS a trust.

Such ~gnition shall imply, as a minimum. that the trust property constitutes a separate fund,

that the trustee may sue and be sued in his capacity as trustee, and that he may appear or act in

this capacity before a notary or any person acting in an official capacity.

In so far as the law applicable to the troSI requires or provides, such rttOgnition shall imply, in

particular -

that personal creditors of the trustee shall have no recourse against the trust

(a)

that the trust assets shall not form part of the trustee's estate upon his insolvency

(b)

or bankruptCy;

that the trust assets shall not form part of the matrimonial propeny of !he trustee

(c)

or his spouse nor part of the trustee's estate upon his death;

A

7fIJ

that the trust assets may be recovered when the UUSIee. in breach of troll, has

(d)

mingkd trust '''cU with his own property or has alienated trust assets. However, the rigbts IIOd

obligatiOO5 of any third pany holder of the "VCS shall remain subjecl lo the law det=nined by the

choice of law rUles of the forum.

Artide 12

Whe~ the trustee (\esirelllo register assets, movable or immovable. or documenl$ of lille 10 them,

be shaH be entitled, in so far as this is not prohibited by or inconsistent with the Jaw of the State

where registration is sought. to do so in his c9pM'ity as trustee or in such other way that the

e.xislcuc::e of the-uusl il dUdes: i

ArtIde 14

The Convention ahaIlllOI prevent the applicatioo of rules of law more favowable 10 the l""""'8nilion

of trusts.

CHAPTER IV -GENERAL CLAUSES

Artkle 15

The Convention does not prevent the applicatioo of provisions of the law designated by the

conflicts rules of the forum, in so far as mu provisions cannot be derogated from by voluntary

act, relating in particular to the following maners-

the protection of mj~ and incapable panics;

Ca)

the personal and proprietary effects of marriage;

(b)

succession rights, testate and int cstate, CIIpccially the indefeasible sl'larc$ of

(c)

spouses and relatives;

me transfer of title to property and security inlcreslS in propeny

(d)

(e)

the pn:xection of cn:dilon in mauers of insolvency;

(0

the protection, in other respects, of third parties acting in good faith.

If recognition of a tlUst is prevented by application of the prco::eding paragraph, the court shall try

to give effect to the objecu of the trust by other means.

Article 16

Tbe Convention does not prevent the application of !hose provisiOll5 of the law of the fOfUlll which

mll$t be applied even to international situations. irrespective of rules of confiictof laws.

Arlkk17

In the Convention the word 1aw· means the rule. of law In force in. State 01 ...... than its ruiCIlA

conflicl: of laWI.

Adlde 11

The pmvUiOOl of the Cu .. mtioo 1nl)' be disregarded wbe:o their !!pplicaticm would be """;ftllly

j ..... iipMl'ble with public J'K"icy (onln publk).

Aldde 22

! nts to the otrsbore TrwU Aa. Cap. 331

}tow ....

m

(I) The short title of the Act. shall be dcldCd and IUbltituted

by the wordt"rusu Aa'.

(2) In the long title to the Act. the word "Offshore" ,hall be

In subsection (1) of s«:t.ion 2 oCthe Act

(I)

the definition of "the Act" shall be substituted by the

(a)

follinving

• ' the Ad" means the Malta Financial Services Centre Act,

Cap 330;";

the defmition of "the Authority" $hall be deleted and after

(b)

the defutition of "breaI:h of tnul" and before the definition of "cunpany"

there sllal.l be insened the following definition

• "the Centre" means the Malta Financial Servk:es Cenue;";

(c) after the definition of "company ' and before the

definition of "the Court" there shall be inserted the following definition

• "the Convention" means the Hague Convention on the law

applicable 10 trullts and on their RCOgDition, sd; OUI in all material

pans in the Firsl Schedule to the Recognition of Trusts Act,

1994;"

after the definition of "the Court" and before the

(d)

defmitiOll of "immovable property Si(!!"tM in Malta" ~ shall be

irucrtcd the following definition

• "foreign uust" means a tfUSl the proper law of which is not

the law ofMalta;";

(e) the definition of · Ministe .... shall be $Ubstitutcd by the

following

• "Minister" means the Minister responsible for finance.";

for the ddinitioo of "oomi""" company' there shall be

(l)

IUbetitutcd !he following

• "nominee company" meaDS a company authorised to perform

the functions or a nominee company as provided in section 47 of this

Act Imd a licensed oomi ...... duly Uo-nscd under section 51A of the

Act, ". and

• •

!he definition of "offshore trust" shall be de\eu:d.

(J:)

(2) Save a.s provided above, for the word "Auibority"

wherever it occurs in tile Act, there shall be substituted the word

"Centre",

(3) The wordli 'offshore trust" and ' offshore trusts"

wherever they appear in the Act, except in section 53 introduced by item

18 oflhi. Schedule, shall be substituted by the words "trust"and "trusts"

respectively.

Subsection (2) of lICCIion 5 of the Act shall be substituted by

the following

"(2) The proper law of the trust shall be ddcrmined in

acx:ordance with the Convention.

(3) The terms of a trust may provide for the proper law of

the tfUst 10 be changed from the law of Malta to the law of another

jurisdiction.' .

(I) For subsection (1) of section 6 of the Act then: shall be

substituted the following

"(I) When the proper law of the trust is the law of Malta. the

validity of I trust, its construction, iU effects and the adrninislfation

of the {lUSt shall be governed by this Act no(withstanding the

provisions of any other law and I trust shall be governed by tu

proper taw as detennined in aorordance with the Recognition of

Trusl5 Act, 1994 in all otbercascs.".

(2) In I" twction (2) of section 6 of the Act for the WOIds

"A tru$1 is an OffiOOre lrust if " tbete 5halI be substituted the words "A

trust shall be governed by this Act if".

Subsections (3) and (4) of section 6 of the Act shall be

()

For section 8 ol the Act there shall be snbscinned the

following

"8. The instrument of' trust shall include the name by which

the trult iJ to be known and registered, and such name may,

subject to the lertnI of the trust, be changed at any time. ".

For section 13 of the Act and the llWJinal note themo there

shall be substituted the following

The term. of a trust may make the interest

"ProI«:tI_etrw.t.

of a benefICiary •

(a) liable to lennination; or

(b) IUbject to restriction OD alienation or

dealing; or

(c) suh;cct to diminution or termination in

the event of the benefICiary becoming bankrupt.

or any of his propeny becoming

Of insolvent.

liable to seizure (or the beocfil o(his creditors.".

Sc:etion 17 of the Act shall be amended as follow.

7. fOl" subsection (2) tbaeof there shall be aubstitued the

(a)

following

"(2) Notwithstandins the provisions of subsection (I) of this

section. !he Ims! .... may require to be provided with reasonable

sc:curity for liabilitiet whether ell, ting. future. contingent or

otherwise before distributina lNSt property."; and

subsccUOfI$ (3), (4) and (5) thereof shall be re.-

(b)

numbered (4), (5) and (6) respectively and immediately after

subsoction (2) there shall be inserted the (oLlowing

"(3) Subject

the provisions of this section and

to

notwithstanding the lemiS of the trust, wllere all the beneficiaries

are in existence and have been ascertained and no one of them is

interdict Of a minor, they may require the trustee to tenninate the

InI!it and distribute the trust property among them.",

8. For subsection (4) of section 21 of the Act there shall be

substituted the following

"(4) Trustees shall keep accurate ICCOIlfll5 and records of

their trusteeship and shall, upon a request by any benerICiary.

provide a copy of such accounts within a reasonable time.".

9. Subsection (3) of section 24 of the ACI shall be deleted.

10. A new section 24A shall be inserted after section 24 of the

Act u (oUow.

24A.( I ) The terms of a trust may provide for

"ProIec:IOJ.

the office of protector of the UUSt.

(2) Subject to Ihe teoos of the trust, the

protector shall have the following POWCflI

to appoint a new or additional trustee;

(a)

(b) to remove a trustee;

(c)

\0 require the trustee 10 obtain his

discretion.

(3) In the e.:.ercise of his office the

protector shall not be deemed to be a trustee. ~.

11. SubJectioo (5) of $eClion 30 of the Act .shall be substituted

by the fol lowing

-(5) Nothina in tne terms of a trust shall relieve, release (H"

UOIImlle • lru5lee from liability for breach of trust aming from

his own fraud, wilful misconduct or gross negligence.",

12. Subsection (2) of section 32 of the Act shall be amended by

the insertion of the words "and that party is otherwise unaware of it,'

immedilllely after the words "acting as trustee,·.

Section 34 of the Act shall be amended u follows

13. for the marginal DOle thereof, there shall be substituted

Ca>

the following

'Position of outgoing trustees."; and

subsection (4) thereof shall be deleted.

(b)

A new 5eCtion 40A shall be inserted immediately after

section 40 of the Act as follows

"Follow;".

Without prejudice to the peQOIJ.al

IrU$t

40 A. (I)

and.

pi0jltl1y

liability of • lfUSlee, trust ""opeit), which has been

""""", '"

alienated Of dealt with in bre.:h of uust, or the

~.

property into which it has been convened, may be

followed and I'CQOvered unless it is iD the hands of •

bona fith purchaser for value without Dotice of the

breach of 1fUSI.

~

(2)

I

truJlec

becomes

bankrupt. or insolvent, or upon his property becoming

liable to seizure or similar process of Jaw, his

credilOl'l shall bave no right or daim agaiMt the trosI

property ucep: to the extent that the trustee himself

has • claim against the tndL

(3) The Cowt may make an 0100 or

directive IU it deems fit in the circums'ance1 of the

case upon an application made under this section by

any beneficiary or creditor as the case may be. ",

(I) Sub5ection (1) of section 43 of the Act shall be

substituted by the following

"(I) Every Irusl shall be registetcd with the CentM. ",

Subsection (2) of section 43 of the Act shall be deleted

(2)

and substituted by the following

"(2) It shall be the responsibility of the trustee 10 ascertain

that. trust is registered under this Act:.

Subsection (4) of 5eCtion 43 of the Act shall be

(3)

substituted by the following

"(4) The Cerure, on being $&tidied that the roquimnents of

paragraphs (a) and (b) of sut»eclion (3) of this section have been

romplied with and that the appropriate fee has been paid, , hall

and iuue a certificate of registration

register the

tnl5t

accordingly,",

New section 4lA lhaIl be inserted after section 43 of the Act

and bcJore the title "Fiscal and Other exemptiOll5" as follows

° Opdwal

4lA.(1) A foreign trust which satisf"1CI the

~JianWonol

conditiCln5 of subsection (2) or section 6 may register

foreilll truJta.

with the Centre.

(2) Registration shall be effected by filillg

with the Centn

(a) a cenifled copy of the trusl instrumeru;

(b) a declaration by the licensed nominee

acting u a trustee of the foreign trust that the

trust sati5fies the conditiOll$ of 5Ub$ection (2) of

5«:tiOIl 6 of this ACL

(3) The Centre, 011 bein& satisfied that the

lUjUiremenlJ of .uhsc(tion (2) of sc:ction 6 of this Aa

an: satisfied and that the appropriate fee has bc:cn paid,

shall rqilter the fomgn trust and issue l certifiCate of

reg.islBlion IIXOI'dingly.

(4) Any sul:Jmiuent change in the trust

instrument Ihalllikewi$c be rqiSlemi with the Centre.

(S) The trustee bcin& l \irwvd oominec

Ihall liktwisc give notice to !be Centre of the tcnninatiOll

of the trust. irrespective of !be Mm ... or ~n of IOCb

tcmIirwion.

(6) At the request of a trustee (being l

Jk.cnsed nuni:::) of a foreign trust registered under this

section, and on adequate proof being given to !be

aatisfaction of the Centre, the Centre may issue a

ccrtir1Cllte slaling that, to the bc$t of ill knowledge, on

the date of the ccrtUJC8lC, the applicant was a trustee of

the trust. A ccrtUlCIle WKIcr this SIlbctrti.on sba.ll be

issued on the payment of a fee of Lm2S or such higher

amount as the Centre may from time to time c;letcrminc.

(7) The Centre shall keep a regi ster of all

foreign trust.! registettd WIder thiJ section and shall enter

tbettin any change relative 10 them notified to il and such

other mattcn III it may deem appropriate to register.

(8) The fee payable for registration shall be

Lm200.

A trustee (being a licensed nominee) of a

(9)

foreign trust may by notice in writing request the Centre

10 caned the registration of the trust under this soction

and upon receipt of such request, the Centre shall caned

such regi5tnltion.

( 10) Nothing in this Act shall be d _!he<! to

make registration of a foreign trusl l condition oC

recognitioo WIder the Recognition of Trusts Aa, 1994.

(11) For the purposes of this Act, "licmscd

nominee" refen to I licensed oominec company

cstablished in tenns of soctJon 51A of me Act.".

New sc:ction 46A shall be iIllCrted aftCf sc:ction 46 of the Act

and before the title "Nominee Companics", as follows

L-artikolu 53 gdid ghandu jidl'lol wan. I-artikolll '2 11;' 1-

n.

Kull o~ f1TISl, li I-lip applibbbli

ghalih m'hix il-liii 11;' Malta, u li jkun jetisti fid4a1l; 11;'

d-dhul fi$-5C:hh ta' I-AIt 11;' 1-1994 dwv GPlarficn 11;'

1IustJ, jigi minn dik id-da1l; aw1oll\lltik&mcnt n-

reiP slcl t mat-Centru bhal. tnlJI batrani taPlt l-artikolll

"lA u minn dik id-data dak it-b'ust jigi regolat bI·

artikolu 4lA u mll1lJ1: l-artikolu "l hlicf iIli I-gannzija

moghlijll bI-artikolu SO gIIandha tkompli gh.addeiia

mid-data tar-teIPsbUZjoni tat-f1TISttaht I-vtikolu 4J. ~.

Mghoddi mill· Kamra tad-Deputati fis -Scdu1l; NfII.JOJ 11;' \-2011;' Lulju, 1994.

LAWRENCEGONZI

RICHARD J. CAUCI-fl

SbiVM w-1UmrI tMJ-/JqNuri

A foreign trust whicb is registc:mI

"App/icMian

pummnl to section 43A may. by accomplishing the

10 rordplnlllll.

fonnalities prescribed by aection 46, qualify for the

fiscal and other ClCIllpUons provided by sections 44

and 45 aDd the guarantee provided by section j() as

though it wen. IruIt validly c reBled under this Act. ",

18. New seaioo. 53 shall be inserted after seaion 52 of the Act, as

follows

An offshore trust, the ptopu law of which

"'EJ.iJIiJI. otrsborr.

is not the law of Mall&, and existing al the date of cntry

1nItU.

into force of the Recognition of Trusts Act, 1994,

shall, as from such date, be aulomalically re-registcm1

by the Ce.!tre as • foreign trust under section 43A and

from such date luch trust shall be governed by section

43A and not by section 43 except that the guarantee

provided by section ~ shall cootinuc to be determined

by .... fe.t.a to the date of regislnllion of tbc tnut

under section 43,",

pused by the House ofRepresent&tives at Sitting No.303 of the 20th luly \994.

LAWRENCEGONZl

S_~

RICHARD J. CAUCHI

Cluk 10 the House of Repraemalil'u

Mj'1NaJI ft· lq ' !I,M .ijo IaJ.(hoem -

I'rWud MW c;", ";"""~ I'riIrIi7t& Pros

I'fea 16< - Priar 16<