ACT No. XIII of 2004 AN ACT to amend the Trusts Act, Cap. 331 BE IT ENACTED 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, as follows>-

I assent.

E DWARD F ENECH A DAMI

(L.S.)

President

23rd November, 2004

ACT No. XIII of 2004

AN ACT to amend the Trusts Act, Cap. 331

BE IT ENACTED 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, as follows>-

PART I

(1) The short title of this Act may be cited as the Trusts Short title and

commencement.

(Amendment) Act, 2004 and this Part shall be read and construed as

one with the Trusts Act, hereinafter referred to as “the principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

(Article 34)

“SCHEDULE

(Articles 2 and 5A)

CONVENTION ON THE LAW APPLICABLE TO TRUSTS AND ON

THEIR RECOGNITION

CHAPTER 1- SCOPE

Article l

This Convention specifies the law applicable to trusts and governs their recognition.

Article 2

For the purposes of this Convention, the term “trust” refers to the legal relationship

created - inter vivos or on death - by a person, the settlor, when assets have been placed

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

A trust has the following characteristics>

(a) the assets constitute a separate fund and are not a part of the trustee’s

own estate<

(b) title to the trust assets stands in the name of the trustee or in the name

of another person on behalf of the trustee<

(c) the trustee has the power and the duty, in respect of which he is

accountable, to manage, employ or dispose of the assets in accordance with the

terms of the trust and the special duties imposed upon him by law. The reservation

by the settlor of certain rights and powers, and the fact that the trustee may himself

have rights as a beneficiary, are not necessarily inconsistent with the existence of

a trust.

Article 3

The Convention applies only to trusts created voluntarily and evidenced in writing.

Article 4

The Convention does not apply to preliminary issues relating to the validity of

wills or of other acts by virtue of which assets are transferred to the trustee.

A

Article 5

The Convention does not apply to the extent that the law specified by Chapter II

does not provide for trusts or the category of trusts involved.

CHAPTER II - APPLICABLE LAW

Article 6

A trust shall be governed by the law chosen by the settlor. The choice must be

express or be implied in the terms of the instrument creating or the writing evidencing

the trust, interpreted, if necessary, in the light of the circumstances of the case. Where

the law chosen under the previous paragraph does not provide for trusts or the category

of trust involved, the choice shall not be effective and the law specified in Article 7

shall apply.

Article 7

Where no applicable law has been chosen, a trust shall be governed by the law

with which it is most closely connected. In ascertaining the law with which a trust is

most closely connected reference shall be made in particular to>-

(a)

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

(b) the situs of the assets of the trust<

(c)

the place of residence or business of the trustee<

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

Article 8

The law specified by Article 6 or 7 shall govern the validity of the trust, its

construction, its effects, and the administration of the trust.

In particular that law shall govern -

(a) the appointment, resignation and removal of trustees, the capacity to

act as a trustee, and the devolution of the office of trustee<

(b) the rights and duties of trustees among themselves<

(c) the right of trustees to delegate in whole or in part the discharge of their

duties or the exercise of their powers<

(d) the power of trustees to administer or to dispose of trust assets, to create

security interests in the trust assets, or to acquire new assets<

(e)

the powers of investment of trustees<

(f) restrictions upon the duration of the trust, and upon the power to

accumulate the income of the trust<

(g) the relationships between the trustees and the beneficiaries including

the personal liability of the trustees to the beneficiaries<

(h) the variation or termination of the trust<

(i) the distribution of the trust assets<

(j) the duty of trustees to account for their administration.

Article 9

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

administration, may be governed by a different law.

Article 10

The 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 another law.

CHAPTER III – RECOGNITION

Article 11

A trust created in accordance with the law specified by the preceding Chapter

shall be recognised as a trust. Such recognition 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 trust requires

or provides, such recognition shall imply, in particular –

(a) that personal creditors of the trustee shall have no recourse against the

trust assets<

(b) that the trust assets shall not form part of the trustee’s estate upon his

insolvency or bankruptcy<

A

(c) that the trust assets shall not form part of the matrimonial property of

the trustee or his spouse nor part of the trustee’s estate upon his death<

(d) that the trust assets may be recovered when the trustee, in breach of

trust, has mingled trust assets with his own property or has alienated trust assets.

However, the rights and obligations of any third party holder of the assets shall

remain subject to the law determined by the choice of law rules of the forum.

Article 12

Where the trustee desires to register assets, movable or immovable, or documents

of title to them, he shall be entitled, in so far as this is not prohibited by or inconsistent

with the law of the State where registration is sought, to do so in his capacity as trustee

or in such other way that the existence of the trust is disclosed.

Article 14

The Convention shall not prevent the application of rules of law more favourable

to the recognition of trusts.

CHAPTER IV - GENERAL CLAUSES

Article 15

The Convention does not prevent the application of provisions of the law designated

by the conflicts rules of the forum, in so far as those provisions cannot be derogated

from by voluntary act, relating in particular to the following matters>

(a)

the protection of minors and incapable parties<

(b) the personal and proprietary effects of marriage<

(c) succession rights, testate and intestate, especially the indefeasible shares

of spouses and relatives<

(d) the transfer of title to property and security interests in property<

(e)

the protection of creditors in matters of insolvency<

(f)

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

If recognition of a trust is prevented by application of the preceding paragraph,

the court shall try to give effect to the objects of the trust by other means.

Article 16

The Convention does not prevent the application of those provisions of the law of

the forum which must be applied even to international situations, irrespective of rules

of conflict of laws.

Article 17

In the Convention the word “law” means the rules of law in force in a State other

than its rules of conflict of laws.

Article 18

The provisions of the Convention may be disregarded when their application would

be manifestly incompatible with public policy (ordre public).

Article 22

The Convention applies to trusts regardless of the date on which they were

created.”.

Passed by the House of Representatives at Sitting No. 188 of the 16th

November, 2004.

A NTON T ABONE

Speaker

R ICHARD J. C AUCHI

Clerk to the House of Representatives

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

Article 1 of the principal Act shall be deleted and substituted Substitution of

article 1 of the

by the following new Article>

principal Act.

“1.

This Act may be cited as the Trusts and Trustees Act.”.

Article 2 of the principal Act shall be amended as follows>-

Amendment of

article 2 of the

principal Act.

(a)

in subarticle (1) thereof>

(i) in the definition of “the Act” and wherever it appears

in the English text of the principal Act, the words “Malta

Financial Services Centre” shall be substituted by the words

“Malta Financial Services Authority” wherever they occur<

(ii) immediately after the definition of “the Act” the

following new definition shall be inserted>-

“ “approved jurisdiction” means a jurisdiction

which has been approved by the Authority for the

purposes of this Act<”<

(iii) immediately after the definition of “approved

jurisdiction” the following new definition shall be inserted>-

“ “approved person” means a person of good

reputation possessing experience and qualifications in

financial, fiduciary, accounting or legal services and

approved by the Authority as being fit and proper to carry

out the duties of a trustee<”<

(iv) immediately after the definition of “approved

person” the following new definition shall be inserted>-

“ “the Authority” means the Malta Financial

Services Authority<”<

(v) the definition of “the Centre” in the English text

shall be deleted<

(vi) immediately after the definition of “breach of trust”

there shall be added the following new definition>-

“ “charitable purpose” means any charitable and

philanthropic purpose, and without prejudice to the

generality of the aforesaid, includes in particular>

(a) the advancement of education, including

physical education and sports<

(b) the advancement of religion<

(c)

the advancement of health<

(d) social and community advancement<

(e) the advancement of culture, arts and

national heritage<

(f) the advancement of environmental

protection and improvement<

(g) the promotion of human rights,

conflict resolution and reconciliation<

but does not include a political purpose<

For the purposes of this definition “political purpose”

means the promotion of the interests of a political party

or a political candidate, whether at local, national or

international level, or to seek or oppose changes in the

law or government policy or decisions except when such

law or government policies or decisions directly concern

the achievement of charitable purposes<”<

(vii) immediately after the definition of “charitable

purpose” the following new definition shall be inserted>

“ “commercial transaction” means the following

transactions and any transactions connected or ancillary thereto>

(a) securities offerings, whether to the public

or for private placement, portfolio management and

custody of investment instruments<

(b) the securitisation of assets<

(c) the grant of real or personal security

interests including hypothecs, mortgages,

privileges, pledges and guarantees<

(d) collective investment schemes<

(e) employee benefit or retirement schemes

or arrangements<

(f) syndicated loan agreements and other

multi-creditor banking facilities<

(g) insurance policies and the payment of

proceeds thereunder<

(h) timeshare and multi-property structures, and

(i) such other commercial transactions as

may be prescribed in a Notice issued by the

Minister<”<

(viii) for the definition of “the Convention” there shall

be substituted the following new definition>-

“ “the Convention” means the Hague Convention

on the law applicable to trusts and on their recognition,

which was adopted by the Hague Conference on Private

International Law on the 20 October 1984, and which

came into force on the 1 January 1992 set out in all

material parts in the Schedule to this Act<”<

(ix)

immediately after the definition of “the

Convention” the following new definition shall be inserted>

“ “corporate trustee” means a trustee which is a

legal person wherever incorporated<”<

(x)

for the definition of “the Court” there shall be

substituted the following new definition>

“ “Court” means the Civil Court in its voluntary

jurisdiction unless otherwise indicated or unless the

context refers to any court seized of a matter in which

case it is the court where the matter arises<”<

(xi) the definition of “immovable property situated in

Malta” shall be deleted<

(xii) immediately after the definition of “foreign trust”

the following new definition shall be inserted>

“ “Malta’s international commitments” means

Malta’s commitments, responsibilities and obligations

arising out of membership of, or affiliation to, or

relationship with, any international, global or regional

organisations or grouping of countries or out of any

treaty, convention or other international agreement,

however called, whether bilateral or multilateral, to

which Malta is a party<”<

(xiii) immediately after the definition of “Malta’s

international commitments” the following new definition shall

be inserted>

“ “Maltese trust” means a trust whose proper law

is the law of Malta<”<

(xiv) the definition of “nominee company” shall be

deleted<

(xv) immediately after the definition of “Minister” the

following new definition shall be inserted>

“ “operating in Malta” means the existence of an

office, branch, or other centre of professional or

commercial activities of a regular nature in Malta and

does not include one or more unconnected and sporadic

acts<”<”

(xvi)

the definition of “qualified person” shall be

deleted<

(xvii) immediately after the definition of “property”

there shall be inserted the following new definition>-

“ “recognised investment exchange” shall have the

same meaning assigned to it by the Financial Markets

Act<”<

(xviii) immediately after the definition of “recognised

investment exchange” there shall be inserted the following

new definition>-

“ “remuneration” means any compensation or

reward for acting as a trustee to be paid out of trust

property in accordance with the terms of trust, or

otherwise, other than the reimbursement of expenses of

the trustee or the indemnification in favour of the trustee

for expenses, liabilities and other claims<”<

(xix) for the definition of “resident in Malta” there shall

be substituted the following new definition>

“ “resident in Malta” shall mean, in case of an

individual, a person whose habitual residence is in Malta

and in case of a company, a company registered in

Malta<”<

(xx) immediately after the definition of “settlor” the

following new definition shall be inserted>

“ “terms of a trust” means the written or oral terms

of a trust, expressed or implied, and any other terms made

applicable by the proper law<”<

(xxi) for the definition of “trustee” there shall be

substituted the following new definition>-

“ “trustee” in relation to property, means the person

or persons holding or in whom the property is vested on

terms of trust in accordance with the provisions of this

Act or is otherwise deemed to be a trustee under this Act<”<

(xxii) in the definition of “unilateral declaration of

trust” for the words “subarticle (2) of article 7” there shall be

substituted the words “subarticle (3) of article 7”<

(xxiii) immediately after the definition of “unilateral

declaration of trust” the following new definition shall be inserted>

“ “unit trust” means any trust established for the

purpose of, or having the effect, or providing, for

persons having funds available for investment,

facilities for the participation by them as beneficiaries

under the trust, in any profits or income arising from

the acquisition, holding, management or disposal of

any property whatsoever, being a collective

investment scheme as defined in the Investment

Services Act, 1994.”<

(b) subarticle (4) thereof shall be deleted< and

(c) subarticle (5) thereof shall be re-numbered as subarticle (4).

Article 3 of the principal Act shall be amended as follows>-

(a)

subarticle (1) shall be substituted by the following>

“(1) A trust exists where a person (called a trustee)

holds, as owner or has vested in him property under an

obligation to deal with that property for the benefit of persons

(called the beneficiaries), whether or not yet ascertained or in

existence, which is not for the benefit only of the trustee, or

for a charitable purpose, or for both such benefit and purpose

aforesaid.”< and

(b) subarticle (2) shall be substituted by the following new

subarticle (2) >

“(2) The trust property shall constitute a separate fund

owned by the trustee, distinct and separate from the personal

property of the trustee and from other property held by the

trustee under any other trust.”<

(c) immediately after subarticle (3) the following new

subarticles (4) to (6) shall be inserted<

“(4) The holding of property under trusts shall have the

following legal effects>

(a) that personal creditors of the trustee shall have

no recourse against the trust property<

(b) that the trust property shall not form part of

the trustee’s personal estate upon his insolvency or

bankruptcy< and

(c) that the trust property shall not form part of

the matrimonial property of the trustee or his spouse nor

part of the trustee’s estate upon his death.

(5) A trustee shall be entitled to appear or act in his

capacity as trustee before any court, any notary or any person

acting in an official capacity. Where the trustee desires to

register property, movable or immovable, or documents of title

to them, he shall be entitled to do so in his capacity as trustee

or in such other way that the existence of the trust is disclosed.

(6) Trusts create fiduciary obligations upon the trustee

in favour of the beneficiary of the trusts. The settlor of trusts

shall have no rights in relation to trust property except as

provided by this Act.”.

Article 5 of the principal Act shall be amended as follows>-

Amendment of

article 5 of the

(a) in subarticle (2) by the deletion of the words “the

principal Act.

Convention” and the insertion of the words “this Act” in their stead<

and

(b) in subarticle (3) by the deletion of the words “from the

law of Malta”.

Immediately after article 5 of the principal Act, there shall be Addition of new

article 5A to the

inserted a new article 5A as follows>-

principal Act.

“Applicability

5A. (1) The provisions of articles 1 to 12, 14, 15,

Convention. 16 (the first paragraph only), 17, 18 and 22 (the first paragraph

only) of the Convention as set out in the Schedule to this Act

shall have the force of law in Malta.

(2) Those provisions shall, so far as applicable,

have effect not only in relation to the trusts described in

article 2 and 3 of the Convention but also in relation to

any other trusts of property arising under the law of

another country.

(3) In Article 17 of the Convention, the reference

to a State includes a reference to any country or territory

(whether or not a party to the Convention) which has its

own system of law.

(4) Article 22 of the Convention shall not be

construed as affecting the law to be applied in relation

to anything done or omitted before the coming into force

of the Recognition of Trusts Act, 1994.

(5) Nothing in the Convention shall have any effect

on the interpretation of the laws of Malta relating to fiscal

matters.”.

Article 6 of the principal Act shall be deleted and substituted

by the following new articles 6, 6A and 6B>

6. (1) When the proper law of a trust is the law of Malta

as the chosen applicable law of the trust or as determined

in accordance with Article 7 of the Convention,

notwithstanding the provisions of any other law, the

validity of the trust, its construction, its effects and the

administration of the trust shall be governed by this Act

and other provisions of Maltese law on trusts.

(2) When the proper law of a trust is a foreign

law as the chosen applicable law of the trust or as

determined in accordance with Article 7 of the

Convention, notwithstanding the provisions of any other

law, the validity of the trust, its construction, its effects

and the administration of the trust shall be governed by

such foreign law and shall be recognised and given effect

to in Malta in accordance with the Convention and this

Act.

(3) The administration of a trust may be regulated

by a law different from the proper law of the trust.

(4) Trusts created or recognised in accordance

with this Act are not prohibited by articles 331, 757 to

761 and 1776 of the Civil Code.

(5) Article 586 of the Civil Code shall not affect

any term of a trust because it relates to the inheritance of

the settlor or because a disposition relating to property

under trusts is to take effect after the death of the settlor.

(6) Subject to the provisions of article 11 and

subarticle (7) of article 21 of this Act, when a commercial

transaction includes the appointment of a trustee to hold

property under trusts in relation to such transaction, the

trust shall operate in accordance with the express terms

of the trust instrument.

6A. (1) Subject to the provisions of subarticle (2) of

this article, in the case of a trust governed by Maltese law,

where the law of Malta contains provisions with regard to the

following matters>-

(i) the protection of minors or incapable

parties<

(ii) the personal and proprietary effects of

marriage<

(iii) succession rights, testate and intestate,

especially the indefeasible shares of spouses,

ascendants and descendants<

(iv) the transfer of title to property and security

interests in property<

(v) the protection of creditors in matters of

insolvency<

(vi) the protection, in other respects, of third

parties acting in good faith<

which cannot be derogated from by voluntary act, such laws

shall prevail over the terms of the trust unless otherwise

expressly provided in this Act or in other provisions of

applicable law relating to trusts and related matters.

(2) To the extent that there exist rules of mandatory

application the courts shall apply such mandatory rules subject

to the provisions of article 6B.

(3) When a trust is governed by Maltese law and

has no connection to Malta by reason of the domicile of the

settlor at the time of settlement of the property on trust or the

situs of the property, when immovable, the trust shall be

governed by the provisions of this Act except that the

provisions of subarticle (1) above shall not apply in any

manner. In such cases no regard shall be had to>–

(i) the domicile, habitual residence,

registration, authorisation or place of business in

Malta of the trustee or any protector or any person

rendering administration, accounting or other

services to the trustee, or

(ii) the fact that the proper law of the trust is

Maltese Law< or

(iii) the situs of property in Malta, when

movable< or

(iv) the place of execution of the deed of trust,

any documents relating to the trusts or the trust

property or other transaction documents is Malta.

(4) In the case of a foreign trust, the provisions

of subarticle (1) of this article shall only apply to such trust

when the settlor is domiciled in Malta at the time of creation

of the trust, subject always to the rules stated in article 6B of

this Act.

(5) In the case of a foreign trust, when the settlor

of such a trust is not domiciled in Malta at the time of the

creation of the trust, the provisions of this Act shall apply

only in so far as they regulate the recognition or otherwise in

Malta of the effects of such trust.

(6) To the extent that there exist rules of

mandatory application in the law applicable in the

circumstances in terms of Maltese private international law,

the courts of Malta may apply such mandatory rules subject

to the provisions of article 6B of this Act.

(7) When a court is requested to recognise a

foreign judgement which enforces any rules of mandatory

application as referred to in subarticle (6), the court may

accede to such request subject to the provisions of article 6B

of this Act.

6B. (1) In order to ensure that the provisions of

applicable law which cannot be derogated from by voluntary

act are applied in a manner which preserves the trust

relationship as far as possible, the following rules shall apply>-

(a) the application of the mandatory rules shall

not produce the failure or invalidity of the trust, and

where possible, the trust shall continue under the same

terms in relation to property which is unaffected by such

mandatory laws. Subject to any order of the court, the

affected property shall be held by the trustee in trust for

the settlor absolutely, or if he is dead, for his heirs<

(b) the trustee shall be empowered to -

(i) vary the terms of the trust in so far as relates

to the nature or the extent of benefit, or

(ii) do such acts as are necessary and legally

permissible,

so that the beneficiary derives the benefits in accordance with

the intentions expressed by the settlor in the trust instrument

in a manner compatible with the mandatory rules and any

property which becomes free from trusts for any reason shall

be held by the trustee in trust for the settlor absolutely, or if

he is dead, for his heirs<

(c) for the purposes of resolving conflicts between

the trust relationship and any mandatory provisions and

to enable the continuance of the trust as specified in

paragraphs (a) and (b) above, the terms of the trust,

where silent, shall be deemed to include>-

(i) the power, without any obligation to do so,

of the trustee to reduce the trust assets and return

all or part of them to the settlor or the estate of the

settlor so as to achieve compliance with such

provisions of law<

(ii) the power of the trustee to enter into

arbitration and mediation agreements and to reach

a compromise to disputes and claims by third

parties< and

(iii) the power to seek directions from the

Court on such matters<

such powers being exercisable notwithstanding any

contrary provisions of the trust and, provided the trustee

acts honestly, in good faith and reasonably, such acts

shall not constitute a breach of trust.

(d) the property of the settlor which is not

settled in trust should first be utilised, to the extent

possible, to meet the claims of any person seeking to

invalidate or reduce a trust<

(e) notwithstanding any other applicable law,

the trustee may meet a valid claim being made against

the trust property, whether voluntarily or as a result of a

court direction, order or judgement, by a payment of

value in money and shall not be obliged to return property

settled in trust in kind<

(f) any person who succeeds in reducing the

property under trusts or obtains a court order to invalidate

a trust in part or who enjoys the benefits of an

arrangement with the trustee as provided in paragraph

(c) above, shall forfeit the benefits under the trusts, unless

the terms of the trust expressly state otherwise or the

trustee considers it unreasonable in the circumstances

and obtains the consent of the Court to maintain in force

trusts in favour of such person subject to such conditions

as the Court may consider appropriate<

(g) in any event and notwithstanding any

provision of law, a trustee shall not be subject to an

obligation to pay or return more than the trust property

held by him under trust, after deducting any fees and

costs, and he shall not be subject to any obligation to

account for any distributions made by him in good faith

prior to having written notice of any claim.”.

Article 7 of the principal Act shall be deleted and substituted

by a new article as follows>-

7. (1) Within the meaning of article 3 of this Act, a

trust may come into existence in any manner.

(2) Without prejudice to the generality of subarticle

(1), a trust may come into existence unilaterally or

otherwise by oral declaration, or by an instrument in

writing including by a will, by operation of law or by a

judicial decision>

Provided that where assets are held, acquired or

received by a person for another on the basis of oral

arrangements of a fiduciary nature, express or implied,

there shall be presumed to be a mandate regulated by

Title XVIII of Book Second of the Civil Code or a deposit

regulated by Title XIX of Book Second of the Civil Code,

as the case may be, unless there is evidence of an

intention to create an oral trust.

(3) A unilateral declaration of trust is a declaration

in writing made by a trustee stating that it is the trustee

of a trust, containing all the terms of the trust as well as

the names or the information enabling the identification

of all the beneficiaries.

(4) A unit trust shall be created by a written instrument.”.

Article 8 of the principal Act shall be deleted and Substitution of

article 8 of the

substituted by a new article as follows>-

principal Act.

8. (1) The Courts of Malta shall have jurisdiction

where>-

(a)

the trust is a Maltese trust< or

(b) the trustee is resident in Malta or is a trustee

authorised by the Authority, or is otherwise constituted

in terms of Maltese law< or

(c)

any trust property is situated in Malta< or

(d) administration of any trust property is carried

on in Malta.

(2) Notwithstanding the provisions of the Code

of Organization and Civil Procedure, when the trust instrument

contains a provision granting jurisdiction to the courts of the

country the law of which expressly governs the trust, the

Courts in Malta shall, on demand of any party to the

proceedings, provided it is made in limine litis, stay

proceedings which may be instituted in Malta in favour of

the chosen forum>

Provided that the court may in any case issue such

interim orders for the protection of any interested party as it

considers appropriate, and provided further that the court shall

enjoy a discretion on whether to stay the proceedings if the

trust property consists of immovable property in Malta or the

settlor or the beneficiaries are domiciled and resident in Malta.

(3) Subject to the above, the provisions of Sub-title

III of Title II of Book Third of the Code of Organization and

Civil Procedure (“Of Pleas to the Jurisdiction”) shall apply.”.

Article 9 of the principal Act shall be deleted and substituted

by the following new article 9>-

9. (1) A beneficiary has an entitlement, called a

Beneficiaries

beneficial interest, in or to the trust property, as the case may

be. The beneficiary may enjoy the beneficial interest subject

to the terms of the trust and the provisions of this Act and any

other provisions of law applicable to trusts.

(2) Rights of a beneficiary are personal to him

and, subject to any applicable laws and only as stated in the

terms of the trust, creditors, spouses, heirs or legatees of the

beneficiary may have rights only to the extent of the

beneficiary’s entitlements under the trusts and have no other

rights in relation to the trust property or the trustee.

(3) The interest of a beneficiary under a trust shall

be deemed to be movable property, even if the trust property

includes immovable property.

(4) A person shall not be entitled to benefit under

a trust unless he is>–

(a)

identifiable by name< or

(b) ascertainable by reference to a class or

to a relationship to some person, whether or not

living at the time which under the terms of the trust

is the time by reference to which members of a class

are to be determined<

and if there are no beneficiaries identifiable or ascertainable

as aforesaid the trust shall, unless the purpose of the trust is a

charitable purpose, fail.

(5) Persons who are not yet conceived at the time

of the settlement of property under trusts may be named as

beneficiaries or form part of a class of beneficiaries but their

rights arise only once they are born viable.

(6) A settlor of a trust may also be a beneficiary

under the trust.

(7) The terms of the trust may provide for the

addition of a person as a beneficiary, the exclusion of a

beneficiary from benefit, or the imposition on a beneficiary

of an obligation as a condition for benefit.

(8) When the trustee is granted the power to add

a person as a beneficiary such power shall be valid on

condition that such person is identifiable by name or forms

part of a class of persons the members of which are reasonably

individually identifiable, such identification to be given either

in the trust instrument or in any other written instrument,

signed by the settlor, whether binding or not on the trustee.

(9) A person who may be added as a beneficiary in

terms of a power granted to the trustee shall not enjoy any

rights in relation to the trust property or against the trustee

and shall not be considered a beneficiary in any manner until

appointed as a beneficiary by the trustee.

(10) It shall be lawful for a trustee to be granted the

discretion as to which beneficiaries are to benefit, the quantity

of any benefit, at what time and in what manner beneficiaries

are to benefit and such other powers relating to the

appointment, application or advancement of trust property.

(11) A beneficiary in whose favour a discretion to

appoint or advance property may be exercised shall have no

rights in or to specific trust property until such time as such

discretion is exercised by the appointment, application or

advancement of such trust property in favour of such

beneficiary>

Provided that nothing in this subarticle shall be construed

as excluding the duty of the trustee to properly and fairly

consider all such beneficiaries in the exercise of his discretion.

(12) A beneficiary may, by instrument in writing,

disclaim his whole interest and such a disclaimer shall be

irrevocable.

(13) Subject to the terms of the trust, a beneficiary

may disclaim part of his interest, whether or not he has

received some benefit from his interest< in any such case, but

subject to the terms of the trust, a disclaimer may, by the

instrument by which the interest is disclaimed, be made

revocable, and shall then be capable of revocation in the

manner and under the circumstances therein mentioned or

referred to.

(14) Subject to the terms of the trust, a beneficiary

may, by instrument in writing, sell, charge, transfer or

otherwise deal with his interest in any manner.

(15) The provisions of this article shall apply to

testamentary trusts notwithstanding the provisions of articles

688, 693 and 695 and any other provisions of the Civil Code.”.

Article 10 of the principal Act shall be deleted and substituted

by the following new article>-

10. (1) Subject to the terms of the trust, a trustee may

accept the settlement of any additional property under the

same terms of the trust.

(2) The trust property shall be such property as is

settled in trust by the settlor, that subsequently added, all fruits

therefrom and property which represents the original or added

property.”.

Article 11 of the principal Act shall be amended as follows >-

(a) for the marginal note thereof, there shall be substituted

the following “Failure of a trust.”<

(b) in subarticle (1) for the words “be invalid and

unenforceable in Malta” there shall be substituted the word “fail”<

(c) by the deletion of subarticle (2) and its substitution by a

new subarticle (2) as follows>-

“(2) Trusts shall fail if any court declares that their

purpose or the terms of trust are not possible, or illegal,

immoral or contrary to public policy, or otherwise tainted by

error, fraud or violence, or any other reason which invalidates

legal acts according to the laws of Malta.”<

(d) by the deletion of subarticle (3) and its substitution by a

new subarticle as follows>-

“(3) The Court may declare the failure of all or of only

one or more purposes or terms of the trust and shall have the

power to direct that the purposes or terms which can be

properly separated from the failed purposes or terms continue

to be valid and enforceable subject to any directive it may

give.”<

(e) Immediately after subarticle (5) there shall be added a

new subarticle (6) as follows>-

“(6) Property as to which a trust has wholly or partially

failed shall, subject to any order of any court or a direction

issued in terms of article 38C, be held by the trustee in trust

for the settlor absolutely, or if he is dead, for his heirs.”.

Subarticle (2) of article 12 of the principal Act shall be Amendment of

article 12 of the

amended by the addition of “or to a unit trust” after the words “for a principal Act.

charitable purpose”.

Article 13 of the principal Act shall be amended as follows>- Amendment

article 13 of the

principal Act.

(a)

the current article should be re-numbered as subarticle

(1)<

(b) in sub-paragraph (c) of subarticle (1) as renumbered,

the words “of his creditors.” shall be substituted by the words “of

his creditors< or”<

(c) immediately following sub-paragraph (c) there shall be

added a new sub-paragraph (d) as follows >-

“(d) not liable to attachment under a garnishee order

issued against the trustee or to termination without the prior

consent of the Court, when the interest is expressed to be for

the maintenance of the beneficiary or as a pension.”< and

(d) immediately after subarticle (1) as re-numbered there shall

be added a new subarticle (2) as follows >

“(2) In the case of a testamentary trust and where the

benefit to the beneficiary consists in an annuity or pension or

the use and enjoyment of property and the enjoyment of fruits

therefrom, the terms of the trust may make the interests of

the beneficiary>-

(a)

subject to restriction on alienation or dealing<

(b) not liable to attachment under a garnishee

order served on the trustee as garnishee< or

(c) not liable to termination without the prior

consent of the Court.”.

Immediately after subarticle (3) of article 15 of the

principal Act there shall be added new subarticles (4) and (5) as

follows>-

“(4) Where trusts have been settled by more than one

settlor and are expressed to be revocable, such trusts may only be

revoked with the express consent of all settlors.

(5) Unless the terms of a trust expressly provide that the

trust is revocable or capable of variation, the settlor may not revoke

or amend the trust instrument.”.

The marginal note to article 16 of the principal Act shall

be substituted by the following>-

“Lapse of interest or termination.”.

Article 18 of the principal Act shall be amended as follows>-

(a) in subarticle (1) thereof, after the words “as may be

so provided.” there shall be added the following additional

paragraph>-

“The fact that there may not be a trustee in office at

any time shall not operate as a cause of invalidity or

termination of any trusts and in such cases the matter shall be

determined by the terms of the trust and the provisions of this

article.”<

(b) subarticle (2) shall be substituted by the following

new subarticle (2) as follows>-

“(2) A trustee may be a natural person provided he

is of full age and legal capacity and not under any legal

impediment to so act. A trustee may also be a juridical person

the objects of which include acting as a trustee.”< and

(c) immediately after subarticle (6) there shall be added

the following new subarticle (7)>-

“(7) In the case of death of a trustee, his heirs or

testamentary executor shall be bound to immediately transfer

all trust property to a successor trustee appointed in terms of

the trust instrument or by the Court. In the case of the

insolvency, dissolution or winding up of a corporate trustee,

such obligation shall be performed by any person having

authority to bind the corporate trustee being, a director,

liquidator, provisional administrator or similar functionary

and this irrespective of any proceedings or formalities

applicable upon such events. Until such time as such

obligation is performed, all persons in control of trust property

shall be obliged to preserve the trust assets and shall be bound

by fiduciary obligations towards the beneficiaries.”.

Article 19 of the principal Act shall be amended as follows>- Amendment of

article 19 of the

principal Act.

(a) subarticle (1) shall be deleted and substituted by the

following>-

“(1) No one is obliged to accept an appointment as

trustee, but if any person who is so appointed does any act or

thing in relation to the trust property consistent with the status

of a trustee of that property, such person shall be deemed to

have accepted the appointment as trustee.”< and

(b) in subarticle (2) for the words “nominee company

which” there shall be substituted the words “trustee who”.

Article 20 of the principal Act shall be amended as follows>- Amendment of

article 20 of the

principal Act.

(a) subarticle (1) shall be deleted and substituted by the

following>-

“(1) Subject to the provisions of subarticle (2) of this

article, a trustee may resign as trustee by notice in writing to

his co-trustees and in the case of there being no other trustee,

to the beneficiaries or, if impracticable, to at least one

beneficiary, or if there are none to whom notice can be given,

to the settlor or to the trustee’s duly appointed successor and

the resignation shall take effect on delivery of the aforesaid

notice.”< and

(b) paragraph (c) of subarticle (3) shall be deleted and

substituted by the following>-

“(c) steps are taken for the winding up of, or declaration

of bankruptcy, of the person acting as trustee.”.

Article 21 of the principal Act shall be amended as follows>-

(a) by the substitution of subarticle (2) with the following >-

“(2) Subject to the provisions of this Act, trustees shall

carry out and administer the trust according to its terms< and,

subject as aforesaid, the trustees shall ensure that the trust

property is vested in them or is under their control and shall,

so far as reasonable and subject to the terms of the trust,

safeguard the trust property from loss or damage>

Provided that the granting of security by assignment or

pledge as authorised by the terms of the trust is permitted>

Provided further that the transfer by the trustee of trust

property to a legal entity wholly owned or controlled, directly

or indirectly, by the trustee or to another trust of which he is

the sole trustee or to another trustee under trusts for the sole

benefit of the trustee, shall be permitted and in such case the

duties and liabilities of the trustee under this Act or the deed

of trust shall not be diminished or otherwise affected in any

manner whatsoever.”<

(b) paragraph (c) of subarticle (3) shall be substituted by

the following>

“(c) on his own account, with a person related to him by

affinity or consanguinity in the direct line or up to the third degree

in the collateral line or with a partner in any partnership, enter

into any transaction related to trust property.”<

(c)

subarticle (4) shall be substituted by the following>

“(4) Trustees shall keep accurate accounts and

records of their trusteeship and shall, upon a request by any

beneficiary, disclose such accounts and records to such

beneficiary and shall, subject to the terms of the trust, provide

a copy of such accounts within a reasonable time of a request>

Provided that it shall be lawful for a beneficiary to

suspend such rights in favour of an independent third party in

cases where the beneficiary is required to do so by any

agreement or by law as a result of any existing or potential

conflict of interest, and this for such time as the said conflict

of interest subsists and under such conditions as may be agreed

or are otherwise applicable.”< and

(d) subarticle (5) shall be amended by the substitution of

the words “identifiable therefrom.” with “identifiable therefrom>”

and the insertion of a new proviso as follows>

“Provided that trustees may, if expressly permitted by

the terms of the trust, or in any case where the trust property

consists of fungible things, place and keep trust property in a

common pool of identical assets or in a clients’ or common

account.”<

(e) immediately after subarticle (5) there shall be added new

subarticles (6) and (7) as follows>-

“(6) Trustees shall not enjoy any benefits under any

trust of which they are the sole trustee without the prior

authority of>-

(a) the Authority, in case of a trustee authorised

in terms of article 43 or not required to be authorised in

terms of subarticle (6) of article 43 of this Act< or

(b) the Court, in any other case>

Provided that in case of an express fixed trust in favour

of the trustee, only prior notification in writing to the Authority

shall be required>

Provided further that a transfer of property by the trustee

to another trust of which he is the sole trustee or sole

beneficiary, shall not be deemed to be a benefit under this

subarticle>

Provided further that remuneration for acting as a trustee

or indemnification for expenses, liabilities and other claims

shall not be treated as a benefit under a trust>

Provided further that this subarticle shall not apply to a

trustee holding property in relation to a commercial

transaction.

(7) Notwithstanding the provisions of this Act and

other provisions which cannot be derogated from by voluntary

act, when a commercial transaction includes the appointment

of a trustee to hold property in relation to such transaction,

the duties and liabilities of trustees as stated in this Act may

be varied by the terms of the trust and shall be regulated

exclusively by the express terms of the trust or any applicable

legislation>

Provided that nothing in this subarticle shall permit a

trustee to be exonerated from the effects of, or be indemnified

for, his own fraud, wilful misconduct or gross negligence.”.

Article 22 of the principal Act shall be amended as follows>-

(a) the current provision shall be re-numbered as subarticle (1)<

(b) the words “to be recorded in writing>” shall be amended

to read “to be recorded in writing.”<

(c)

the proviso to subarticle (1) shall be deleted< and

(d) immediately after new subarticle (1) as renumbered there

shall be inserted a new subarticle (2) as follows>-

“(2) Trust property shall at all times vest in the co-trustees

in possession between them pro indiviso.”.

Article 29 of the principal Act shall be amended as follows>

(a)

subarticles (2) and (3) shall be deleted<

(b) subarticle (1) shall be renumbered as subarticle (2)<

(c) subarticle (2) as renumbered shall be amended as follows>-

(i) the words “of such duty>” shall be substituted by the

words “of such duty.”< and

(ii) sub-paragraph (d) and the proviso thereto shall be deleted<

(d) a new subarticle (1) shall be inserted immediately before

subarticle (2) as renumbered>-

“(1) A trustee shall, so far as is reasonable and within a

reasonable time of receiving a request in writing to that effect,

provide full and accurate information as to the state and

amount of the trust property, including the accounts of the

trust, and subject to subarticle (2) hereof, the conduct of the

trust administration to>-

(a)

the Court<

(b) subject to the terms of the trust, the settlor<

(c)

the protector of the trust<

(d) subject to the terms of the trust, any

beneficiary of the trust who is of full age and capacity,

or if a minor, to his lawful guardian or representative<

(e) subject to the terms of the trust, any charity

referred to by name for the benefit of which the trust

was established< and

(f) in case of a trust established for a charitable

purpose, the Attorney General or the relevant authority

under applicable law.”<

(e) immediately after subarticle (2) as re-numbered, there

shall be added the following new subarticles (3) to (12)>-

“ (3) Unless the terms of the trusts expressly determine

the time when and the method how beneficiaries are to be

informed of their entitlement under a trust, the trustee shall

be obliged to inform any beneficiary of his entitlement, in

writing, within a reasonable time of his accepting to act.

(4) When the terms of the trust grant a discretion in

terms of subarticle (10) of article 9 of the Act, the terms of

the trust may suspend until such time as a discretion is

exercised in their favour the duty of the trustee to inform such

beneficiaries that they may benefit under the trust or that they

form part of a class of beneficiaries which may so benefit.

The terms of the trust may also indicate the time when and

the method of how such beneficiaries are to be informed.

(5) If the trust instrument expressly prohibits

notification of information to beneficiaries or to those persons

that form part of a class from among which beneficiaries may

be appointed, without reference to any point in time,

ascertained or ascertainable, such term shall be construed as

implying a duty of the trustee to inform such beneficiaries

within a reasonable time after the death of the settlor.

(6) Should the trustee consider providing information as

required by the preceding subarticles to be prejudicial to the

beneficiaries of the trust or any of them, the trustee may apply to

the Court and the Court may release the trustee from the obligation

to inform under such conditions as it may consider appropriate.

(7) The duty to inform as above provided shall not arise

if the trustee is in possession of information which reasonably

demonstrates that those entitled to such information have

already been informed or are already aware of such

information.

(8) In the case of a trust established for charitable

purposes, the duty to inform either unnamed beneficiaries

forming part of a class or persons forming part of a class of

persons who may be appointed as beneficiaries in terms of a

power of the trustee, shall not arise notwithstanding the terms

of the trust unless, in case of the unnamed beneficiaries the

trustee establishes that there exist less than ten beneficiaries

appertaining to such class of beneficiaries. Furthermore, in

the absence of any indication to the contrary, the unnamed

beneficiaries or persons who may be added as beneficiaries

in terms of a power shall be assumed to be persons who carry

on relevant charitable activities principally in Malta.

(9) The trustee shall carry out the duty to inform to

the best of his abilities and at the expense of the trust and in

the event it appears to the trustee that such exercise will be

too costly or burdensome, the trustee may apply to the Court

for directions and the Court shall be empowered to release

the trustee from such duty under such conditions as it considers

appropriate.

(10) The suspension of the duty of a trustee to inform

beneficiaries as provided in this article shall not reduce the

rights of beneficiaries or the duties and liability of the trustee

towards such beneficiaries in terms of this Act.

(11) Persons who may be added as beneficiaries in

terms of a power referred to in subarticle (7) of article 9 of

this Act shall have no right of information until such time as

they are appointed beneficiaries by the trustee pursuant to

such power.

(12) In the case of a trust to hold property in relation

to a commercial transaction, the duties of the trustee relating

to the provision of information and the rights of beneficiaries

to such information may be determined by the terms of trust,

in which case the preceding subarticles of this article shall

not apply.”< and

(f) the marginal note to the article shall be deleted and shall

be substituted by the following new marginal note>-

“Duty of trustee to provide information.”.

Article 37 of the principal Act shall be amended as follows >- Amendment

article 37 of the

principal Act.

(a) paragraph (b) of subarticle (2) shall be deleted and

substituted by a new paragraph (b) as follows>-

“(b) make any declaration as to the validity or

enforcement of a trust, the existence of any resulting or

constructive trust, breach of trust or failure of a trust<”

(b) in subarticle (3) thereof for the words “Attorney

General.” there shall be substituted the words “Attorney General

or by any other person having a lawful interest>”< and

(c) immediately after subarticle (3) thereof there shall be

inserted the following new proviso>

“Provided that in cases where the duty to inform a

beneficiary of his interest in a trust has been suspended in

terms of article 29 of this Act and until such suspension is in

force, and in the absence of a protector of a trust, the settlor

of a trust may also make an application to the Court in terms

of this subarticle. Whilst dealing with such application the

Court may determine whether the suspension of rights to

information as aforesaid be maintained in force in full or in

part for all or some of the beneficiaries.”.

Immediately after article 37 of the principal Act there Insertion of new

article 37A of the

shall be inserted the following new article 37A>

principal Act.

“37A. (1) Where any court makes an order on the

demand of a beneficiary who has been prejudiced as a result

of bad faith on the part of the trustee in the operation of a

trust relationship or in relation to trust property, the court

shall have the power to restore the position to what it was had

the action complained of not been taken or otherwise to protect

his interests.

(2) When a person domiciled in Malta is obliged

to pay maintenance in terms of the Civil Code and is a

beneficiary under a discretionary trust, the court shall have

such powers as are necessary to review the exercise of

discretion by the trustee and give due consideration to the

rights of persons entitled to claim maintenance.”.

Article 38 of the principal Act shall be amended as Amendment of

article 38 of the

follows>-

principal Act.

(a) subarticle (1) thereof shall be substituted by the following

new subarticle (1) as follows>-

“(1) There shall be no appeal from any decree, order,

declaration or direction of the Civil Court in its voluntary

jurisdiction given under the provisions of this Act.”<

(b) subarticle (2) thereof shall be re-numbered as subarticle (6)<

(c) immediately after subarticle (1) thereof there shall be

inserted the following new subarticles (2) to (5)>-

“(2) Such decrees, orders, declarations or directions

shall remain in force until they are substituted or varied by

the Civil Court in either its voluntary or contentious

jurisdiction.

(3) During the hearing of an application before the

Court the trustee or applicant shall at the earliest opportunity

disclose to the Court all material facts known to him which

may be relevant to the application including the existence of

any “res judicata” or pending judicial action given or

commenced in Malta or before a foreign court.

(4) All applications to the Court shall be notified to

the trustee and the applicant shall furthermore notify all

persons who he considers having an interest in the subject

matter of the application. The Court shall have the power to

order notification to all other persons who it considers may

have an interest as it deems fit.

(5) The Court shall hear the trustee and any interested

parties as it considers appropriate.”.

(d) the marginal note to the article shall be substituted by

the following new marginal note>-

“Applications, enforcement and hearings.”.

Immediately after article 38 of the principal Act there shall

be inserted the following new articles 38A, 38B and 38C>-

(1) All proceedings under these sections shall

be held in camera and only the parties to the proceedings, the

trustees, the beneficiaries, if they prove they have an interest

in the proceedings to the satisfaction of the Court, and their

respective advocates and legal procurators shall be allowed

in court during the hearings.

(2) Any decree or judgement of the Court shall

preserve the confidentiality of the proceedings and shall only

reveal such facts as may be necessary to make the same

intelligible and enforceable by the parties and the trustees.

(3) All applications, responses, affidavits,

opinions, statements and other documents or evidence shall

be kept by the Registrar of the Court in a confidential manner

and no access shall be given thereto except with the written

consent of the Court.

(4) The Court may order the notification of any

order to the depository notary as is referred to in article 43A

of this Act if it considers it appropriate in the circumstances.

The Board established under article 29 of the Code

of Organisation and Civil Procedure may make Rules of Court

concerning applications made under or in terms of this Act.

Without prejudice to any other obligations arising

under any other law, a trustee may apply to the Authority for

directions concerning the manner in which he may or should

act in connection with any matter concerning the trust or its

property when such matter relates to the fulfillment of his

obligations relating to the prevention of money laundering.

Any bona fide communication or disclosure made in terms

of this article shall not be treated as a breach of the duty of

professional secrecy or any other restriction, whether imposed

by statute or otherwise, upon the disclosure of information

and any information disclosed in terms of this Article shall

be used only in connection with investigations of money

laundering.”.

27. Immediately after subarticle (2) of article 40 of the principal Amendment of

article 40 of the

Act there shall be added new subarticles (3) to (6) as follows>-

principal Act.

“(3) A person dealing with a trustee in relation to trust

property need not -

(a)

enquire into the terms of the trust< or

(b) obtain the consent of the beneficiaries or any

other person<

and shall, subject to being in good faith, be entitled to rely on

declarations made by the trustee with regard to any matters

therein stated.

(4) The trustee may furnish to any person a certificate

containing the following information without being in breach of

any confidentiality obligations>-

(a) that the trust exists and the date the trust instrument

was executed<

(b) the identity and address of the current trustee<

(c) that the trustee is duly authorised and empowered

to carry out the relevant transaction and has obtained all

necessary consents, if any<

(d) the revocability or irrevocability of the trust and,

if revocable, that the trust has not been revoked.

(5) When there is more than one trustee, a certificate may be

signed and authenticated by any trustee.

(6) Any trustee who issues any certificate containing any

statement which he knows or ought to know is false shall be guilty

of an offence and shall on conviction be liable to the punishment

of imprisonment for a term not exceeding two years or to a fine

(multa).”.

Article 40A of the principal Act shall be amended as follows>

28. (a) in subarticle (1) thereof, instead of the words “in breach

of trusts.” there shall be substituted the words “in breach of trusts>”<

and

(b) immediately after subarticle (1) of the said article there

shall be added the following new proviso>-

“Provided that an alienation of immovable property

by the trustee as provided by article 958A of the Civil Code

shall not give rise to the rights provided in this article in favour

of any person claiming a right of legitim.”.

29. For article 42, the heading “Registration of Trusts”, articles

43 and 43A following it, the heading “Fiscal and other Exemptions”,

articles 44 and 46A following it, the heading “Nominee Companies”

and articles 47 and 48 following it, of the principal Act there shall be

substituted the following>-

“REGULATION OF TRUSTEES

Persons may carry on the activities as trustees either

in a professional or in a private capacity and, as the case may

be, shall be subject to the provisions of articles 43 and 43A of

this Act.

Requirements

(1) Except as provided in terms of subarticles (6)

Authorisation and (7) of this article, any person, resident or operating in

Malta, or a corporate trustee, who receives property upon trusts

or accepts to act as a trustee or co-trustee of a trust and who>-

(a) receives or is entitled to remuneration for so

acting, or

(b) does so on a regular and habitual basis, or

(c)

holds himself out to be a trustee<

shall require authorisation by the Authority in terms of this

Act irrespective of the proper law of the trusts they hold and

whether or not all or part of the trust property is in Malta>

Provided that in the event of reasonable doubt as to

what constitutes acting as a trustee on a regular and habitual

basis, the matter shall be conclusively determined by the

Authority.

(2) The Authority may issue Rules to establish

when trustees are considered as receiving remuneration, when

activity is done on a regular or habitual basis and when a

person holds himself out as a trustee.

(3) Any person, whether an individual or a

company may apply in writing to the Authority to be

authorised as a trustee and the Authority may grant

authorisation upon being satisfied that the conditions laid

down in this article have been met and such authorisation

may be general or may be restricted to particular specified

activities.

(4) The conditions referred to in the preceding

subarticle are that>-

(i)

in the case an applicant is a company>-

(a) its objects include acting as trustee and

carrying on activities ancillary or incidental thereto, and

does not include objects which are not compatible with

the services of a trustee< and

(b) its actual activities are compatible and

connected with the services of a trustee< and

(c) the directors of the company are not less than

three in number and are individuals who are approved

persons< and

(d) the company has established adequate systems

for maintaining proper records of the identity and

residence of beneficiaries, the dealings and the assets in

connection with trusts and compliance with applicable

law< and

(e) every person who has a direct or indirect

interest in the company, is an approved person< and

(f) the name of the company is not inconsistent

with its trustee activity< and

(g) where the company is not registered in Malta,

that company must be constituted or incorporated in an

approved jurisdiction<

(ii) in the case of an applicant who is an

individual that such individual -

(a)

is resident in Malta or operating in Malta<

(b) is an approved person< and

(c) has established adequate systems for

maintaining proper records of the identity and residence

of beneficiaries, and of the dealings and the assets of

trusts and compliance with applicable law.

(5) A trustee shall notify the Authority of any

change or circumstance which would have a bearing upon

his status as an authorised person and in the case of a corporate

trustee, of any change in its charter, statute, memorandum or

articles of association or other instrument constituting the

company, directors or members, and in case of companies

registered in Malta such changes shall not be registered unless

and until they are so notified to and approved by the Authority.

(6) (a) The following persons shall not be required

to obtain authorisation in terms of this Act to act as a trustee

in the course of carrying on the activities for which they are

licenced>-

(i) a person who is in possession of a valid

licence issued in terms of the Banking Act< or

(ii) a person who is licenced in terms of the

Investment Services Act to hold clients’ monies or assets<

or

(iii) a person who is authorised in terms of the

Insurance Business Act or enrolled in the Brokers List

under the Insurance Brokers and Other Intermediaries

Act to hold clients’ monies or assets< or

(iv) a person with an equivalent licence to (i)

to (iii) issued by the relevant regulatory authority in an

approved jurisdiction.

(b) A person approved by the Malta Maritime

Authority to act as a trustee of a shipping trust or a shipping

foundation as defined in article 84Z of the Merchant Shipping

Act shall not require any further authorisation in terms of this

Act.

(7) Without prejudice to the obligation of any

person to obtain authorisation in terms of any other law which

may be applicable, the provisions of this article and article

43A shall not apply>-

(a) to a person when acting as a trustee under

trusts created for the purpose of holding security in the

form of hypothecs, pledges, assignments, mandates or

otherwise, granted in relation to any financial transaction

for the benefit of lenders or other creditors in such

transaction<

(b) to a person when acting as trustee of any

movable property held as security and for the benefit of

persons whose entitlement is conditional or determinable

in terms of the trust or the contract in relation to which

the holding was created<

(c) to a liquidator, curator in bankruptcy or court

appointed administrator acting in the course of the

liquidation, bankruptcy or administration<

(d) to a person in possession of a warrant to carry

out the profession of an advocate, notary public, legal

procurator or certified public accountant but only if

acting as a trustee is limited to what is necessary and

incidental in the course of carrying out his profession

and does not otherwise hold himself out as a trustee to

the public< provided he shall be obliged to maintain

proper records of clients’ assets for a period of not less

than five years or longer period as established by any

other law governing his profession<

(e) to persons when acting as trustees of a unit

trust which is a collective investment scheme which is

recognised in terms of the Investment Services Act or

which is exempt from licensing in terms of the said Act

and the establishment of which is notified to the

Authority<

(f) to an individual acting as a trustee under

charitable trusts provided he is not remunerated and does

not hold himself out as providing such services<

(g) any person acting as a co-trustee when another

trustee or, if more than one, the majority of the trustees

are authorised in terms of this article<

(h) to companies or other legal entities,

established in an approved jurisdiction, the directors of

which must be approved persons, and which are wholly

owned, including as trustees, and controlled by

authorised trustees in terms of this article and which are

established solely for the purpose of holding trust

property and ancillary acts, the details of which are

notified in writing to the Authority by an authorised

trustee<

(i) to a party to a contract who agrees to receive

or hold property as trustee in the context of or ancillary

to the performance of a contract provided that the trustee

does not otherwise hold himself out as a trustee to the

public and is not remunerated therefor<

(j) to a person holding one or more shares in a

company registered in Malta when such shares do not

have any special voting rights and their individual

nominal value does not exceed one Maltese lira or its

equivalent in any other currency.

(8) A person herein referred to may apply to the

Authority and the Authority shall authorise in terms of this

article>

(i) a person with a licence or authorisation

equivalent to sub-paragraph (i) to (iii) of paragraph (a)

of subarticle (6) issued by the Authority or the relevant

regulatory authority in an approved jurisdiction and who

will be acting as trustee not in the course of its ordinary

business for which they are licensed< or

(ii) a person having a licence or authorisation to

act as a trustee issued by the relevant regulatory authority

in an approved jurisdiction>

Provided such person whether Maltese or foreign notifies

the Authority, in writing, of its intention to act as a trustee in

Malta at least forty-five days prior to commencing activities

in Malta, and who receives a confirmation from the Authority

that it does not object thereto.

A notification under this subarticle shall outline the

proposed activities and shall be accompanied by such

information as may be required by the Authority from time

to time.

To the extent that the Authority lays down any

restrictions or conditions for such activities, on initial response

to a notification or at any other time, such restrictions and

conditions shall come into effect as stated in the response or

by subsequent notice of the Authority.

(9) (a) The holding upon trust of >

(i) securities or interests in or issued by a

Maltese legal entity, other than securities which are listed

on the Malta Stock Exchange or other recognised

investment exchange< or

(ii) immovable property in Malta (hereafter

referred to as “relevant property”) by trustees who are

not authorised shall be permitted only if a person>-

(aa) authorised in terms of sub articles (3)

and (8) of this article, or

(bb) not required to be authorised under

subarticle (6) (a) and (7) (e), (g) and (h) of this

article,

(hereafter referred to as a “qualified person”) is engaged in

writing by the trustee to carry out the compliance functions

referred to in paragraph (b) of this subarticle on an indefinite

basis with specific reference to such relevant property and

such agreement is notified to the Authority prior to any

acquisition of such relevant property taking place and shall

be accompanied by such information as may be required by

the Authority from time to time.

(b) The qualified person shall ensure due

compliance with all fiscal, prevention of money

laundering and other legal obligations in connection with

relevant property and shall notify the Authority in the

event that he resigns, has his engagement terminated or

is otherwise hindered in performing his duties hereunder.

(c) Paragraphs (a) and (b) of this subarticle shall

also apply to the holding of relevant property by a

mandatory for another person.

(d) If at any time there is no qualified person to

carry out the functions as required by this subarticle, the

Court may appoint a qualified person on the application

of the Authority or any interested person.

(e) The Authority may issue rules from time to

time prescribing the form and conditions of such

notification and functions of qualified persons.

(10) No transactions in relation to relevant property,

including assignments of beneficial interests in a trust, shall

take place without the prior written consent of a qualified

person>

Provided that nothing in this section shall imply that a

qualified person is himself a trustee or that he is jointly and

severally liable for the performance of obligations of the

trustee in relation to relevant property or related transactions.

(11) The requirement for a qualified person shall

not apply >-

(a) to the holding of one or more shares in a

company when they do not have any special voting

rights and their individual nominal value does not

exceed one Maltese Liri or its equivalent in any

other foreign currency< or

(b) to the holding by trustees named and

appointed by a will creating the trust in respect of

the initial period of six months from the date of

acceptance by the trustee in respect of the estate of

the testator unless it is necessary to enter into any

transaction in relation to relevant property, other

than the initial transfers or declarations by the

trustee to assume ownership and control of the trust

property, in which case a qualified person shall be

appointed prior thereto.

(12) Without prejudice to the nature of the

legal relationship in any particular case, for the purposes

of this article, any person who>-

(a) acts as a mandatory in the holding of

property for another person< or

(b) acts as an administrator, a trustee,

director or similar functionary, exercising control

over the assets, by whatever name he may be called,

of a private foundation,

shall, not being a person referred to in subarticle

(6) of this article, require authorisation in terms of this

article, irrespective of the extent of his activities, whether

remuneration is payable therefor or whether he holds

himself out as providing such services or not.

For the purposes of this subarticle a “private

foundation” is a foundation established or operating in

Malta for the benefit of a private interest or purpose

which is not charitable.

(13) Nothing in this article shall imply that a

person held to be a trustee under a constructive or resulting

trust or as a result of any statutory provision or judicial

declaration has acted in breach of this Act during any period

prior to his becoming aware of such trusts and in such a case

it shall be a defence against prosecution under this Act to

prove that the said person was unaware of his duties hereunder.

(1) In this article the term “Notarial Law”

Trustees and

means the Notarial Profession and Notarial Archives Act.

(2) An individual who agrees to act as a trustee

because>-

(a) he is related to the settlor, by consanguinity

or affinity in the direct line up to any degree or in the

collateral line up to the fourth degree inclusively, or

(b) he has known the settlor for at least ten years

and, in both cases,

(i) is not remunerated, even indirectly,

except as permitted by any rules issued by the

Authority<

(ii) does not hold himself out as a trustee to

the public, and

(iii) does not act habitually as trustee, in any

case in relation to more than five settlors at any

time,

(hereafter referred to as a “private trustee”) may act as a trustee

without the need for authorisation in terms of the preceding

article, subject to the conditions stated in subarticle (3) of

this article.

(3) A private trustee shall be permitted to act as

trustee under the following conditions which shall apply as

the case may be>

(i) in the case of a testamentary trust, that within

six months of accepting to act as trustee, he shall draw

up an inventory by notarial deed in terms of Part IIIA of

the Notarial Law and shall declare in the deed that the

inventory includes all the property under the trust and

an extract of the will containing all the terms of the said

trust shall be annexed to the said notarial deed<

(ii) in the case of an inter vivos trust, the trust

must be created by a notarial trust deed<

(iii) where property, other than immovable

property, is added to the trust by a settlor or any other

person, in terms of article 10 of this Act or by declaration

of the trustee, such addition shall be recorded by a

notarial trust deed on delivery of the additional property

to the trustee, if practicable, but in any case not later

than 14 working days of receipt of such property by the

trustee. In the case of immovable property the addition

of property shall be carried out by a notarial act, an

authenticated copy of which shall be delivered to the

depository notary for safekeeping and registration with

the trust documents within such time<

(iv) records of meetings with beneficiaries,

advisors or protectors, the exercise of discretion by the

trustee in appointing or removing a beneficiary, in

reducing, distributing or advancing trust property, in the

termination of the trust for any reason, or other material

events shall be rendered in writing and shall, together

with any annual accounts and Court decrees, orders,

declarations or directions which may be issued in relation

to trust property, be delivered to the depositary notary<

(v) in all cases, the trustee shall declare the

facts applicable to himself to show that he does not

require authorisation to act as a trustee in terms of this

Act and is not disqualified in terms of article 53 of this

Act, after the notary has warned him as to the importance

of the truthfulness of such declarations<

(vi) in the case of a trust relating to relevant

property for the purposes of subarticle (9) of article 43

of this Act, the depositary notary shall ascertain that the

provisions of article 43 are observed by the trustee.

(4) Where the trustee is a private trustee, the

notary public who publishes a will containing a testamentary

trust or receives a notarial trust deed inter vivos shall be the

sole depository of all acts referred to in the preceding

subarticle and such notary shall be known as the depository

notary>

Provided that if such notary public is appointed as a

trustee in the deed creating the trust and accepts to so act,

such notary shall ensure that the deed of trust names another

notary public to carry out the functions of the depositary

notary.

(5) Notwithstanding any other law relating to the

profession of notaries public, a notary who receives a will or

notarial trust deed shall not be precluded from being appointed

as the trustee in such deed but if a notary is a trustee he may

not act as the depository notary or the notary keeper>

Provided that should the depositary notary be appointed

trustee subsequent to the creation of a trust, his acceptance to

act shall be conditional on such notary delivering all trust

documents to another depositary notary to the satisfaction of

the Authority and as provided in subarticle (9).

(6) All documents relative to a trust shall be

submitted to the depository notary within 15 days of coming

into existence or of coming into possession of the trustee or

of the date of relevant event to which the document refers, as

the case may be. On receipt of any such document the notary

shall declare in writing on the document the date, time, and

place of receipt. Such declaration shall, until the contrary is

proved, be evidence of its content. All such documents shall

be held for safekeeping and registration in the manner as may

be laid down by the Authority from time to time.

(7) The trust deed and all documents relative to a

trust filed with a depository notary shall be confidential. The

depository notary shall not be obliged to provide information

on the trust deed or any other document relative thereto except

as provided by this Act and with the written consent of the

trustee or upon an order of the Court.

(8) Where in terms of Notarial Law a notary

keeper has been appointed instead of the depository notary,

the notary keeper shall be the depository notary relative to

the trust and a reference to the depository notary in this or

any other law shall be construed accordingly.

(9) The trustee may, by notice in writing to the

notary and to the Authority, substitute the depositary notary

or the notary keeper in his capacity as the depositary notary

and the latter shall deliver to the substitute depositary notary

all documents in his possession in the preceding subarticles

and, in case of public deeds, authenticated copies thereof and

this within 30 days from the date of the receipt of such notice,

unless otherwise ordered not to do so by the Authority. The

substituted notary may request a written receipt and keep

copies of the documents delivered to the appointed depository

notary but shall keep such copies secure and in strict

confidence and shall not provide access to any person other

than the serving depository notary, the trustee or the Authority.

(10) A notary who fails to observe the provisions

of this article shall be guilty of an offence and shall on

conviction be liable to a fine (ammenda) of not less than LM50

and not more than LM100>

Provided that no proceedings shall be instituted where

the notary, upon a notice in writing by the Authority admits

liability to pay such fine at its maximum amount.

(11) When a trust is created in accordance with

the provisions of this article, the trustee shall remain subject

to the requirements set out in relation to the depository notary

until the termination of the trust even if the trustee becomes

authorised or is substituted by a trustee authorised or not

required to be authorised in terms of article 43 of this Act.

(12) When a trust is not created in accordance

with the provisions of this article and a private trustee is

subsequently appointed to office, it shall be a condition to his

acceptance to act that a notarial deed of acceptance be

executed in such manner that the provisions of this article are

observed as far as possible at that stage, reference being made

to the settlor for the purposes of the note of enrollment and a

full inventory, of the trust property being transferred to the

trustee, being attached.

(13) If any person wishes to create a trust and

appoints a trustee other than a private trustee and also wishes

that the provisions of this article apply, such person may

choose to do so by notifying the notary public that it is his

wish that the provisions of this article apply and that the notary

act as depository notary under the provisions of this article.

In such case the notary shall request the trustee to declare, in

lieu of the declaration in sub-paragraph (v) of subarticle (3)

above, that he is authorised, or not required to be authorised,

in terms of article 43 and is aware of his obligations under

this article. In such cases the requirement of article 50 of the

Notarial Law to the effect that the Notary registers a Note of

enrollment relating to the creation of the trust shall not apply

if the settlor expressly exempts him from such duty.

(14) In all cases the Court may exercise the power

to appoint, remove, substitute and give directions to a

depositary notary on the application of the depositary notary,

any interested person or the Authority.

APPLICATION, GRANT, REVOCATION, ETC. OF

AUTHORISATION

An application for authorisation in terms of article

shall

be made in the form and manner required by the

authorisation.

Authority and shall furthermore>-

(a) contain or be accompanied by such

information and particulars, in addition to those required

by this article, as the Authority may require or as may

be prescribed<

(b) be verified in the manner and to the extent

required by the Authority, or as may be prescribed<

(c) contain the address in Malta for service on

the applicant of any notice or other document required

or authorised to be served on him by or under this Act<

(d) be accompanied by such fee as may be

prescribed in respect of the authorisation applied for.

(1) The Authority may grant or refuse to grant

authorisation applied for under this Act.

authorisation.

(2) In granting authorisation the Authority may

subject it to such conditions as it may deem appropriate, and

having granted authorisation it may, from time to time, vary

or revoke any condition so imposed or impose new conditions.

(3) When considering whether to grant or refuse

authorisation the Authority shall, in particular, have regard

to>-

(a) the protection of settlors and beneficiaries< and

(b) the protection of the reputation of Malta taking

into account Malta’s international commitments< and

(c)

the promotion of competition and choice.

(4) Without prejudice to the provisions of

subarticle (8) of article 43, the Authority shall notify any

applicant of its decision whether to grant or refuse to grant

the licence applied for within three months from the receipt

of a complete application made in compliance with the

applicable provisions of this Act.

(5) Any requirement in this Act that a person be

an approved person to carry out certain activities or functions

shall be interpreted as a requirement that, in the case of a

legal entity, any director or officer of such person, and, in the

case of a trust, each one of its trustees, be an approved person

to carry out such activities or functions.

The Authority may at any time cancel or suspend

an authorisation in accordance with the provisions of this Act>-

(a) if it considers that the holder thereof is not

or is no longer an approved person to act as a trustee< or

(b) if it considers that the holder thereof does

not fulfil the requirements of, or has contravened, any

of the provisions of this Act or of any rules or regulations

made thereunder, or has failed to satisfy or comply with

any obligation or condition to which he or the

authorisation is subject by virtue of or under this Act< or

(c) if the Authority has been furnished by or

on behalf of the authorised trustee with information

which is false, inaccurate or misleading< or

(d) if the authorised trustee has not commenced

activities within the term which may be provided for in

the authorisation or has ceased to provide such service<

or

(e) if it considers it desirable to cancel or

suspend the authorisation for the protection of the general

public or the reputation of Malta taking into account

Malta’s international commitments< or

(f) at the request of the authorised trustee< or

(g) in any other circumstances under which the Authority

would have been precluded from issuing an authorisation

under this Act or where it would have been entitled to refuse

the grant of such authorisation.

(1) Where the Authority proposes-

Notification of

(a) to vary any condition to which the

cancellation or

authorisation is subject or to impose a condition

suspension of

thereon< or

authorisation.

(b) to refuse an application for an

authorisation or to cancel or suspend an authorisation,

it shall give the applicant or, as the case may be, the authorised

trustee notice in writing of its intention to do so, setting out

the reasons for the decision it proposes to take.

(2) Every notice given under subarticle (1) of this

article shall state that the recipient of the notice may, within

such reasonable period after the service thereof as may be

stated in the notice, being a period of not less than forty-eight

hours and not longer than thirty days, make representations

in writing to the Authority giving reasons why the proposed

decision should not be taken, and the Authority shall consider

any representation so made before arriving at a final decision.

(3) The Authority shall as soon as practicable

notify its final decision in writing to the applicant or the

authorised trustee, as the case may be.

REGULATORY AND INVESTIGATORY POWERS

(1) Notwithstanding any other provision of this

Act, the Authority may, by notice in writing, require any

person who is or was acting, or who appears to be or to have

been acting as trustee, or who was providing services which

require authorisation according to this Act, and any other

person who appears to be in possession of relevant information

to do all or any of the following>-

(a) to furnish to the Authority, at such time

and place and in such form as it may specify, such

information and documentation as it may require

with respect to any such activities as aforesaid<

(b) to furnish to the Authority any

information or documentation aforesaid verified in

such manner as it may specify<

(c) to attend before the Authority, or before

a person appointed by it, at such time and place as

it may specify, to answer questions and provide

information and documentation with respect to any

such activities as aforesaid.

(2) The Authority may take copies of any

documents furnished or provided under this article.

(3) Where the person required to provide

information or documentation under this article does not have

the relevant information or documentation, he shall disclose

to the Authority where, to the best of his knowledge, that

information or documentation is, and the Authority may

require any person, whether indicated as aforesaid or not, who

appears to it to be in possession of that information or

documentation, to provide it.

(4) A statement made and documentation

provided in pursuance of any requirement under this article

may be used in evidence against the person making the

statement or providing the documentation as well as against

any person to whom they relate.

(5) Except as provided for in article 642(1) of the

Criminal Code and of article 588(1) of the Code of Cap. 377

Organization and Civil Procedure, the provisions of this article Cap. 9

shall apply to all information or documentation

notwithstanding the provisions of the Professional Secrecy Cap. 12

Act.

(6) The power to require the production of

documentation under the provisions of this article shall be

without prejudice to any lien or charge claimed by any person

in relation to such documentation.

(7) Where the Authority has appointed a person

under paragraph (c) of subarticle (1) of this article, such person

shall, for the purposes of carrying out his functions under his

appointment, have all the powers conferred on the Authority

by this article and a requirement made by him shall be deemed

to be and have the same force and effect as a requirement of

the Authority.

Power to issue

(1) Without prejudice to any of the powers

conferred on it by this Act, the Authority may, whenever it

deems it necessary, give, by notice in writing, such directives

as it may deem appropriate in the circumstances< and any

person to whom or to which the notice is given shall obey,

comply with and otherwise give effect to any such directive

within the time and in the manner stated in the directive.

(2) Without prejudice to the generality of the

foregoing provisions of this article, a directive under this

article may>-

(a) require anything to be done or be omitted to

be done, or impose any prohibition, restriction or

limitation, or any other requirement, and confer powers,

with respect to any transaction or other act, or to any

assets, or to any other thing whatsoever<

(b) require that any person having functions of a

trustee be removed or replaced by another person

acceptable to the Authority<

(c) require a trustee to cease operations and to

wind up its affairs, in accordance with such procedures

and directions as may be specified in the directive, which

may provide for the appointment of a person to take

possession and control of all documents, records, assets

and property belonging to or in the possession or control

of the trustee.

(3) The power to give directives under this article

shall include the power to vary, alter, add to or withdraw any

directive, as well as the power to issue new or further

directives.

(4) Where the Authority is satisfied that the

circumstances so warrant, it may at any time make public

any directive it has given under any of the provisions of this

article.”.

Article 49 of the principal Act shall be amended as follows>-

30. (a) it shall be re-numbered as article 56 and shall be

transposed in the principal Act in its proper numerical sequence in

accordance with its renumeration<

(b) in sub-paragraph (b) of subarticle (1) thereof, the words

“nominee companies” and “companies” wherever they appear, shall

be deleted and substituted by the word “trustees”<

(c) sub-paragraph (e) of subarticle (1) thereof shall be re-

numbered as sub-paragraph (o)<

(d) immediately after sub-paragraph (d) of subarticle (1)

thereof there shall be added the new sub-paragraphs (e) to (n) as

follows>-

“(e) to further regulate the activities of trustees as well

as the services provided and activities carried on or in

conjunction therewith or in relation thereto, providing for any

matter he may deem expedient including the creation and

exercise of rights by or for the benefit of the beneficiaries or

settlors and the imposition of duties and obligations on persons

authorised to act as trustees<

(f) to establish the requirements relating to the books

of account to be maintained by trustees, the form and content

of accounts which trustees are obliged to prepare, which

accounts have to give a true and fair view of the assets under

trusts, the requirements of review or audit on such accounts,

the duties of auditors who may be engaged and related matters<

(g) to exempt any activities or classes of persons from

the requirements of articles 43 and 43A of this Act and to

impose conditions he may deem fit for eligibility for

exemption<

(h) without prejudice to any rules which may apply in

terms of the Investment Services Act, to establish rules

applicable to the responsibilities of trustees of unit trusts under

this Act, the issue of units, the rights and responsibilities of

unit holders and any other matters which may need to be

regulated relating to unit trusts<

(i) to regulate any matters in connection with the use

of trusts in commercial transactions, to establish conditions

for such use including the prohibition of such use, and to

amend the definition of commercial transactions in the Act<

(j) to regulate any matter in relation to security trustees

and security trusts, including the definition of what constitutes

fair and reasonable actions in relation to enforcement of

security trustees<

(k) to regulate trusts which provide for maintenance

of persons or for the provision of annuities or pensions<

(l) to regulate the accumulation of income and distribution

of income and capital by trustees and ancillary matters<

(m) to regulate the duties of private trustees and the duties

and functions of depository notaries, procedures to be adopted

for the safekeeping and registration of all documents filed with

such notary in relation to a trust and all ancillary matters<

(n) to regulate matters in relation to trusts created by

holders of public office and such other persons as may be

prescribed, including the qualifications of the trustees, the

powers of appointment of such trustees, the powers and duties

of such trustees, the rights of beneficiaries and third parties

in such cases and all ancillary matters<”< and

(e) in subarticle (2) thereof, for the words “Regulations and

rules” there shall be substituted the words “Regulations”.

31. Immediately after article 48 there shall be inserted a new

article 49 as follows>

(1) In relation to trustees, the provisions of article

17 of the Malta Financial Services Authority Act shall apply

mutatis mutandis.

collaboration.

(2) The Authority may exercise the powers granted

to it by virtue of this Act at the request of or for the purposes

of assisting an overseas regulatory authority>

(a) where the assistance is required by the

overseas regulatory authority for the purposes of

the exercise of one or more of its regulatory

functions< or

(b) where so required within the terms of

Malta’s international commitments< or

(c) where so required within the terms of

undertakings assumed in bilateral or multilateral

agreements for the exchange of information and

other forms of collaboration with overseas

regulatory authorities including a request under a

memorandum of understanding concluded with the

Authority.”.

32. Articles 50, 51, 52 and 53 of the principal Act shall be deleted Substitution

articles 50, 51, 52

and substituted by the following new articles 50 to 53>-

and 53 of the

principal Act with

new articles 50 to

(1) Any officer, employee or agent of the

“Right of entry.

(1) Kull persuna li tikser jew li tonqos li t[ares

xi wa[da mid-disposizzjonijiet ta’ dan l-Att, jew tikser jew

tonqos li t[ares xi awtorizzazzjoni, kondizzjoni, obbligazzjoni,

[tie;a, direttiva jew ordni mag[mula jew mog[tija ta[t xi

wa[da mid-disposizzjonijiet ta’ dan l-Att, tkun [atja ta’ reat.

(2) Kull persuna li g[all-finijiet ta’, jew skond,

xi wa[da mid-disposizzjonijiet ta’ dan l-Att jew ta’ xi regoli

jew regolamenti mag[mulin bis-sa[[a tieg[u, jew ta’ xi

kondizzjoni, obbligazzjoni, [tie;a, direttiva jew ordni

mag[mula jew mog[tija kif imsemmi qabel, tag[ti tag[rif

jew tag[mel stqarrija jew dikjarazzjoni li tkun taf li ma tkunx

preçi]a jew li tkun falza jew qarrieqa f’xi [a;a materjali, jew

bi traskura;ni tag[ti tag[rif jew tag[mel stqarrija li ma tkunx

preçi]a jew li tkun falza jew qarrieqa f’xi [a;a materjali, tkun

[atja ta’ reat.

(3) Kull persuna li bil-[sieb li tevita li tinqabad

bl-g[emil ta’ reat ta[t dan l-Att tne[[i, tiddistru;;i, ta[bi jew

b’mod frawdulenti tibdel xi ktieb, dokument jew karta o[ra,

tkun [atja ta’ reat.

(4) Kull persuna li bil-[sieb tfixkel lil persuna

milli te]erita drittijiet mog[tija b’dan l-Att tkun [atja ta’ reat.

(5) Kull persuna li ta;ixxi jew li turi li tkun qed

ta;ixxi b[ala trustee jew mod ie[or f’Malta ming[ajr ma tkun

awtorizzata li hekk tag[mel mill-Awtorità, meta hekk

me[tie;a b’dan l-Att, tkun [atja ta’ reat.

(6) Kull persuna li tkun [atja ta’ reat ta[t is-

subartikoli (1), (2), (3), (4) u (5) ta’ dan l-artikolu u, sakemm

ma tkunx provduta xi piena og[la b’xi li;i o[ra, tista’ te[el,

meta tinsab [atja, multa ta’ mhux iktar minn mitejn elf lira

jew pri;unerija g[al ]mien ta’ mhux i]jed minn erbg[a snin,

jew dik il-multa u pri;unerija flimkien.

(7) Meta trustee jikser jew jonqos milli j[ares xi

wa[da mill-kondizzjonijiet imposti f’awtorizzazzjoni

me[tie;a ta[t l-artikolu 43 ta’ dan l-Att jew il-kondizzjonijiet

ta’ l-artikolu 43A jew jikser jew jonqos milli j[ares xi direttiva,

obbligazzjoni jew [tie;a o[ra mag[mula jew mog[tija mill-

Awtorità, l-Awtorità tista’ timponi penali amministrattiva li

ma tistax tkun i]jed minn erbg[in elf lira Maltin.

(8) Ksur jew nuqqas ta’ t[aris minn xi persuna

ta’ xi wa[da mid-disposizzjonijiet ta’ dan l-Att dwar l-

awtorizzazzjoni ta’ dik il-persuna li ta;ixxi b[ala trustee jew

xort’o[ra ma g[andha b’ebda mod tippre;udika l-validità jew

l-e]egwibbilità ta’ trust jew tolqot id-dmirijiet u r-

responsabbiltajiet ta’ dik il-persuna skond dan l-Att.

REGOLI

(1) L-Awtorità tista’ to[ro; Regoli li jirregolaw

trustees, kemm jekk ikunu awtorizzati kif ukoll jekk ma

humiex me[tie;a li jiksbu awtorizzazzjoni skond dan l-Att,

l-operazzjonijiet ta’ trustees f’Malta, u l-kwalifiki ta’ persuna

biex ta;ixxi b[ala trustee. Ir-Regoli jkunu jorbtu lit-trustees

u persuni o[ra kif ji;i speçifikat fihom. Ir-Regoli jistg[u

jistabbilixxu [ti;iet addizzjonali u kondizzjonijiet dwar l-

attivitajiet ta’ trustees, ir-responsabbiltajiet tag[hom lejn l-

Awtorità, kodiçi ta’ m;ieba u kull [a;a o[ra li l-Awtorità

jidhrilha xierqa, mag[duda l-forma u l-kontenut ta’ records

tal-kontijiet li g[andhom jin]ammu minn trustees.

(2) L-Awtorità tista’ to[ro; ukoll Regoli li

jistabbilixxu liema attivitajiet jikkostitwixxu servizzi

amministrattivi dwar trusts u li jistabbilixxu l-kondizzjonijiet

dwar it-tmexxija ta’ dawn l-attivitajiet.

Authority, on producing, if required, evidence of his authority,

may enter premises occupied by a person on whom a notice

has been served under this Act for the purpose of obtaining

the information or documents required by that notice, or

otherwise for the purpose of the investigation, and of

exercising any of the powers conferred upon it.

(2) Where any officer, employee or agent of the

Authority has reasonable cause to believe that if such notice

as is referred to in subarticle (1) of this article were served it

would not be complied with or that any documents to which

it could relate would be removed, tampered with or destroyed,

such person may, on producing, if required, evidence of his

authority, enter any premises referred to in subarticle (1) of

this article for the purpose of obtaining from there any

information or documents specified in the authority, being

information or documents that could have been required under

such notice as is referred to in subarticle (1) of this article.

(3) For the purposes of any action taken under

the provisions of this article, the Authority may request the

assistance of the Commissioner of Police, who may for such

purpose exercise such powers as are vested in him for the

prevention of offences and the enforcement of law and order.

SANCTIONS

51. (1) Any person who contravenes or fails to

comply with any of the provisions of this Act, or contravenes

or fails to comply with any authorisation, condition,

obligation, requirement, directive or order made or given

under any of the provisions of this Act, shall be guilty of an

offence.

(2) Any person who for the purposes of, or

pursuant to, any of the provisions of this Act or of any rules

or regulations made thereunder, or any condition, obligation,

requirement, directive or order made or given as aforesaid,

furnishes information or makes a statement or declaration

which he knows to be inaccurate, false or misleading in any

material respect, or recklessly furnishes information or makes

a statement which is inaccurate, false or misleading in any

material respect, shall be guilty of an offence.

(3) Any person who with intent to avoid detection

of the commission of an offence under this Act, removes,

destroys, conceals or fraudulently alters any book, document

or other paper, shall be guilty of an offence.

(4) Any person who intentionally obstructs a

person exercising rights conferred by this Act shall be guilty

of an offence.

(5) Any person who acts or purports to act as a

trustee in Malta without being authorised to do so by the

Authority, when so required in terms of this Act, shall be

guilty of an offence.

(6) Any person who is guilty of an offence under

subarticles (1), (2), (3), (4) and (5) of this article and, saving any

higher punishment which may be provided under any other law,

shall be liable, on conviction, to a fine (multa) not exceeding

two hundred thousand liri or to a term of imprisonment not

exceeding four years, or to both such fine and imprisonment.

(7) Where a trustee contravenes or fails to comply

with any of the conditions imposed in an authorisation issued

under article 43, or the conditions imposed in article 43A, or

contravenes or fails to comply with any directive, obligations

or other requirement made or given by the Authority, the

Authority may impose an administrative penalty which may

not exceed forty thousand Maltese liri.

(8) A breach or non-observance by any person of

any provision of this Act relating to the authorisation of such

person to act as a trustee or otherwise shall not in any manner

prejudice the validity or enforceability of a trust or affect the

duties and responsibilities of such person in terms of this Act.

RULES

Power to issue

52. (1) The Authority may issue Rules governing

trustees, whether authorised or not required to obtain

authorisation in terms of this Act, the operations of trustees

in Malta, and on the qualifications to act as trustees. The Rules

shall be binding on the trustees and other persons as may be

specified therein. The Rules may lay down additional

requirements and conditions in relation to the activities of

trustees, their responsibilities to the Authority, a code of

conduct, and any other matters as the Authority may consider

appropriate, including the form and content of accounting

records to be kept by trustees.

(2) The Authority may also issue Rules to

establish which activities constitute administrative services

in relation to trusts and to establish the criteria for the conduct

of these activities.

53. (1) The court, upon the application of the

Disqualification

Authority, may make a disqualification order against any

person who is found guilty of an offence under this Act or

any other law, other than an offence punishable only with a

fine, or who has infringed any requirement of this Act.

(2) The court, upon the application of the

Authority or any interested person, may also make a

disqualification order against any person if it is satisfied that

his conduct as a trustee of a trust, either taken alone or taken

together with his conduct as a trustee of any other trust or

trusts, makes him unfit to be a trustee.

(3) A disqualification order made under this

article may be for a minimum period of one year and a

maximum period of fifteen years.

(4) For the purposes of this article, a

disqualification order is an order whereby a person shall not,

without leave of the court -

(a) be a trustee of a trust or a private

foundation< or

(b) be delegated any functions, duties or

powers of a trustee< or

(c) perform or exercise any functions or

otherwise act in a fiduciary capacity in relation to a

mandate, trust or a private foundation.

(5) A notice of a disqualification order made

under this article shall>-

(a) be delivered by the Registrar of Courts to

the Authority<

(b) be furthermore recorded in a register to be

kept for this purpose by the Authority and which shall

be open for public inspection.

(6) Any person who, while being subject to a

disqualification order, acts in contravention thereof, shall be

guilty of an offence and liable on conviction to a fine (multa)

of not more than twenty thousand liri or imprisonment for a

term not exceeding three years or to both such fine and

imprisonment.

(7) The provisions of this article shall be without

prejudice to any other offences or remedies which may exist

under any other law.”.

33. Immediately after article 53 there shall be inserted the

following new articles 54 to 56>-

A person shall not be qualified for appointment or

to hold office as trustee if>-

(a) he is interdicted or incapacitated or is an

undischarged bankrupt<

(b) he has been convicted of any of the crimes

affecting public trust or of theft or of fraud or of

knowingly receiving property obtained by theft or fraud<

(c)

he is a minor< or

(d) he is subject to a disqualification order under

article 53.

APPEALS

(1) In this article, the “Financial Services

Tribunal” means the Tribunal established in terms of article

21 of the Malta Financial Services Authority Act, and the

term “Tribunal” shall be construed accordingly< and the

provisions of the said article 21 shall, except in so far as any

of them is incompatible with the provisions of this article,

apply to appeals made to the Financial Services Tribunal under

this Act.

(2) Any person who is aggrieved by a decision of the

Authority>-

(a)

to refuse the issue of an authorisation<

(b) to impose or vary any condition of an

authorisation<

(c)

to impose or vary any restriction<

(d) to revoke an authorisation<

(e)

to make any order under this Act,

may appeal against the decision to the Financial Services

Tribunal within such period and under such conditions as

are established under the Malta Financial Services Authority

Act.

(3) An appeal against a decision of the Authority

shall not suspend the operation of that decision.

For the purpose of articles 44 till 55 of this Act

Meaning of

term trustee.

the term “trustee” shall be construed as including those persons

referred to in subarticle (12) of article 43.”.

34. Instead of the Schedule to the Act there shall be substituted Substitution of

Schedule to the

the Schedule to this Act.

principal Act.

35. (1) The following provisions in this Part shall apply in Transitory

relation to registered trusts, trustees of unregistered trusts, licensed Provisions.

nominees and nominee companies as referred to in the principal Act as

in force immediately before the coming into force of this Part and the

Malta Financial Services Centre Act as retained in force by Act XVII

of 2002 (hereinafter referred to as “the applicable law”).

(2) Upon the coming into force of this Part no further trusts Registered

shall be registered in terms of the principal Act as in force immediately Trusts.

before the coming into force of this Part.

(3) All trusts registered prior to the coming into force of

this Part shall continue to be regulated by the principal Act as in force

immediately before the coming into force of this Part for a maximum

period of ten years from the date of their registration and they shall

continue to enjoy the rights and exemptions and other privileges due as

provided by the principal Act as in force immediately before the coming

into force of this Part.

(4) A trustee of a registered trust in relation to which the

period of ten years has expired prior to the coming into force of this

Part shall amend the trust deed in consultation with the settlor, any

protector or other interested parties so as to achieve compliance with

the principal Act as amended by this Part within a maximum period of

two years from the coming into force of this Part.

(5) A trustee of a registered trust in relation to which the

said period of ten years is due to expire on or after the coming into

force of this Part shall amend the trust deed in consultation with the

settlor, any protector or other interested party so as to achieve compliance

with the principal Act as amended by this Part within a maximum period

of two years from the expiry of the said period of ten years.

(6) Notwithstanding the provisions of subarticles (4) and

(5) hereof, a trustee of a registered trust may at any time prior to the

lapse of said period of ten years amend the trust deed as aforesaid to

achieve compliance with the principal Act as amended by this Part and

such amendment shall imply a waiver of all rights and exemptions and

other privileges contemplated by the provisions of the principal Act as

in force immediately before the coming into force of this Part.

(7) The trustee of any trust, other than a registered trust,

which is in existence on the date of the coming into force of this Part,

and to which the provisions of subarticle (1) of article 43 of the principal

Act as amended by this Part applies, shall, within two years of such

date, do all such acts as may be necessary to comply with the provisions

of the principal Act including>-

(a) applying for and obtaining authorisation as a trustee in

terms of article 43 of the principal Act as amended by this Part< or

(b) making the relevant declarations and preparing such

inventory of trust assets as required by article 43A of the principal

Act as amended by this Part< or

(c) notifying the Authority of his activities to the extent necessary<

or

(d) cease to act as a trustee in Malta unless he obtains

authorisation as required by the principal Act as amended by this Part.

(8) Nothing validly done in relation to a trust prior to the

coming into effect of this Part shall be affected hereby and no action

carried out prior to the coming into force of this Part and, without

prejudice to any trust regulated by a foreign law and the provisions of

the Recognition of Trusts Act, no relationship in existence prior to the

coming into force of this Part shall be treated as a trust relationship

unless it unambigouosly appears from the relationship that it was

intended to create a trust relationship.

Licensed Nominees.

(9) On the coming into force of this Part, no further licences

to act as a licensed nominee shall be issued in terms of the applicable

law and all existing valid licences issued up to such date shall expire

upon the lapse of two years from the coming into force of this Part.

(10) (a) Upon the lapse of six months from the coming

into force of this Part and until the expiry date referred to in subarticle

(9) hereof, no licensed nominee shall undertake any new nominee

activities and licensed nominees shall only continue to service existing

arrangements<

(b) A licensed nominee shall, prior to the lapse of two years

from the coming into force of this Part>-

(i) either apply for authorisation under article 43 of the

principal Act as amended by this Part<

(ii) or cease its business activities>

Provided that if such licensed nominee does not obtain

authorisation to act as a trustee under Article 43, such licensed

nominee shall be obliged to ensure that all rights of property held

under trusts or other arrangements are transferred in the form

required by law to a person who is duly authorised to act as trustee

in terms of Article 43 or that the provisions of article 43A are fully

complied with, as the case may be.

(11) Notwithstanding any limitation in any memorandum

and articles of association of any licensed nominee company in terms

of the applicable law, any such company may at any time apply for and

may be granted authorisation to act as a trustee in terms of the principal

Act as amended by this Part.

(12) Upon the issue, in terms of Article 43 of the principal

Act as amended by this Part, of authorisation to any such company to

act as a trustee in terms of Article 43 of the said Act, any licence issued

pursuant to the applicable law shall expire and be cancelled and shall

be surrendered to the Authority.

(13) Upon the coming into force of this Part no further warrants Nominee

to act as a nominee company shall be issued in terms of the applicable law. Companies.

(14) (a) Where upon the coming into force of this Part, a

nominee company is solely performing the functions of liquidator of

offshore companies, it shall immediately submit its warrant to the

Authority for modification and such warrant shall continue to be renewed

only in relation to the functions of liquidator and until such time as the

nominee company completes the winding up of such offshore

companies, whereupon the nominee company shall immediately

surrender its modified warrant to the Authority for cancellation.

(b) A nominee company solely performing the functions of

liquidator as aforesaid shall not act as trustee in any manner and shall

not be entitled to apply for authorisation to act as trustee in terms of the

principal Act as amended by this Part.

(15) (a) Where upon the coming into force of this Part,

a nominee company is solely performing the functions of trustee of

registered trusts, the warrant of such nominee company shall be renewable

for a maximum period of two years from the coming into force of this

Part and such nominee company shall, during the said period, continue to

be regulated by the principal Act as in force prior to the coming into force

of this Part and by the relevant provisions of the applicable law.

(b) A nominee company solely performing the functions of

trustee as aforesaid shall, prior to the lapse of the period of two years

from the coming into force of this Part>

(i) either apply for authorisation to act as trustee under

article 43 of the principal Act as amended by this Part,

(ii) or cease to act as trustee>

Provided that where such nominee company does not obtain

authorisation to act as trustee under article 43, it shall be bound to ensure

that all the rights of property under trusts and all other arrangements

are transferred in the form required by law to a person authorised to act

as trustee in terms of article 43 or that the provisions of article 43A are

fully complied with, as the case may be.

(16) Where upon the coming into force of this Part, a

nominee company is performing both the functions of liquidator of

offshore companies and also the functions of trustee of registered trusts,

the provisions of subarticle (12) shall mutatis mutandis apply to such

nominee company in respect of its functions of trustee and the provisions

of paragraph (a) of subarticle (11) shall mutatis mutandis apply to such

nominee company in respect of its functions of liquidator, and the

modification of its warrant as provided for in paragraph (a) of subarticle

(11) shall be required only in respect of any period following the lapse

of two years from the coming into force of this Part, during which the

nominee company continues to act as liquidator of offshore companies.

(17) The Authority shall have the power to require such

changes to the memorandum and articles of association of any licensed

nominee or any nominee company applying for authorisation, including

a change in name to the extent considered necessary, so as to more

suitably reflect its status, provided that any such changes shall not affect

the authorisation of the company to act as a trustee in terms of the

principal Act as amended by this Part or the functions as liquidator of a

nominee company under the applicable law.

Part II

AMENDMENTS TO THE CIVIL CODE, CAP. 16

36. (1) This Part amends and shall be read and construed as Amendments to the

Civil Code, Cap. 16.

one with the Civil Code, hereinafter in this Part referred to as “the Code”.

(2) This Part shall come into force on such date as the

Minister responsible for justice may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

Amendment of

37. Article 20 of the Code shall be amended as follows>-

article 20 of the

Code.

(a) in subarticle (3) thereof, immediately following the

words “property” there shall be added the words “and any income

accruing under a trust”< and

(b) in subarticle (5) thereof, immediately after the word

“him” the following words shall be added “as well as to any

beneficial interest under a trust.”.

38. Article 163 of the Code shall be amended as follows >-

Amendment of

article 163 of the

Code.

(a) in sub-paragraph (f) thereof, for the words “or negligent.”

there shall be substituted the words “or negligent<”< and

(b) immediately after sub-paragraph (f) thereof there shall

be inserted the new sub-paragraph (g) as follows>-

“(g) persons who are trustees of property for the benefit

of the minor.”.

39. Immediately after article 958 of the Code there shall be added Addition of new

articles 958A to

a new Title IIIA and the additional new articles 958A to 958J as follows>- 958J to the Code.

“Title IIIA

Of Trusts and their Effects

958A. (1) Property under trusts shall be regulated by

Trusts and

applicable

the special law on trusts and to the extent applicable, the rules

rules.

of this Code relating to trusts.

(2) (a)

Transactions relating to property including>

Transactions

(i) the settlement of property under trusts, even

relating to

property in

when effected by unilateral declaration or resulting from

trusts.

a judgement or order of a court<

(ii) the distribution, application, or advancement

of property by a trustee to a beneficiary<

(iii) the reversion of property to a settlor or his

estate when a trust fails or is terminated<

(iv) the assignment, vesting or transfer of property

under trusts from a trustee to another trustee under the

same trusts,

shall be subject to the special laws relating to trusts and their

effects when such transactions arise by operation of law or

are carried out in the form and manner required by applicable

law.

(b) When such transactions are intended to

transfer the ownership or other rights to or in property from

one person to another , such transactions shall comply with

all applicable requirements for the transfer of ownership of

such property, including the provisions of article 996 when

applicable, and when so carried out shall>

(i) be effective modes of transfer of

ownership or other rights to or in such property<

(ii) result in the creation or termination of

legally enforceable interests in or to such property

in favour of such persons as provided by the special

laws relating to trusts< and

(iii) be operative against third parties.

(c) The sole consideration for the validity of such

transactions may be the imposition or assumption, the performance,

or the termination, as the case may be, of legally enforceable

obligations on or by a trustee in relation to such property.

(3) A trustee may validly dispose of and transfer

by trustees of

trust property to third parties notwithstanding any right of

legitim arising out of the application of Articles 615 to 653

and the other provisions of this Code relating to reduction of

trust property.

(4) In any case where, after the death of the settlor,

the trustee is formally notified of a claim for legitim in

circumstances where trust property is to be sold, the trustee

shall hold on trust for the benefit of any claimant of such

right a sum in money based on the net transfer value of the

property at the time of transfer until the claim for legitim is

determined or otherwise lapses.

(5) If trust property subject to a claim for legitim

or, where it has been sold, the proceeds thereof, have already

been distributed to any beneficiary, the legitimary claim may

be made against such beneficiary as though he were an heir,

legatee or donee as the case may be, and if there remains any

property under such trusts, proportionately between the trust

property and the beneficiary.

(6) The trustee’s obligation to retain the value as

stated in subarticle (4) shall operate for a peremptory period

of five years from the date of death of the decujus. This shall

not prejudice the right of any claimant with respect to other

property forming part of the inheritance but not settled in trust.

958B (1) Trusts for the benefit of a person who is not

capable of receiving property, whether by testamentary

disposition or donation, under the provisions of this Code,

absolutely or more than as permitted by this Code, are subject

to reduction in full or for the excess in accordance with this

article>

Provided that in case of members of monastic orders or

religious corporations of regulars the provisions of article 611

shall apply to trusts in favour of such persons mutatis

mutandis.

Reduction of

(2) Subject to the provisions of article 6B of the

Trusts and Trustees Act, except in cases where the trustee

exercises a power of variation or otherwise acts so as to be in

conformity with the provisions of this Code, trust settlements

shall be reduced to the portion permitted by law if at the time

of the opening of succession of the settlor they are found to

exceed the disposable portion of his estate>

Provided that when trust property is reduced,

the excess property shall be held by the trustee absolutely for

the heirs of the settlor or for the benefit of the person entitled

thereto as the case may be.

(3) When the beneficiary entitled to property

which is in excess of what is permissible at law is a spouse of

the settlor, such excess property shall be held under separate

trust for use and enjoyment of fruits for the lifetime of such

spouse and subject to the terms of the trust, thereafter for the

heirs of the settlor absolutely.

(4) The rules laid down in article 621 and in articles

647 to 653, relating to the reduction of testamentary

dispositions, shall be observed with regard to the reduction

of trust settlements, subject to the provisions of this Title.

(5) The reduction of a settlement can only be

demanded by those for whose benefit the law has reserved a

portion of the property of the deceased, and by their heirs or

other persons claiming under them and -

(a) saving article 1240, such persons cannot waive

such right during the lifetime of the settlor, whether by

an express declaration or by consenting to such

settlements<

(b) donees, legatees or creditors of the deceased

cannot demand the reduction of settlements or benefit

by it<

(c) trusts forming part of a commercial transaction

cannot be reduced in any manner until the completion

of the commercial transaction, after which the residual

property shall be subject to the rules stated in this article.

(6) No reduction of settlements can take place until

the value of all the property disposed of under any will has

been exhausted and when such reduction takes place, it shall

be made commencing with the last settlement and so on

successively, from the last to the previous settlements.

(7) The right arising upon a reduction of trust property

is to receive value and there shall be no right to restitution of

property in kind.

(8) To the extent not already distributed prior to notice of

a claim, the trustee shall restore the fruits of such part of the

settlement which exceeds the disposable portion from the day of

the opening of succession of the settlor if the action for reduction

has been brought within the year, otherwise from the day of the

demand. In the case referred to in subarticle (4) of article 958A,

the claimant shall be entitled to interest on the value retained for

his benefit at the rate paid by banks on savings accounts from

the date of the notification of his claim on the trustee or from the

date of receipt of proceeds by the trustee whichever is the later.

(9) Saving the provisions of the Trusts and

Trustees Act, unless the terms of the trust expressly exclude

such effects>

(a) a person claiming the legitim from a trustee shall

lose any benefit under the trust< and

(b) the provisions of subarticle (4) of article 620 of

this Code shall apply in relation to any gains received

under the terms of the trust.

(10) Where the benefit to the beneficiary consists

in the use and enjoyment of property and the enjoyment of

fruits therefrom or a life annuity and it appears that the value

of the trust fund exceeds the disposable portion of the estate

of the settlor, the persons entitled to the legitim may claim

either >-

(a) the legitim and lose all benefits under the

trust and any will, if any< or

(b) receive from the trustee after the death

of the said beneficiary and notwithstanding any terms

of the trust, an amount equal to the said legitim and

interest at 5% per annum, without compounding, up to

the value of the trust property remaining on such event

and in such case shall not be entitled to any benefits

under the will or the trust. Any further remainder of trust

property shall thereafter be applied according to the terms

of the trust< or

(c) opt not to claim and enjoy all benefits

under any trust and any will.

(11) When, in the case contemplated in the

preceding subarticle, the beneficiary is subject to a mental or

physical disability which renders him incapable of sustaining

himself, if it appears to the trustee that the trust property is

not susceptible of division, sale or reduction to fulfil the claims

of a legitimary in terms of paragraph (a) of subarticle (10)

above without materially prejudicing the interests of the said

beneficiary, the trustee may apply to the Court and the Court

may order that the property not be sold, divided or reduced

until the death of the said beneficiary. Furthermore, and in

such case >-

(a) the beneficiary shall not be entitled to demand

the reduction of the trust settled in his favour and claim

the legitim, and

(b) any other legitimary shall be entitled to apply

paragraph (b) of subarticle (10) at the time of death of the

beneficiary unless he had opted as stated in sub-paragraph

(c) thereof within five years of the death of the settlor.

(12) The legitimaries may choose any of the above

options by notice in writing to the trustee and to the other

heirs or executors of the estate.

(13) The action for reduction, whether against

Prescription.

trustees or against third parties, shall be barred by the prescription

on the lapse of five years to be reckoned from the day of the

opening of the succession. The aforesaid time shall also run

against minors and persons interdicted and shall not be capable

of suspension or interruption by judicial act or otherwise.

958C. (1) The provisions of article 605 shall apply to

unworthy of

trusts

in the same manner as it applies to wills, and on the

under trusts. events contemplated therein, trusts in favour of such a person

shall be subject to termination on the demand of the trustee

or any interested person.

(2) Notwithstanding that a trust may have been

settled without the reservation of the right of revocation or

variation, a settlor may demand the variation of the terms of

trust on the grounds specified in article 1787 and the provisions

of articles 1788 and 1790 of this Code and those of article 15

of the Trusts and Trustees Act shall apply.

958D. When there exist both donations and settlements,

for purposes of determining the order of transactions and other

matters for the purpose of reduction of>-

(a) donations in terms of Sub-title VI of Title XIV

of Part II of Book Second, and

(b)

of settlements in terms of this Title,

donations and settlements shall be treated as forming part of

the same type of transactions and they shall be subject to

reduction commencing with the latest in date unless the

settlor#donor has expressly stated an order he wishes to be

applied for such purpose.

958E. For the purposes of the calculation of the value

of an estate for any purposes of this Code, including for the

benefit of a claimant of a legitim and of an heir for the purposes

of collation amongst co-heirs, any settlement of property

under trust shall also be included in the estate>

Provided that the settlor of property in trust may

exempt such settlement from collation in terms of article 914>

Provided further that if the property settled in trust

for the benefit of an heir is collated in the interest of the other

co-heirs, such property as has been collated shall thereafter

be held by the trustee under separate trust absolutely for the

benefit of such heir.

Trustees and

958F. (1) A trustee appointed in terms of a

Testamentary

testamentary trust shall not be considered to be a testamentary

executor and the provisions of articles 762 to 778 shall not

apply to testamentary trustees.

(2) When a person is appointed as trustee and

also as an executor, such executorship shall be regulated in

terms of this Code until such time as the executorship is

fulfilled upon the delivery or registration of any relevant assets

to or in the name of the trustee.

958G. (1) Where movable or immovable property

situated in Malta has been settled in trust, under the laws of

foreign trust,

Malta or otherwise, by a person who is not domiciled in Malta

at the time of settlement -

(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 full age and sound mind under the

law of his domicile and the law of Malta< and

(b) no provision in this Code relating to

inheritance or succession to such property including, but

without prejudice to the generality of the foregoing, rights

to legitim or similar rights applicable under this Code

shall apply to such trust property, at such time or

subsequently< and

(c) the beneficiaries shall be deemed to have

capacity to benefit.

(2) Once property has been settled in trust it shall

not be affected by a change of domicile of the settlor, even if

the settlor subsequently becomes domiciled in Malta.

(3) For the purposes of this article “legitim”

means the legal rule restricting the right of a person to dispose

of his property during his lifetime so as to preserve such

property for distribution at his death, or having similar effect.

958H. The right of redemption as provided for in article

applicability

of right of 912 of this Code shall not apply when the transfer of the

redemption.

undivided share of an inheritance shall consist of a settlement

of such right under trusts, the beneficiaries of which are the

settlor himself, his heirs or the other heirs of the estate or a

distribution or reversion thereof to such persons.

958I. The provisions of articles 1000 and 1001 shall

applicability

not

be

interpreted as creating any limitation on the power of

any person to settle a trust or a person to accept to act as

1001. trustee under a trust for the benefit of a beneficiary, on the

binding nature and effect of any trust or on the enforceablility

of such rights as arise under a trust by a beneficiary.

958J. The right of a debtor of a litigious right in terms

applicability

of article 1483 of this Code shall not arise when the settlement

1483. involves the assignment of a litigious right under trusts for

the benefit of the creditor or creditors who have assigned the

debt.”.

40. Immediately after article 1124 of the Code, there shall be

added the new sub-title and the following new articles 1124A and 1124B>-

“VII. OF FIDUCIARY OBLIGATIONS

1124A (1) Fiduciary obligations arise in virtue of

obligations.

law, contract, quasi-contract, trusts, assumption of office or

behaviour whenever a person (the “fiduciary”)>-

(a) owes a duty to protect the interests of another

person< or

(b) holds, exercises control or powers of

disposition over property for the benefit of other persons,

including when he is vested with ownership of such

property for such purpose< or

(c) receives information from another person

subject to a duty of confidentiality and such person is

aware or ought, in the circumstances, reasonably to have

been aware, that the use of such information is intended

to be restricted.

(2) A person who is delegated any function by a

fiduciary and is aware, or should, from the circumstances, be

aware, of the fiduciary obligations shall also be treated to be

subject to fiduciary obligations.

(3) Fiduciary obligations arise from behaviour when

a person>-

(a) without being entitled, appropriates or makes

use of property or information belonging to another,

whether for his benefit or otherwise< or

(b) being a third party, acts, being aware, or where

he reasonably ought to be aware from the circumstances,

of the breach of fiduciary obligations by a fiduciary, and

receives or otherwise acquires property or makes other

gains from or through the acts of the fiduciary.

(4) Without prejudice to the duty of a fiduciary to carry

out his obligations with utmost good faith and to act honestly

in all cases, a fiduciary is bound, subject to express provision

of law or express terms of any instrument in writing excluding

or modifying such duty, as the case may be >-

(a) to exercise the diligence of a bonus pater

familias in the performance of his obligations<

(b) to avoid any conflict of interest<

(c) not to receive undisclosed or unauthorised

profit from his position or functions<

(d) to act impartially when the fiduciary duties

are owed to more than one person<

(e) to keep any property as may be acquired or

held as a fiduciary segregated from his personal property

and that of other persons towards whom he may have

similar obligations<

(f) to maintain suitable records in writing of the

interest of the person to whom such fiduciary obligations

are owed<

(g) to render account in relation to the property

subject to such fiduciary obligations< and

(h) to return on demand any property held under

fiduciary obligations to the person lawfully entitled

thereto or as instructed by him or as otherwise required

by applicable law.

(5) In addition to any other remedy available under

law, a person subject to a fiduciary obligation who acts in

breach of such obligation shall be bound to return any property

together with all other benefits derived by him, whether

directly or indirectly, to the person to whom the duty is owed.

(6) The obligation to return property derived from a

breach of a fiduciary duty shall apply also to all property into

which the original property has been converted or for which

it has been substituted.

1124B. (1) When the ownership of property is vested

in a person who holds it subject to fiduciary obligations, third

parties may act in relation to such person as though he were

the absolute owner thereof.

(2) When a person holds property subject to fiduciary

obligations, such property is not subject to the claims or rights

of action of his personal creditors, nor of his spouse or heirs

at law.

(3) A person dealing with a fiduciary in relation to

property subject to fiduciary obligations need not>-

(a)

enquire into the terms of his authority< or

(b) obtain the consent of the person to whom the

fiduciary duties are owed or any other person,

and shall, subject to being in good faith, be entitled to rely on

declarations made by the fiduciary with regard to his authority.

(4) The fiduciary may furnish to any person dealing with

him a certificate containing the following information without

being in breach of any confidentiality obligations>-

(a) that the authority exists, the date the relevant

instrument was executed and that the authority has not

been revoked<

(b) a declaration that he is authorised to carry out

the transactions being entered into< and

(c)

the identity and address of the fiduciary.

(5) Any fiduciary who issues any certificate containing

any statement which he knows or ought to know is false shall

be guilty of an offence and shall on conviction be liable to

the punishment of imprisonment for a term not exceeding

two years or to a fine (multa).”.

41. Subarticle (3) of article 1322 of the Code shall be amended Amendment of

article 1322 of the

as follows>-

Code.

(a) in paragraph (l) thereof, for the words “article 2010,

and” there shall be substituted the words “article 2010<”<

(b) in paragraph (m) thereof, the words “immovable

assets.” there shall be substituted the words “immovable assets<

and”< and

(c) immediately after paragraph (m) there shall be added

the new paragraph (n) as follows >-

“(n) the settlement in trust of property forming part

of the community of acquests and the variation or revocation

of the terms of any trust in which any such property has been

settled.”.

42. Immediately after article 1740 of the Code, there shall be Addition of new

article 1740A of the

added a new article 1740A as follows>-

Code.

1740A. The rules relating to donations shall not apply

to the settlement or distribution of property under trusts except

to the extent expressly stated by the provisions of this Code.”.

43. Immediately after article 1871 of the Code, there shall be

added a new article 1871A as follows>-

1871A (1) Any person holding property for another

holds property subject to fiduciary obligations to the person

engaging him for such purpose and shall be regulated by the

provisions of this title and by the provisions of this Code

relating to fiduciary obligations.

(2) Where such person acquires property in his

own name but on behalf of a mandator, the mandator shall at

all times be entitled to demand the immediate and

unconditional transfer thereof from the mandatory. The

mandatory shall on such demand or, in any case, on the

expiration of the time during which the mandate was to

continue, immediately render account of his mandate in terms

of article 1875 of this Code and transfer the property to the

mandator by such means as may be appropriate, saving any

special terms of the mandate relating to fees and expenses

and rights of any third party in good faith.

(3) Notwithstanding article 1886 of this Code,

a mandate in favour of a person acting in terms of this article

shall not lapse>-

(i) on the death of the mandator and shall continue

to bind the mandatory to preserve the property and all

rights related thereto until such time as the property held

by him is validly transferred to the heirs or legatees of

the mandator< and

(ii) on the bankruptcy of the mandator or the

mandatory and shall continue to bind the mandatory to

preserve the property and all rights related thereto until

such time as the property held by him is validly

transferred as directed by the competent court for the

benefit of the mandator or of the creditors of the

mandator, as the case may be.

(4) A term of the mandate purporting to bind a

mandatory as referred to above to transfer the property held

by him to a third party after the death of the mandator shall

not be valid unless such bequest be made by means of a will

in accordance with the formalities required by law.

(5) In the event of the death of the mandatory, the heirs

at law or the executor, if any, of the will of the mandatory

shall be bound by the same obligations to preserve the property

held for the mandator and to immediately transfer it to him or

as he may instruct, saving such rights to the payment of

outstanding dues and expenses according to law.

(6) Notwithstanding the provisions of subarticle (1)

of article 1871 of this Code, in cases where a mandatory, as

referred to above, brings, by any means, to the attention of any

third party the fact that he is acting in such capacity, the mandatory

shall not be personally liable for the obligations entered into other

than with and to the extent of the property held by him.”.

44. Immediately after article 2095 of the Code, there shall be Addition of title and

added the new title and new articles from 2095A to 2095E as follows >- new

to 2095E to the

Code.

“Title XXIIIA

Of Trusts and Obligations

Sub-Title I

Of matrimonial regimes

2095A. (1) Property being the subject of matrimonial

contracts may be settled in trust only by means of a written

instrument. Trusts between spouses are not created by

operation of law.

(2) Property forming part of the community

of acquests or governed by the system of community of residue

under separate administration may only be settled in trust with

the consent of both spouses. Paraphernal property of either

spouse may be settled in trust by each spouse acting singly.

(3) A trust settled by both spouses jointly

may only be varied or, if revocable, may only be revoked by

both spouses acting jointly and after the death of one of the

spouses such trust shall be irrevocable notwithstanding any

of its terms, except with the authorisation of the Court in its

voluntary jurisdiction.

(4) A beneficial interest held by a spouse

under a trust shall not form part of the community of acquests

irrespective of when it was settled in his favour or when he

became a beneficiary, except in the case of a beneficial interest

under a trust into which community property has been jointly

settled by the spouses and only in relation to such property.

(5) Any distribution of income made under

a trust in favour of a spouse shall, unless otherwise expressly

provided in the trust instrument, form part of the community

of acquests or of the community of residue under separate

administration of such spouse, as may be applicable, in terms

of article 1320 and article 1338(2) of this Code respectively.

(6) When the matrimonial home is the subject of

trusts for the benefit of the spouses or any one of them, nothing

in the trust instrument or in the law shall imply that a spouse

enjoys lesser rights to the home and its enjoyment than under

article 3A of the Code, and the terms of the trust may not be

revoked or varied, nor may the trustee dispose of the said

property, without the consent in writing of both spouses or,

in the absence of consent, without the authorisation of the

Court.

(7) Any debt, indemnity or other liability due by

either spouse as a trustee shall not be charged to the assets of

the community of acquests in terms of article 1327 except as

provided in article 1329 and, for the purposes of article 1341,

any such debt shall be deemed to be a paraphernal debt.

2095B. (1) A person may settle property under trusts

to his spouse acting as trustee for the benefit of beneficiaries

including any such spouse as beneficiary.

(2) When a spouse is a beneficiary, a trustee

may not enter into a contract of sale with the settlor spouse

except in the cases specified in sub-paragraph (b) of article

1366 of the Code.

(3) A person cannot be a beneficiary under a

trust settled by his or her spouse for more than the property

that is allowed to be bequeathed or donated to such spouse in

terms of this Code. Notwithstanding the terms of the trust

and the rules at law otherwise applicable in relation to any

excess, the excess shall be held by the trustee for the use and

enjoyment of such spouse for his lifetime and thereafter shall

be held on trust for the settlor or his heirs.

(4) If a beneficiary spouse is entitled at law to

any property in ownership, the property held in trust up to the

reserved portion, having regard to any other dispositions in

such person’s favour, shall in virtue of this provision be held

on separate trust for the benefit of such spouse alone

irrespective of the terms of the trust. Any further property

settled in trust for the benefit of the spouse shall, irrespective

of the terms of the trust, be held under trust only for the use

and enjoyment of the beneficiary for his lifetime and thereafter

for the benefit of the settlor or his heirs. The above shall be

without prejudice to the right of any legitimary to demand

the reduction of the trust when the settlement impinges on

right of legitim as provided by this Code.

2095C The provisions of law relating to spouses or

matrimonial property shall not apply in any manner to the

actions of a spouse when acting as trustee.

Sub-title II

Of Annuities

2095D. Title XI of Book Second “Of the Constitution

applicability

of Annuities” and the provisions of sub-titles I and II thereof

of provisions

shall not apply in relation to annuities constituted in a deed of

on annuities.

trust or testamentary trusts and the obligations of trustees and

the rights of the beneficiaries shall be regulated exclusively

by the terms of the trust and the special laws relating to trusts.

Sub-title III

Of Security Trusts

2095E. (1) Security may be created in favour of a

Security Trusts.

trustee, called a security trustee, for the benefit of any creditor

or creditors, present or future, or in favour of a class or classes

of creditors.

For the purposes of article 2042 and other provisions

under special laws which may be applicable to security, the

trustee shall be treated as a creditor and shall be entitled to be

registered as holder of the security, indicating his position as

trustee.

(2) The security trustee shall enjoy all such

rights and be subject to such obligations as may be stated in

the instrument in writing regulating>-

(a)

the appointment of the security trustee, and

(b) the security granted to the security trustee

for the benefit of the creditor or creditors.

(3) Security, for the purposes of this article,

means any arrangement whereby the rights of a creditor are

legally protected including any undertaking, guarantee,

mandate, pledge, assignment, transfer, grant, privilege or

hypothec or the placing of property in possession or control

of the trustee with rights of retention and sale as may be agreed.

(4) When a hypothec is created in favour of a

security trustee which is a bank or other entity which is

authorised in terms of the Banking Act or in terms of

equivalent legislation overseas, such hypothec may,

notwithstanding any other provision of law, be granted to

secure future debts by the same debtor to the security trustee

or the beneficiaries of the security trusts, present or future, as

may be defined in the trust instrument. Such a hypothec shall

be valid on condition that the deed constituting the hypothec

expressly states that it secures future debts of the same debtor

and limits the effects of the hypothec to a stated maximum

sum. Such information shall form part of the relative note of

registration for the purposes of article 2042 of this Code.

(5) When security is granted to a security trustee,

such trustee shall have the power and legal interest to file any

legal proceedings for the enforcement thereof even where

under the terms of the deed of trust and the security>-

(a) the trustee is not the creditor of the

principal debt or obligation< or

(b) all creditors enjoy the right to sue, jointly

and severally, for the enforcement of the debt>

Provided that payment by the debtor either to the security

trustee or to the beneficiaries, if also creditors, shall discharge

the obligations of the debtor to the extent of the payment made.

(6) Subject to the preceding article, nothing in the

Code of Organization and Civil Procedure shall hinder the

action of a security trustee for the benefit of the beneficiaries

under a trust on the basis of any simultaneous judicial or other

action by any beneficiary under the trust.

(7) A security trustee shall not be subject to any

of the obligations of the creditors for whose benefit he may

hold security except to the extent to which he has expressly

agreed in writing.

(8) A security trustee may resign, retire or be

substituted in accordance with the terms of the trust and in

such case the original security trustee shall assign any security

held by him to the substitute security trustee in the form

required by law for the particular security held.

(9) Beneficiaries of a security trust who may be

vested with the debt, may assign the debt to third parties and

the provisions of article 1475 shall apply to the security for

such debt even when held by a security trustee and in such

case the assignees of such debt shall enjoy the rights of

beneficiaries under the security trust upon notice to or

acknowledgement by the trustee without the need of a separate

assignment of the beneficiary rights under the trust deed.

(10) The appointment of a security trustee to hold

security, his removal or his substitution by another trustee

and any related transactions shall not operate as a novation

nor shall they affect the security validly constituted in any

manner.

(11) A security trustee may also act as an agent

or mandatory for the beneficiaries of the security trust and

may carry out functions under such contract in accordance

with its terms.

(12) In the exercise of any right relating to the

enforcement of any security, the security trustee shall be bound

by the legal provisions relating to the particular type of security

and in any case where the security arrangements are not

subject to rules as to its enforcement, the security trustee shall

act in a fair and reasonable manner in relation to the debtor.

Part III

AMENDMENTS TO THE NOTARIAL PROFESSION

AND NOTARIAL ARCHIVES ACT, CAP. 55

45. (1) This Part amends and shall be read and construed as Amendments to the

one with the Notarial Profession and Notarial Archives Act, hereinafter Notarial

and Notarial

in this Part referred to as “the principal Act”.

Archives Act, Cap.

55. (2) This Part shall come into force on such date as the

Minister responsible for notarial affairs may, by notice in the

Government Gazette, appoint, and different dates may be so appointed

for different provisions and different purposes thereof.

Article 28 of the principal Act shall be amended as

46. follows>-

(a) immediately after sub-paragraph (iii) of paragraph (c)

of subarticle (1) of the said article there shall be inserted a new

sub-paragraph as follows >-

“(iv) where a party appearing declares to be acting

as a trustee in respect of the subject-matter of the Act, the

indication that the party appears as trustee in respect of that

subject-matter<” and

(b) immediately after subarticle (2) of the said article there

shall be added the following new subarticle>-

“(3) The above requirements, apart from those stated

in sub-paragraphs (a), (b), (c), (h), (i), (j) and (k) of subarticle

(1) of this article, shall not apply to a notarial deed whereby a

trust is created in terms of article 43A of the Trusts and

Trustees Act except in the case where it involves any act of

settlement under trust or unilateral declaration of a trust of

immovable property or real rights over such property or any

vesting or divesting of a trustee in respect of such property or

rights.”.

Article 50 of the principal Act shall be amended as follows>-

47. (a) immediately after paragraph (k) of subarticle (1) of the

said article there shall be inserted a new paragraph as follows>–

“(l) any act of settlement under trust or unilateral

declaration of a trust of immovable property or real rights

over such property or any vesting or divesting of a trustee in

respect of such property or rights and any act of settlement

under trust of any other property made in accordance with

article 43A of the Trusts and Trustees Act when the trustee is

a private trustee as defined in the said Act.”< and

(b) immediately after subarticle (8) there shall be inserted

the following new subarticle (9) as follows >-

“(9) In the case of a deed of settlement under trust of

property which is not immovable property, the note shall only

contain the date and nature of the act and the designation of

the settlor in accordance with paragraph (c) of subarticle (1)

of article 28< provided that the notary shall have no obligation

and shall not register such note if the settlor has exempted

him from so doing in the trust deed and the trustee is a person

who is authorised or not required to be authorised to act as a

trustee in terms of article 43 of the Trusts and Trustees Act.”.

48. Immediately after article 68 of the principal Act there shall Addition of new

article 68A to the

be a new article 68A as follows>-

principal Act.

(1) All deeds of trusts done by notarial deed in

terms of article 43A of the Trusts and Trustees Act, except

any act of settlement under trust or unilateral declaration of a

trust of immovable property or real rights over such property,

and any vesting or divesting of a trustee in respect of such

property or rights, shall not be accessible to any person other

than the settlor, the trustee or such other person as may be

permitted access by the terms of the trusts, the applicable law

or under authority of any court.

(2) The same rules shall apply to all other

documents relative to a trust held by the depository notary

in terms of the said Act.

(3) In the case of a testamentary trust, the

provisions of this Act which apply to wills shall apply

mutatis mutandis< however, the provisions of this article

shall not apply to all documents subsequently filed with

the depository notary in accordance with article 43A of

the Trusts and Trustees Act.

(4) For the better carrying out of its functions

under the Trust and Trustees Act, the Authority, as

defined in the said Act, shall have the right and power to

demand information from any depository notary relating

to any trust documents in his possession and in such a

case the depositary shall provide such information and

documents as may be requested notwithstanding any duty

of professional secrecy.”.

49. Immediately after article 84 of the principal Act, there shall Addition of new

Part IIIA and new

be inserted a new Part IIIA and a new article 84A as follows >-

article 84A to the

principal Act.

“Part IIIA – Of Notarial Trust Deeds

(1) The formalities for notarial acts for the

settlement of property under trusts, including unilateral

declarations of trusts and the vesting and divesting of a trustee

in respect of trust property applicable when a settlor wishes

to create a trust by means of a notarial trust deed or when it is

mandatory to do so in terms of article 43A of the Trusts and

Trustees Act, shall be laid down from time to time by the

Authority referred to in the Trusts and Trustees Act>

Provided that where the deed involves the transfer,

vesting or divesting of any immovable property or real rights

over such property, a notarial act shall be drawn up in

accordance with Part III of this Act.

(2) The custody of notarial trust deeds and other

trust documents relative to the same trust and their registration

by the notary, access thereto and the issue of copies and

extracts therefrom may also be regulated by such rules.

(3) In this article “notarial trust deed” shall include

such notarial deed whereby a trustee declares an inventory of

assets placed under trust in terms of article 43A of the Trusts

and Trustees Act.”.

PART IV

AMENDMENTS TO THE INCOME TAX ACT, CAP 123

50. (1) This Part amends the Income Tax Act and it shall be

read and construed as one with the Income Tax Act hereinafter in this

Part referred to as “the principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

51. Article 5 of the principal Act shall be amended as follows > –

(a) immediately following sub-paragraph (ii) of paragraph

(a) of subarticle (1) thereof, there shall be inserted the following

new sub-paragraph>-

“(iii) gains or profits arising from a transfer of the

beneficial interest in a trust in accordance with the provisions

of subarticle (19) of this article. For the purposes of this sub-

paragraph, “transfer of the beneficial interest in a trust” shall

include a transfer of a full or partial beneficial interest in a

trust and any alienation of any such full or partial interest as

a result of a disclaimer of such interest or as a result of a

person not remaining a beneficiary of such trust<”<

(b) in paragraph (b) of subarticle (1) thereof for the words

“donation, sale by instalments” there shall be substituted the words

“donation, settlement of property on trust, distribution and reversion

of property settled on trust, sale by instalments”<

(c) paragraph (g) of subarticle (2) thereof shall be deleted

and shall be substituted by the following new paragraph>–

“(g) gains and profits relating to a transfer by donation,

settlement of property in trust, or distribution or reversion of

property settled in trust means the difference in the market

value of the property at the time of the donation, settlement,

distribution or reversion and the cost of acquisition of the

property at the time of acquisition of the property by the donor,

settlor or trustee as the case may be. The relevant instrument

pursuant to which the said transfers were effected shall include

a declaration of the said market value.”<

(d) immediately after subarticle (17) thereof there shall

be inserted the following new subarticles (18) to (26) as follows>

(18) On the settlement of property on trust, where the

“Settlement of

trust is established or evidenced by means of a written instrument

it shall be deemed, for the purposes of this article that>–

(a) no transfer had taken place where the sole

settlor is also the sole beneficiary of such trust<

(b) such property had been donated directly by

the settlor of such trust to the beneficiaries that are

persons other than the settlor himself>

Provided that –

(i) the relevant trust instrument specifically

provides that the beneficiaries have an irrevocable

vested right to receive all the property settled in

trust as specified in the said written instrument< and

(ii) the relevant trust instrument specifically

provides that the beneficiaries are, in relation to each

settlor, persons referred to in subparagraph (i) of

paragraph (e) of subarticle (2) of this article,

whether they are in existence or not at the time of

such settlement, or are persons referred to in

subparagraph (ii) of the said paragraph in each case,

such persons being either alone or with the settlor

himself< and

(iii) the beneficiaries include persons who

are in existence at the time of the settlement of such

property on trust<

(c)

no loss or gain had arisen>

Provided that –

(i) the relevant trust instrument specifically

provides that the beneficiaries of such trust

comprise only persons referred to in sub-paragraph

(i) of paragraph (e) of subarticle (2) of this article,

whether they are in existence or not at the time of

such settlement, in relation to each settlor and may

also include the said settlor himself< and

(ii) the beneficiaries of such trust include at

the time of such settlement a person who by reason

of an interdiction, incapacitation, or of a physical

or mental impairment, or by reason of an irregular

or dissolute lifestyle is substantially limited in his

ability to administer or manage the property settled

in trust, or include at the time of such settlement a

person who by reason of a physical or mental

impairment is or may become unable to fully

provide for his own maintenance, and where the

trustee of such trust provides the Commissioner

with the necessary evidence proving such

interdiction, incapacitation, impairment or inability

in the form of medical certificates, court orders or

any other relevant documents which the

Commissioner may deem necessary< and

(iii) the beneficiaries of such trust include

persons who are in existence at the time of the

settlement of such property.

(19) (a) For the purposes of the provisions of sub-

paragraph (iii) of paragraph (a) of subarticle (1) of this article,

gains or profits shall be deemed to arise on the date of the

execution of a written instrument (hereinafter in this subarticle

referred to as “transfer instrument”) whereby there is a transfer

of the beneficial interest in a trust which includes taxable trust

property. For the purposes of this subarticle “taxable trust

property” means property referred to in sub-paragraphs (i)

and (ii) of paragraph (a) of subarticle (1) of this article>

provided that this phrase includes only such property, the

transfer of which, had it been carried out directly by the

relevant beneficiary, would have given rise to gains or profits

chargeable to tax in accordance with the provisions of this

Act.

(b) The gain or profit arising from the transfer of the

beneficial interest in a trust which has taxable trust property

shall be equal to the consideration for the said beneficial

interest as declared in the relevant transfer instrument. No

deductions shall be allowable against the consideration

payable to the transferor.

(c) The gain or profit that is determined in accordance

with paragraph (b) of this subarticle shall be taxable at the

rate specified in subarticle (6) of article 56 of this Act. No

relief, reduction, credit or set-off of any kind shall be made in

respect of such tax.

(d) In addition to the requirements laid down in Sub-

Title VII of Title VI of Part II of Book Second of the Civil

Code, any person transferring the beneficial interest in a trust

which includes taxable trust property shall, within forty-five

days of the date on which the transfer instrument was executed,

provide the trustee of such trust with an authenticated copy

of the said transfer instrument and shall require the trustee to

collect an amount of tax equal to the tax determined in

accordance with the provisions of paragraph (c) for onward

payment to the Commissioner.

(e) The tax so collected by the trustee from the

transferor in accordance with the provisions of paragraph (d)

shall be a debt due from the trustee to the Commissioner

payable by not later than the fourteenth day following the

end of the month in which the trustee had collected the tax.

Together with this payment, the trustee shall provide the

Commissioner with>-

(i) an account of the gains or profits together with

a list of all the assets making up the taxable trust property

on the date the transfer instrument was executed on such

form as may be prescribed<

(ii) an authenticated copy of the relevant transfer

instrument< and

(iii) a copy of the last financial statements of the

trust.

(f) The trustee of the relevant trust shall, by not later

than fifteen days from the date when he receives

acknowledgement from the Commissioner of receipt of the

tax and documents referred to in paragraph (e), furnish the

parties to the transfer instrument with a certificate evidencing

that the tax has been paid and that his obligations under

paragraph (e) have been fulfilled.

(g) Notwithstanding the provisions of Sub-Title VII

of Title VI of Part II of Book Second of the Civil Code, any

transfer of a beneficial interest in a trust which includes taxable

trust property shall not take place and shall not have any effects

for the purposes of any law unless the said transfer is made

by means of a transfer instrument and unless the transferor

and the trustee have fulfilled their obligations in accordance

with the provisions of paragraphs (d) and (e) of this subarticle.

(h) Subject to the provisions of article 10A of the

Income Tax Management Act, the person transferring the

beneficial interest in a trust which includes taxable trust

property shall not be obliged to disclose the existence of such

gains or profits in any return made pursuant to the provisions

of the Income Tax Acts and no further tax shall be payable

on such gains or profits.

(i) The provisions of this article shall not apply -

(i) where the Commissioner is satisfied that an

irrevocable disclaimer of a beneficial interest was not

effected with the sole or main purpose of avoiding,

reducing or postponing liability to tax and where he has,

at his discretion, ordered in writing that the provisions

of this article are not applicable to such a disclaimer<

(ii) to any transfer of beneficial interest in a trust

where the trustee holds property solely for the purpose

of a designated commercial transaction as defined in

subarticle (24) of this article.

(20) (a) Where, in the administration of a trust, the

trustee transfers property of such trust, gains shall be

the administ-

ascertained in accordance with the provisions of this article

and the cost of acquisition shall be determined in accordance

with the provisions of paragraphs (b) and (c) of this

subarticle.

(b) In the case where such property had been settled

in trust in any of the circumstances described in subarticles

(18) and (24) of this article where the settlor is also a

beneficiary of the trust, the cost of acquisition shall be equal

to the cost of acquisition of such property at the time it was

originally acquired by the settlor of such trust. Where the

property had been settled in the circumstances described in

paragraph (a) of subarticle (18) or paragraph (a) of subarticle

(24) of this article, it shall be deemed for the purposes of this

article that the settlor has directly transferred such property.

(c) Subject to the provisions of paragraph (b) of

this subarticle, the cost of acquisition shall be the cost of

acquisition at the time when such property was first acquired

as trust property of that trust whether by way of settlement or

otherwise.

(21) (a) For the purposes of this article, property is

distributed to beneficiaries of a trust when the trustee transfers

property of a trust to any beneficiary of such trust provided

that such transfer does not constitute a reversion of property

settled on trust as defined in paragraph (a) of subarticle (22)

of this article.

(b) Where property which had been settled on trust

is distributed to the beneficiaries it shall be deemed that for

the purpose of this article>-

(i) no transfer took place in the case where such

property had been settled in the circumstances described

in paragraph (b) of subarticle (18) of this article provided

that the property was distributed to beneficiaries which

were not settlors of the trust<

(ii) property distributed to persons referred to

in sub-paragraph (i) of paragraph (e) of subarticle (2) of

this article in relation to the settlor, was donated directly

by the settlor to such beneficiaries where such property

had been settled in the circumstances described in

paragraph (c) of subarticle (18) of this article<

(iii) notwithstanding the relevant deeming

provisions of subarticle (18) of this article, such property

was donated directly by the original settlor of that

property to such beneficiaries where such property had

been settled in the circumstances described in paragraphs

(b) and (c) of subarticle (18) of this article and was

subsequently distributed to a beneficiary that was also a

settlor of such trust>

Provided that the said beneficiary is a person

referred to in sub-paragraph (i) of paragraph (e) of

subarticle (2) of this article in relation to the said original

settlor who had owned such property prior to its

settlement in trust.

(c) The provisions of subarticle (20) of this article

shall apply mutatis mutandis in the circumstances of a

distribution of property as they apply to the transfer of property

in the administration of a property of a trust.

(22) (a) For the purpose of this article, property

Reversion of

settled on trust reverts where there is a transfer to a person

who is the settlor of a trust (even where such person is a

beneficiary of that same trust) of property which had,

immediately before its settlement into such trust, been owned

by that same settlor.

(b) Where property which had been settled in trust

in the circumstances described in subarticle (18) of this article

reverts back to the settlor, notwithstanding the relevant

deeming provisions of subarticle (18) of this article, it shall

be deemed for the purposes of this article that such property

had never been settled into such trust.

(c) Where property had been settled into trust in

circumstances other than those described in paragraph (b) of

this subarticle, and where such property reverts back to the

settlor for the reasons referred to in article 16 of the Trusts

and Trustees Act, it shall be deemed for the purpose of this

article that no loss or gain had arisen in the event of such

reversion.

(d) The provisions of subarticle (20) of this article

shall apply mutatis mutandis in the circumstances of a

reversion of property settled on trust as they apply to the

transfer of property in the administration of a property of a

trust.

(23) In the case of a subsequent transfer of property

by a settlor or beneficiary, as the case may be>-

(a) where such property had reverted to such

settlor< or

(b) where such property was distributed to the

beneficiaries, and where>-

(i) such distribution was deemed, in

accordance with the provisions of this article, to be

a direct donation from the settlor of the trust to the

said beneficiaries of such trust< and

(ii) such property is transferred by such

beneficiaries within the period of time referred to

in paragraph (f) of subarticle (2) of this article from

the date of such deemed donation<

capital gains shall be ascertained in accordance with the

provisions of this article by taking into account the cost of

acquisition of such property at the time it was originally

acquired by the settlor of the trust before the relevant

settlement.

(24) (a) No transfer of the property shall be

deemed to have taken place>-

(i) on the settlement of property consisting of

shares in one company when the settlor who owned the

said shares prior to the settlement thereof on trust is also

the sole beneficiary of the trust<

(ii) on the settlement of property consisting of

shares in one company when the settlement is made by

more than one settlor, and the said settlors are the only

beneficiaries of the trust, and the beneficiaries are

entitled to benefit in accordance with the terms of the

trust in the same proportion as they would have done as

settlors<

(iii) on the reversion to the settlors of the shares

referred to in sub-paragraphs (i) and (ii) of this paragraph

in the same proportion which the settlors would have

been entitled to when the property was owned by them

as settlors immediately prior to the settlement<

(iv) upon the transfer of shares in one company

purchased by a trustee with money settled in trust by a

settlor for the purpose of acquiring, purchasing or

subscribing to such shares, when the said transfer is made

to the sole beneficiary of the trust who is also the original

settlor<

and in each case, the trustee is a person authorised or not

required to be so authorised to act as a trustee in terms of

articles 43 and 43A of the Trusts and Trustees Act.

(b) No transfer of the property of a trust shall be

deemed to have taken place where the trustee of such trust

transfers all the property of such trust, which transfer involves

only a change in the trustee of such trust and there is no change

in the beneficiaries or in the beneficial interest.

(c) No loss or gain shall be deemed to have arisen

where property is settled into a trust and where the trustee

holds such property for the purpose of designated commercial

transactions or where such property so settled reverts to the

settlor. Where such property is transferred by the trustee of

such trust to its beneficiaries (or to any person through a

judicial sale or otherwise), the cost of acquisition shall be the

cost at which the settlor of such trust had acquired the said

property. In such a case, the provisions of subarticle (10) of

this article can be availed of by the settlor in the same manner

as if the transfer of the property by the trustee had been made

directly by the settlor himself. Where such property is not so

transferred but reverts to the settlor, or where the settlor waives

his right to a reversion of the property, and there is a

subsequent transfer of such property, the cost of acquisition

shall be the cost at which the settlor had acquired the said

property prior to its settlement into the said trust. Subject to

the approval of the Commissioner, the provisions of this sub-

paragraph shall also be applicable where a property is settled

into a trust for the purpose of a commercial transaction not

being a designated commercial transaction. For the purposes

of this sub-paragraph, “designated commercial transactions”

means the custody of investment instruments, the

establishment or holding of real or personal security interests

(including hypothecs, privileges, pledges and guarantees), and

any other commercial transaction which may be prescribed,

while “commercial transaction” shall have the meaning

assigned to it in article 2 of the Trusts and Trustees Act.

(25) (a) Where a person that is authorised or not

required

to be so authorised to act as a trustee in terms of

articles 43 and 43A of the Trusts and Trustees Act holds in

relationships.

its own name shares in a company on behalf of the beneficial

owner of such shares, and where such person transfers or

otherwise disposes of the beneficial ownership of such shares

to a third party, such a transaction shall be deemed to constitute

a transfer of shares for the purposes of this article.

(b) Where a change in the registered holder of shares

in a company does not involve a change in the beneficial

ownership thereof, such change shall not be deemed to

constitute a transfer of shares for the purposes of this article

provided that the registered holder of such shares remains a

person authorised or not required to be so authorised to act as

a trustee in terms of articles 43 and 43A of the Trusts and

Trustees Act.

(c) For the purposes of this subarticle “beneficial

owner” means a person who is the real owner of, or who is

otherwise beneficially entitled to, the shares which are

subscribed or held on his behalf and in his interest by a person

authorised or not required to be so authorised to act as a trustee

in terms of articles 43 and 43A of the Trusts and Trustees Act

and “beneficial ownership” shall be construed accordingly.

(d) When the shares referred to in this subarticle are

transferred either by the trustee to a person other than the

settlor or by the settlor to a third party after the shares have

reverted to the settlor, the acquisition cost shall be deemed to

be the cost of acquisition of the shares by the settlor when the

shares were originally purchased or subscribed by the settlor

prior to the shares being settled into the trust.

(26) The Minister may make regulations

determining the method of calculation of capital gains in

relation to transfers involving trusts and to prescribe any

matter that may be prescribed in relation to such transfers.”.

52. Immediately after article 27A of the principal Act there Addition of new

articles 27B to 27D

shall be added the following new articles 27B to 27D>

to the principal Act.

“Taxation of

27B. (1) Where at least one of the trustees of a trust

is a person resident in Malta, tax shall be payable on any

income attributable to a trust accruing or deriving in the year

immediately preceding the year of assessment commencing

on such date as the Minister responsible for finance may, by

notice in the Government Gazette, appoint and for each

subsequent year.

(2) For the purposes of this article, “income

attributable to a trust” means the aggregate of any relevant

income referred to in article 4 of this Act which has accrued

to or is derived by a trustee or trustees of a trust from property

which was settled in such trust and from property which was

acquired in the administration of such trust including any

income from the employment of such property.

27C. The trustee of a trust shall be answerable for doing

all matters and things required to be done under the Income

Tax Acts for the purposes of the determination, assessment

and payment of tax in connection with the income attributable

to a trust. Where two or more persons act in the capacity of

trustees of the same trust, they shall be jointly and severally

so answerable.

27D. (1) (a) The trustee of a trust that has been

Trusts treated

companies. granted authorisation under subarticle (3) of Article 43 of the

Trusts and Trustees Act where such trustee is a person resident

in Malta (hereinafter a resident trustee) may elect, in

accordance with the provisions of this subarticle, to have the

income attributable to a trust treated in the manner provided

for in paragraph (c) of this subarticle. Such election, which

shall be irrevocable, is to be effected on the date of the

establishment of such trust, or the date of appointment of the

said resident trustee, whichever is the later, and is to be made

on such form and under such conditions as may be prescribed.

The said trustee shall submit such form to the Commissioner

not later than 30 days from the date of the establishment of

such trust or the appointment of a resident trustee whichever

is the later.

(b) An election as provided for in this subarticle may

only be made where the trust is established by a written

instrument which specifically provides that the income

attributable to a trust shall comprise only of income in the

form of royalties, dividends, capital gains, interest, rents or

any other income from investments. For the purposes of

paragraph (c) of this subarticle, such income shall not

constitute income from a trade, business, profession or

vocation.

(c) Where an election has been made in accordance

with the provisions of this subarticle, the trustee of such trust

shall compute the chargeable income in relation to the income

attributable to a trust for the relevant year of assessment as if

such income was derived by a company ordinarily resident

and domiciled in Malta. Tax thereon shall be charged at the

rate specified in subarticle (6) of article 56 of this Act and

payable in the same manner applicable to such companies.

Distributable profits shall be allocated in the same manner

applicable to such companies and distributions of such

allocated profits to beneficiaries of such trust shall be treated

as if they were dividends distributed to shareholders of such

a company. For the purposes of this subarticle, distributable

profits of a trust shall mean the total profits which would be

available for distribution to the beneficiaries resulting from

the income attributable to a trust. The trustee shall keep all

records and submit all returns and documents to the

Commissioner as is required in the case of such companies.

Where the Income Tax Acts require documents which are to

comply with the Companies Act, the trustee shall submit

similar documents, certified by a certified public auditor, and

which are either provided for under the Trusts and Trustees

Act or, in the absence of such provision, which comply as far

as is possible, with the Companies Act.

(2) The trustee of a trust where such trustee is a

person in possession of a valid licence issued in terms of the

Banking Act or the Financial Institutions Act may apply to

the Commissioner for a determination that property has been

settled into such trust as a result or consequence of another

transaction or set of transactions, and that the duration of such

trust is of a temporary nature lasting only until such time as is

necessary so that the said transaction or transactions may be

effectively concluded. Such an application may be made on

such form and under such conditions as may be prescribed.

Where the Commissioner makes, at his discretion, such a

determination>-

(i) no deduction or exemption contemplated by

this Act shall be allowable or granted in relation to the

income attributable to a trust< and

(ii) the said income shall be taxable at the rate

specified in subarticle (6) of article 56 of this Act< and

(iii) the tax payable as provided for in this

subarticle shall not be reduced whether by way of relief

of double taxation or otherwise, and no set-off or credit

shall be made or allowed in respect of such tax. The

resulting tax shall be payable by such time as may be

prescribed< and

(iv) the trustee of such trust shall declare such

income and property settled in trust on such form as may

be prescribed and no further disclosure of such income

shall be required by the beneficiaries of such trust< and

(v) no further tax shall be payable on such income.

(3) (a) Where neither an election in accordance

with subarticle (1) nor a determination in accordance with

subarticle (2) has been made the provisions of paragraphs

(b), (c), (d) and (e) of this subarticle shall apply.

(b) In the case where –

(i) all the income attributable to a trust consists

of income either arising outside Malta or income referred

to in paragraph (c) of subarticle (1) of article 12 of this

Act< and

(ii) all the beneficiaries of the trust are persons

who are either not ordinarily resident in Malta or not

domiciled in Malta, or are persons whose income is

totally exempt from tax under the provisions of article

12 of this Act<

it shall be deemed that such income is not income attributable

to a trust but is income derived directly by such beneficiaries,

and that where the income arising outside Malta is received

in Malta by the trustee of the trust, it shall be deemed to be

received in Malta by such beneficiaries. The trustee shall

notify the beneficiary of such income and shall inform him

of his duties under the Income Tax Acts.

(c) In the case where the income attributable to a

trust comprises solely income referred to in sub-

paragraph (i) of paragraph (b) of this subarticle or

dividends distributed out of the profits allocated to the

foreign income account or out of the profits of an

international trading company which were derived by

such company whilst it was an international trading

company, or both such income and dividends, and all

the beneficiaries of such trust are persons not resident

in Malta, and the trustee of such trust provides the

Commissioner with a certificate as referred to in

subarticle (3) of article 5 of the Income Tax Management

Act, it shall be deemed that such income does not

constitute income attributable to a trust and that such

income is derived directly by such beneficiaries.

(d) Without prejudice to the provisions of paragraphs

(b) and (c) of this subarticle, capital gains derived in

accordance with the provisions of article 5 of this Act from

the transfer of property settled in trust in the administration

of such trust or in the distribution or reversion of such property

shall form part of the income attributable to a trust.

(e) The chargeable income in relation to the income

attributable to a trust shall be computed as if the trust was a

person that is ordinarily resident and domiciled in Malta but

shall exclude amounts of income attributable to a trust

allocated to beneficiaries as determined in accordance with

the provisions of subarticle (4) of this article.

(4) For the purpose of paragraph (e) of subarticle (3)

of

this

article>-

beneficiaries.

(a) amounts of income attributable to a trust

allocated to beneficiaries shall consist of -

(i) amounts over which beneficiaries had a

vested right in the year immediately preceding the

year of assessment< and

(ii) amounts over which an entitlement had

been bestowed to beneficiaries other than in the

manner referred to in subparagraph (i) of this

paragraph, and where such entitlement had been so

bestowed by the end of the year immediately

preceding the year of assessment< and

(iii) amounts representing income

attributable to a trust for the year of assessment

which were distributed to beneficiaries by the end

of the year immediately preceding the year of

assessment, and which amounts do not form part

of the amounts referred to in subparagraphs (i) and

(ii) of this paragraph.

(b) In order that the amounts referred to in

paragraph (a) of this subarticle may be excluded in terms

of paragraph (e) of subarticle (3) of this article, the trustee

must ensure that>-

(i) the return referred to in article 24A of the

Income Tax Management Act has been submitted

in accordance with the provisions of that same

article< and

(ii) he has furnished the beneficiaries in

question with a certificate indicating, for the relative

year of assessment and where applicable, the

relevant amounts referred to in paragraph (a) of this

article on such form and giving such additional

details as may be prescribed< and

(iii) where the amounts referred to in

subparagraphs (i) and (ii) of paragraph (a) of this

subarticle were not distributed to the beneficiaries

by the 31 st March following the end of the year

immediately preceding the relevant year of

assessment, a payment of tax has been made on

behalf of the beneficiaries equivalent to the tax

which would result were the said amounts charged

to tax at the rate specified in subarticle (6) of article

56 of this Act. Where such distribution is not made

by the said date, this tax becomes a debt due from

the relevant trustee to the Commissioner payable

by not later than the 30 th June following the end of

the said year. The tax so paid shall be available as a

credit against the beneficiary’s tax liability, or for

a refund as the case may be, for the relevant year of

assessment.

(5) Except as provided in subarticle (4) of article 56

of this Act, tax shall be charged upon the chargeable income

in relation to the income attributable to a trust at the rate

specified in subarticle (6) of article 56 of this Act.

(6) (a) Where foreign tax has been paid on the income

attributable to a trust, such tax shall be deemed to have been

paid by a trustee of such trust, whether it was paid by a trustee

or a beneficiary of such trust.

(b) A claim for relief of double taxation with

respect to the tax referred to in paragraph (a) of this paragraph,

may only be made through the provisions of articles 79 to 88

of this Act. Any reference in these articles to a person, shall,

for the purposes of this subarticle, be deemed to be a reference

to a trustee of a trust while any reference to income or income

of a person, shall be deemed to be a reference to the income

attributable to a trust.

(7) Unless otherwise provided for in this article, no

person shall be charged to further tax under this Act in respect

of income attributable to a trust which has been charged to

tax in accordance with the provisions of subarticles (1), (2)

and (3) this article.

(8) (a) Amounts allocated to beneficiaries referred

Beneficiaries.

to in paragraph (a) of subarticle (4) of this article shall be

aggregated with other income of the said beneficiaries for

the purposes of article 4 of this Act and tax shall be charged

accordingly for the year of assessment commencing on such

date as the Minister responsible for finance may, by notice in

the Government Gazette, appoint and for each subsequent

year of assessment.

(b) Amounts allocated to beneficiaries referred

to in paragraph (a) of subarticle (4) of this article shall be

treated as income derived by the beneficiary at the time it

vests, or the beneficiary becomes entitled to it, or it is

distributed, as the case may be.

(c) Income distributed to beneficiaries shall retain

its character as to type and country of source. A claim for

relief of double taxation with respect to such income may be

made in accordance with the provisions referred to in article

74 of this Act notwithstanding that foreign tax may have been

paid by the trustee or the beneficiary himself.

Interpretation.

(9) (a) For the purposes of this article the terms

“beneficiary”, “settlor”, “trust” and “trustee” shall have the

meaning assigned to them by article 2 of the Trusts and

Trustees Act.

(b) Words and expressions used in this article and in

other parts of the Income Tax Acts which relate to the income

attributable to a trust, shall, in so far as their meanings are not

defined by the Income Tax Acts, have the meaning assigned

to them in the Trusts and Trustees Act and any rules and

regulations made thereunder.

(10) (a) Where in the opinion of the Commissioner,

transactions involving a trust are carried out with the sole or

main purpose of reducing the amount of tax payable by a

person, the Commissioner shall disregard such trust and the

income of such person shall be determined as if it had been

derived without the involvement of such trust.

(b) Article 57 of the Income Tax Management

Act shall apply mutatis mutandis in the circumstances relating

to trustees. References in that article to>

(i) “warrant holder” shall be construed as

references to any person acting as trustee as provided

for under the Trusts and Trustees Act<

(ii) “Board” shall be construed as references to

the Malta Financial Services Authority<

(iii) “article 14(1)(a)(i) of the Accountancy

Profession Act” shall be construed as references to article

51 of the Trusts and Trustees Act<

(iv) “documents” shall be construed as references

to any document required to be produced by a trustee in

relation to a trust under Maltese law<

(v) “1 st January, 1998” shall be construed as

references to the date of the coming into force of the

Trusts and Trustees Act.”

53. In subarticle (2) of article 30 of the principal Act, for the

words “allied institution, trust, foundation” there shall be substituted

the following words “allied institution, foundation”.

Amendment of

In subarticle (10) of article 56 of the principal Act>

54. article 56 of the

principal Act.

(a) in paragraph (b) thereof, for the words “15c on every

lira.” there shall be substituted the words “15c on every lira<”<

(b) immediately after paragraph (b) thereof, there shall be

included the following new paragraph>

“(c) Where income has been deemed to be derived

directly under the provisions of paragraph (b) of subarticle

(3) of article 27D of this Act by an individual who has been

granted a residence permit under article 7 of the Immigration

Act, such income shall be charged to tax at the rate of 15

cents on every lira as if such income constitutes separate

chargeable income.”.

Article 61 of the principal Act shall be amended as follows>– Amendment of

55. article 61 of the

principal Act.

(a) in the Maltese text only, paragraphs (i) and (ii) shall be

renumbered as (a) and (b), while sub-paragraphs (a) and (b) shall

be renumbered as (i) and (ii)< and

(b) in subparagraph (ii) of paragraph (a) thereof, for the

words “and domiciled in Malta<” there shall be substituted the

words “and domiciled in Malta< or”< and

(c) immediately after sub-paragraph (ii) of paragraph (a)

thereof there shall be included the following new sub-paragraph>-

“(iii) a trustee of a trust where the beneficiaries of such

trust are persons referred to in paragraphs (i) and (ii) of this

subarticle<”<

Article 70 of the principal Act shall be amended as follows>- Amendment

56. article 70 of the

principal Act.

(a) in subarticle (1) thereof, for the word “trustee” wherever

it occurs, there shall be substituted the word “administrator”< and

(b) in subarticle (2) thereof the word “trust,” shall be deleted<

and for the words “a trustee” there shall be substituted the words

“an administrator”.

Article 72 of the principal Act shall be deleted.

57. PART V

AMENDMENTS TO THE EXTERNAL

TRANSACTIONS ACT, CAP. 233

58. (1) This Part amends and shall be read and construed as

one with the External Transactions Act, hereinafter referred to as “the

principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint.

59. Subarticle (1) of article 2 of the principal Act shall be

amended as follows>-

(a) for the definition of “non-resident” there shall be

substituted the following new definition>-

“ “non resident” means>

(a) any person, body corporate or other entity

which is not a resident<

(b) any resident trustee in terms of a trust where

any of the beneficiaries are non-resident and in the case

of a discretionary trust, where the power of appointment

or any discretion may be exercised in favour of any non-

resident”< and

(b) for the definition of “resident” there shall be substituted

the following new definition>-

“ “resident” means>

(a) any natural person regardless of nationality

whose place of business is ordinarily in Malta or in a

Member State or who has resided in or has the intention

to reside in Malta or in a Member State for a continous

period of one year<

(b) any body corporate incorporated in or under

the laws of Malta or of a Member State, or any entity

which operates from or is otherwise registered in Malta

or in a Member State<

(c) any trustee in terms of a trust whose place of

residence is ordinarily outside Malta or any Member

State but where all the beneficiaries of the trust are

determined and are residents and in case of a

discretionary trust where the power of appointment or

any discretion may be exercised only in favour of

residents.”.

PART VI

AMENDMENTS TO THE MERCHANT SHIPPING ACT,

60. (1) This Part amends and shall be read and construed as Amendment to the

Merchant Shipping

one with the Merchant Shipping Act, hereinafter referred to as “the Act, Cap. 234.

principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for merchant shipping may, by notice in the

Government Gazette, appoint.

61. In subarticle (4) of article 38 of the principal Act after the Amendment of

words “any other enactment.” there shall be inserted the words “Any subarticle

article 38 of the

such security trust shall be governed by the provisions of article 2095E principal Act.

of the Civil Code when the applicable law is the law of Malta.”.

PART VII

AMENDMENTS TO THE IMMOVABLE PROPERTY

(ACQUISITION BY NON-RESIDENTS) ACT, CAP. 246

62. (1) This Part amends and shall be read and construed as Amendments to the

Immovable Property

one with the Immovable Property (Acquisition by Non-Residents) Act, (Acquisition by

hereinafter referred to as “the principal Act”.

Non-Residents) Act,

(2) This Part shall come into force on such date as the Minister

responsible for finance may, by notice in the Government Gazette, appoint.

Article 2 of the principal Act shall be amended as follows>- Amendment of

63. article 2 of the

principal Act.

(a) in paragraph (c) of the definition of “non-resident

person” there shall be deleted the word “trust,” and in sub-paragraph

(iii) thereof, for the words “ or is registered in the name of a

company licensed to act as a nominee company” there shall be

inserted the words “or is registered in the name of a trustee for the

benefit of a non-resident person”<

(b) immediately after paragraph (c) there shall be added a

new paragraph (d) as follows>-

“(d) any trustee in terms of a trust who is>

(i) a non-resident person unless all the

beneficiaries of the trust are determined and are residents

of Malta and in case of a discretionary trust where the

power of appointment or any discretion may be exercised

in favour of residents of Malta<

(ii) a resident of Malta where any of the

beneficiaries are non-resident persons and in case of a

discretionary trust, where the power of appointment or

any discretion may be exercised in favour of any non-

resident person<”.

PART VIII

AMENDMENTS TO THE LAND REGISTRATION ACT,

64. (1) This Part amends and shall be read and construed as

one with the Land Registration Act, hereinafter referred to as “the

principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for land registration may, by notice in the

Government Gazette, appoint, and different dates may be so appointed

for different provisions and different purposes thereof.

65. Sub-paragraph (a) of subarticle (1) of Article 12 of the

principal Act shall be deleted and substituted by the following>-

“(a) every contract conveying the ownership of

immovable property, or any real right over such property including

transactions relating to immovable property under trusts, or

whereby any act having the effect of conveying the ownership of

immovable property or any real right over such property, is

dissolved, rescinded or revoked, and every contract creating or

varying such right or whereby any such right is converted into any

other of such rights or is waived, and every contract whereby

immovable property is partitioned, and every act having a

declaratory effect as to the ownership of, or any real right over,

immovable property (including a deed made for a purpose of the

Duty on Documents and Transfers Act, 1993 and an inventory

drawn by a trustee accepting a testamentary trust and a unilateral

declaration of trust with regard to additional trust property, but

excluding any other deed of inventory), and every contract of

antichresis< and”.

66. In Article 24 of the principal Act, immediately after the words “only Amendment of

article 24 of the

for a limited period,” there shall be inserted the words “or is owned under trusts.” principal Act.

67. In paragraph (a) of Article 25 of the principal Act immediately Amendment of

article 25 of the

after the word “the owner,” there shall be inserted the words “a trustee,”. principal Act.

PART IX

AMENDMENTS TO THE MALTA FINANCIAL SERVICES

AUTHORITY ACT, CAP. 330

68. (1) This Part amends and shall be read and construed as Amendments to the

Malta Financial

one with the Malta Financial Services Authority Act, hereinafter in this Services Authority

Part referred to as “the principal Act”.

Act, Cap. 330.

(2) The provisions of this Part shall come into force on such

date as the Minister responsible for finance, may by notice in the Gazette

establish and different dates may be so established for different

provisions or different purposes of this Part.

Article 18 of the principal Act shall be amended as follows> Amendments of

69. article 18 to the

principal Act.

(a) the present provision shall be renumbered as subarticle

(1) thereof< and

(b) immediately after subarticle (1) thereof as renumbered

there shall be added the following new subarticle (2)>-

“(2) The Authority may, subject to such conditions it

may deem fit to impose and to such procedures as may be

applicable according to law, disclose information to overseas

central banks and other authorities responsible for monetary

policy and, where appropriate to other overseas public

authorities responsible for overseeing payment systems, where

such information relates and is connected to their respective

functions in terms of law.”.

70. Immediately after article 20A of the principal Act, there shall Addition of new

articles 20B and

be added the following two new articles 20B and 20C>-

20C to the principal

Act.

20B. (1) The Minister may, acting on the advice of the

Conglomerates.

Authority, make regulations for the transposition of Directive

2002#87#EC of the European Parliament and of the Council

of 16 December 2002 and to provide for the supplementary

supervision of credit institutions, financial institutions,

insurance undertakings and investment firms in a financial

conglomerate, and to otherwise regulate the supervision of

financial conglomerates and financial groups with cross-

sectoral financial activities.

(2) Regulations made by the Minister in virtue of

subarticle (1) shall, in particular and without prejudice to the

authority vested in the Minister by the said subarticle>

(a) provide for the appointment of a coordinator

responsible for coordination and examination of

supplementary supervision, for the assessment of the

financial situation of a group, including solvency

requirements, risk concentration and intra-group

transactions, and the means for obtaining from the

entities within a financial group and from other

competent authorities, the information necessary for the

performance of this supplementary supervision and may

provide for consultation and the sharing and exchange

of information with overseas competent authorities, as

may be necessary<

(b) provide for the establishment and imposition

of administrative penalties or other measures for the

contravention of any of the regulations, and to provide

for appeals therefrom to the Financial Services Tribunal.

20C. Regulations which are required to be issued

by the Minister upon the advice of the Authority or after

consultation therewith under any Act in respect of which the

Authority has been appointed as the competent authority, may

be made in the English language only.”.

PART X

AMENDMENTS TO DUTY ON DOCUMENTS AND

TRANSFERS ACT, CAP. 364

71. (1) This Part amends and shall be read and construed as one

with Duty on Documents and Transfers Act, hereinafter referred to as

“the principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

72. Immediately after article 32A of the principal Act, a new

article to be numbered 32B shall be inserted as follows>-

32B. (1) Notwithstanding any other provisions of this

Act,

no

duty shall be chargeable on any transfer of immovable

property or any real right over an immovable property>

(a) by a settlor to the trustees of a trust of which

the settlor is the sole beneficiary and where the settlor has

an irrevocable vested right to receive the trust property<

(b) by a settlor to the trustees of a trust created

for the purpose of a designated commercial transaction<

(c) by a settlor to the trustees of a trust created for

the purpose of a commercial transaction not being a

designated commercial transaction but which has been

approved by the Commissioner for the purposes of this

paragraph<

(d) between trustees consequent to a change in

the trustees (whether by addition, substitution or

otherwise) holding the immovable property upon trust

provided that no beneficial interest in the trust is also

transferred upon such change in trustees<

(e) by trustees to the settlor where the trust

property reverts back to the settlor< and

(f) by trustees to a beneficiary of the trust where

duty has been previously charged on the initial transfer

by the settlor to the trustees in accordance with subarticle

(1) of article 32< provided that duty shall be chargeable

in relation to any increase in value between the date of

the initial transfer to the trustees and the subsequent

distribution to the beneficiaries>

Provided that in all cases the trust must be established

or evidenced by means of a written instrument.

For the purposes of this subarticle, “designated

commercial transactions” means the custody of

investment instruments, the establishment or holding

of real or personal security interests (including

hypothecs, privileges, pledges and guarantees), and any

other commercial transaction which may be prescribed,

while “commercial transaction” shall have the meaning

assigned to it in article 2 of the Trusts and Trustees Act.

(2) Where a beneficiary under a trust for

immovable property assigns or otherwise transfers inter vivos

to a third party his beneficial interest in such trust, such a

transfer shall be deemed to constitute a transfer for the

purposes of this Act, and the transfer value shall be deemed

to be the amount limited to that part of the value of the

immovable property which is proportionate to the value of

the beneficial interest transferred by such beneficiary.

(3) The provisions of sub article (2) of this article shall

apply mutatis mutandis in those cases when there is any change

in beneficiary, including a disclaimer or renunciation whether

in full or in part of a beneficiary’s entitlement under a trust<

Provided that where the Commissioner is satisfied that

an irrevocable disclaimer of a beneficial interest was not

effected with the sole or main purpose of avoiding, reducing

or postponing liability to duty, he may at his discretion order

in writing that the provisions of this subarticle shall not apply

to such a disclaimer and that no duty shall be chargeable.”.

73. In subarticle (6) of article 33 of the principal Act, immediately

after the words “testamentary executors” there shall be inserted the words “and

trustees”.

74. In article 34 of the principal Act immediately after the words

“as may be prescribed.” there shall be inserted a new paragraph as follows>-

“For the purpose of determining the applicability of the

benefits of this Article whenever the immovable property or real

rights thereon are held on trust, reference shall be made to the

beneficiaries of the trust as indicated in the declaration, and the

trustee shall be ignored for such purpose.”.

Article 35 of the principal Act shall be amended as follows>-

75. (a) subarticles (3) to (6) shall be renumbered as subarticles

(4) to (7) respectively<

(b) immediately after subarticle (2) there shall be added a

new subarticle (3) as follows>-

“(3) For the purpose of determining the applicability

of the benefits referred to in subarticles (1)(a) and (2) of this

Article whenever the dwelling house is transferred causa

mortis to a trustee, reference shall be made to the beneficiaries

of the trust as indicated in the declaration, and the trustee

shall be ignored for such purpose. No reference to the

beneficiaries of a trust shall be made for the purpose of

subarticle (1)(b) of this article.”< and

(c) in subarticle (6) as renumbered, immediately after the

words “which is not merely potestative” there shall be inserted the

words “or of a transfer causa mortis upon trust”.

76. Immediately after article 42 of the principal Act, a new article Addition of new

article 42A to the

to be numbered 42A shall be inserted as follows>-

principal Act.

42A. The provisions of Article 32B shall apply

mutatis mutandis to any transfers of marketable securities,

applicable to

and references to “immovable property” in Article 32B shall

be construed as references to “marketable securities” for the

purposes of this article.”.

77. In subarticle (4) of article 47 of the principal Act, for the Amendment

article 47 of the

words “are held by persons who” there shall be substituted by the words principal Act.

“are held by persons who, or by a trustee of a trust the beneficiaries of

which are all persons who”.

PART XI

AMENDMENTS TO THE INVESTMENT SERVICES

ACT, CAP. 370

78. (1) This Part amends and shall be read and construed as one with Amendments to the

Investment Services

the Investment Services Act, hereinafter referred to as “the principal Act”.

Act, Cap. 370.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

Article 12 of the principal Act shall be amended as follows> Amendment to

79. article 12 of the

principal Act.

(a) paragraphs (j) and (k) of subarticle (1) thereof shall be

respectively re-numbered as (l) and (m)<

(b) immediately after paragraph (i) of subarticle (1) thereof,

there shall be added the following new paragraph (j)>-

“(j) transpose the requirements of Directive 2002#87#EC

of the European Parliament and of the Council of 16 December

2002 on the supplementary supervision of credit institutions,

insurance undertakings and investment firms in a financial

conglomerate, as may be applicable to a licence holder<”.

80. Paragraph 4 of the First Schedule to the principal Act shall Amendment

First Schedule to the

be amended as follows>-

principal Act.

(a) in sub-paragraph (a) the words “this Schedule< or”

shall be substituted by the words “this Schedule>”<

(b) immediately after sub-paragraph (a) there shall be

added the following proviso>-

“Provided that for the purposes of this sub-paragraph any

person who is authorised or otherwise exempt from authorisation

in the terms of Article 43 or 43A of the Trusts and Trustees Act

shall not by virtue of holding such assets be required to have a

licence in terms of this sub-paragraph if such person does not

provide an investment service and delegates all activities which

are investment services in terms of this Act to a person who is

licenced to provide such services< or”<

(c) in sub-paragraph (b) of the said paragraph the words

“investment service< or” shall be substituted by the words

“investment service>”< and

(d) immediately after sub-paragraph (b) thereof there shall

be added the following proviso>-

“Provided that for the purposes of this paragraph any person

who is authorised or otherwise exempt from authorisation in the

terms of Article 43 or 43A of the Trusts and Trustees Act shall not

by virtue of holding such assets be required to have a licence in

terms of this Act.”

PART XII

AMENDMENTS TO THE BANKING ACT, CAP. 371

81. (1) This Part amends and shall be read and construed as

one with the Banking Act, hereinafter in this Part referred to as “the

371. principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

82. In subarticle (1) of article 2 of the principal Act, in the

definition of “competent authority” for the words “article 3(2)” there

shall be substituted the words “article 3(1)”.

83. In subarticle (3) of article 13 of the principal Act, for the

words “ listed a stock exchange licensed under the Financial Markets

Act” there shall be substituted the words “listed on a recognised

investment exchange in terms of the Financial Markets Act”.

84. Immediately after article 29A of the principal Act, there shall Addition

articles 29B and

be added the following new articles 29B and 29C>-

29C. “29B. The Minister may, after consultation with the “Financial

competent authority, make regulations for the transposition conglomerates.

of Directive 2002#87#EC of the European Parliament and of

the Council of the European Union of 16 December 2002 on

the supplementary supervision of credit institutions, insurance

undertakings and investment firms in a financial

conglomerate, as may be applicable to credit institutions.

29C. Regulations made under this Act and any Language of

amendment thereto or revocation thereof may be made in the regulations.

English language only.”.

PART XIII

AMENDMENTS TO THE INCOME TAX

MANAGEMENT ACT, CAP. 372

(1) This Part amends the Income Tax Management Act and Amendments to the

it shall be read and construed as one with the Income Tax Management Income

Management Act,

Act hereinafter in this Part referred to as “the principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

Article 5 of the principal Act shall be amended as follows>- Amendment of

article 5 of the

principal Act.

(a) in subarticle (3) thereof, for the words “is licensed

under article 51A of the Malta Financial Services Centre Act” there

shall be substituted the words “had been licensed under article

51A of the Malta Financial Services Authority Act and until such

time that he is so licensed or is authorised or otherwise permitted

to act as a trustee under article 43 or 43A of the Trusts and Trustees

Act”< and

(b) in subarticle (4) thereof, for the words “A licensed

nominee shareholder who” there shall be substituted the words

“A person referred to in subarticle (3) of this article who”.

In subarticle (1) of article 24 of the principal Act, for the Amendment of

article 24 of the

words “Where any person in any capacity whatsoever” there shall be principal Act.

substituted the words “Where any person in any capacity whatsoever,

but not in the capacity of a trustee of a trust”.

Immediately after article 24 of the principal Act there shall

be added the following new articles 24A and 24B>-

“24A. (1) The Commissioner may give notice to a

trustee of a trust requiring him to furnish, within the time

limited by such notice, not being less than 30 days from the

date of service of such notice, a return containing>–

(a) a true and correct statement, certified by a

warrant holder referred to in article 57 of this Act, of the

income attributable to such trust as referred to in article

27B of the Income Tax Act< and

(b) (i) the names and addresses of those

beneficiaries to whom income has been allocated as

provided in subarticle (4) of article 27D of the Income

Tax Act, together with the relative amounts so allocated<

and

(ii) the amount, date of allocation, type and

country of source of the income so allocated for

each beneficiary referred to in subparagraph (i) of

this paragraph.

(2) (a) A return under the provisions of this

article shall be deemed to be a return required to be furnished

under the provisions of article 10 of this Act.

(b) A trustee who issues a false certificate

to the Commissioner shall be guilty of making a false

statement within the meaning of paragraph (b) of subarticle

(1) of article 52 of this Act.

24B. Where –

(a) the settlor of a trust is a person resident in

Malta< and

(b) none of the trustees of such trust is a person

resident in Malta< and

(c) property is settled into such trust after such

date as the Minister responsible for finance may, by

notice in the Gazette, appoint,

the said settlor shall inform the Commissioner of the property

so settled together with a copy, where applicable, of the

relevant trust instrument or of any other document evidencing

the existence of such trust. This information shall be submitted

to the Commissioner by not later than 30 days from the date

of the relevant settlement. Any settlor who fails to comply

with the provisions of this article shall be guilty of an offence

and liable on conviction to a fine (multa) of not less than 50

liri and not exceeding 500 liri and to a further fine (multa) of

not less than 2 liri but not exceeding 10 liri for every day

during which the offence continues after the lapse of the said

30 days.”.

Immediately after article 42 of the principal Act there shall Addition of new

article 42A to the

be inserted the following new article 42A>-

principal Act.

42A. Notwithstanding anything contained in article 42

within which

of this Act, tax payable on the income attributable to a trust

as defined in article 27B of the Income Tax Act for any year

of assessment, shall be paid not later than the tax settlement

date as defined in the Income Tax Acts.”.

Paragraph (a) of subarticle (1) of article 43 of the principal Amendment of

article 43 of the

Act shall be amended as follows>

principal Act.

(a) in sub-paragraph (iii) thereof, for the words “31st

October, 2004” there shall be substituted the words “31st October,

2005”<

(b) in sub-paragraph (iv) thereof for the words “15th

December, 2004” there shall be substituted the words “15th

December, 2005”.

PART XIV

AMENDMENTS TO THE RECOGNITION OF TRUSTS ACT,

As from the date established by notice in the Gazette by the Amendment to the

Minister responsible for finance the Recognition of Trusts Act shall be Recognition

Trusts Act, Cap.

repealed.

374. PART XV

AMENDMENTS TO THE FINANCIAL INSTITUTIONS ACT,

(1) This Part amends and shall be read and construed as one

with the Financial Institutions Act, hereinafter in this Part referred to as

“the principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

Immediately after subarticle (2) of article 12 of the principal

Act, there shall be added the following new articles 12A and 12B>-

12A. The Minister may, after consultation with the

conglomerates.

competent authority, make regulations for the transposition

of Directive 2002#87#EC of the European Parliament and of

the Council of the European Union of 16 December 2002

and to provide for the supplementary supervision of financial

institutions in an financial conglomerate.

12B. Regulations made under this Act and any

Language of

amendment or revocation of such may be made in the English

language only.”.

PART XVI

AMENDMENTS TO THE COMPANIES ACT,

(1) This Part amends and shall be read and construed as one

with the Companies Act, hereinafter in this Part referred to as “the

principal Act”.

(2) This Part shall come into force on such date as the

Minister responsible for finance may, by notice in the Government

Gazette, appoint, and different dates may be so appointed for different

provisions and different purposes thereof.

Immediately after subarticle (2) of article 16 of the principal

Act, there shall be inserted the following new subarticle (3)>

“(3) The registration of a partnership by the Registrar

under this article shall be without prejudice to any other licence

or other authorisation as may be required in respect of the

activities to be carried on by the partnership under any other

law.”.

Article 70 of the principal Act shall be amended as follows>- Amendment

article 70 of the

principal Act.

(a) for subarticle (5) thereof, there shall be substituted the

following>-

“(5) A company shall not be registered by a name

which includes the word “fiduciary”, “nominee” or “trustee”,

or any abbreviation, contraction or derivative thereof, unless

such company is authorised to act as a trustee in terms of the

applicable laws of Malta, or unless otherwise permitted to do

so by the relevant competent authority.”< and

(b) for paragraph (b) of subarticle (6) thereof, there shall be

substituted the following>-

“ (b) under a name or title which contains the words

“fiduciary”, “nominee” or “trustee”, or any abbreviation,

contraction or derivative thereof, which is not the name of a

company which is authorised to use such name as provided

in subarticle (5) of this article< or”.

Immediately after subarticle (2) of article 77 of the principal Amendment of

article 77 of the

Act, there shall be inserted the following new subarticle (3)>-

principal Act.

“(3) The registration of a company by the Registrar

under this article shall be without prejudice to any other licence

or other authorisation as may be required in respect of the

activities to be carried on by the company under any other

law.”.

In subarticle (4) of article 88 of the principal Act, for the Amendment of

words “the offer in the Gazette” there shall be substituted the words article

principal Act.

“the offer in the Gazette or on a website maintained by the Registrar”.

Article 127 of the principal Act shall be amended as follows>- Amendment of

article 127 of the

principal Act.

(a)

subarticles (2), (4), (5) and (10) thereof shall be deleted<

(b) subarticle (3), (6), (7), (8) and (9) thereof shall be re-

numbered as subarticles (2), (3), (4), (5) and (6) respectively<

(c) in subarticle (2) as renumbered immediately after the

words “any nominee” there shall be added the words “or any trust>

Provided that the company shall not be obliged to obtain

or to record any information on the number of beneficiaries

and it shall be the sole duty of the trustee to inform the

company of the number of beneficiaries if it appears to the

trustee that, paying regard to the number of beneficiaries, it

may result in the aggregate number of persons interested

exceeding fifty. The Registrar may at any time order any

trustee to declare in writing to the company the number of

beneficiaries and in such a case reference shall only be made

to beneficiaries who enjoy a fixed interest in the shares under

the trust.”<

(d) subarticle (3) as renumbered shall be substituted by the

following new subarticle (3)>-

“(3) Where a trustee holds shares in a company for

the benefit of beneficiaries>

(a) the memorandum of association and articles

of association, if any, shall be deemed to be validly

entered into for the purposes of articles 68 and 75 of this

Act if they are signed only by the trustee when all the

shares in the company are subscribed by the trustee<

(b) the memorandum of association, the register

of members, share certificates, returns of allotments and

any annual return of a company may specify the number

of shares held by the trustee on its own account, if any,

and the amount of shares held under trusts or each trust

if more than one, and the provisions of paragraphs (a),

(b) and (c) of subarticle (1) of article 123 of this Act

shall be construed accordingly<

(c) a resolution in writing pursuant to article 210

of this Act shall be deemed to be valid and effective if it

is signed only by the trustee when all the shares in the

company are subscribed by the trustee.”<

(e) subarticle (4) thereof as renumbered shall be amended as

(a) paragraph (a) thereof shall be substituted by the

following new paragraph (a)>-

“(a) Where a beneficial owner of shares in a

company which are held by a trustee, transfers or

otherwise disposes of the beneficial ownership of such

shares inter vivos to a third party, such a transaction shall

be deemed to constitute a transfer of shares for the

purposes of the Duty on Documents and Transfer Act,

and for the purposes of article 5(1) of the Income Tax

Act.”< and

(b) in paragraph (c) thereof, for the words “licensed

nominee” there shall be substituted the words “trustee”<

(f)

in subarticle (5) thereof as renumbered>-

(i) the definition of “beneficial owner” shall be

substituted by the following new definition>-

“beneficial owner” means the person beneficially

entitled to the shares under a trust or a fiduciary agreement<

(ii) the definition of “licensed nominee” shall be

deleted< and

(iii) following the definition of “beneficial owner”

there shall be inserted the following new definition>-

“trustee” shall mean a person who may act as a

trustee in accordance with the Trusts and Trustees Act

and shall include any fiduciary holding shares on behalf

of another person”.

In subarticle (1) of article 324 of the principal Act, for the Amendment of

article 324 of the

words “notice thereof in the Gazette” there shall be substituted the words principal Act.

“notice thereof in the Gazette or on a website maintained bythe Registrar”.

Article 325 of the principal Act shall be amended as follows>- Amendment of

article 325 of the

principal Act.

(a) in subarticle (2) thereof, for the words “notice in the

Gazette” there shall be substituted the words “notice in the Gazette

or on a website maintained by the Registrar”<

(b) in subarticle (3) thereof, for the words “ publish in the

Gazette” there shall be substituted the words “publish in the Gazette

or on a website maintained by the Registrar”< and

(c) in subarticle (4) thereof, for the words “publish a notice

in the Gazette” there shall be substituted the words “publish a notice

in the Gazette or on a website maintained by the Registrar”.

Article 356 of the principal Act shall be amended as follows> Amendment of

article 356 of the

principal Act.

(a) in paragraph (a) thereof, for the words “the Registrar in

the Gazette” there shall be substituted the words “the Registrar in

the Gazette or on a website maintained by the Registrar”< and

(b) in paragraph (c) thereof, for the words “published by

the Registrar in the Gazette” there shall be substituted the words

“published by the Registrar in the Gazette or on a website

maintained by the Registrar”.

Article 401 of the principal Act shall be amended as follows>-

(a) in paragraph (e) of subarticle (1) thereof, for the words

“in the Gazette” wherever they occur, there shall be substituted

the words “in the Gazette or on a website maintained by the

Registrar”< and

(b) in paragraph (g) of subarticle (1) thereof, for the words

“statement published in the Gazette” there shall be substituted the

words “statement published in the Gazette or on a website

maintained by the Registrar”.

In subarticle (6) of article 402 of the principal Act, for the

words “a licensed nominee as defined in article 127, who holds in his

name shares in the company on behalf of and for the interest of another

person beneficially entitled thereto.” there shall be substituted the words

“a trustee, as defined in article 127 of this Act, who holds shares in the

company.”

Article 425 of the principal Act shall be amended as follows>

(a)

subarticle (5) thereof shall be renumbered as subarticle

(7)<

(b) immediately after subarticle (4) thereof there shall be

added two new subarticles (5) and (6) as follows>

“(5) The Minister may by regulations provide for the

formation, constitution and regulation of European Companies

(SE). In this subarticle, a European Company (Societas

Europea or SE) refers to a company set up within the territory

of the European Union on the conditions and in the manner

laid down in Council Regulation 2157#2001 of 8 October 2001

on the Statute for a European Company (SE).

(6) Regulations made under any of the provisions of

this Act may be made in the English language only.”.

In paragraph (b) of subarticle (1) of article 431 of the

principal Act, for the words “from when the provisions of this Act”

there shall be substituted the words “from when the provisions of this

Act or of any other law”.

The Tenth Schedule to the principal Act shall be amended

as follows>-

(a) sub-paragraph (a) of paragraph (1) thereof, shall be

deleted<

(b) sub-paragraph (b) of paragraph (1) thereof, shall be

renumbered as paragraph (1)<

(c) in sub-paragraph (1)(a) of paragraph (3) thereof, for the

words “and at least one of whom shall be a licence holder licensed

as a manager of a collective investment scheme within the meaning

of the Investment Services Act” there shall be substituted the words

“and each of whom shall satisfy the competent authority within

the meaning of the Investment Services Act that he is a fit and

proper person to carry out such activities or functions and shall

further satisfy the requirements of subarticle (7) of article 6 of the

Investment Services Act and any other requirements as may be

established by guidelines issued by the competent authority under

and within the meaning of the Investment Services Act”< and

(d) in sub-paragraph (8) of paragraph (22) thereof, for the

words “published in the Gazette” there shall be substituted the

words “published in the Gazette or on a website maintained by the

Registrar”.

PART XVII

AMENDMENTS TO THE ARBITRATION ACT, CAP. 387

(1) This Part amends and shall be read and construed as Amendments to the

Arbitration Act,

one with the Arbitration Act, hereinafter referred to as “the principal Cap. 387.

Act”.

(2) This Part shall come into force on such date as the

Minister for justice may by notice in the Government Gazette appoint.

Immediately after article 15 of the principal Act there shall Addition

article 15A to the

be inserted the following new article 15A as follows>

principal Act.

“Arbitration

15A. (1) It shall be lawful for a testator to insert an

clause in

arbitration clause in a will. In such event such clause shall be

wills and

trusts.

binding on all persons claiming under such will in relation to

all disputes relating to the interpretation of such will, including

any claim that such will is not valid.

(2) It shall be lawful for a settlor of a trust to insert

an arbitration clause in a deed of trust and such clause shall

be binding on all trustees, protectors and any beneficiaries

under the trust in relation to matters arising under or in relation

to the trust.

(3) In the cases referred to in the preceding

subarticles, the right of a party to seek directions of the Court

of voluntary jurisdiction in terms of the Trusts and Trustees

Act shall not be limited by any such clause and

notwithstanding the provisions of this Act, the said Court shall

not be bound to stay proceedings in terms of subarticle (3) of

article 15 or otherwise, but shall enjoy a discretion to do so

until such time as it determines that the matter is of a

contentious nature, in which case it shall stay the proceedings

and shall refer the parties to arbitration.”.

PART XVIII

AMENDMENTS TO THE INSURANCE BUSINESS ACT,

(1) This Part amends the Insurance Business Act,

hereinafter in this Part referred to as “the principal Act” and shall be

read and construed as one with the principal Act.

(2) The provisions of this Part shall come into force on such

date as the Minister responsible for finance may, by notice in the Gazette,

establish and different dates may be so established for different

provisions or different purposes of this Part.

For paragraph (b) of subarticle (1) of article 10 of the

principal Act, there shall be substituted the following>

“(b) where the authorisation sought or held is one not

restricted to reinsurance, the company submits proof that it

maintains the minimum guarantee fund in accordance with article

16 of the Act.”.

Article 12 of the principal Act, shall be amended as follows>

(a) the present article 12 shall be renumbered as subarticle

(1) thereof< and

(b) immediately after the new renumbered sub-article (1)

there shall be inserted the following new subarticle>

“(2) Without prejudice to the provisions of subarticle

(1) of this article, the general representative shall not be

personally liable for the debts and obligations of the company

referred to in article 11.”.

For paragraph (b) of subarticle (5) of article 14 of the Amendment

article 14 of the

principal Act, there shall be substituted the following>

principal Act.

“(b) the Malta margin of solvency is the margin of solvency

of an authorised company computed by reference to the assets and

liabilities of the business carried on by that company in Malta.”.

In subarticle (1) of article 16 of the principal Act, for the Amendment of

article 16 of the

words “shall maintain in Malta at all times a guarantee fund” there principal Act.

shall be substituted the words “shall maintain at all times a guarantee

Subarticle (1) of article 28 of the principal Act, shall be Amendment

article 28 of the

amended as follows>-

principal Act.

(a) the present paragraph (h) shall be re-numbered as

paragraph (i) thereof< and

(b) immediately after paragraph (g) thereof, there shall be

inserted the following new paragraph>-

“(h) require the company to submit a financial recovery

plan if it considers that the interest of insureds, policyholders,

creditors or other interested persons are likely to be prejudiced

owing to a deterioration in the financial position of the

company<”.

Article 38 of the principal Act shall be amended as follows>- Amendment of

article 38 of the

principal Act.

(a) immediately after subarticle (1) thereof, there shall be

inserted the following new subarticle>

“(2) If the person acquiring a qualifying shareholding

is an insurance undertaking, a credit institution or an

investment firm authorised in a Member State or an EEA State,

or the parent undertaking of such an entity, or a natural or

legal person controlling such an entity, and if, as a result of

that acquisition, the undertaking in which the acquirer

proposes to hold a holding would become a subsidiary or

subject to the control of the person acquiring such

shareholding, the assessment of the acquisition must be subject

to the prior consultation referred to in Article 12a of Council

Directive 73#239#EEC of 24 July 1973 on the coordination of

laws, Regulations and administrative provisions relating to

the taking up and pursuit of the business of direct insurance

other than life assurance and Article 12a of Council Directive

79#267#EEC of 5 March 1979 on the coordination of laws,

regulations and administrative provisions relating to the taking

up and pursuit of the business of direct life assurance, as

amended from time to time.”<

(b) in subarticle (3) thereof, for the words “listed on

any Stock Exchange” there shall be substituted the words

“listed on any recognised investment exchange”< and

(c) immediately after subarticle (11) thereof, there shall

be inserted the following new subarticle>-

“(12) In this article, the expressions “Member

State” and “EEA State” have the following meanings>

(a) “Member State” means a Member State

of the European Communities< and

(b) “EEA State” means a State which is a

contracting party to the agreement on the European

Economic Area signed at Oporto on 2 May, 1992 as

amended by the Protocol signed at Brussels on the

17 May, 1993 and as amended from time to time.”.

For paragraph (a) of subarticle (1) of article 41 of the

principal Act, there shall be substituted the following>

“(a) in the case of a company whose head office is in

Malta, dissolve and consequentially wind up under and in

accordance with regulations made under this article< and”.

Article 58 of the principal Act, shall be amended as follows>–

(a) paragraph (c) of subarticle (1) thereof, shall be

substituted by the following>-

“(c) to suspend or revoke an authorisation under article

26, or under any regulation made under this Act<”< and

(b) subarticle (3) thereof, shall be substituted by the

following>-

“(3) An appeal made under this article shall not

suspend the operation of any decision from which the appeal

is made>

Provided that, a decision to revoke an authorisation shall

not become operative until the expiration of the period within

which an appeal may be made under this article and, if an

appeal is made within such period, the decision shall become

operative on the date of the decision of the Tribunal dismissing

the appeal or the date on which the appeal is abandoned.”.

Article 62 of the principal Act shall be amended as follows>- Amendment of

article 62 to the

(a) in subarticle (1) thereof for the words principal Act.

“Notwithstanding the provisions of the Companies Act,

regulations”, there shall be substituted the words

“Regulations”< and

(b) immediately after subarticle (3) thereof, there shall

be added a new subarticle (4) as follows>-

“(4) The provisions of this article and of any

regulations made thereunder shall prevail over anything

to the contrary contained in the Companies Act, or

regulations made thereunder, with respect to continuance

of companies.”

Article 64 of the principal Act, shall be amended as follows> Amendment of

article 64 to the

(a) paragraph (c) of subarticle (1) thereof, shall be principal Act.

substituted by the following>-

“(c) provide for and regulate the payment by any

person, body or cell created by a cell company, as the case

may be, of any fees, duties and such other charges payable to

the competent authority in respect of any matter provided for,

by or under this Act or any regulations made under this

article<”< and

(b) subarticle (3) thereof, shall be renumbered as subarticle

(4)< and

(c) immediately after sub-article (2) there shall be added

the following new subarticle>-

“(3) The Minister may, after consultation with the

competent authority, make regulations for the transposition

of Directive 2002#87#EC of the European Parliament and of

the Council of 16 December 2002 on the supplementary

supervision of credit institutions, insurance undertakings and

investments firms in a financial conglomorate, as may be

applicable to insurance undertakings.”.

Immediately after paragraph 4.3 of the First Schedule to

the principal Act, there shall be inserted the following new paragraph>-

“4.4 Without prejudice to the other provisions of this

paragraph, the general representative shall not be personally liable

for the debts and obligations of Lloyd’s or any of its members.”.

The Fourth Schedule to the principal Act, shall be amended

as follows>-

(a)

Part I thereof, shall be amended as follows>-

(i) in 3.8 thereof, for the words “signed by a senior

officer of the company”, there shall be substituted the words

“signed by a senior officer of an insurer or an insurance broker,

as the case may be,”< and

(ii) in 3.9 thereof, for the words “shall not act for any

company”, there shall be substituted the words “shall not act

for an insurer or an insurance broker, as the case may be,”< and

(b) in item (ii) of sub-paragraph (b) of paragraph 5.5 of Part

III thereof, for the words “arranging a contract of insurance with

an authorised company” there shall be substituted the words

“arranging a contract of insurance with a company”.

PART XIX

AMENDMENTS TO THE LEGAL PROCEDURES

(RATIFICATION OF CONVENTIONS) ACT, CAP. 443

(1) This Part amends and shall be read and construed as

one with the Legal Procedures (Ratification of Conventions) Act,

hereinafter referred to as “the principal Act”.

(2) This Part shall come into force on such date as the

Minister for justice may, by notice in the Gazette, appoint.

Article 40 of the principal Act shall be substituted by the

following>

“40. For the purposes of this Part of the Act, a trust shall

be deemed to be domiciled in Malta if any of the factors stated

in subarticle (1) of article 8 of the Trusts and Trustees Act

exist, subject to the provisions of subarticle (2) thereof.”.

PART XX

AMENDMENT TO THE MONEY LAUNDERING ACT,

This Part amends and shall be read and construed as one Amendment to the

with the Money Laundering Act, hereinafter referred to as “the principal Money

Act, Cap. 373.

Act”, and it shall come into force on its publication.

Immediately after article 30 of the principal Act there shall Addition of new

article 30A to the

be added the following new article>–

principal Act.

30A. (1) Notwithstanding anything contained in any

other law, the Unit may likewise demand form any person,

authority or entity, as is referred to in article 30, any

under article

information it deems relevant and useful for the purpose of

16. pursuing its functions under article 16.

(2) The provisions of article 30(2) shall mutatis

mutandis apply where any information is demanded by the

Unit under this article.”.”