ACT No. IX of 2008 AN ACT to introduce amendments to the Accountancy Profession Act and to other Laws, and to implement Directive 2006#43#EC.

I assent.

E DWARD F ENECH A DAMI

(L.S.)

President

14th August, 2008

ACT No. IX of 2008

AN ACT to introduce amendments to the Accountancy Profession Act

and to other Laws, and to implement Directive 2006#43#EC.

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>-

(1) The short title of this Act is the Accountancy Profession Short title and

commencement.

Act and other Laws (Amendment) Act, 2008.

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

Minister responsible for finance may by notice in the Gazette appoint

and different dates may be so appointed for different provisions or

different purposes of this Act.

PART I

This Part amends the Companies Act, and shall be read and Amendment of the

Companies Act.

construed as one with the Companies Act, hereinafter in this Part referred

to as “the principal Act”.

The Arrangement of Act in the principal Act shall be amended

as follows>

(a) in Part IV thereof, for the words “51-66”, there shall be

substituted the words “51-66A”<

(b) in Part VI thereof, for the words “327-329”, there shall

be substituted the words “327-329B”<

(c) in Part IX thereof, for the words “Chapter III.” there

shall be substituted the words “Chapter IV.”, and immediately after

the words from “Chapter II. Division by the formation of new

companies 374” there shall be added the words “Chapter III.

Division by a combinaton of a division by acquisition with a

division by the formation of one or more new companies 374A”<

and

(d) Part XI thereof shall be amended as follows>

(i) for the words “384-399” there shall be substituted

the words “384-399A”< and

(ii) for the word “399” there shall be substituted the

words “399-399A”.

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

(a) for the definition “auditor” in subarticle (1) thereof there

shall be substituted the following>

“ “auditor” shall have the meaning assigned to it in the

Accountancy Profession Act or regulations issued in terms

thereof<”< and

(b) in subarticle (1) thereof, immediately after the definition

“issuer”, there shall be inserted the following new definition>

“ “Maltese regulated market” means a regulated market

duly authorised by the competent authority in accordance with

article 4 of the Financial Markets Act<”<

(c) in subarticle (1) thereof, the definition “recognised

investment exchange” shall be deleted<

(d) in subarticle (1) thereof, the definition “recognised stock

exchange” shall be deleted<

(e) in subarticle (1) thereof, immediately after the definition

“Registrar”, there shall be inserted the following new definition>

“ “regulated market” means a regulated market as defined

in the Financial Markets Act and includes a Maltese regulated

market<”< and

(f) for subarticle (4) thereof, there shall be substituted the

following>

“(4) For the purposes of this Act, “generally accepted

accounting principles and practice” shall have the meaning

assigned to it in the Accountancy Profession Act or regulations

issued in terms thereof.”

Paragraph (c) of subarticle (12) of article 66 of the principal Amendment

article 66 of the

Act shall be substituted by the following>

principal Act.

“(c) The provisions of article 153 shall apply to an auditor

appointed in terms of paragraph (a). Such auditor shall not be a

person who has held the office of auditor of the partnership en

commandite or limited partnership at any time during the last three

years immediately preceding the date of dissolution.”.

In paragraph (c) of subarticle (4) of article 74 of the principal Amendment of

article 74 of the

Act, for the words “to stock exchange acquisitions.”, there shall be principal Act.

substituted the words “to acquisitions made on a regulated market or on

an equivalent market in a non-Member State or non-EEA State.”.

For the first proviso to subarticle (1) of article 83 of the Amendment

article 83 of the

principal Act, there shall be substituted the following>

principal Act.

“Provided that if a creditor of the company whose debt existed

prior to the publication of the statement mentioned in this subarticle

objects thereto by sworn application filed within the period of three

months reckoned as aforesaid and satisfies the Court that due to

the proposed reduction in the issued share capital the satisfaction

of his claims would be prejudiced and that no adequate safeguards

have been obtained from the company, the court shall either uphold

the objection or allow the reduction on sufficient security being

given>”.

In subarticle (3) of article 84 of the principal Act, for the words

“Action taken by a company to ensure that the stock exchange value of

its shares does not deviate from its net asset value”, there shall be

substituted the words “Action taken by a company to ensure that the

value of its shares as quoted on a regulated market or any equivalent

market in a non-member State or non-EEA State does not deviate from

its net asset value”.

Subarticle (2) of article 84A of the principal Act shall be

amended as follows>

(a) for paragraph (a) thereof, there shall be substituted the

following>

“ (a) “business of insurance" has the same meaning as

assigned to it in article 2(1) of the Insurance Business Act

and shall include the business of affiliated insurance as

prescribed by regulations issued thereunder, the business of

an insurance manager and the business of insurance broking

under the Insurance Intermediaries Act<”< and

(b) in paragraph (d) thereof, for the words “in such

manner as may be prescribed.” there shall be substituted the

words “in such manner as may be prescribed< and in relation

to the business of insurance manager, as well as the business

of insurance broking, reference to a "company" shall include

reference to a partnership en commandite or similar or

equivalent body corporate, the capital of which is divided

into shares.”.

In paragraph (e) of article 89 of the principal Act, for the

words “admitted to trading on a recognised investment exchange”, there

shall be substituted the words “admitted to trading on a regulated

market”.

Article 101 of the principal Act shall be amended as follows>

(a) in subarticle (1) thereof, for the words “listed on a

recognised investment exchange in or outside Malta.”, there shall

be substituted the words “listed on a regulated market or on an

equivalent market in a non-Member State or non-EEA State.”< and

(b) in subarticle (2) thereof, for the words “as may be

notified to the applicant, within those twenty-one days, for

permission by or on behalf of the stock exchange.”, there shall be

substituted the words “as may be notified by or on behalf of the

regulated market or the equivalent market in a non-Member State

or non-EEA State to the applicant for permission, within those

twenty-one days.”.

Article 106 of the principal Act shall be amended as follows> Amendment of

article 106 of the

principal Act.

(a) in subarticle (1) thereof, for the words “A company may

acquire any of its own shares otherwise than by subscription,”,

there shall be substituted the words “Without prejudice to the

principle of equal treatment of the shareholders who enjoy the same

rights in respect of the shares held by them and to any relevant

provisions of the Prevention of Financial Markets Abuse Act, a

company may acquire any of its own shares otherwise than by

subscription,”< and

(b) in paragraph (e) of subarticle (1) thereof, for the words

“lower than the amount of issued share capital”, there shall be

substituted the words “lower than the amount of called up issued

share capital”.

In article 110 of the principal Act, immediately after Amendment of

subarticle (3) thereof there shall be inserted the following new subarticle> article

principal Act.

“(4) The provisions of subarticle (1)(b) shall not apply if

the company granting the financial assistance is a private company

and the following requirements are fulfilled>

(a) the Board of Directors has, after taking into account

the financial position of the company and the obligations of

the directors as set out in article 136A, resolved by the

affirmative vote of a majority of all the directors forming the

Board at the time of the particular resolution, to authorize the

grant of financial assistance for a specific transaction<

(b) an extraordinary resolution has been passed

affirming the resolution taken pursuant to paragraph (a) of

this subarticle< and

(c) a declaration in the prescribed form signed by two

directors confirming that the requirements set out in

paragraphs (a) and (b) of this subarticle have been satisfied is

duly filed with the Registrar prior to the granting of the

financial assistance, and the signature of one director shall

suffice where the Board is composed of only one director.”.

Subarticle (12) of article 122 of the principal Act shall be

amended as follows>

(a) in paragraph (a) thereof, for the words “quoted on the

recognised investment exchange” there shall be substituted the

words “quoted on a Maltese regulated market”, and for the words

“maintenance by the recognised investment exchange of the

relevant register of holders thereof,” there shall be substituted the

words “maintenance by such Maltese regulated market of the

relevant register of holders thereof,”<

(b) in indent (i) of paragraph (a) thereof, for the words “a

certified copy of the signed pledge agreement to the recognised

investment exchange,” there shall be substituted the words “a

certified copy of the signed pledge agreement to the Maltese

regulated market,”<

(c) in indent (iii) of paragraph (a) thereof, for the words

“delivery of the signed pledge agreement to the recognised

investment exchange” there shall be substituted the words “delivery

of the signed pledge agreement to the Maltese regulated market”<

(d) in indent (iv) of paragraph (a) thereof, for the words

“upon giving notice by judicial act to the pledgor, the recognised

investment exchange and the company,” there shall be substituted

the words “upon giving notice by judicial act to the pledgor, the

Maltese regulated market and the company,”, and for the words

“have the securities sold through a licensed stockbroker.” there

shall be substituted the words “have the securities sold through a

person duly licensed under the Investment Services Act.”< and

(e) in paragraph (b) thereof, for the words “quoted on a

prescribed foreign Stock Exchange,”, there shall be substituted

the words “quoted on a regulated market other than a Maltese

regulated market or on an equivalent market in a non-Member

State or non-EEA State,”, and for the words “have the shares sold

through a licensed stockbroker.” there shall be substituted the words

“have the securities sold through a person duly authorised for this

purpose.”.

Article 153 of the principal Act shall be substituted by the

following>

153. An auditor must at all times adhere to the rules

“Rules on

auditor

on

independence

and professional ethics set out in the Code

independence

of Ethics and any other regulations, directives or guidelines

professional

issued from time to time in terms of the Accountancy

ethics.

Profession Act.”.

Article 156 of the principal Act shall be amended as follows> Amendment

article 156 of the

principal Act.

(a) for subarticle (5) thereof there shall be substituted the

following>

“(5) There shall also be stated in the notes to the

accounts separately the total fees charged by the auditor for>

(a)

other assurance services<

(b) tax advisory services< and

(c)

other non-audit services.”< and

(b) immediately after subarticle (5) thereof, there shall be

added the following subarticles (6) and (7)>

“(6) The provisions of subarticle (5) shall not apply>

(a) where an undertaking is included within the

consolidated accounts of another undertaking and the

information required by subarticle (5) is provided in the

notes to such consolidated accounts< or

(b) to a company which on its balance sheet date,

such undertaking does not exceed the limits of two out

of the three criteria set out in article 185(1)(a).

(c) Notwithstanding the provisions of paragraph (b),

the information specified in subarticle (5) shall be

delivered to the Accountancy Board established in terms

of the Accountancy Profession Act within such period

as may be indicated by the Accountancy Board for that

purpose.

(7) The provisions of subarticle (6) shall not apply to a

public interest entity as defined in the Accountancy Profession

Act.”.

Article 157 of the principal Act shall be amended as follows> Amendment of

article 157 of the

principal Act.

(a) in subarticle (1) thereof the words “article 140(1).” shall

be substituted by the words “article 140(1)>” and immediately

thereafter there shall be added the following provisos>

“Provided that an auditor may only be removed from

office as aforesaid if there is a proper ground for dismissal>

Provided further that divergence of opinions on

accounting treatments or audit procedures shall not constitute

a proper ground for dismissal.”< and

(b) for subarticle (2) thereof, there shall be substituted the

following>

“(2) (a) Where a resolution removing an auditor is

passed at a general meeting of a company, the company shall

within fourteen days give notice thereof to the Registrar for

registration. The company shall also, within the same period,

deliver to the Board a statement by the company giving an

adequate explanation of the reasons for the removal of the

auditor. If a company fails to give the aforesaid notice to the

Registrar or the aforesaid statement to the Board, every officer

of the company who is in default shall be liable to a penalty

in respect of each default, and for every day during which the

default continues, to a further penalty.

(b) For the purposes of this subarticle, the Board shall

have the meaning assigned to it by the Accountancy Profession

Act.”.

In subarticle (1) of article 159 of the principal Act, the words

“An auditor of a company may resign his office” shall be substituted by

the words> “Without prejudice to the notification obligations in terms

of article 17 of the Accountancy Profession Act, an auditor of a company

may resign his office” and the words “and he shall so resign if he ceases

to be qualified as an auditor or if he fails to satisfy the conditions of

qualification provided in article 153” shall be deleted.

Article 167 of the principal Act shall be amended as follows>-

(a) in subarticle (2) thereof the words “clearly and in

accordance with the provisions of this Act and with generally

accepted accounting principles and practice” shall be substituted

by the words “in accordance with generally accepted accounting

principles and practice”<

(b) the proviso to subarticle (2) shall be substituted by the

following>

“Provided that the disclosures prescribed in indents (m),

(o) and (p) of paragraph 31 of Part III of the Third Schedule

shall be complied with.”<

(c) subarticle (4) thereof shall be substituted by the

following>

“(4) Where the application of the provisions of this

Act would not be sufficient to give a true and fair view within

the meaning of subarticle (3), additional information shall be

given.”<

(d) subarticle (5) thereof shall be substituted by the

following>

“(5) Where in exceptional cases the application of a

provision of this Act is incompatible with the obligation for

the individual accounts to give a true and fair view, that

provision shall be departed from in order to give a true and

fair view. Any such departure shall be disclosed in the notes

to the accounts together with an explanation of the reasons

for it and a statement of its effect on the assets, liabilities,

financial position and profit or loss.”< and

(e)

subarticle (6) thereof shall be deleted.

Article 168 of the principal Act shall be amended as follows> Amendment of

article 168 of the

principal Act.

(a) for subarticle (1) thereof, there shall be substituted the

following>

“(1) Banks governed by the Banking Act, financial

institutions governed by the Financial Institutions Act, and

insurance companies governed by the Insurance Business Act

need not apply the provisions of the Third and Fourth

Schedules.”<

(b) for subarticle (2) thereof, there shall be substituted the

following>

“(2) Banks and financial institutions shall follow the

Banking Rules and Financial Institutions Rules issued by the

relevant competent authority under the Banking Act and the

Financial Institutions Act, respectively, in relation to the form

and content of their annual accounts and any other Rules

issued by the competent authority in this regard.” < and

(c) in subarticle (3) thereof, for the words “or if no such

regulations have been made they shall follow any directives issued

by the competent authority in this regard.”, there shall be substituted

the words “and any rules as may be issued by the competent

authority from time to time.”.

Subarticle (1) of article 169 of the principal Act shall be

substituted by the following>

“(1) An investment company with variable share capital

shall prepare its individual accounts in accordance with the format

set out in the Fifth Schedule.”.

Article 171 of the principal Act shall be amended as follows>-

(a) subarticle (2) thereof shall be substituted by the

following>

“(2) Without prejudice to articles 170 and 172 to 174,

and to the provisions of subarticle (2) of article 2 and the

Ninth Schedule in so far as may be relevant to articles 170

and 172 to 174, the consolidated accounts shall be drawn up

in accordance with generally accepted accounting principles

and practice>

Provided that the disclosure prescribed in indent (m) of

paragraph 31 of Part III of the Third Schedule shall apply to

the consolidated accounts as if the undertakings included in

the consolidation were a single company and the disclosures

prescribed in sub-paragraphs (7) and (8) of paragraph 22 of

the Fourth Schedule shall apply to the consolidated accounts.”<

(b) subarticle (4) thereof shall be substituted by the

following>

“(4) Where the application of the provisions of this

Act would not be sufficient to give a true and fair view within

the meaning of subarticle (3), additional information shall be

given.”<

(c) subarticle (5) thereof shall be substituted by the

following>

“(5) Where in exceptional cases the application of a

provision of this Act is incompatible with the obligation for

the consolidated accounts to give a true and fair view, that

provision shall be departed from in order to give a true and

fair view. Any such departure shall be disclosed in the notes

to the consolidated accounts together with an explanation of

the reasons for it and a statement of its effect on the assets,

liabilities, financial position and profit and loss.”< and

(d) subarticle (6) thereof shall be deleted.

Subarticle (1) of article 173 of the principal Act, shall be Amendment of

article 173 of the

amended as follows>

principal Act.

(a) for the words “two of the three criteria laid down

in article 185>”, there shall be substituted the words “two of the

three criteria laid down in article 185(1)(a)>”< and

(b) in the proviso thereto, for the words “admitted to

official listing on the recognised investment exchange.” there shall

be substituted the words “admitted to official listing on a regulated

market or on an equivalent market in a non-Member State or non-

EEA State.”.

Article 174 of the principal Act shall be amended as follows> Amendment of

article 174 of the

principal Act.

(a) in paragraph (a) of subarticle (1) thereof, for the words

“registered under the law of Malta” there shall be substituted the

words “registered under the law of a Member State or an EEA

State”<

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

“ninety per cent or more in nominal value” there shall be substituted

the words “more than fifty per cent in nominal value”, and for the

words “the remaining percentage in nominal value” there shall be

substituted the words “not less than ten per cent in nominal value”<

(c) in paragraph (a) of subarticle (2) thereof, for the words

“registered under the law of Malta” there shall be substituted the

words “registered under the law of a Member State or an EEA

State”<

(d) in paragraph (b) of subarticle (2) thereof, for the words

“established under the law of Malta” there shall be substituted the

words “registered under the law of a Member State or an EEA

State”, and for the words “equivalent to that prescribed by this

Act” there shall be substituted the words “equivalent to that required

by this Act”< and

(e) in subarticle (3) thereof, for the words “admitted to

official listing on the recognised investment exchange.”, there shall

be substituted the words “admitted to official listing on a regulated

market or on an equivalent market in a non-Member State or non-

EEA State.”.

Article 179 of the principal Act shall be amended as follows>-

(a) in subarticle (2) thereof, the words “International

Standards on Auditing” shall be substituted by the words “generally

accepted auditing standards”< and

(b) for subarticle (8) thereof, there shall be substituted the

following>

“(8) References in this article to signature by the auditors

are, where the office of auditor is held by an audit firm, to the

signature of a principal authorised to sign on behalf of such

audit firm.”<

(c) subarticle (13) thereof shall be substituted by the following>

“(13) In this article “audit firm”, “generally

accepted auditing standards” and “principal”, shall have

the meaning assigned to them in the Accountancy

Profession Act or regulations issued in terms thereof.”<

and

(d) subarticle (13) thereof shall be substituted by the

following>

“(13) In this article, “generally accepted auditing

standards” shall have the meaning assigned to it in the

Accountancy Profession Act or regulations issued in

terms thereof.”.

For the provisos to subarticle (2) of article 183 of the principal

Act, there shall be substituted the following>

“Provided that where the company which qualifies to draw

up abridged annual accounts is an exempt company, it may deliver

to the Registrar only its abridged balance sheet, all the notes to the

accounts relevant for the purposes of that balance sheet and the

auditors’ report, and without the directors’ report>

Provided further that where the exempt company which

qualifies to draw up abridged accounts is a company referred to in

article 185(1)(b), it may deliver to the Registrar only its abridged

balance sheet and all the notes to the accounts relevant for the

purposes of that balance sheet, and without a directors’ report and

an auditors’ report.”.

Article 185 of the principal Act shall be amended as follows>- Amendment

article 185 of the

principal Act.

(a) in paragraph (a) of subarticle (2) thereof, the words

“balance sheet<” shall be substituted by the words “balance sheet>”<

(b) the following proviso shall be added to paragraph (a) of

subarticle (2)>

“Provided that a company may instead choose to present

its resulting abridged balance sheet as determined in

accordance with the aforesaid provisions of this subarticle

using the terminology and layouts in accordance with

generally accepted accounting principles and practice, and in

such case the aforesaid provisions of this subarticle shall apply

mutatis mutandis<”<

(c) in paragraph (b) of subarticle (2) thereof, the words “

“Loss Account Formats. ” shall be substituted by the words “Loss

Account Formats>”<

(d) the following proviso shall be added to paragraph (b) of

subarticle (2)>

“Provided that a company may instead choose to present

its resulting abridged profit and loss account as determined

in accordance with the aforesaid provisions of this subarticle

using the terminology and layouts in accordance with

generally accepted accounting principles and practice, and in

such case the aforesaid provisions of this subarticle shall apply

mutatis mutandis.”< and

(e) for subarticle (3) thereof, there shall be substituted the

following>

“(3) Companies referred to in subarticle (1) may draw

up abridged notes to the accounts omitting the disclosures

prescribed by indents (d) and (g) to (o) of paragraph 31 of

Part III of the Third Schedule. The notes to the accounts shall

however disclose the information specified in indent (j) of

the said paragraph 31 in total for all the items concerned>

Provided that companies referred to in subarticle (1) may

instead draw up abridged notes to the accounts in accordance

with generally accepted accounting principles and practice

by>

(i) omitting, where relevant, any corresponding

disclosures resulting from compliance with generally

accepted accounting principles and practice equivalent

to those set out in indents (d) and (g) to (o) of paragraph

31 of Part III of the Third Schedule< and

(ii) if generally accepted accounting princoples

and practice require the disclosure of the information

specified in indent (j) of paragraph 31 of Part III of the

Third Schedule, disclosing in the notes to the accounts

such information as specified in indent (j) of the said

paragraph 31 as a total for all the items concerned.”.

Article 187 of the principal Act shall be amended as follows>-

(a) in subarticle (1) thereof, the words “draw up its annual

accounts” shall be substituted by the words “present its annual

accounts”<

(b) in subarticle (2) thereof, the words “are drawn up in a

currency other than euro” shall be substituted by the words “are

presented in a currency other than euro”< and

(c) in subarticle (4) thereof, the words “in the currency in

which they are drawn up.” shall be substituted by the words “in

the currency in which they are presented.”, and the words “both

the currency in which they are drawn up and in euro” shall be

substituted by the words> “both the currency in which they are

presented and in euro”.

Article 188 of the principal Act shall be amended as follows>-

(a) in paragraph (e) thereof, the words “permit a company

to draw up its annual accounts” shall be substituted by the words

“permit a company to present its annual accounts”< and

(b) in paragraph (g) thereof, the words “International

Accounting Standards or International Standards on Auditing” shall

be substituted by the words “generally accepted accounting

principles and practice or generally accepted auditing standards.”.

For paragraph (a) of subarticle (4) of article 194 of the

principal Act, there shall be substituted the following>

“(a) its shares are listed on a regulated market< and”.

Subarticle (4) of article 274 of the principal Act shall be Amendment

article 274 of the

substituted by the following>

principal Act

“(4) The provisions of article 153 shall apply to an auditor

appointed in terms of subarticle (1). Such auditor shall not be a

person who has held the office of auditor of the company at any

time during the last three years immediately preceding the date of

dissolution.”.

In paragraph (d) of subarticle (3) of article 329B of the Amendment of

article 329B of the

principal Act, for the words “listing of securities on a recognised principal Act.

investment exchange,” there shall be substituted the words “listing of

securities on a Maltese regulated market,”.

In article 348 of the principal Act, immediately after subarticle Amendment of

article 348 of the

(5) thereof there shall be added the following new subarticle>

principal Act.

“(6) The provisions of this article shall not apply if all the

shareholders of all the companies involved in the amalgamation

have so agreed.”.

For paragraph (e) of subarticle (1) of article 349 of the Amendment of

article 349 of the

principal Act, there shall be substituted the following>

principal Act.

“(e) where required, the reports of the experts relating to the

amalgamation.”.

Subarticle (1) of article 359 of the principal Act shall be Amendment of

article 359 of the

amended as follows>

principal Act.

(a) in paragraph (b) thereof, for the words “shall be held

not later than three months from the publication referred to in

paragraph (a)<” there shall be substituted the words “shall be held

at least one month after, and not later than three months from the

publication referred to in paragraph (a)<”< and

(b) in paragraph (d) thereof, for the words “the provisions

of article 358(3)(c) shall”, there shall be substituted the words “the

provisions of the proviso to article 358 (3) shall”.

In paragraph (b) of subarticle (6) of article 391 of the principal Amendment of

article 391 of the

Act, for the words “for the time being listed on the recognised investment principal Act.

exchange or on such other investment exchange as may be prescribed<”

there shall be substituted the words “for the time being listed on a

regulated market or on any equivalent market in a non-Member State

or non-EEA State<”.

Article 395 of the principal Act shall be amended as follows>

(a) for the marginal note thereto, there shall be

substituted the following>

“Certificate exempting from compliance with Part B of

the Second Schedule.”<

(b) in paragraph (b) of subarticle (1) thereof, for the

words “listing of its shares or debentures on a recognised

investment exchange.” there shall be substituted the words “listing

of its shares or debentures on a Maltese regulated market.”< and

(c) in subarticle (3) thereof, for the words

“admissibility to listing on a recognised investment exchange” there

shall be substituted the words “admissibility to listing on a Maltese

regulated market”.

In subarticle (4) of article 396 of the principal Act, for the

words “in connection with an application under that article to the

recognised investment exchange,” there shall be substituted the words

“in connection with an application under that article to a Maltese

regulated market,”.

Subarticle (1) of article 401 of the principal Act shall be

amended as follows>

(a) paragraph (d) thereof shall be renumbered as sub-

paragraph (i) of paragraph (d)<

(b) in sub-paragraph (i) of paragraph (d) as renumbered,

for the words “may deem appropriate<”, there shall be substituted

the following>

“may deem appropriate>

Provided that any such document shall be drawn up in

any one of the official languages of Malta<”<

(c) immediately after sub-paragraph (i) of paragraph (d)

thereof as renumbered, there shall be inserted the following new

sub-paragraph (ii)>

“(ii) to retain, in addition to any document which is

required to be delivered or given to or served on him as

indicated in sub-paragraph (i), a translation of any such

document which may voluntarily be delivered or given to or

served on him, and provided it is a certified translation into

one of the official languages of the Community.

In case of conflict between any document delivered in

accordance with the provisions of sub-paragraph (i) and any

translation delivered voluntarily in accordance with this

paragraph, the translation may not be relied upon against third

parties. Third parties may nevertheless rely on the translation

voluntarily delivered, unless the company proves that the third

parties had knowledge of the version which was required to

be delivered or submitted or served to the Registrar.”.

In paragraph (g) of subarticle (1) of article 425 of the principal Amendment of

Act, for the words “in relation to companies listed on any recognised article

principal Act.

investment exchange” there shall be substituted the words “in relation

to companies listed on any regulated market or any equivalent market

in a non-Member State or non-EEA State”.

For subarticle (1) of article 31 in Part II of Part B of the Amendment

Second Schedule to

Second Schedule to the principal Act there shall be substituted the the principal Act.

following>-

“(1) A report required by paragraph 27 or 28 of this Part

shall be made by an accountant who is an individual who holds a

warrant to act as accountant issued under the Accountancy

Profession Act, or is “an accountancy firm duly registered under

the said Act.”.

Paragraph 4 of the Fifth Schedule to the principal Act shall Amendment

Fifth Schedule to

be amended as follows>

the principal Act.

(a) for sub-paragraph (a) thereof, there shall be

substituted the following>

“(a) transferable securities admitted to listing on a

Maltese regulated market<”<

(b) for sub-paragraph (b) thereof, there shall be

substituted the following>

“(b) transferable securities dealt in on any other

regulated market or on any equivalent market in a non-

Member State or non-EEA State<”< and

(c) for the words “References in sub-paragraph (c) of this

paragraph to recently issued transferable securities are to securities

the terms of issue of which include an undertaking that an

application will be made for admission to listing on a recognised

investment exchange or for admission to any other regulated

market.”, there shall be substituted the words “References in sub-

paragraph (c) of this paragraph to recently issued transferable

securities are to securities the terms of issue of which include an

undertaking that an application will be made for admission to listing

on a Maltese regulated market or for admission on any other

regulated market or on any equivalent market in a non-Member

State or non-EEA State.”.”.

The Eighth Schedule to the principal Act shall be amended

(a) in the title thereof, the word “reporting” shall be

substituted by the word “presentation”<

(b) paragraph 1 thereof shall be amended as follows>

(i) the definition “Reporting Currency” shall be deleted

and substituted by the following>

“ “Presentation currency” shall mean the currency

used in presenting the annual accounts in accordance

with the provisions of article 187. On a change in the

presentation currency consequent to a change in the

currency in which the share capital of a company is

expressed which is effected in accordance with the

provisions of article 186, the term "original presentation

currency" shall refer to the presentation currency in

operation before the change< and the term "new

presentation currency" shall refer to the presentation

currency applicable following the change, and in the case

of the change taking place in the first accounting period,

to the presentation currency which would have been used

had such change not taken place.”<

(ii) the definition “Foreign currency” shall be deleted<

(iii) in the definition “Closing rate”, the words

“reporting currency” shall be substituted by the words

“presentation currency”<

(iv) the definitions “Monetary items” and “Average

annual exchange rate” shall be deleted<

(c)

paragraph 2 thereof shall be amended as follows>

(i) in the sub-title thereof the word “rules” shall be

substituted by the word “rule”<

(ii) paragraph 2 shall be renumbered as sub-paragraph

(1) thereof and shall be substituted by the following>

“(1) The company’s share capital, its share

premium account when applicable, and its reserves shall

be converted from the original presentation currency to

the new presentation currency in accordance with the

rules set out in paragraphs 3 and 4 of this Schedule.”<

(iii) immediately after sub-paragraph (1) thereof as

renumbered, a new sub-paragraph (2) shall be added as

follows>

“(2) All other items in the company’s annual

accounts, including comparative figures where

applicable, shall be presented in the new presentation

currency in accordance with generally accepted

accounting principles and practice.”<

(d) paragraph 3 thereof shall be deleted<

(e) paragraph 4 shall be renumbered as paragraph 3 and>

(i) the title “Conversion rules” shall be substituted by

the title “Conversion rules for share capital and share

premium”<

(ii) in sub-paragraph (1) thereof the words “paid-up

share capital” shall be substituted by the words “called-up

share capital”<

(iii) in sub-paragraph (2) thereof the words “were

issued.” shall be substituted by the words “were issued by

the company.”<

(iv) in sub-paragraph (3) the words “reporting currency”,

wherever appearing shall be substituted by the words

“presentation currency” and the words “paid-up share capital”

shall be substituted by the words “called-up share capital”<

(v) in the proviso to sub-paragraph (3) the words “or

for each class of ordinary shares in so far as the nominal value

per share” shall be substituted by the words “or for each class

of ordinary and preference shares in so far as the nominal

value per share”<

(f) paragraph 5 thereof shall be renumbered as paragraph 4

and shall be amended as follows>

(i) a new sub-title thereof shall be added as follows>

“Conversion rules for reserves.”<

(ii) sub-paragraph (1) thereof shall be substituted by

the following>

“(1) Reserves created out of profits, including

retained profits, and accumulated losses shall be

converted at the average annual exchange rate or rates

pertaining to the accounting period or periods during

which the profits and losses from which such reserves

or accumulated losses originated were earned or

incurred.”<

(iii) sub-paragraph (2) thereof shall be substituted by

the following>

“(2) Reserves which were not created out of

profits shall be converted at the exchange rate or rates

applicable on the date or dates when such reserves were

created.”< and

(iv) sub-paragraph (3), (4), (5) and (6) thereof shall be

deleted<

(g) paragraph 6 shall be substituted by a new paragraph 5 as

(i) a sub-title shall be added thereto as follows>

“Presentation currency conversion difference”<

(ii) sub-paragraphs (1) to (4) shall be substituted by

the following provision>

“5. Where following conversion to the new

presentation currency a presentation currency conversion

difference arises, this is not to be recognised in the company’s

profit and loss account but is to be recognised as a separate

component of equity, and is to be considered as an unrealised

gain or as a realised loss as applicable.”<

(h) paragraph 7 shall be substituted by a new paragraph 6

as follows>

(i) a sub-title shall be added thereto as follows>

“Disclosure”<

(ii) sub-paragraphs (1) to (3) shall be substituted by

the following provision>

“(6) In the first annual accounts following the

conversion, the notes shall include full details of the

method of conversion and the exchange rates used for

the company’s share capital, its share premium account

when applicable, and its reserves.”< and

(i) paragraphs 8 and 9 thereof shall be deleted.”.

The Tenth Schedule to the principal Act shall be amended Amendment of the

Tenth Schedule to

the principal Act

“(a) in paragraph 3(1)(a) thereof, for the words “established

by guidelines issued by the competent authority”, there shall be

substituted the words “established by Investment Services Rules

issued by the competent authority”<

(b) paragraph 14(3) in Part I thereof shall be substituted

by the following>

“(3) The individual accounts shall be drawn up in

accordance with generally accepted accounting

principles and practice.”<

(c) in paragraph 25(8)(h) in Part I thereof for the words

“shall draw up its annual accounts” there shall be substituted

the words> “shall present its annual accounts”< and

(d) paragraph 25(8)(k) in Part I thereof shall be

substituted by the following>

“(k) For the purposes of sub-paragraphs (h) and (j),

the conversion from the base currency of a sub-class into the

currency in which the annual accounts of the umbrella or

multi-class partnership are to be presented in accordance with

generally accepted accounting principles and practice. This

note shall be disclosed in the notes to the accounts.”.

In the Eleventh Schedule to the principal Act, with relation

to article 159(3), for the words “Officers of company failing to give

notice to Registrar of resignation of auditor” there shall be substituted

the words “Officers of company failing to give notice to Registrar or

failing to give statement to Accountancy Board of resignation of an

auditor”.

PART II

This Part amends the Accountancy Profession Act, and shall

be read and construed as one with the Accountancy Profession Act,

hereinafter in this Part referred to as “the principal Act”.

Article 2(1) of the principal Act shall be amended as follows>

(a) in the definition “accountant” for the words “includes

an individual or a partnership of accountants” there shall be

substituted the words “means a warrant holder or an accountancy

firm.”<

(b) immediately after the definition “accountant” there shall

be added the following definitions>

“ “accountancy firm” means a partnership whether a civil

partnership or a commercial partnership including a company,

formed in accordance with article 10 of this Act and any

connected undertaking<

“audit” means the audit of historical financial statements

and includes the statutory audit< the term “auditing” shall be

construed accordingly<

“audit client” means an entity in respect of which an

auditor conducts an audit<

“audit firm” means a civil partnership or a commercial

partnership, including a company which is authorised to

practise in the field of auditing in terms of article 10 and any

connected undertaking<

“auditor” is a holder of a practising certificate to practise

in the field of auditing and includes an audit firm<”<

(c) immediately after the definition “Board” there shall be

added the following definitions>

“ “chain of command” shall have the meaning prescribed

by the Board from time to time<

“compliance principal” shall mean a principal of a firm,

who, acting on behalf of and under the instructions of such

firm, is responsible for ensuring compliance with the

provisions of this Act or the regulations or directives issued

under it, and in the case of a sole practitioner, shall, in all

cases, be the sole practitioner<

“connected undertaking” means an undertaking which

is effectively managed or promoted as one practice with the

firm or as a related undertaking of the firm<

“financial statements” means the individual accounts of

an entity or the consolidated accounts of a group of entities<

“firm” means an audit firm or an accountancy firm<

“generally accepted accounting principles and practice”

means the generally accepted accounting principles and

practice as defined in the regulations prescribed by the

Minister in terms of article 8 of this Act<”< and

“Member State” means a member state of the European

Union<”<

(d) immediately after the definition “Minister” there shall

be added the following definitions>

“ “network” means the larger structure which is>

(a) aimed at cooperation and to which an auditor

belongs< and

(b) clearly aimed at profit- or cost-sharing or

shares common ownership, control or management,

common quality-control policies and procedures, a

common business strategy, the use of a common brand-

name or a significant part of professional resources<

“non-practitioner” means any natural person who, for at

least three years before his involvement in the governance of

the Board or any committee thereunder has not carried out

statutory audits, has not held voting rights in an audit firm,

has not been a member of the administrative or management

body of an audit firm and has not been employed by, or

otherwise associated with, an audit firm<

“practising certificate” shall have the meaning assigned

to it in article 4(2)<”<

(e) the definition “prescribed” shall be substituted by the

following>

“ “prescribed” means prescribed by regulations or

directives under this Act<”<

(f) immediately after the definition “prescribed” there shall

be added the following definitions>

“ “principal” means every member of the administrative

or management body of a firm and any person who signs a

report on behalf of the firm< and in the case of an audit firm,

an individual who carries out an audit on behalf of the firm

including the individual who signs the audit report, the

individual responsible for leading the engagement, the quality

control engagement reviewer and any other person in the chain

of command for that audit<

“public-interest entity” means an entity whose

transferable securities are admitted to trading on a regulated

market of any Member State within the meaning of point 14

of Article 4(1) of Directive 2004#39#EC, a credit institution

as defined in point 1 of Article 1 of Directive 2000#12#EC of

the European Parliament and of the Council of 20 March 2000

relating to the taking up and pursuit of the business of credit

institutions, an insurance undertaking within the meaning of

Article 2(1) of Directive 91#674#EEC and such other entities

as may be prescribed by the Board. References to the

Directives in this definition shall include any other legislation

amending or substituting such Directives<

“statutory audit” means the audit of financial statements

as prescribed by law<

“third-country” means a country which is not a Member

State<

“third-country audit entity” means an entity, regardless

of its legal form, which carries out audits of entities

incorporated in a third-country<

“third-country auditor” means an individual who carries

out audits of an entity incorporated in a third country<

“warrant holder” shall mean a person who holds a

warrant issued in terms of article 4(1).”<

(g) immediately after subarticle (2) there shall be added the

following new subarticle>

“(3) In this Act and in any regulations, directives or

guidelines made thereunder, if there is any conflict between

the English and Maltese texts, the English text shall prevail.”.

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

article 3 of the

principal Act.

(a) in subarticle (1) thereof the words “the holder of a

warrant issued under article 4” shall be substituted by the words

“a warrant holder”<

(b) in paragraph (a) of subarticle (2) thereof the words

“conduct and moral character” shall be substituted by the word

“repute”<

(c) for paragraph (c) of subarticle (2) thereof there shall be

substituted the following>

“(c)

he has>

(i) successfully completed the course leading to

the award of Bachelor of Accountancy (Honours)

organised by the University of Malta< or

(ii) attained university entrance or equivalent

level, then completed a course of theoretical instruction

recognised by the Board>

Provided that in every case the courses referred to

in this subarticle shall cover such subjects at such levels

as may be prescribed<”<

(d) paragraph (d) of sub-article (2) thereof shall be

substituted by the following>

“(d) unless covered in the courses referred to in sub-

article 2(c), he has passed an examination, part or all of which

must be in writing, of professional competence of University

final or equivalent examination level, recognised or set by

the Board for that purpose>

Provided that the Board shall ensure that in the case of

an application for a practising certificate in the field of auditing

the examination of professional competence referred to in

this subarticle adequately covers the necessary level of

theoretical knowledge of the prescribed subjects relevant to

auditing as well as the ability to apply such knowledge in

practice>

Provided further that where a person has completed a

course of theoretical instruction and passed an examination

of professional competence of university final or equivalent

examination level relating to the accountancy profession and

recognised by the Board but which did not cover all of the

subjects prescribed, the Board may accept such qualification

after such person shall have passed such examination or

examinations in local laws and in those other subjects as the

Board may determine according to the particular

circumstances<”<

(e) immediately after paragraph (d) there shall be added the

following new paragraph>

“(e) he satisfies the Board that he has adequate

experience in the practice of accountancy for an aggregate

period of three years, of which an equivalent of at least one

year’s experience shall be gained after he has obtained the

academic qualifications stipulated in paragraph (c).”<

(f) in sub-article (3) thereof the words “after consulting”

shall be substituted by the words “on the advice of”<

(g) in sub-article (5) thereof, immediately after the words

“obtaining a warrant” there shall be added the words “or practising

certificate”< and

(h) in sub-article (6) thereof, the words “not being the holder

of the appropriate warrant” shall be substituted by the words “not

being a warrant holder or a holder of a practising certificate in the

field of auditing”, and the words ”“not exceeding one hundred

liri” shall be substituted by the words “not exceeding two thousand

and three hundred euro (2,300.00)”.

Article 4 of the principal Act shall be amended as follows>- Amendment

article 4 of the

principal Act.

(a) in subarticle (1) thereof, the word “recommendation”

shall be substituted by the word “advice”<

(b) in subarticle (2) thereof, the words “as may be prescribed

by the Minister, acting on the recommendation of the Board” shall

be substituted by the words “as may be prescribed”<

(c) for subarticle (3) thereof, there shall be substituted the

following>

“(3) The Board shall issue a practicing certificate to

practise in the field of auditing in Malta to an individual of

good repute who is an approved auditor in any Member State

provided that such individual has passed, to the satisfaction

of the Board, an aptitude test, covering local laws and

regulations relevant to auditing, set by the Board for this

purpose.”<

(d) immediately after subarticle (3) thereof, there shall be

added the following new subarticle>

“(4) Where a practicing certificate in the field of

auditing is withdrawn for any reason, the Board shall

communicate that fact and the reasons for the withdrawal to

the relevant competent authorities of the Member States where

the auditor is also approved.”<

(e) immediately after new subarticle (4) there shall be added

the following new subarticle>

“(5) The Minister acting on the recommendation of

the Board may make regulations prescribing the qualifications

required for the issue of certificates in terms of subarticles

(2), (3) and (6) as well as to regulate their suspension,

withdrawal or the taking of any other regulatory measures

which may be reasonably necessary to protect the public

interest.”< and

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

the following new subarticle>

“(6) Subject to reciprocity and subject to rules that may

be prescribed by the Board, the Board may issue a practising

certificate to practice in the field of auditing to a third-country

auditor if it is satisfied that such individual is in possession of

the qualifications set out in article 3(2), has passed an aptitude

test set by the Board in accordance with subarticle (3) and

satisfies any other conditions which may be prescribed.”.

Subarticle (1) of article 5 of the principal Act shall be

renumbered as the whole article 5, the words “The holder of a warrant

issued under article 4” shall be substituted by the words “A warrant

holder”, and subarticle (2) thereof shall be deleted.

Article 6 of the principal Act shall be amended as follows>-

(a) in subarticle (1) thereof, for the words “six other

members who” there shall be substituted the words “ten other

members, all of whom shall be knowledgeable in the field of

auditing and accounting, who”<

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

following>

“(2) The Board shall consist of>

(a) a chairman of recognised standing and

experience in the accountancy profession and who is a

non-practitioner<

(b) a non-practitioner nominated by the

University of Malta from among a list of not less than

two persons nominated by the said university from

among the teaching staff of the Faculty or Faculties in

which teaching of and research in the field of

accountancy is organised<

(c) a senior official of the Ministry responsible

for finance who is a non-practitioner<

(d) two members recommended by a recognised

accountancy body from among a list of not less than

four members nominated by the said body<

(e) three members who are practising accountants

holding a warrant issued under article 4(1)< and

(f) three other members who are non-

practitioners.”< and

(c) in subarticle (3) thereof, the word “four” shall be

substituted by the word “six”.”.

Article 7 of the principal Act shall be amended as follows> Amendment of

article 7 of the

principal Act.

(a)

in subarticle (1) thereof -

(i) immediately after the words “and shall have the”

there shall be added the word “ following”<

(ii) paragraph (a) thereof shall be substituted by the

following>

“(a) to consider applications for the issue of

warrants or practicing certificates under article 4 and to

advise the Minister<”<

(iii) in paragraph (b) thereof, the words “certified

public accountants” shall be substituted by the words “warrant

holders or holders of a practising certificate”<

(iv) paragraph (c) thereof shall be substituted by the

following>

“(c) to take such measures as may be reasonably

necessary to protect the public interest and the integrity

of the profession including the placing of restrictions,

the imposition of fines and other similar measures on

warrant holders and holders of a practising certificate

which in no case shall exceed twelve thousand euro

(12,000.00) per warrant holder or firm<”<

(v) immediately after paragraph (c) thereof, there shall

be added paragraphs (d),(e), (f), (g), (h) and (i) as follows>

“(d) to advise, or make recommendations or

otherwise express its views to the Minister on any matter

on which the Minister is to consult with the Board or on

which the Board is to make recommendations to the

Minister or on which the views of the Board are sought

by the Minister<

(e) to carry out all such things as may be necessary

to meet the obligations arising from Directive

2006#34#EC

(f) to establish procedures for the registration

referred to in subarticle (4)<

(g) to operate an appropriate system of quality

assurance<

(h) to publish guidelines on the interpretation of

the Accountancy Profession Act and the regulations and

directives issued under it< and

(i) such other functions as are or may be assigned

to it by this or any other law or as may be delegated to it

by the Minister.”<

(b) in subarticle (2) thereof the words “paragraph of” shall

be deleted and the words “may assign to them.” shall be substituted

by the words “may assign to them, including but not limited to,

the establishment and operation of a system of quality assurance”<

(c) for subarticle (3) thereof, there shall be substituted the

following>

“(3) In the exercise of its function under subarticle

(1)(e), the Board shall be empowered to exchange confidential

information with the competent authorities of other Member

States.”<

(d) for subarticle (4) thereof, there shall be substituted the

following>

“(4) The Board shall maintain an updated register,

separately identifying the following>

(a) warrant holders and holders of practising

certificates<

(b) audit firms and accountancy firms< and

(c) third-country auditors and third-country audit

entities.”<

(e) for subarticle (5) thereof, there shall be substituted the

following>

“(5) The Minister may, upon recommendation of the

Board, prescribe the details to be contained in the register.”<

(f) immediately after subarticle (5) thereof, there shall be

added the following subarticles (6) to (20)>

“(6) The Board shall register, in accordance with the

provisions of this article, every third-country auditor and third-

country audit entity that provides an audit report concerning

the financial statements of a company incorporated outside

the European Union whose transferable securities are admitted

to trading on the regulated market in Malta within the meaning

of point 14 of Article 4(1) of Directive 2004#39#EC, except

when the company is an issuer exclusively of debt securities

admitted to trading on a regulated market in a Member State

within the meaning of Article 2(1)(b) of Directive

2004#109#EC, the denomination per unit of which is at least

fifty thousand euro (50,000) or, in case of debt securities

denominated in another currency, equivalent at the date of

issue, to at least fifty thousand euro (50,000).

(7) The audit report, referred to in subarticle (6), shall

have no legal effect until the third-country auditor or the third-

country audit-entity have been registered in accordance with

the provisions of this article.

(8) Registered third-country auditors and third-country

audit entities shall mutatis mutandis, be subject to the rules,

obligations, penalties and offences under this Act or the

regulations or directives issued under it>

Provided that a third-country auditor or a third-country

audit entity may be exempt from being subject to the quality

assurance system if another Member State’s or third country’s

system of quality assurance that has been assessed as

equivalent by the Board in accordance with subarticle (9) has

carried out a quality review of the third-country auditor or

audit-entity concerned during the preceding three years.

(9) The Board may, on the basis of reciprocity disapply

or modify the requirements provided in subarticle (6) and (8)

if the third-country auditors or third-country audit entities are

subject to systems of public oversight, quality assurance and

investigations and penalties in the third-country that are

equivalent to those under this Act or the regulations and

directives issued under it.

(10) The equivalence referred to in subarticle (9) shall

be assessed by the Board which may also rely on the

assessments carried out by another Member State.

(11) The Board may register a third-country auditor

and third-country audit entity in accordance with the provision

of subarticle (6) only if>

(a) it is of good repute<

(b) the third-country auditor or the third-country

auditor carrying out the audit on behalf of the third-

country audit entity is in possession of qualifications

which are equivalent to those laid down in article 3(2)<

(c) in case of a third-country audit entity, the

majority of the members of the administrative or

management body of the third-country audit entity meet

the requirements which are equivalent to those laid down

in article 10(6)<

(d) the audit referred to in subarticle (6) is carried

out in accordance with international auditing standards

and complies with the requirements of independence,

objectivity and audit fees set out in this Act or by the

Board or with equivalent standards and requirements<

and

(e) it publishes on its website an annual

transparency report which includes the information

referred to in article 18(1) or it complies with equivalent

disclosure requirements.

(12) The equivalence referred to in subarticle (11) (b),

(c), (d) and (e) shall be assessed by the Board.

(13) All the persons registered in accordance with the

provisions of this article shall notify the Board in writing of

any change to the information contained in the register

pertaining to them. The notification shall be signed by the

warrant holder, practising certificate holder, third-country

auditor, properly authorised representative of the registered

firm or the third-country audit entity and delivered to the Board

by not later than such term as may be prescribed by the Board

for that purpose>

Provided that the Board may establish procedures for

the notification referred to in this subarticle to take place by

electronic means.

(14) The register shall be updated without undue delay

and in any case not later than four weeks following notification

referred to in subarticle (13).

(15) The register shall be made available electronically

through the Board’s website.

(16) The Board shall exercise its functions under

subarticle (1)(b) through disciplinary committees appointed

in respect of each particular proceeding and which shall in

each case be composed of five members appointed by the

Board as to two from a list of not less than ten persons

submitted to the said Board each year by approved

accountancy bodies and as to the remaining three members,

at least one shall be a person holding a warrant under article

4(1) who has practised his profession for such period as may

be prescribed. The Board shall appoint one of the said

members being a warrant holder or a person who had been a

warrant holder to be the chairman of the disciplinary

committee.

(17) Without prejudice to any power granted to the

disciplinary committee under the Act or the regulations or

directives issued under it, the disciplinary committee shall

have the power to impose administrative fines against any

person in case of professional misconduct and other

disciplinary proceedings which shall in each case not exceed

twelve thousand euro (12,000.00).

(18) The Board may with the agreement of the Minister

delegate, under such terms and conditions as it may deem

appropriate and subject to its overall supervision or control,

any of its functions, other than those under subarticle (1)(b)

or those under article 4, to an approved accountancy body.

(19) The Board shall publish an annual report including

details of its annual work programme, activity reports, a

description of the work carried out by the disciplinary

committee, a summary of the work carried out in respect of

quality assurance and such other things which the Board

deems relevant.

(20) The annual report shall be published by not later

than the 31st March of every year.”.

(1) Article 8 of the principal Act shall be renumbered as

subarticle (1) thereof and shall be amended as follows>

(a) paragraph (a) thereof, shall be substituted by the

following>

“(a) the establishment and definition of accounting

standards, procedures and generally accepted accounting

principles and practice applicable in respect of the preparation

of financial statements of entities<”<

(b) paragraph (b) thereof shall be substituted by the

following>

“(b) the establishment and definition of auditing

standards and generally accepted auditing principles and

practice and other duties and practices to be followed by

auditors, either generally or in particular fields of activity<”<

(c)

paragraph (c) thereof shall be deleted<

(d) paragraph (d) thereof shall be renumbered as paragraph

(c)<

(e) paragraph (e) thereof shall be renumbered as paragraph

(d) and immediately after the words “holding a warrant” thereof

there shall be added the words “ or a practising certificate”<

(f) paragraph (f) thereof shall be renumbered as paragraph

(e) and immediately after the words “holding a warrant” thereof

there shall be added the words “or a practising certificate”<

(g) paragraph (g) thereof shall be deleted<

(h) paragraph (h) thereof shall be renumbered as paragraph

(i) paragraph (i) thereof shall be renumbered as paragraph

(g)<

(j) paragraphs (j) and (k) thereof shall be deleted<

(k) paragraph (l) thereof shall be renumbered as paragraph

(h) and the words “Board< and” shall be substituted by the word

“Board<”<

(l) immediately after paragraph (h) thereof, as renumbered,

there shall be added a new paragraph (i) as follows>

“(i) the implementation of the provisions of Directive

2006#43#EC<”< and

(m) paragraph (m) thereof shall be renumbered as paragraph

(2) Immediately after subarticle (1) of article 8 as

renumbered of the principal Act, subarticles (2) to (5) shall be added as

“(2) The Board may, with the approval of the Minister,

issue directives or guidelines regulating the activity of warrant

holders and holders of practising certificates on the following>

(a) the professional conduct of warrant holders and

practising certificate holders, code of ethics, standards of

competency and integrity and independence to be kept by the

profession<

(b) the confidentiality of information obtained by a

warrant holder or practising certificate holder, or his

employees in connection with work performed or services

rendered in connection with the accountancy profession<

(c) advertising and publicity by warrant holders and

practising certificate holders<

(d) obtaining professional work<

(e) the manner in which experience for the purposes

of article 3(2)(e) or which may be required to obtain practising

certificates under article 4(2), and the persons with whom

such practice and experience may be undertaken<

(f) clients’ accounts and monies held on behalf of

clients and third parties<

(g) continued professional education<

(h) the establishment and operation of a system of

quality assurance<

(i) the meaning and interpretation of any regulations

issued in terms of article 8(1)<

(j) the punishments, penalties and other consequences and

effect to which a person may become liable or which may take

place in the event of any contravention of, or non-compliance

with the provisions of any directive, so however that these may

not exceed such parameters as may be set out in the Act<

(k) the implementation of the provisions of Directive

2006#43#EC<

(l) the provision of such information as may be required

from warrant holders and practising certificate holders by the

Board in order to enable it to carry out any of its functions

under this Act<

(m) the establishment of a system of registration and

renewals for warrants and practising certificates< and

(n) such other matters as may be prescribed by

regulation.

(3) Directives and guidelines issued in terms of subarticle

(2) shall be published>

(a)

in the Gazette< or

(b) by the Ministry of Finance in a separate publication and

the fact of publication thereof shall be notified in the Gazette

together with information as to where the said publication may be

viewed or copies thereof obtained by the public.

(4) Directives and guidelines issued in terms of subarticle

(2) shall not become operative before the lapse of one week from the

publication in the Gazette made in terms of subarticle (3), or such later

date as may be specified therein.

(5) Regulations, directives or guidelines made under any

of the provisions of this Act may be made in the English language only.”.

Article 10 of the principal Act shall be amended as follows>

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

following>

“(1) Where two or more persons intend to practise

jointly as accountants, they may form an accountancy firm

having as one of its main objects the practice of accountancy>

Provided that for an accountancy firm to practise as an

audit firm it shall be required to have as one of its main objects

the practice of auditing and shall fulfil such other conditions

as may be prescribed from time to time>

Provided further that any other service provided by such

firms shall not be incompatible with their main object, as

aforesaid.”<

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

following>

“(2) Where an accountancy firm is authorised to act

as an audit firm it may indicate such fact in or together with

the firm’s name as the case may be.”<

(c) sub-article (3) thereof shall be substituted by the

following>

“(3) No person may be a principal in an accountancy

firm which is not also an audit firm unless such person>

(a)

holds a warrant issued under article 4(1)< or

(b) is a person of good repute and is appropriately

qualified either by way of academic or professional

qualifications or experience.”<

(d) subarticle (4) thereof, there shall be substituted by the

following>

“(4) In an accountancy firm which is not also an audit

firm the persons listed in subarticle (3)(a) shall>

(a) hold more than fifty per centum of the voting

rights in the firm< and

(b) constitute more than sixty per centum of the

firm’s administrative or management body>

Provided that in the case of an accountancy firm which

is owned, managed and controlled by two individuals, only

one of the individuals sitting on the administrative or

management body of the firm shall be required to satisfy the

conditions laid down in subarticle 3(a).”<

(e) subarticle (5) thereof shall be substituted by the

following>

“(5) No person may be a principal in an audit firm

unless such person>

(a) holds a practising certificate to practise in the

field of auditing< or

(b) is an audit firm of good repute approved in a

Member State< or

(c) is a person of good repute and is appropriately

qualified either by way of academic or professional

qualifications or experience.”<

(f) subarticle (6) thereof shall be substituted by the

following>

“(6) An audit firm shall be of good repute and shall

satisfy the following conditions>

(a) the individuals who carry out the audit on

behalf of the audit firm must hold a practising certificate

in the field of auditing<

(b) the majority of the voting rights in the audit

firm must be held by an audit firm or audit firms approved

in any Member State or by individuals holding a

practising certificate in the field of auditing< and

(c) sixty per centum of the administrative or

management body of the audit firm must be made up of

an audit firm or audit firms approved in any Member

State or by individuals holding a practising certificate in

the field of auditing>

Provided that in the case of an audit firm which is owned,

managed and controlled by two individuals, only one of the

individuals sitting on the administrative or management body

of the audit firm shall be required to satisfy the conditions

laid down in this paragraph (c) of subarticle (6).”<

(g) subarticle (7) thereof shall be substituted by the

following>

“(7) A firm shall, when duly formed according to law,

be registered with the Board, and upon such registration the

principals, shall, for so long as it is so registered, be authorised

by the Board to act, in the name and on behalf of the firm and

where applicable, to bring to the notice of the public the fact

that it may practise in any field of the profession of accountant

for which a certificate may be required under article 4(2)<

and in the case of an accountancy firm it shall be entitled

accordingly to use the designation of certified public

accountants and the abbreviation “CPAs”.”<

(h) subarticle (8) thereof shall be substituted by the

following>

“(8) When an audit firm carries out an audit, the audit

report shall be signed at least by an individual auditor carrying

out the audit on behalf of the audit firm.”<

(i) immediately after subarticle (8) thereof, there shall be

added a new subarticle (9) as follows>

“(9) Every firm registered under this article shall give

to the Board such information as the Board may reasonably

require or as may be prescribed, and shall give notice to the

Board of any relevant change in any information previously

given to it within fifteen days after the date on which the

change occurs.”<

(j) immediately after subarticle (9) thereof there shall be

added a new subarticle (10) as follows>

“(10) Notwithstanding any other provisions of this Act

or of any other enactment and notwithstanding any agreement

to the contrary, the principals shall be responsible for the

maintenance of the required professional standards and

conduct including any applicable Code of Ethics, and

generally responsible for the fulfilment of their obligations

under this Act or any other applicable law.”<

(k) immediately after new subarticle (10) thereof there shall

be a new subarticle (11) as follows>

“(11) Any person who makes use of the designation

“certified public accountants” or its abbreviation “CPAs” and,

or, bringing to the notice of the public the holding of any

particular certificate in relation to a firm which is not registered

under this article or in any other manner knowingly makes

use of a name falsely implying the existence of such a firm,

or that such a firm is registered, or may otherwise lawfully

function, under this article, or does any other act calculated

to lead to the belief that any of the facts aforesaid exists when

in fact it does not, shall be guilty of an offence and shall be

liable on conviction, for each offence, in respect of a first

offence to a fine (multa) not exceeding two thousand and three

hundred and twenty-nine euro and thirty-seven cents

(2,329.37), and in respect of a second or subsequent offence

to a fine (multa ) not exceeding eleven thousand and six

hundred and forty-six euro and eighty-seven cents (11,646.87)

or to imprisonment to a term not exceeding three months or

to both such imprisonment and fine, and in the case of a

continuing offence to an additional fine (multa) not exceeding

two hundred and thirty-two euro and ninety-four cents

(232.94) for each day during which the offence continues.”<

and

(l) immediately after new subarticle (11) thereof there shall

be a new subarticle (12) as follows>

“(12) The provisions of article 3(5) shall, mutatis

mutandis, apply to the registration of a firm under this article

as they apply to the issue of a warrant under this Act.”.

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

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

following>

“(1) Every firm formed under article 10 and every

warrant holder or a holder of a practising certificate, shall,

for so long as they hold such a warrant or practising certificate

or, as the case may require, for so long as they are so formed,

and thereafter with respect to anything done or omitted during

that time, be covered by an indemnity insurance, by such

company, in such manner and for such amount as may be

prescribed, against any liability which such person or firm

may incur for compensation in respect of any loss or damage

which a client or any other person may suffer as a result of

any negligent act, error or omission committed by any such

person or firm, or any principal thereof, or by any of their

employees, in the carrying out of their functions as well as

against any claim in respect of any loss or damage brought

about or contributed by any dishonest, fraudulent, criminal

or malicious act or omission of any of their employees.”<

(b) in subarticle (2)(a) thereof, immediately after the words

“surrender of the warrant” there shall be added the words “or

practising certificate”, the word “partner” shall be substituted by

the word “principal” and the words “or practitioner” shall be

deleted<

(c) in subarticle (3)(a)thereof, the words “the holder of the

warrant of accountant” shall be substituted by the words “a warrant

holder or a holder of a practising certificate”, immediately after

the words “not exercised the profession of accountant” there shall

be added the words “or auditor” and the words “he will not be

exercising the profession of accountant.” shall be substituted by

the words> “he will not be exercising the profession of accountant

or auditor”<

(d) in subarticle (3)(c) thereof, the words “person holding

the warrant of accountant” shall be substituted by the words “

warrant holder or a holder of a practising certificate”<

(e) in subarticle (3)(c)(ii) thereof, the words “a partnership

of accountants” shall be substituted by the words “a firm.”<

(f) in subarticle (4) thereof, the word “partnership” shall be

substituted by the word “firm”<

(g) in subarticle (5) thereof, the words “or partnership” shall

be deleted< and

(h) subarticle (6) thereof shall be deleted.

Articles 12, 13, 14 and 15 of the principal Act shall be Amendment of

article 12 to 15 of

substituted by the following>

the principal Act

12. Every person who acts or omits to act in breach of

his professional duty as accountant or auditor, shall, if such

act or omission amounts to dishonesty or serious misconduct,

be liable on conviction to imprisonment for a period of not

less than one year and not exceeding five years, and the court

may also inflict on such person a fine (multa) not exceeding

fifty-eight thousand and two hundred and thirty-four euro and

thirty-three cents (58,234.33).”

13. Any agreement or other arrangement, as may be

from liability

prescribed

by the Minister, purporting to exempt a warrant

responsibility

holder or a holder of a practising certificate, from any liability,

responsibility or duty relative to the statutory audit, except

under a policy of insurance made out under article 11, to

indemnify him against any such liability or responsibility,

shall be null and void.

Administrative

14. In the case of a breach of any rules under this Act

or any regulations or directives issued under it, the Board

shall have the power to issue administrative fines and

reprimands, and to take such other measures as it may deem

appropriate according to the circumstances of the case.

15. (1) Without prejudice to article 14 a warrant or

practising certificate issued under any of the provisions of

this Act may be suspended or subjected to other conditions,

and the registration of a firm under article 10 may be

suspended, cancelled or subjected to other conditions, by the

Board, in accordance with the provisions of this article, if the

person to whom such a warrant or practising certificate was

issued or the firm or any of the principals of the firm>

(a) has, following an enquiry held by the

disciplinary committee appointed under article 7(16),

been found guilty of any of the following acts or

omissions>

(i) dishonesty, serious misconduct or gross

negligence in the exercise of his profession<

(ii) material contravention of regulations

with respect to professional standards, practices or

integrity<

(iii) grievous conduct discreditable to the

profession<

(iv) failure to comply with any condition

attached to a warrant or practising certificate under

subarticle (5) when such failure is of a material

nature< or

(b) has been found guilty by a court of law –

(i)

of an offence under this Act or any

regulations made thereunder< or

(ii) of a crime affecting public trust or of theft

or of fraud or of knowingly receiving property

obtained by theft or fraud or of any crime punishable

by a term of imprisonment exceeding one year.

Provided that the Board may, in any of the

cases referred to in (a) or (b) above>

(i) revoke or withdraw a practising

certificate< or

(ii) advise the Minister to revoke or

withdraw the warrant.

(2) Without prejudice to the provisions of subarticle

(1)>

(a) a warrant may be withdrawn or cancelled by

the Minister at the request of the warrant holder addressed

to the Board<

(b) a practising certificate may be withdrawn or

cancelled by the Board at the request of the practising

certificate holder or the firm<

(c) the registration of a firm may be cancelled by

the Board at the request of the firm<

(d) a warrant may be revoked or cancelled by the

Minister acting on the advice of the Board, whenever

the Board is of the opinion that there are material

circumstances concerning the person to whom the

warrant was issued or if the warrant had not been issued,

would disqualify such person from obtaining a warrant<

(e) a practising certificate and the registration of

a firm may be revoked or cancelled by the Board

whenever the Board is of the opinion that there are

material circumstances concerning the person to whom

the practising certificate was issued or the firm which, if

the warrant or practising certificate had not been issued

or the firm registered, as the case may require, would

disqualify such person from obtaining a practising

certificate or such firm from being registered.

(3) In exercising its functions under this article the

disciplinary committee shall act in accordance with such rules

and procedures as shall be prescribed< and the findings of the

said disciplinary committee shall be subject to such reference

back, review or appeal as may be prescribed.

(4) Where a warrant or practising certificate or

registration has been suspended or subjected to conditions or

when the practising certificate or the registration of the firm

has been withdrawn or cancelled under any of the provisions

of this article, the suspension or the conditions may be lifted

by the Board at any time< and where the warrant or practising

certificate has been withdrawn under subarticle (2)(a) or (b)

or the registration cancelled under subarticle 2(c), a new

warrant or practising certificate may be issued or a new

registration made at any time if the conditions for such issue

or registration are satisfied.

(5) Where a warrant has been revoked under any of

the provisions of this article, other than subarticle (1)(a)(i)

and (b), in respect of an offence against article 3(5), article

10(11) or article 10(12), the Minister may, after the expiration

of two years from the date of the revocation, and if the Board

so advises, issue a fresh warrant under article 4, under such

conditions as may be imposed by the Minister on the advice

of the Board.

(6) Where a practising certificate has been revoked

under any of the provisions of this article, other than subarticle

(1)(a)(i) and (b), in respect of an offence against article 3(5),

article 10(11) or article 10(12), the Board may, after the

expiration of two years from the date of the revocation, issue

a fresh practising certificate under article 4, under such

conditions as may be imposed by the Board.

(7) Upon the revocation or withdrawal of a warrant or

practising certificate issued under this Act, or during such

period as such a warrant or practising certificate is suspended,

the person to whom the warrant or practising certificate was

issued shall cease to be the holder of such warrant or practising

certificate< and upon the cancellation of any registration of a

firm under article 10, or for such period as such registration

is suspended, the firm shall cease to be registered.” .

Immediately after article 15 of the principal Act, there shall Addition

articles 16 to 20 to

be added the following new articles 16, 17, 18, 19 and 20>

the principal Act.

16. (1) The provisions of this Act establishing

offences and punishments in respect thereof shall not affect

the operation of any other law establishing offences and

punishments in respect of the same acts or omissions and shall

punishments. not, in particular, affect the application of any higher

punishments under any other law.

(2) For the purposes of article 3(5) and of article 10(11),

the use on any card, letterhead, sign, board, plate,

advertisement or other written, printed or engraved device,

instrument or document, of the words “certified public

accountant” or its abbreviation”“CPA”, whether in its singular

or plural form, in relation to a name, shall be sufficient

evidence of the knowledge of such use by the person in relation

to whose name the said words or abbreviations are used, unless

such person proves that the use was made without his

knowledge and that upon becoming aware of the use he took

adequate steps to stop it.

(3) For the purposes of this Act>

(a) a person shall not be deemed to exercise the

profession of accountant if he acts simply as an employee

of, or assistant to, an accountant, and does not issue any

accounting or financial statement over his name<

(b) to the extent that is so prescribed, a person

shall not be deemed to exercise the profession of

accountant if he is in such employment or holds or acts

in such office, or performs only such work, services,

acts or functions, as may be prescribed.

(4) The conduct by the Board of proceedings for

professional misconduct and other disciplinary proceedings

in terms of article 7 shall be without prejudice to any

proceedings which may be taken against the person concerned

under the provisions of the Criminal Code or of any other

law and any proceedings so taken shall be without prejudice

to any proceedings that may be taken by the Board.

(5) The Minister may by regulation prescribe that the

provisions of subarticle (2) be applied mutatis mutandis in

respect of the holding of a practising certificate in the field of

auditing.

17. (1) The auditor shall inform the Board in writing

case

of a dismissal or a resignation of the auditor during

the term of appointment and shall give adequate explanations

for the reasons thereof.

(2) The notification referred to in subarticle (1) shall

be made within fourteen days from the dismissal or resignation

as the case may be.

18. (1) Auditors that carry out statutory audits of

public-interest entities shall publish on their websites, within

three months of each calendar year, annual transparency

reports that include at least the following>

(a) a description of the legal structure and

ownership<

(b) where the audit firm belongs to a network a

description of the network and the legal and structural

arrangements in the network<

(c) a description of the governance structure of

the audit firm<

(d) a description of the internal quality control

system of the audit firm and a statement by the

administrative or management body on the effectiveness

of its functioning<

(e) an indication of when the last quality assurance

review took place<

(f) a list of public-interest entities for which the

auditor or audit firm has carried out statutory audits

during the preceding calendar year<

(g) a statement concerning the auditor’s

independence practices which also confirms that an

internal review of independence compliance has been

conducted<

(h) a statement on the policy followed by the audit

firm concerning the continuing education of auditors<

(i) the total turnover divided into audit fees and

fees for all other services rendered< and

(j) information concerning the basis for the

principal’s remuneration.

(2) The transparency report shall be signed by the

compliance principal.

(3) The first transparency report shall be published by

not later than 31 March 2009.

(4) The Board may issue guidelines or directives on

the correct interpretation of this article.

19. (1) The information provided to the Board under

the provisions of this Act or the rules and directives issued

under it shall be signed by the compliance principal.

(2) The Board may issue rules prescribing the use of

electronic signatures as defined in point 1 of Article 2 of

Directive 1999#93#EC of the European Parliament and of the

Council of 13 December 1999 on a Community framework

for electronic signatures.

20. The Board shall appropriately disclose to the public

Disclosure of

all the measures taken and the penalties imposed on auditors

in terms of this Act or the regulations and directives issued

under it including the appropriate disclosure of penalties

imposed. The disclosure required by this article may take place

through the annual report published in terms of subarticle (19)

of article 7.”.

Passed by the House of Representatives at Sitting No. 34 of the 16th July,

2008. Pauline Abela

Acting Clerk to the House of Representatives

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

€4.66