ACT No. XI of 2014 AN ACT to amend the Trusts and Trustees Act, Cap. 331.

I assent.

M ARIE L OUISE C OLEIRO P RECA

(L.S.)

President

25th April, 2014

ACT No. XI of 2014

AN ACT to amend the Trusts and Trustees 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:-

The short title of this Act is the Trusts and Trustees Short title.

(Amendment) Act, 2014, and this Act shall be read and construed as

one with the Trusts and Trustees Act, hereinafter referred to as "the Cap. 331.

principal Act".

Article 1 of the principal act shall be amended as follows

Amendment of

article 1 of the

principal Act.

(a)

for the marginal note thereof, there shall be

substituted the following

"Short title and applicability.";

(b) the said article 1 shall be re-numbered as sub-article

(1) of the same article; and

(c)

immediately after sub-article (1) thereof, as

renumbered, there shall be added the following new sub-article

"(2) The provisions of this Act, except as

otherwise provided in this Act, shall apply to all trustees,

whether such trustees are authorised, or are not required to

obtain authorisation in terms of article 43 and article

43A.".

Article 2 of the principal Act shall be amended as follows

(a)

the definition "the Act" in sub-article (1) thereof

shall be deleted;

(b)

in the definition "approved person" -

(i) for the words "duties of a trustee;", there shall

be substituted the words "duties of a trustee:"; and

(ii) immediately after the words "duties of a

trustee:", there shall be added the following new provisos

"Provided that where a person is not in

possession of any qualifications in financial,

fiduciary, accounting or legal services, the

Authority may, in exceptional circumstances,

consider the requirement to be satisfied if such

person can prove that he has experience in the

relevant fields

Provided further that in the case of a company

or body corporate, the majority of members of the

Board of Directors or the persons entrusted with

the management and administration thereof, in

addition to being fit and proper persons, must

satisfy both the experience and qualifications

criteria;";

(c)

for the definition "the Authority" in sub-article (1)

thereof, there shall be substituted the following

" "the Authority" means the Malta

Financial Services Authority established in

terms of the Malta Financial Services

Authority Act;";

(d) immediately after the definition "beneficiary" in

sub-article (1) thereof, there shall be added the following new

" "body corporate" means any entity having a legal

personality distinct from that of its members;";

(e)

the definition "body of persons" in sub-article (1)

thereof, shall be deleted;

(f)

in the definition "charitable purpose" in sub-article

(1) thereof, for the words "any charitable or philanthropic

purpose", there shall be substituted the words "any charitable,

social or philanthropic purpose";

(g) immediately after the definition "charitable

purpose" in sub-article (1) thereof, there shall be inserted the

following new definition

" "close links" means a situation in which two or

more persons are linked in any of the following ways

(a) by participation, in the form of direct

ownership or by way of control, of twenty per

centum or more of the voting rights or capital of a

body corporate;

(b) by control, through the relationship

between a parent undertaking and a subsidiary

undertaking as defined in article 2(2) of the

Companies Act, or a similar relationship between

any natural or legal person and an undertaking; or

(c)

to one and the same third person when

(i) such person is a member of the

individual trustee’s family, including, but not

limited to, the trustee’s spouse or partner, the

trustee’s child or step-child, the trustee’s

parents and other dependants of the trustee;

(ii) such person is acting in the

capacity of trustee of any trust, the

beneficiaries of which include (a) the trustee,

the trustee’s dependants, including, but not

limited to, the trustee’s spouse, children or

step-children; or (b) a body corporate with

which one is associated in terms of (a) and (b)

above;

(iii) such person is acting as business

partner of the trustee or of any person who, by

virtue of sub-paragraphs (i) or (ii) above is

connected with the trustee;";

(h) in the definition "commercial transaction" in sub-

article (1) thereof

(i) in paragraph (h) thereof, for the words

"structures, and", there shall be substituted the words

"structures;";

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

paragraph (j); and

(iii) immediately after paragraph (h) thereof, there

shall be added the following new paragraph

"(i) settling an asset on trust as security for a

loan obtained for commercial purposes; and";

(i)

immediately after the definition "company" in sub-

article (1) thereof, there shall be added the following new

definition

" "conflict of interest" means any situation in

which the trustee’s personal interest or the interests which

the trustee owes to any other person, can lead to or can be

perceived as leading to a situation where such interests

conflict with the fiduciary duties which the trustee owes to

the beneficiary;";

(j)

immediately after the definition "Minister" in sub-

article (1) thereof, there shall be added the following new

definition

" "Notary keeper" means the person

entrusted to be a keeper of notarial acts in

terms of the Notarial Profession and Notarial

Archives Act;";

(k) for the definition "operating in Malta" in sub-article

(1) thereof, there shall be substituted the following

" "operating in or from 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;";

(l)

for the definition "person" in sub-article (1) thereof,

there shall be substituted the following

"

"person"

means

an

individual

or

body

corporate;";

(m) immediately after the definition "property" in sub-

article (1) thereof, there shall be added the following new

definition

" "qualifying shareholding" means a direct or

indirect holding in a company which represents ten per

centum or more of the share capital or of the voting rights

or which makes it possible to exercise a significant

influence on the management of the company in which that

holding subsists, and "qualifying shareholder" shall be

construed accordingly;";

(n) for the definition "resident in Malta" in sub-article

(1) thereof, there shall be substituted the following

" "resident in Malta" shall mean, in case of an

individual, a person whose habitual residence is in Malta

and in the case of a body corporate, a body corporate

having its registered address in Malta;";

(o) immediately after the definition "resident in Malta"

in sub-article (1) thereof, there shall be added the following new

definition

" "securities" includes shares, debentures, interest

in investment funds or any other similar instrument issued

by a company or other commercial partnership;";

(p) for the definition "trustee" in sub-article (1) thereof,

there shall be substituted the following

" "trustee", in relation to property, means the

person or persons holding the property or in whom the

property is vested on terms of trust in accordance with the

provisions of this Act or, a person that is otherwise deemed

to be a trustee under this Act;";

(q) for the definition "unilateral declaration of trust" in

sub-article (1) thereof, there shall be substituted the following

" "unilateral declaration of trust" has the meaning

assigned to it in terms of article 7(3);"; and

(r)

in sub-article (3) thereof, for the words "to which

they are used in the Act" there shall be substituted the words "to

which they are used in this Act".

Article 9 of the principal Act shall be amended as follows

(a)

for sub-article (2) thereof, there shall be substituted

the following

"(2) Rights of a beneficiary are personal to him

and cannot be transmitted by inheritance except as

provided for in the terms of the trust. Subject to any

applicable laws and only as stated in 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 trust and have no other rights in

relation to the trust property or the trustee."; and

(b) in sub-article (12) thereof, for the words, "and such

a disclaimer shall be irrevocable", there shall be substituted the

words "and such a disclaimer shall be irrevocable, whether or

not he has received any benefit from his interest".

In sub-article (1) of article 12 of the principal Act, for the

words, "the one-hundredth", there shall be substituted the words, "the

one hundred and twenty-fifth".

Immediately after article 14 of the principal Act, there

shall be added the following new article 14A

" Powers

(1) The reservation or grant by

reserved by the

the settlor of any beneficial interest in the

settlor.

trust property or of any of the following

powers shall not affect the validity of the

trust, nor delay the trust taking effect

(a)

any powers to appoint, add

or remove any trustees, protectors or

beneficiaries;

(b) any powers to appoint an

investment adviser or investment

manager

Provided that the reservation of

powers referred to in paragraphs (a) and (b)

shall be without prejudice to other powers that

can be reserved by the settlor in terms of the

other provisions of the Act.

(2) Where a power mentioned in sub-

article (1) has been reserved or granted by the

settlor, a trustee who acts in accordance with

the exercise of the power shall not be

considered to be acting in breach of trust.".

7. Article 16 of the principal Act shall be amended as Amendment of

article 16 of the

principal Act.

(a)

for the marginal note thereof, there shall be

substituted the following

"Termination of a trust due to lapse of interest or

lack of beneficiary";

(b) for sub-article (1) thereof, there shall be substituted

the following

"(1) Subject to the terms of a trust and to any order

of the court, where a trust terminates due to -

(a)

a lapse of an interest under a trust; or

(b) there being no beneficiary and no

person who can become a beneficiary in accordance

with the terms of the trust,

the interest of the property affected by such lapse, or lack

of beneficiary, shall be held by the trustee in trust for the

settlor absolutely or, if he is deceased, for his heirs."; and

(c)

in sub-article (3) thereof, for the word, "section",

and wherever it appears throughout the Act, there shall be

substituted the word "article".

8. Article 17 of the principal Act shall be amended as Amendment of

article 17 of the

principal Act.

(a)

in sub-article (3) thereof, for the words "no one",

there shall be substituted the word "none", and for the words

"and distribute the trust property among them.", there shall be

substituted the words, "and distribute the trust property among

them:", and immediately thereafter there shall be added the

following new proviso

"Provided that this sub-article shall not apply

where the terms of the trust provide that the interest of a

beneficiary is

(a)

liable to termination; or

(b) subject to a restriction on alienation or

dealing; or

(c) subject to diminution or termination in

the event of the beneficiary becoming bankrupt, or

insolvent, or any of his property becoming liable to

seizure for the benefit of his creditors; or

(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

(b) in sub-article (4)(a) thereof, for the words, "require

the trustee to distribute trust property;", there shall be

substituted the words, "require the trustee to distribute trust

property; or".

9. Article 18 of the principal Act shall be amended as

(a)

for sub-article (7) thereof, there shall be substituted

the following

"(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."; and

(b) immediately after sub-article (7) thereof, there shall

be added the following new sub-articles

"(8) In the case of the insolvency, dissolution or

winding up of a trustee set up as a company, any person

having authority to bind the trustee being a director,

liquidator, provisional administrator or similar functionary

shall be bound to immediately transfer all trust property to

a successor trustee, and this irrespective of any

proceedings or formalities applicable upon such events.

(9) Without prejudice to the generality of sub-

articles (7) and (8), 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.".

10. Article 19 of the principal Act shall be amended as

(a)

in sub-article (2) thereof, for the words "after

becoming aware of it by notice in writing to the settlor or to the

other trustees", there shall be substituted the words "after

becoming aware of it by notice in writing to the testamentary

executor, protector, settlor or to the co-trustees";

(b) in sub-article (3) thereof, for the words "and there

are no other trustees, the trustee", there shall be substituted the

words "and there are no other trustees, the testamentary

executor, protector, or the trustee";

(c)

in sub-article (4) thereof

(i) for the words "the death of the settlor, the

heirs", there shall be substituted the words "the death of the

settlor, the testamentary executor, the protector or the

heirs"; and

(ii) for the words "in accordance with the terms

of the trust and this Act.", there shall be substituted the

words "in accordance with the terms of the trust and this

Act:", and immediately thereafter there shall be added the

following new proviso

"Provided that the notary who published the

will or the notary keeper of his deeds shall not be

held liable for breach of duty under this sub-article

if he proves that he was not aware of the death of the

settlor."; and

(d) immediately after the new proviso to sub-article (4),

there shall be added the following new sub-articles

"(5) Until such time as the appointment of a

trustee is accepted, 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.

(6) Without prejudice to the forgoing sub-

articles, the obligations of the trustee under this Act shall

be deemed to commence once the trustee obtains control of

the trust assets.".

11. In sub-article (1) of article 20 of the principal Act, for the Amendment of

words "by notice in writing to his co-trustees", there shall be article

principal Act.

substituted the words "by notice in writing to his co-trustee or co-

trustees".

12. Article 21 of the principal Act shall be amended as

(a)

in sub-article (1) thereof, for the words "attention of

a bonus paterfamilias and observe the utmost good faith", there

shall be substituted the words "attention of a bonus

paterfamilias, act in utmost good faith and avoid any conflict of

interest"; and

(b)

sub-article (2) thereof shall be amended as follows

(i) the whole sub-article shall be renumbered as

paragraph (a) thereof; and

(ii) immediately after paragraph (a), as

renumbered, there shall be added the following new

paragraph

"(b) Trustees shall, when accepting their

appointment, draw up in writing an inventory and

shall declare that the inventory includes all the trust

property and of which the incoming trustee is

aware.";

(c)

for sub-article (3) thereof, there shall be substituted

the following

"(3) Except as permitted by this Act or as

expressly provided by the terms of the trust, a trustee shall

not, without the authority of the court -

(a) directly or indirectly profit from the

trusteeship; or

(b) cause or permit any other person to

profit directly or indirectly from the trusteeship; or

(c) enter into any transaction related to trust

property on his own account; or

(d) enter into any transaction related to trust

property 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; or

(e) generally enter into any transaction

related to trust property that may give rise to a

conflict of interest.";

(d)

sub-article (4) thereof shall be amended as follows

(i) the whole sub-article shall be renumbered as

paragraph (a) thereof; and

(ii) immediately after paragraph (a), as

renumbered, there shall be added the following new

paragraph (b)

"(b) Trustees shall be obliged to keep such

accounts and records for a period of not less than ten

years from the date of the termination of the trust or

the trusteeship, whichever event occurs earlier.";

and in the Maltese version of the above paragraph, for the

words "il-kontijiet u reġistrazzjonijiet", there shall be

substituted the words "il-kontijiet u records";

(e)

in sub-article (7) thereof, for the words "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", there

shall be substituted the words "the duties and liabilities of

trustees as stated in this Act shall be regulated by the provisions

of this Act or any applicable legislation unless varied by the

terms of the trust"; and

(f)

immediately after sub-article (7) thereof, there shall

be added the following new sub-article (8)

"(8) In the case where one of the beneficiaries of a

trust is subject to tutorship or curatorship, the trustee shall,

as the case may be, seek directions from the Court in the

execution of his duties and shall be obliged to comply with

any directions so given by the Court.".

13. In paragraph (c) of sub-article (2) of article 24A of the Amendment of

principal Act, for the words "to require the trustee to obtain his article

the principal

discretion", there shall be substituted the words "to require the trustee Act.

to obtain his consent before exercising a discretion.".

14. Immediately after article 24A of the principal Act, there Addition of new

articles 24B and

shall be inserted the following new articles

24C to the

principal Act.

" Enforcer.

(1) The terms of a trust set up

for a charitable purpose may provide

(a)

for the appointment of an

enforcer in relation to the trust; and

(b) for the appointment of a new

enforcer any time when the current

enforcer in office has terminated his

appointment.

(2) The duty of the enforcer shall be

that of ensuring that the trustee administers

the trust in accordance with the terms of the

trust and to promote the purposes of the trust

Provided that where the enforcer

becomes aware that the charitable purposes

prescribed in the terms of the trust are not

being observed, the enforcer shall take action

against the trustee for breach of trust.

(3) The enforcer of a trust is prohibited

from also acting as trustee of the trust.

(4) Except -

(a)

with the approval of the

Court; or

(b) when permitted by this Act

or when expressly provided by the terms

of the trust,

an enforcer shall not -

(i) directly or indirectly

profit from his office;

(ii) cause or permit any

other person to profit directly or

indirectly from his office; or

(iii) on his own account,

enter into any transaction with the

trustee or relating to the trust

property which may result in such

profit.

(5) Unless authorised by the terms of

the trust or by any order of the Court, an

enforcer shall not be entitled to remuneration

for services rendered.

(1) Subject to sub-article (2), an

Resignation or

removal of the

enforcer may resign from his office by notice

enforcer.

in writing delivered to the trustee and such

resignation shall be effective as from the date

of delivery of the notice to the trustee

Provided that a resignation given in

order to facilitate a breach of trust shall be of

no effect.

(2) An enforcer shall relinquish his

appointment as enforcer of the trust set up for

a charitable purpose immediately upon -

(a)

the enforcer’s removal from

office by the court;

(b) the enforcer’s resignation

becoming effective;

(c)

the coming into effect of a

provision in the terms of a trust under

which the enforcer is removed from

office or otherwise ceases to hold office;

or

(d) the enforcer’s appointment

as a trustee of the trust.".

15. Article 29 of the principal Act shall be amended as Amendment of

article 29 of the

follows

principal Act.

(a)

in paragraph (d) of sub-article (1) thereof, for the

words "subject to the terms of the trust,", there shall be

substituted the words "without prejudice to sub-article (4) and

sub-article (5),"; and

(b) in paragraph (f) of sub-article (1) thereof, for the

words, "the Attorney General or the relevant authority", there

shall be substituted the words "the Attorney General, the

enforcer or the relevant authority".

16. Immediately after sub-article (3) of article 34 of the Amendment of

article 34 of the

principal Act, there shall be added the following new sub-article

principal Act.

"(4) The new trustee shall be entitled to be indemnified

out of the trust property in respect of any claims against the

outgoing trustee, except in respect of actions arising from

breach of trust.".

17. Article 36 of the principal Act shall be amended as Amendment of

article 36 of the

follows

principal Act.

(a)

sub-article (4) thereof shall be renumbered as sub-

article (5);

(b) immediately after sub-article (3) thereof, there shall

be added the following new sub-article

"(4) Where trust property is set up for a charitable

purpose and any of the circumstances mentioned hereunder

apply, the Court may, on application of the trustee or the

enforcer, declare that the property or the remainder of the

property, as the case may be, shall be held for such other

charitable purpose, as the case may be, as the Court

considers to be consistent with the original intention of the

settlor. The circumstances are that

(a) the purpose of the trust has ceased for

whatever reason to be charitable; or

(b) the charitable purpose has ceased in any

other way to provide a suitable and effective method

of using the property, regard being had to the spirit

of the gift."; and

(c)

in sub-article (5) thereof, as renumbered, for the

words "under this section", there shall be substituted the words

"under sub-article (1)".

18. In sub-article (1) of article 41 of the principal Act, for the

words "shall not be barred by prescription except by lapse of thirty

years", there shall be substituted the words "shall not be barred by

prescription".

19. Article 42 of the principal Act shall be amended as

(a)

in the Maltese text of sub-article (1) thereof, for the

words "42. (1)", there shall be substituted the words "42."; and

(b) for the words "articles 43 and 43A", there shall be

substituted the words "articles 43, 43A and 43B".

20. Article 43 of the principal Act shall be amended as

(a)

in sub-article (1) thereof, for the words "any person,

resident or operating in Malta, or a corporate trustee, who

receives property", there shall be substituted the words "any

person, resident or operating in or from Malta, who receives

property";

(b) in sub-article (3) thereof, for the words "Any person,

whether an individual or a company, may apply", there shall be

substituted the words "Any person may apply";

(c)

in sub-article (4) thereof

(i) for the words "The conditions referred to in

the preceding sub-article are that", there shall be

substituted the words "The conditions referred to in sub-

article (3) shall consist of the following and shall be

satisfied on an ongoing basis";

(ii) in paragraph (i) thereof, for the words "in the

case an applicant is a company", there shall be substituted

the words "in the case an applicant is a body corporate:";

(iii) sub-paragraph (c) of paragraph (i) thereof

shall be substituted by the following

"(c) the directors of the company or, in the

case of a body corporate other than a company, any

other persons entrusted with the management and

administration thereof, are not less than three in

number and are individuals who are approved

persons; and";

(iv) sub-paragraphs (d) to (g) of paragraph (i)

thereof shall be renumbered as sub-paragraphs (f) to (i)

respectively and immediately after sub-paragraph (c)

thereof there shall be added the following sub-paragraphs

(d) and (e)

"(d) the body corporate must have a

minimum capital of fifteen thousand euro (€15,000),

which it shall maintain throughout its duration; and

(e) the body corporate shall maintain

insurance cover at all times which cover shall be

proportionate to the nature and size of the trustee’s

business operations; and";

(v) in sub-paragraph (f) of paragraph (i) thereof,

as renumbered, for the words "the company", there shall be

substituted the words "the body corporate";

(vi) for sub-paragraph (g) of paragraph (i) thereof,

as renumbered, there shall be substituted the following

"(g) any person who has a direct or indirect

interest in the body corporate which represents ten

percent (10%) or more of the capital or, in the case

of a company, every person who has a qualifying

shareholding, is approved by the Authority as being

fit and proper; and";

(vii) in sub-paragraph (h) of paragraph (i) thereof,

as renumbered, for the words "the name of the company",

there shall be substituted the words "the name of the body

corporate";

(viii) in sub-paragraph (i) of paragraph (i) thereof,

as renumbered, for the words "where the company", there

shall be substituted the words "where the body corporate",

and for the words "that company must be constituted",

there shall be substituted the words "it must be

constituted";

(ix) for sub-paragraph (a) of paragraph (ii), there

shall be substituted the following

"(a) is resident or operates in or from

Malta;";

(x) in sub-paragraph (c) of paragraph (ii) thereof,

for the words "applicable law.", there shall be substituted

the words "applicable law; and"

(xi) immediately after sub-paragraph (c) of

paragraph (ii) thereof, there shall be added the following

new sub-paragraphs (d) and (e)

"(d) has a minimum capital of fifteen

thousand euro (€15,000) which the individual shall

maintain for as long as he is authorised; and

(e)

shall maintain insurance cover at all

times which cover shall be proportionate to the

nature and size of the trustee’s business operations.";

(d)

in sub-article (5) thereof

(i) for the words "and in the case of a corporate

trustee", there shall be substituted the words, "and in the

case of a body corporate",

(ii) for the words "constituting the company,"

there shall be substituted the words "constituting the body

corporate", and

(iii) for the words "and in the case of companies

registered", there shall be substituted the words "and in the

case of commercial partnerships";

(e)

in sub-article (6) thereof

(i) in paragraph (a) thereof, for the words "for

which they are licenced", there shall be substituted the

words "for which they are licensed, provided that the

provision of trustee services is incidental and ancillary to

the main activities for which they are licensed";

(ii) in paragraph (c) thereof, for the words "are

limited to retirement schemes.", there shall be substituted

the words "are limited to retirement schemes:", and

immediately thereafter there shall be added the following

new proviso

"Provided that where a person, who is in

possession of a licence in terms of paragraphs (a),

(b) or (c) of this sub-article, intends providing

trustee services as one of its main activities, it shall

require authorisation in terms of this Act.";

(f)

in sub-article (7) thereof

(i) for the words "which may be applicable, the

provisions of this article and article 43A shall not apply",

there shall be substituted the words "which may be

applicable, and to the provisions of article 43A(11), the

provisions of this article, article 43A and article 43B shall

not apply";

(ii) in paragraph (d) thereof, for the words "for a

period of not less than five years or longer period", there

shall be substituted the words "for a period of not less than

ten years from the date of termination of the trust or the

trusteeship, whichever event occurs earlier, or such longer

period";

(g) in sub-article (9) thereof, for the words from "(a)

The holding upon trust of -" to the words "For the purposes of

this paragraph:", there shall be substituted the following

"(a) The holding upon trust of

(i) securities or interests in or issued by a

commercial partnership registered in Malta, other

than securities which are listed or traded on a

regulated market or on a multilateral system

established in Malta or in a recognised jurisdiction,

or

(ii) immovable property in Malta, (either of

which is hereinafter referred to as "relevant

property") by trustees who are not authorised in

terms of this Act shall be permitted only if a person

authorised in terms of sub-articles (3), (8), (12)(a) or

notaries authorised to act as qualified persons in

terms of any regulations issued pursuant to this Act,

(hereinafter referred to as a "qualified person") is

engaged in writing by the trustee to carry out the

compliance functions referred to in paragraph (b) 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;

For the purposes of this sub-article:";

(h)

in sub-article (12) thereof

(i) for the words, "any person who", there shall

be substituted the words "any person resident or operating

in or from Malta, who";

(ii) in paragraph (a) thereof, for the words "in the

holding of property", there shall be substituted the words

"in the holding of securities and, or immovable property";

(iii) in the Maltese version of paragraph (a)

thereof, for the words "bħala nominee għal xi persuna

oħra", there shall be substituted the words "bħala

mandatarju ta’ sigurtajiet u, jew proprjetà immobbli għal xi

persuna oħra";

(i)

sub-article (13) thereof shall be deleted;

(j)

sub-article (14) thereof shall be renumbered as sub-

article (17); and

(k) immediately after sub-article (12) thereof, there

shall be added the following new sub-articles (13), (14), (15)

and (16)

"(13) Any person which intends to act as a

mandatory in terms of sub-article (12) shall apply in

writing to the Authority for authorisation and the Authority

may grant authorisation upon being satisfied that the

conditions prescribed hereunder have been met, and which

conditions shall be satisfied on an ongoing basis

(i) in the case an applicant is a body

corporate

(a) its objects include acting as a

mandatory and carrying on activities ancillary

or incidental thereto, and does not include

objects which are not compatible with the

services of a mandatory; and

(b) its actual activities are compatible

and connected with the services of a

mandatory; and

(c) the directors of the company or any

other person entrusted with the management

and administration of the body corporate are

not less than three in number and are

individuals who are approved persons; and

(d) the body corporate must have a

minimum capital of fifteen thousand euro

(€15,000) which it shall maintain throughout

its duration; and

(e) the body corporate shall maintain

insurance cover at all times which cover shall

be proportionate to the nature and size of the

trustee’s business operations; and

(f) the body corporate has established

adequate systems for maintaining proper

records of the identity and residence of the

ultimate beneficial owners, of any transactions

relating to the securities and, or immovable

property subject to the mandate and of

compliance with the applicable law; and

(g)

any person who has a direct interest

in the body corporate which exceeds ten

percent (10%) or more of the capital or, in the

case of a company, every person who has a

qualifying shareholding, is approved by the

Authority as being fit and proper; and

(h) the name of the body corporate is

not inconsistent with its activity of mandatory;

and

(i) where the body corporate is not

registered in Malta, it 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 or operating in or from

Malta; and

(b)

is an approved person; and

(c) has a minimum capital of fifteen

thousand euro (€15,000) which the individual

shall maintain for as long as he is authorised;

and

(d) shall maintain insurance cover at all

times which cover shall be proportionate to the

nature and size of his business operations; and

(e) has established adequate systems

for maintaining proper records of the identity

and residence of the ultimate beneficial

owners, of any transactions relating to the

securities and, or immovable property subject

to the mandate and of compliance with the

applicable law.

(14) Any person authorised in terms of sub-article

(12)(a) 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 body corporate,

of any change in its charter, statute, memorandum or

articles of association or other instrument constituting it,

directors or members. In the case of commercial

partnerships registered in Malta such changes shall not be

registered unless and until they are so notified to and

approved by the Authority.

(15) Any person who intends to act as an

administrator, trustee, director or similar functionary by

whatever name he may be called, exercising control over

the assets of a private foundation shall apply in writing to

the Authority for authorisation and the Authority may

grant authorisation upon being satisfied that the conditions

prescribed hereunder have been met

(i) in the case where an applicant is a body

corporate

(a) its objects include acting as

administrator, trustee, director or similar

functionary by whatever name he may be

called, exercising control over the assets of a

private foundation and carrying on activities

ancillary or incidental thereto, and does not

include objects which are not compatible with

such an activity; and

(b) its actual activities are compatible

and connected with the services of an

administrator, trustee, director or similar

functionary by whatever name he may be

called exercising control over the assets of a

private foundation; and

(c) the directors of the company or any

other person entrusted with the management

and administration of the body corporate are

not less than three in number and are

individuals who are approved persons; and

(d) the body corporate has established

adequate systems for maintaining proper

records of the identity and residence of

beneficiaries, of any transactions relating to

the assets of the foundations and of compliance

with the applicable law; and

(e) any person who has a direct interest

in the body corporate which exceeds ten

percent (10%) or more of the capital or in the

case of a company, every person who has a

qualifying shareholding, is approved by the

Authority as being fit and proper; and

(f) the name of the body corporate is

not inconsistent with its activity of

administrator, trustee, director or similar

functionary, by whatever name he may be

called, exercising control over the assets of a

private foundation; and

(g) where the body corporate is not

registered in Malta, it shall 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 or operating in or from

Malta; and

(b)

is an approved person; and

(c) has established adequate systems

for maintaining proper records of the identity

and residence of beneficiaries, of any

transactions relating to the assets of the

foundations and of compliance with the

applicable law.

(16) Any person authorised in terms of sub-article

(12)(b) of this article 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

company, of any change in its charter, statute,

memorandum or articles of association or other instrument

constituting the company, directors or members, and in the

case of commercial partnerships registered in Malta such

changes shall not be registered unless and until they are so

notified to and approved by the Authority.".

21. Article 43A of the principal Act shall be amended as

(a)

in paragraph (b) of sub-article (2) thereof, for the

words "he has known the settlor for at least ten years and, in

both cases,", there shall be substituted the words "he has known

the settlor for at least ten years,";

(b) immediately before sub-paragraph (i) in sub-article

(2) thereof, there shall be added the words "and in the cases

mentioned in paragraphs (a) and (b), the individual:";

(c)

sub-article (5) thereof shall be amended as follows

(i) for the words "who receives a will or notarial

trust deed", there shall be substituted the words "who

receives a will containing a trust, or a notarial trust deed";

(ii) for the words "appointed as the trustee in such

deed", there shall be substituted the words "appointed as

the trustee in such will or deed";

(iii) for the words "he may not act as the

depository notary or the notary keeper", there shall be

substituted the words "he may not act as the depository

notary, the notary keeper or qualified person, as

applicable" and

(iv) in the proviso thereof, for the words "to the

satisfaction of the Authority and as provided in sub-article

(9)", there shall be substituted the words "to the

satisfaction of the Authority and as provided in sub-article

(9), and also to appoint a new qualified person where

applicable";

(d)

in sub-article (6) thereof

(i) for the words "All documents relative to a

trust shall be submitted to the depository notary within

fifteen days of coming into existence or of coming into

possession", there shall be substituted the words "It shall

be the duty of the trustee to submit to the depository notary

all documents relative to the trust within fifteen days of

coming into existence or of coming into existence or of

coming into possession"; and

(ii) for the words "from time to time.", there shall

be substituted the words "from time to time:", and

immediately thereafter there shall be added the follwing

new proviso

"Provided that the depository notary shall not

be held responsible for the failure of the trustee to

deliver the documents relative to the trust as laid

down in this sub-article.";

(e)

in sub-article (7) thereof, for the words "except as

provided by this Act and", there shall be substituted the words

"except as provided by this Act or article 68A of the the Notarial

Profession and Notarial Archives Act and"; and

(f)

in sub-article (9) thereof, for the words "any person

other than the serving depository notary, the trustee or the

Authority", there shall be substituted the words "any person

other than the serving depository notary, the trustee or the

Authority. A publishing notary who is not also the depository

notary may also request a written receipt and keep copies of the

documents delivered to the appointed depositary notary, in

which case the publishing notary shall also be subject to the

same duties of confidentiality as set out above, with respect to

such documents".

22. Immediately after article 43A of the principal Act, there

shall be added the following new article 43B

" Family trusts.

Notwithstanding the provisions of

article 43A, a trustee set up as a company -

(a)

whose object and activities

are limited to acting as trustee in

relation to a specific settlor or settlors

and providing administrative services in

respect of a specific family trust or

trusts; and

(b) which does not otherwise

hold itself out as a trustee to the public;

and

(c)

which

does

not

act

habitually as a trustee, in any case in

relation to more than five settlors at a

time,

shall not require authorisation in terms of this

Act but shall be required to apply for

registration by the Authority under this

article, and no company shall act as a trustee

for a family trust unless it is so registered. The

registration process shall be established by

rules issued by the Authority under article

52(3) of this Act and trustees shall comply

with any registration requirements and

conditions imposed by the Authority

Provided that for the purposes of

this sub-article, a "family trust" shall mean a

trust created to hold property settled by the

settlor or settlors for the present and future

needs of family members or family

dependants who are definite and can be

ascertained

Provided further that for the

purposes of this article, rules issued by the

Authority in terms of article 52 of this Act

may further define the meaning of the terms

"family members" and "family dependants".".

23. Immediately after article 43B of the principal Act, there Addition of new

heading and

shall be added the following new heading and new article 43C

new article 43C

to the principal

Act.

"DUTY OF AUDITORS

43Ċ. (1) An auditor of a trustee

Auditor’s duty

to report.

authorised in terms of the Act, shall have the

duty to report immediately to the Authority

any fact or decision of which he becomes

aware in his capacity as auditor of such

trustee which

(a)

is likely to lead to a serious

qualification or refusal of the auditor’s

report on the accounts of such trustee; or

(b) constitutes or is likely to

constitute a material breach of the legal

or regulatory requirements applicable to

trustees under this Act; or

(c)

gravely impairs the trustee’s

ability to continue as a going concern; or

(d) relates to any other matter

which may be prescribed

Provided that the matters

prescribed in this paragraph may include

matters related to any interested person

other than the trustee.

(2) The auditor of a corporate trustee

shall report to the Authority any facts or

decision, as specified in sub-article (1),

regarding any person having close links with

such trustee of which he becomes aware in his

capacity as auditor of the trustee or of the

person having such close links.

(3) No duty (including the duty of

professional secrecy) to which an auditor of

the trustee may be subject, shall be regarded

as contravened by reason of his

communicating in good faith to the Authority,

whether or not in response to a request from

it, any information or opinion on a matter of

which the auditor has become aware in his

capacity as auditor of that trustee and which is

relevant to any function of the Authority

under the provisions of the Act or is required

to be communicated by virtue of sub-article

(1).".

24. Article 44 of the principal Act shall be amended as

(a)

the whole article shall be renumbered as sub-article

(1) thereof;

(b) paragraph (d) of sub-article (1) thereof, as

renumbered, shall be renumbered as paragraph (e);

(c)

immediately after paragraph (c) of sub-article (1)

thereof, as renumbered, there shall be added the following new

paragraph (d)

"(d) be accompanied by a programme of

operations setting out such matters as may be prescribed

by the Authority from time to time;"; and

(e)

immediately after sub-article (1) thereof as

renumbered, there shall be added the following new sub-article

"(2) Where close links exist between an applicant

and any other person, the Authority shall

(a) only grant a licence if it considers that

such close links do not prevent it from exercising its

supervisory functions; and

(b) refuse to grant such a licence if it

considers that the laws, regulations or administrative

provisions of any country outside Malta governing

one or more persons with whom the applicant has

close links, or their enforcement prevent the

effective exercise of its supervisory functions.".

25. Article 46 of the principal Act shall be amended as Amendment of

article 46 of the

principal Act.

(a)

in sub-article (1) of the Maltese version thereof, for

the words "46. (1)", there shall be substituted the words "46.";

and

(b) for paragraph (d) thereof, there shall be substituted

the following

"(d) if the authorised trustee does not commence

activities pursuant to its authorisation within twelve

months of its issue or within such other period as may be

specified in the authorisation or has ceased to provide such

service; or".

26. Immediately after article 46A of the principal Act, there Addition of new

article 46B to

shall be added the following new article 46B

the principal

Act.

" Power of the

(1) Without prejudice to the

competent

powers conferred to the competent authority

authority to

under article 46, the competent authority may,

protect the

public interest.

where it is satisfied that sufficient

circumstances exist, proceed to take any one

or more of the following measures

(a)

require the trustee to take

forthwith such steps as the competent

authority may consider necessary to

rectify or remedy the matter;

(b) appoint a person to advise

the trustee in the proper conduct of its

business;

(c)

appoint a person to take

charge of the assets of the trustee, or any

portion thereof, for the purposes of

safeguarding the interests of the

shareholders or any creditors of the

trustee as well as any other interested

person;

(d) appoint a person to assume

control of the business of the trustee

either to carry on that business or to

carry out such function or functions in

respect of such business or part thereof,

as the competent authority may direct;

(e)

fix the remuneration to be

paid by the trustee to any person

appointed under this article;

(f)

require the trustee to submit

a financial recovery plan as may be

determined in any rules issued by the

Authority, if it considers that the

interests of the creditors or other

interested persons are likely to be

prejudiced owing to a deterioration in

the financial position of the trustee;

(g) do such other act or require

the doing of such other act as it may

deem appropriate in the circumstances;

and having proceeded in any one or more of

the manners aforesaid, the competent

authority may further proceed in any one or

more such manners, whether in addition

thereto or in substitution therefor.

(2) Where a person is appointed by the

competent authority -

(a)

under sub-article (1)(b), it

shall be the duty of the trustee to act in

accordance with the advice given by

such person unless and until the

competent authority, on representation

made to it, directs otherwise;

(b) under sub-article (1)(c), the

trustee shall deliver to such person all

the assets of which he is placed in

charge, and all the powers, functions

and duties of the trustee in respect of

those assets, whether exercisable by the

trustee or otherwise, shall be exercisable

by and vest in the person appointed

under the said paragraph to the

exclusion of any other person;

(c)

under sub-article (1)(d), the

trustee shall submit its business to the

control of such person and shall provide

him with such facilities as he may

require the trustee to provide him to

carry on that business or to carry out the

functions assigned to him under the said

paragraph; and all the powers, functions

and duties of the trustee, shall be

exercisable by and vest in him to the

exclusion of any other person.

(3) The competent authority may,

where it feels is in the best interest of the

public so to do, make or issue public

statements or notices giving warnings or

information about any action taken in terms of

article 46, article 46A and this article.

(4) The competent authority may

require the trustee concerned to pay all the

expenses of, and incidental to, the publication

or issue of public statements or notices

pursuant to this article or such part thereof as

it may deem appropriate; and any sum so due

shall be recoverable by the competent

authority in the same manner as an

administrative penalty imposed under this

Act.".

27. Article 51 of the principal Act shall be amended as Amendment of

article 51 of the

follows

principal Act.

(a)

in sub-article (1) thereof, for the words

"authorisation, condition, obligation", there shall be substituted

the words "authorisation, registration, condition, obligation";

(b) in sub-article (5) thereof, for the words "without

being authorised to do so", there shall be substituted the words

"without being authorised or registered to do so"; and

(c)

in sub-article (7) thereof, for the words "in article

43A", there shall be substituted the words "in article 43A, or the

conditions imposed by the Authority upon registration in

accordance with article 43B of this Act,".

28. Immediately after sub-article (2) of article 52, there shall Amendment of

article 52 of the

be added the following new sub-article (3)

principal Act.

"(3) The Authority may also issue rules to regulate

trustees which are subject to a registration procedure in terms of

article 43B. The rules may lay down additional requirements

and conditions in relation to the activities of such trustees, their

responsibilities to the Authority, adherence to a code of conduct,

payment of fees and any other matter as the Authority may

consider appropriate.".

29. Sub-article (2) of article 55 of the principal Act shall be

amended as follows

(a)

in paragraph (a) thereof, for the words "issue of an

authorisation", there shall be substituted the words "issue of an

authorisation or registration;" and

(b) in paragraph (b) thereof, for the words "condition of

an authorisation", there shall be substituted the words

"condition of an authorisation or registration".

30. Article 57 of the principal Act shall be amended as

follows

(a)

sub-article (1) thereof shall be amended as follows

(i)

in paragraph (c) thereof -

(aa) for the words "a fee is not provided by

this Act:", there shall be substituted the words "a

fee is not provided by this Act;"; and

(bb) the proviso immediately following the

words "a fee is not provided by this Act;" shall be

deleted;

(ii) in paragraph (i) thereof, for the words "the

definition of commercial transactions in the Act", there

shall be substituted the words "the definition of

commercial transaction in this Act";

(iii) paragraph (o) thereof shall be renumbered as

paragraph (u); and

(iv) immediately after paragraph (n) thereof, there

shall be added the following new paragraphs

"(o) regulate the authorisation and regulation

of sub-trusts to be used in connection with collective

investment schemes and retirement schemes;

(p) regulate the registration, conservation

and access of notarial trust deeds as referred to in

article 43A of this Act;

(q) regulate the matters in relation to the

registration by the Authority of notaries acting as

qualified persons, including the powers and duties of

such qualified persons and any information which

they may be required to submit to the Authority, and

to establish any fees payable to the Authority in

respect of the registration and the supervision

thereof;

(r) exempt any activities or classes of

persons from the requirements in article 43(12) and

to impose conditions it may deem fit for eligibility

for exemption;

(s) regulate any matters in connection with

the use of trusts for persons with disability,

including the conduct, duties and other obligations

of persons acting as trustees of such trusts;

(t) transpose, implement and give effect to

the provisions and requirements of Directives,

Regulations and any other legislative measures of

the European Union requiring transposition and, or

implementation, as they may be amended from time

to time, including any implementing measures that

have been or may be issued thereunder and relating

to licence holders and others as may be specified

therein or to any other matter falling within the

terms of this Act, and for this purpose to provide

that any provision in any other law shall not apply to

matters falling under the regulations; and"; and

(b) immediately after sub-article (2) thereof, there shall

be added the following new sub-articles

"(3) Regulations made under this article may be

made subject to such exemptions or conditions as may be

specified therein, may make different provision for

different cases, circumstances or purposes and may give to

the Authority such powers of adaptation of the regulations

as may also be so specified.

(4)

Where regulations have been made in terms

of this article, the Authority may issue Rules within the

meaning of article 52 of this Act for the better carrying out

and to better implement the provisions of the regulations.

(5) Regulations made under this article may

impose punishments or other penalties in respect of any

contravention or failure of compliance not exceeding a fine

(multa) of one hundred and fifty thousand euro (€150,000)

or imprisonment for a term not exceeding one year, or both

such fine and imprisonment.".

31. Immediately after article 57 of the principal Act, there

shall be added the following new heading and article 58

"TRANSITORY PROVISIONS

" Transitory

(1) Subject to the provisions of

provisions.

the Trusts and Trustees (Amendment) Act,

2013, trustees and providers of other fiduciary

services in possession of an authorisation

before the date of coming into force of the

amendments contained in the Act above-

mentioned shall take all necessary measures

to comply with the provisions of articles

43(4)(i)(e),

43(4)(ii)(e),

43(13)(i)(e),

43(13)(ii)(d) and article 43C within six

months from the said date.

(2) Trustees in possession of an

authorisation prior to the coming into force of

the amendments contained in the Act above-

mentioned shall comply with the provisions

of articles 43(4)(i)(d), 43(4)(ii)(d) within two

years from the said date.

(3) Mandatories in possession of an

authorisation prior to the coming into force of

the amendments contained in the Act above-

mentioned shall comply with the provisions

of

article

43(13)(i)(d)

and

article

43(13)(ii)(c), within two years from said

date.".

32. Sub-article (2) of article 3 of the Financial Institutions Act

shall be amended as follows

(a) paragraph (b) thereof shall be renumbered as

paragraph (d);

(b)

immediately after paragraph (a) thereof, there shall

be inserted the following two new paragraphs (b) and (c)

"(b) is an undertaking and provides any of the

activities listed in the First Schedule to other undertakings,

which are not banks or financial institutions, and all such

undertakings are controlled directly or indirectly by the

same person; or

(c) is an undertaking and provides any of the

activities listed in the First Schedule to a person, which is

not a bank or financial institution, that directly or

indirectly controls it; or";

(c)

in paragraph (d) thereof, as renumbered, for the

words "in respect of the price due.", there shall be substituted

the words "in respect of the price due:"; and

(d) immediately after paragraph (d)

thereof,

as

renumbered, there shall be added the following

"Provided that for the purposes of this sub-article, a

person shall be deemed to control an undertaking if such

person

(i)

is a ‘parent company’ as defined in

article 2(2)(a) of the Companies Act; or

(ii)

has all of the following characteristics

(aa) power over the undertaking,

based on the current ability to direct the

relevant activities which significantly affect

returns;

(bb) exposure, or right, to variable

returns from its involvement with the

undertaking; and

(cc) the ability to use its power over

the undertaking to affect the amount of the

person’s returns.

For the purposes of this sub-article

‘person’ means a natural person or an

undertaking; and

‘undertaking’ means a body corporate or

unincorporated which carries on a trade or

business.".

Passed by the House of Representatives at Sitting No. 143 of the

16th April, 2014.

A NĠLU F ARRUGIA

Speaker

R AYMOND S CICLUNA

Clerk to the House of Representatives