ACT No. XLVIII of 2016 AN ACT to encourage the regulation of family businesses, their governance and the transfer of the family business from one generation to the next; to encourage and assist family businesses to enhance their internal organisation and structure with the aim of

I assent.

M ARIE- L OUISE

(L.S.)

C OLEIRO P RECA

President

9th September, 2016

ACT No. XLVIII of 2016

AN ACT to encourage the regulation of family businesses, their

governance and the transfer of the family business from one

generation to the next; to encourage and assist family businesses to

enhance their internal organisation and structure with the aim of

effectively operating the business and working towards a successful

succession of the family business; and for other matters

consequential or ancillary thereto.

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 Family Business

Act, 2016.

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

may by notice in the Gazette establish, and different dates may be so

established for different provisions of this Act.

In this Act, and in any rules or regulations made under this

Act, unless the subject or context otherwise requires

"applicant" means a business registering as a family business

under this Act;

"benefits" means any assistance or relief granted to a registered

family business in terms of the Duty and Documents Transfers Act,

Malta Enterprise Act, Business Promotion Act and in terms of any

other law or scheme as the Minister may prescribe by regulations;

"established in Malta" means the head office, agency, or branch

or part of a business and shall include a permanent presence of that

business carried out in Malta;

"family business" has the meaning assigned to it in article 3;

"family member" means the family business owner’s spouse,

ascendants, descendants in the direct line and their relative spouses,

brothers or sisters and their descendants or as the Minister may

prescribe;

"guidelines" means the set of rules issued by the Regulator from

time to time for the further implementation of the provisions of this

Act, and any regulations made hereunder, including the definition,

application, administration, grant and revocation of benefits, schemes

and other arrangements for the regulation, management and transfer

of family businesses and their governance in Malta;

"limited liability company" means a company duly formed and

registered under Part V of the Companies Act;

"the Minister" means the Minister responsible for the economy;

"owner" means the ultimate beneficiary, natural person who,

directly or indirectly, has a shareholding or other interest in a family

business;

"partnership" means a partnership en nom collectif or

partnership en nom commandite duly formed and registered in terms

of Part III and Part V of the Companies Act;

"prescribed" means either prescribed by regulations made by the

Minister under this Act or prescribed by binding guidelines made by

the Regulator under this Act, unless otherwise expressly stated, and in

the event of a conflict between the regulations made by the Minister

and guidelines made by the Regulator on any particular matter, the

regulations shall prevail;

"private foundations" means those foundations established for a

private interest and registered or otherwise recognised as legal

persons in terms of the Second Schedule to the Civil Code;

"public limited company" means a company duly formed and

registered under Part V of the Companies Act;

"the Regulator" means a person who is appointed to manage,

supervise and administer the Register of Family Businesses according

to this Act and appointed by virtue of article 17;

"spouse" means a spouse in terms of the Marriage Act and a Cap. 255.

partner in terms of the Civil Unions Act;

"trusts" means a trust in terms of the Trusts and Trustees Act.

Part II

General Provisions

(1) A family business that can qualify for registration Conditions for

under this Act shall mean any business established in Malta whereby: registration

family business.

(a)

in the case of a public limited liability company Listed

whose shares are listed on a regulated market or traded on a companies.

multilateral trading facility, the majority of the shares including

the rights are held, whether directly or indirectly, by at least two

owners who are family members within the same family;

(b) in the case of a limited liability company constituted Limited liability

companies.

in a manner other than that referred to in paragraph (a)

(i) all the shares of the company are held, directly

or indirectly, by at least two owners who are family

members within the same family; and

(ii) at least one family member is formally involved

in the general governance, its proper administration and

management of the company

Provided that shares held directly or indirectly by

individuals who are not family members shall be disregarded

for the purposes of this paragraph if their aggregate issued value

does not exceed five per cent of the issued share capital of the

company

Provided further that shares held directly or

indirectly by employees who have been in continuous, full-time

employment within the family business for over three years and

who are not family members shall be disregarded for the

purposes of this paragraph if their aggregate issued value does

not exceed ten percent of the issued share capital of the

company

Provided further that where any business assets are

held on lease, the family members are the majority of the lessees

in the lease agreement;

(c)

in the case of partnerships en nom collectif and

partnerships en commandite

(i) the full capital contribution to the partnership

shall have been made, directly or indirectly, by at least

two owners who are family members within the same

family having, directly or indirectly, the right to receive

the majority of distributable profits; and

(ii) at least one of whom holds the majority of the

decision making rights

Provided that capital contributions made, directly or

indirectly, by persons who are not family members shall be

disregarded for the purposes of this paragraph if their aggregate

contribution does not exceed five per cent of the total

contribution made by all partners in the partnership

Provided further that capital contribution made,

directly or indirectly, by employees who have been in

continuous full-time employment within the family business for

over three years and who are not family members shall be

disregarded for the purposes of this paragraph if their aggregate

contribution does not exceed ten percent of the capital

contribution of the partnership

Provided further that where any business assets are

held on lease, the family members are the majority of the lessees

in the lease agreement;

(d) in the case of a family business where all the shares

or the interest are being held by a trustee under trust for the

benefit of members of a family as beneficiaries, and which has

been established by a written instrument and all the

beneficiaries are owners and family members within the same

family

Provided that other beneficiaries who are not family

members within the same family business trust shall be

disregarded for the purposes of this paragraph if they do not in

aggregate benefit from more than five per cent of the family

business, or if they are only residual beneficiaries who will

benefit from the trust only upon termination of the trust due to

the fact that there are no existing family members within the

same family capable of benefiting from the trust at any relevant

point in time

Provided further that other beneficiaries who are

employees who have been in continuous full-time employment

within the same family business trust for over three years and

who are not family members within the same family shall be

disregarded for the purposes of this paragraph if they do not in

aggregate benefit from more than ten per cent of the family

business trust, or if they are only residual beneficiaries who will

benefit from the trust only upon termination of the trust due to

the fact that there are no existing family members within the

same family capable of benefiting from the trust at any relevant

point in time

Provided further that where any business assets are

held on lease by the trustee, the trustee is the majority of the

lessees in the lease agreement;

(e)

in the case of a business carried out by family Other registered

members in a form of partnership other than as indicated in forms

family business.

paragraph (c), the business and the assets of such business are

owned and controlled, directly or indirectly, by at least two

owners who are family members within the same family

Provided that other assets held by individuals who

are not family members shall be disregarded for the purposes of

this paragraph if their aggregate value does not exceed five per

cent of the net assets of the family business

Provided further that other assets held by employees

who have been in continuous full-time employment within the

family business for over three years and who are not family

members shall be disregarded for the purposes of this paragraph

if their aggregate value does not exceed ten per cent of the net

assets of the family business

Provided further that such a business shall abide by

all the provisions relative to unregistered organisations as

provided in the Civil Code, and the relative Schedule thereto

Provided further that where any business assets are

held on lease, the family members are the majority of the lessees

in the lease agreement; and

(f)

any other business as the Minister may prescribe.

(2) For the purposes of this article, a reference to shares,

interests or other assets, held indirectly by family members in the

business or contributions made to the business indirectly by family

members refers to those shares, interests or other assets held or

contributions made by

(a) holding companies which are at least 85%, as the

case may be, beneficially owned by family members; or

(b) trustees of a trust set up for the benefit of family

members within the same family provided that other

beneficiaries who are not family members within the same

family shall be disregarded for the purposes of this sub-article if

they may not in aggregate benefit from more than five per cent

of the family business, or if they are only residual beneficiaries

who will benefit from the trust only upon termination of the

trust due to the fact that there are no existing beneficiaries

capable of benefiting from the trust at any relevant point in

time

Provided that other beneficiaries who are employees

who have been in continuous full-time employment within the

family business trust for over three years and who are not family

members within the same family shall be disregarded for the

purposes of this sub-article if they may not in aggregate benefit

from more than ten per cent of the family business, or if they are

only residual beneficiaries who will benefit from the trust only

upon termination of the trust due to the fact that there are no

existing family members within the same family capable of

benefiting from the trust at any relevant point in time; or

(c)

private foundations that are set up for the benefit of

family members within the same family provided that other

beneficiaries who are not family members within the same

family shall be disregarded for the purposes of this sub-article if

they may not in aggregate benefit from more than five per cent

of the family business, or if they are only residual beneficiaries

who will benefit from the private foundation’s assets only upon

termination of the private foundation due to the fact that there

are no existing beneficiaries capable of benefiting from the

foundation at any relevant point in time

Provided that other beneficiaries who are employees

who have been in continuous full-time employment within the

family business for over three years and who are not family

members within the same private foundation shall be

disregarded for the purposes of this sub-article if they may not

in aggregate benefit from more than ten per cent of the private

foundation, or if they are only residual beneficiaries who will

benefit from the private foundation only upon termination of the

private foundation due to the fact that there are no existing

family members within the same family capable of benefiting

from the private foundation at any relevant point in time

Provided further that where any business assets are held on

lease, the family members are the majority of the lessees in the lease

agreement.

(1) For the purposes of this Act, shares or share capital Ownership of

family business.

of a company shall mean

(a)

the issued share capital of a company;

(b)

the shares allow for rights to dividends;

(c)

the shares shall be voting shares; and

(d) the shares shall allow for right to assets and profits

upon winding up.

(2) For the purposes of this Act, all other shares shall be

disregarded.

(1) An owner who is also a family member shall not Apportionment

of ownership.

have in ownership or the beneficial interest

(a)

in the case of a company, own, whether directly or

indirectly, more than eighty per cent (80%) of the issued share

capital of the family business; or

(b) in the case of a partnership en nom collectif or en

commandite contribute, whether directly or indirectly, more

than eighty per cent (80%) to the partnership’s assets; or

(c)

in the case of a trust be in a position where he may

benefit from more than eighty per cent (80%) of the trust

property; or

(d) in the case of a business carried out in partnership in

any other form, own, whether directly or indirectly, more than

eighty per cent (80%) of the business assets; or

(e)

in the case of indirect ownership, own more than

eighty per cent (80%) of the shares, interests, other assets or

contributions of the business.

(2) The percentage of eighty per cent (80%) shall be that

percentage that remains after deducting the percentage of five per

cent (5%) from the total contributions not owned by family members

and after deducting the ten per cent (10%) of the contributions owned

by employees of the business in accordance with the provisos of

article 3.

In the case of a trustee directly or indirectly holding a

family business, for the benefit of family members, registration for

the purposes of this Act shall be made after the declarations and

documents required in the First Schedule are delivered to the

Regulator by the duly licensed pro tempore trustee of the interests in

the family business being held under the trust.

(1) A business shall be a registered family business

once it has been accepted for registration by the Regulator in terms of

article 28.

(2) The family business may, upon a resolution of the holders

of shares or other participating rights or interests therein, request the

removal of the family business from the Register upon giving three

months notice to the Regulator and, in such case, the Regulator shall

proceed to cancel the registration subject to the issue of any orders

under article 31 which he may consider appropriate.

A registered family business shall clearly identify a

representative of the family business and make his contact details

available to the Regulator upon any change.

A registered family business shall notify the Regulator of

any change set out in article 3 within ten days from such change.

A business shall not qualify to be registered as a family

business if it has not been actively trading or in operation without

interruption for a minimum period of at least three (3) consecutive

calendar years.

(1) The intended objective of the benefits provided

under this Act are for the facilitation of the transfer of the registered

family business from the owners who are family members to other

family members within the same family.

(2) Transfers made by family members to family members

who are ascendants shall not be eligible for any of the benefits.

(3) Upon receiving benefits it shall not be possible for the

registered family business or the family member to transfer or assign

in whole or in part the benefits of an incentive granted by virtue of

this Act, to any other person or business.

(4) When a registered family business intends to apply for any

benefits in terms of this Act or any other law, the family business

shall obtain the issue of an updated certificate from the Regulator

attesting that the family business still qualifies as a registered family

business in terms of this Act.

(5) The benefits in terms of the Duty on Documents Transfers Cap. 364.

Act shall only be granted to a registered family business which has all

fiscal returns and contributions duly submitted up to the date of the

transfer and the tax due in terms of the Duty on Documents Transfers

Act has been paid in full before the transfer takes place.

When a registered family business is occupying industrial Industrial

government premises or land on lease or emphyteusis respectively as premises.

prescribed under the Business Promotion Act and subject to the Cap. 325.

business satisfying all the conditions of the tenancy agreement or

emphyteutical deed, the Regulator shall recommend to the Malta

Enterprise Corporation and, or Malta Industrial Parks to renew the

tenancy, which renewal shall not be unreasonably withheld when the

objectives of the renewal are to ensure the continuity of the family

business between family members.

(1) A registered family business benefiting from an Annual Return.

incentive by virtue of its registration under this Act shall submit the

Annual Return found in the Second Schedule to the Regulator by the

end of the calendar year. In default there shall be a penalty of twenty-

five euro (€25) for each month of delay. In the event of non-

compliance for a year, registration shall be duly cancelled and all

benefits shall be refunded and reimbursed immediately.

(2) The annual return for a family business shall cover a

calendar year from the first day of January to the thirty-first day of

December of each year

Provided that

(a)

if a family business was registered between the first

day of January and the thirtieth day of September of any year, it

shall file the annual return normally but such annual return

shall, for the first year only, cover a period of less than twelve

months since its registration;

(b) if a family business was registered between the first

day of October and the thirty-first day of December of any year,

it shall not file an annual return for its first year of registration

but it shall file, for the second year only, an annual return up to

the thirty-first day of December following the year of

registration for a period over twelve months but not exceeding

fifteen months.

(3) The annual return and all the required documents relating

to a family business shall be filed by not later than the thirtieth day of

April of the following year.

(1) Any acquisition of immovable property in respect of

which a benefit has been claimed pursuant to this Act must remain

within the registered family business for a minimum period of three

(3) years and in the event that such immovable property is transferred

they must be replaced with a similar asset used for the same benefit of

the registered family business or such other period as the Regulator

may approve.

(2) Any acquisition of shares, interests, contributions or other

assets in respect of which a benefit has been claimed pursuant to this

Act must remain within the registered family business for a minimum

period of three (3) years and in the event that such shares, interests,

contributions or other assets are transferred they must be replaced

with a similar share, interest, contribution or other asset used for the

same benefit of the registered family business or such other period as

the Regulator may approve.

(3) The owners of the registered family business must

undertake to trade and operate the family business during these three

(3) consecutive years without interruption immediately following the

granting of the benefits or such other shorter period as the Regulator

may approve and in the event that the business ceases to exist in the

said period, any benefit claimed shall be refunded and reimbursed.

In the event that a registered family business which has

availed itself of and claimed any benefits does not remain constituted

and registered as a family business for a minimum period of three (3)

consecutive years as referred to in article 14, the business shall make

a refund of the benefits

Provided that where a business does not remain constituted

as a family business due to the unexpected death of a family member,

in those cases where the business is owned, whether directly or

indirectly, by only two family members, the business shall not be

required to refund the benefits acquired for the previous transfer of

the business

Provided further that the Regulator shall be informed by

the surviving family member within sixty (60) days from the date of

the deceased.

(1) The Minister may by regulations prescribe the Powers of the

Minister to

proper implementation of the provisions of this Act.

make

regulations.

(2) The Minister may also by regulations amend the Schedules

to this Act.

Part III

The Regulator

(1) There shall be a Regulator for Family Businesses Appointment of

the Regulator.

who shall be appointed by the Minister for the purpose.

(2) The Regulator shall be appointed for a period of three

years and may be re-appointed upon expiration of the term of office

for a further period or periods

Provided that during his term as Regulator, such person

shall not hold any position which results in a conflict of interest or is

incompatible with the correct performance of his official duties as

Regulator or with impartiality expected from this office or with

public confidence therein.

(3) The Regulator shall receive such remuneration as the

Minister may establish.

(4) When the office of the Regulator becomes vacant, a person

appointed as Regulator shall hold office temporarily until a successor

is appointed. The Minister may, at any time, during the absence of the

Regulator or for any other temporary purpose where the Minister

considers it necessary to do so, appoint a person to act in the office of

the Regulator, until the resumption of office of the Regulator.

(5) The Regulator shall be provided with premises and an

adequate number of officials and staff to carry out the functions

assigned to him under this Act.

(6) The Minister may also appoint one or more Deputy

Regulators to assist the Regulator as directed by him and in the

performance of his functions

Provided that the Deputy Regulators, officials and staff

appointed to assist the Regulator shall receive such remuneration as

the Minister may establish.

A person shall not be qualified to be appointed, or to

remain, a Regulator if he

(a)

is a presiding judge or magistrate; or

(b) is adjudged bankrupt or has entered into any

arrangement with his creditors; or

(c)

is interdicted or incapacitated; or

(d) is convicted of an offence affecting public trust,

theft, or fraud or of knowingly receiving property obtained by

theft or fraud; or

(e)

is subject to a disqualification under article 320 of

the Companies Act; or

(f)

is a public officer or becomes a public officer.

(1) The Regulator shall only be removed or suspended

from office by the Minister on the grounds of proved inability to

perform the functions of the office of the Regulator or proved

misbehaviour.

(2) The Regulator may, at any time, resign from office by

notice in writing to the Minister.

(1) The Regulator shall assess all applicants seeking to

register as a family business under this Act and, once registered,

ensure their ongoing compliance with the relevant requirements and

regulations made hereunder to his satisfaction.

(2) The Regulator shall perform the duties and exercise the

functions imposed and conferred on him by this Act and by any

regulations made thereunder including

(a)

accepting or refusing applications from businesses

to register as family businesses in terms of this Act;

(b) provide registration facilities for businesses which

are eligible for enrolment in terms of this Act;

(c)

keeping and updating the register of registered

family businesses;

(d) monitoring the activities of registered family

businesses in order to ensure that they comply where applicable

with the provisions of this Act and or, any regulations and or

any guidelines as prescribed;

(e)

where eligible, providing the registered family

businesses an updated registration certificate attesting that the

business still qualifies as a family business in terms of this Act;

(f)

providing family businesses with information and

guidance about the requirements, benefits and responsibilities in

connection with registrations and enrolments in terms of this

Act;

(g) making recommendations to the Minister on

legislation and policies in support of the family business sector;

(h) assisting government, government departments,

public agencies, authorities and entities controlled by the

Government in preparing and reviewing policies in support of

family businesses;

(i)

investigating written grievances in relation to this

Act relating to registered family businesses or businesses

purporting to be registered family businesses under this Act, and

furthermore to investigate ex officio any registered family

business for any shortcoming and to take such action as is in his

power to redress any justified grievance that may come to his

notice and including if he deems fit, to refer his findings to the

police;

(j)

encouraging and promoting the family business

sector as well as developing co-operation between family

businesses and the Government;

(k) encouraging family businesses to enter into written

agreements concerning the principles of governing the family

business;

(l)

co-ordinating and communicating with any

competent authority with a view to facilitating the registration

and enrolment processes for family businesses;

(m) performing any other function or duty that is

assigned to him by the Minister under this Act and any

regulations made thereunder as well as such other functions as

may be assigned to him under any other law.

(3) In the exercise of his functions, the Regulator shall act

impartially and shall not be subject to the direction of any other

person or authority.

(4) The Regulator may, by writing under his hand, delegate to

any person in the office of the Regulator, specific functions, powers

or authorities assigned to or conferred on him by this Act or any other

law, and may at any time revoke or vary such delegation

Provided that no such delegation shall be deemed to divest

the Regulator of any of his functions, powers or authorities and he

may, if he thinks fit, exercise such functions, powers or authorities

collaterally with the person so delegated.

The provisions of article 72 of the Financial

Administration and Audit Act shall not apply to the Regulator or any

other person carrying out his functions in terms of this Act.

(1) The Regulator may request any information from

any government entity, public authority or department in order to

fulfil his duties.

(2) Any competent authority shall co-operate with the

Regulator as required in the performance of his functions under this

Act

Provided that the Regulator may require the submission of

any documentation from any competent authority.

(3) A demand under this article may also be sent to a person

who is bound by a duty of professional secrecy under the Professional

Secrecy Act and for the purposes of article 6A of such Act, the

Regulator shall be considered to be a public authority. Any

information obtained by the Regulator upon such a demand shall be

used exclusively for the purposes of this article.

The Regulator may, from time to time, issue guidelines in

relation to the activities of registered family businesses and any

breach or declaration from these guidelines shall be a consideration

for the family business to have their registration certification

cancelled.

Any registered family business not compliant with any

rules and regulations under any other Act or legislation may be

cancelled at the discretion of the Regulator.

(1)

The Regulator shall, by not later than eight weeks

after the end of each calendar year, prepare and present to the

Minister an annual report which shall include

(a)

a report of the Regulator’s office activities during

the preceding year;

(b) a general description of the circumstances of family

businesses in Malta and any developments which may affect the

sector;

(c)

any

recommendation

regarding

legislation,

regulations, policies or other matters affecting the family

business sector; and

(d)

accounts and other financial records referred to in

this Act.

(2) The Regulator shall cause to be kept proper accounts and

other financial records in respect of the operations of his office, and

shall cause to be prepared a statement of accounts in respect of each

financial year. After the end of each financial year, and not later than

the date on which the report in sub-article (1) is to be forwarded to the

Minister, the Regulator shall cause a copy of the statement of

accounts duly audited to be transmitted to the Minister together with a

copy of any report made by the auditors on that statement or on the

accounts of the office of the Regulator.

(1) There shall be a Register of Family Businesses Register of

which shall be maintained by the Regulator and shall contain Family

Businesses.

information and data relevant to the registration process as applicable,

as found in the First and Second Schedule, supported by the

documentation referred to in the Schedules.

(2) Upon registration, the Regulator shall allocate a unique

registration number to the family business which shall be preceded by

the letters "FB" which registration number shall be known hereinafter

as the "Family Business Label" and the family business label may be

quoted by the registered family business on any published materials,

letters, notices, advertisements and other documents issued by such

business.

(3) A list of the names of the family businesses in the Register

will be available upon written request. No other information or

contents of the Register other than the name of the family business

will be available for disclosure except to the competent authorities

granting benefits as referred to in the Act.

The Regulator shall, for the purposes of this Act, compile

and maintain the Register subject to the provisions of the Data

Protection Act.

(1) For a family business to be registered as such, the

documents listed in the First Schedule shall be submitted to the

Regulator who shall determine, to his satisfaction, whether the

application complies with the provisions of this Act.

(2) A business may apply for registration by submitting the

prescribed application form in the First Schedule to the Regulator.

(3) A non-refundable administration fee shall be submitted

with every application irrespective of the outcome of the application.

(4) In considering an application, the Regulator may request

the applicant to provide further information about the business or

make representations on any matter on which he may have

reservations or concerns in relation to the application.

(5) The Regulator may accept or refuse any application for

registration on the basis of any of the following

(a) the non-observance or otherwise of all the

formalities required by this Act and as may be prescribed;

(b) the legality or otherwise of the purpose and

objectives of the business that is not in compliance of the law or

ethics in relation to its business activities;

(c)

the fulfilment or otherwise of obligations relating to

the payment of social security contributions in accordance with

the applicable laws;

(d) the business has not fulfilled its obligations relating

to the payment of taxes due in accordance with the applicable

law; or

(e)

the business has not supplied the information

required under these regulations or has incorrectly supplied

them.

(6) Where the Regulator requires proof from the applicant that

none of the cases quoted in sub-article (5)(c), (d) and (e) have been

met, it shall accept, as sufficient evidence, relevant certification

issued by the administrative body in the country of origin or the

country whence that person comes showing that these requirements

have been met.

Certificates of registration shall be deemed to be public Certificates.

documents and shall be surrendered to the Regulator on his simple

demand in writing stating the reasons for such request.

The Regulator may request from the registered family Powers of the

business any information and any clarification, and may also carry Regulator.

out any verification required so as to ascertain to his satisfaction that

such business is in compliance with the provisions of this Act or any

rule, regulation or guideline made thereunder. The registered family

business shall seek to comply with this request expediently and in

default the Regulator may cancel the certificate of registration.

(1) The Regulator may order the cancellation of the Cancellation of

registration of a family business by the issue of a cancellation order, activities.

which shall come into effect immediately.

(2) A cancellation order may be issued, at the discretion of the

Regulator, if the registered family business

(a)

is not compliant with the criteria, where applicable,

in the First and Second Schedule or any other provisions, rules,

regulations and guidelines in accordance with this Act; or

(b) has not functioned, operated, traded or carried on

business for a period which exceeds twelve consecutive months

without interruption or earlier as the Regulator deems fit; or

(c)

has obtained registration on the basis of materially

incorrect or incomplete information that would have otherwise

resulted in a refusal had the correct or complete information

been known to the Regulator; or

(d) is not seeking to uphold and maintain the objectives

of this Act; or

(e)

the certificate of registration has been used in an

incorrect manner or a forgery thereof has been committed.

(3) Prior to ordering the cancellation of the registration of a

family business by the issue of a cancellation order, the Regulator

shall inform the business in writing of his intentions to issue a

cancellation order. The Regulator shall grant the business a period of

time to give reasons why the cancellation order should not be issued.

Following this the Regulator may grant the business a period of time

in which to regularise its position and conform to the provisions of

this Act. If the business does not do so within this stipulated time

period, which may be extended by the Regulator at his discretion, the

Regulator shall order the cancellation of the registration of the family

business in accordance with sub-article (1).

(4) The Regulator shall notify and publish, in the Gazette, any

cancellation order which has become final and shall notify all

competent authorities accordingly.

(5) The registration of a family business shall terminate ipso

jure if the business is struck off, or ceases to operate, function, trade

or carry on business under any form.

(1) In the event of cancellation of registration of a

family business, the family members shall forthwith surrender, to the

Regulator, the certificate of registration of such business and any

person failing to surrender such certificate within the time stated as

notified by the Regulator, shall be liable to an administrative fine of

two hundred and fifty euro (€250).

(2) In the event of cancellation of registration of a family

business, all benefits granted to such business by virtue of

registration, shall cease to have effect from the date when the decision

to cancel takes effect.

(3) Cancellation for the reasons mentioned in article 31(2)

shall require the business to refund any benefits received by the

business or any other individual by virtue of its registration in terms

of this Act unless provided otherwise in this Act, and the Regulator

may issue the relative orders against the business and any persons

involved in such business

Provided that when the demand for the refund of any

benefits is made by the Regulator by judicial letter issued in

accordance with article 466 of the Code of Organization and Civil

Procedure, this shall constitute an executive title against the business

or any named family member of administrator in favour of the

Regulator, in his own or as trustee for the person entitled to the refund

as aforesaid.

(4) An order of the Regulator against a family business or any

named family member shall be enforceable as an executive title once

any judgment has become res judicata or no proceedings have been

filed within the relevant time limits.

Part IV

Offences

(1) Any person or business who in order to obtain and Forgery or

alteration of

maintain the status of a family business -

certificates or

mis-

representation

or abusive use

of status.

(a) in any manner, forges or alters a certificate of

registration so as to give the impression that he acts on behalf of

a registered family business shall be guilty of an offence and

shall be liable to the same punishment as provided for in article

183 of the Criminal Code;

(b) who falsely misrepresents the registered family

business or makes false representations shall be guilty of an

offence under this Act;

(c)

who, in any manner, makes an abusive use of a

certificate of registration or the Family Business Label shall be

guilty of an offence under this Act;

(d) who without reasonable excuse prepares any

incorrect statement or gives any incorrect information in

relation to any matter falling under this Act, shall be guilty of an

offence under this Act.

(2) Any persons or business who is found guilty of any offence

under sub-article (1) shall be liable on conviction to a term of

imprisonment from thirteen months to four years.

(3) Upon any person or business admitting to or being found

guilty of any of the above offences, the Regulator shall on conviction

revoke any Certificate of Registration issued to the family business.

(4) The Regulator shall issue public statements on the facts to

warn the public about any abuse by any person or business.

(1) Any person or business who wilfully with intent to Abuse of

obtain any benefit under this Act or regulations made under this Act benefits.

or to assist any other person to do so

(a) omits from a return or any other document or

statement made, prepared or submitted for the purposes of or

under this Act, any matter which should be included therein; or

(b) makes any false statement or entry in any return or

other document or statement prepared or submitted for the

purposes of or under this Act; or

(c)

gives any false answer, whether verbally or in

writing, to any question or request for information asked or

made in accordance with the provisions of this Act; or

(d) prepares or maintains or authorises the preparation

or maintenance of any false books of account or other records or

falsifies or authorises the falsification of any books of account

or records; or

(e)

makes use of any fraud, art or contrivance or

authorises the use of any such fraud, art or contrivance,

shall be guilty of an offence, and shall for each such offence be liable

on conviction to a fine (multa) of not less than two thousand euro

(€2,000) and not exceeding twelve thousand euro (€12,000) or to

imprisonment for any term not exceeding four years, or to both such

fine and imprisonment.

(2) Upon any person admitting to or being found guilty of any

of the above offences, the Court may, on conviction, revoke any

certificate issued to the registered family business.

If any person or business contravenes or fails to comply

with any of the requirements of this Act or of any regulations made

thereunder, in respect of which no specific penalty is provided, he

shall be guilty of an offence and shall for each offence be liable, on

conviction, to a fine (multa) of not less than two hundred and fifty

euro (€250) and not more than one thousand and five hundred euro

(€1,500).

The provisions of this Act establishing offences and

penalties in respect thereof shall not affect the operation of any other

law establishing offences and penalties in respect of the same acts or

omissions and shall not affect the application of any higher penalty

under any other law.

Proceedings for an offence under this Act may be

commenced at any time within five years from the date of

commission of the offence upon the complaint of the Regulator.

Immediately after article 41B of the Duty on Documents

and Transfers Act, there shall be added the following new article

(1)Notwithstanding any other provision

of this Act, where a family business is transferred

as a going concern by an individual to family

members as defined in the Family Business Act

and there is a transfer of immovable property being

a commercial tenement as defined in article 1525

of the Civil Code (hereinafter referred to as

"property"), that had been used in the said business

for a period of at least three years preceding the

transfer, in assessing the duty chargeable in terms

of the said Act, duty shall be charged on the first

five hundred thousand euro (€500,000) of the value

of the property transferred as aforesaid at the rate

of three euro and fifty cents per one hundred euro

or part thereof, provided that the notary who

receives any deed of such a transfer shall record in

the deed a written declaration by the individual so

transferring and the person so acquiring that the

conditions laid out in this article are satisfied and

the notary shall warn the said persons of the

importance of the truthfulness of such declaration

Provided that this sub-article shall also

apply where the said individual transfers property

that had been used in a family business carried out

by the family members or business for a period of

at least three years preceding the transfer

Provided further that if such property or

part thereof is either transferred inter vivos by the

family members or family business, as the case

may be, during the first three years from the date of

acquisition, or ceases to be used in the business

within the said period, the duty which would have

been payable on the acquisition of the property or

part thereof that is so transferred, but for the relief

granted under this article, shall be levied at the

time of the said transfer inter vivos or at the time

the property ceases to be used by the business

Provided further that where such

property or part thereof transferred inter vivos by

the family member or family business, as the case

may be, is replaced within one year by an

immovable property used solely for a similar

purpose in the family business (hereinafter referred

to as the "replacement property"), in assessing the

duty chargeable in respect of the replacement

property, duty chargeable and paid in accordance

with the previous proviso shall be allowed as a

deduction.

(2)

For the purposes of paragraphs (a), (b)

and (c) of article 42(1), in assessing the duty

chargeable, when an individual transfers shares or

interests in a partnership, trust or foundation to

family members referred to in sub-article (1) and

such shares or interests in a partnership, trust or

foundation are held in a family business which

carries on a business, no account shall be taken of

the first one hundred and fifty thousand euro

(€150,000) or such other greater amount as may be

prescribed of the value of the shares, or interests in

a partnership, trust or foundation transferred as

aforesaid

Provided that this sub-article shall only

apply where

(a)

the said family business does not

own, directly or indirectly, any immovable

property other than property referred to in

sub-article (1) used in the said business for a

period of at least three years preceding the

transfer;

(b) the said family business is

controlled and beneficially owned, directly or

indirectly, to the extent of more than eighty-

five per cent by the said individuals or family

members.

(3)

For the purpose of this article "business"

shall mean a family business registered with the

Regulator in terms of the Family Business Act and

shall duly present an updated certificate in

accordance with the law.

(4)

This article shall only apply where the

Commissioner issues a certificate attesting that he

is satisfied that the conditions laid out in this article

are fulfilled.

(5)

Where, in accordance with the second

proviso to sub-article (1), the property or part

thereof is either transferred inter vivos by the

family members or family businesses, or ceases to

be used in the business, the duty chargeable under

the said proviso shall be due by the family

members or business, as the case may be, and shall

be remitted to the Commissioner within fifteen

working days from the date on which the property

is either transferred as aforesaid, or ceases to be

used in the business.".

First Schedule

(Article 28)

Application Form for registration as a Family Business

1. Purpose.

The purpose of this application form is to provide the Regulator

the necessary information in accordance with the provisions of this

Act to allow him to assess the business as to its qualification as a

registered family business.

2. Content and form.

The content and form of the application form, with all the

required documents and Appendices as attachments as the case may

require, that each family business shall duly file with the Regulator

along with the Appendices, is as follows

Application Form for Registration as a Family Business

Application Form of ..................... (insert official name)

Trade name of business

Registered Address/Postcode

Any other address (apart from the registered address)

where the applicant business carries out business

Mobile/Landline/Telephone/Fax number(s)

E-mail address/es

Website

Where applicable

Registration Number

VAT number/s

Stock Exchange Listing Number

Trading Licence Number

Name/s of shareholders in the business and the number of

shares held

Name/s of family members involved in the governance of

the business with certified copy of documentary evidence

The written consent of the relevant family members to hold

office after registration;

A resolution signed by the family members of the business

indicating that they resolve to register the business with the

Regulator;

Compliance Certificate from the VAT Department and

Income Tax Department;

For businesses applying under article 3(5) the relative

requirements of the Second Schedule, Sub-Title V of the Civil Code;

Organisation Chart to be certified by an accountant or

lawyer with an accompanying bank reference letter of the business

which must include

(a)

the organisational structure of the business;

(b)

the family relationship within this structure;

(c)

the job designation of each family member;

(d) an indication of who is responsible for the day to

day running of the business;

(e)

an indication of who the ultimate owners of the

business are.

This section is to be completed by each family member.

-

Name of Family Member in the business

-

Designation

-

Passport number/I.D. Card number

-

Address

-

Family relationship in relation to the founder of the

business

-

Any other details/information or other document as may be

required by this Act or as may be prescribed

Declaration of Completeness and Correctness

We hereby confirm that the details provided, including the

attached Appendices, are complete and truthful as to their contents.

-

Signature of family members

-

Name of family members

-

Date

Appendices

(Where applicable)

Appendix A - Certified copy of declaration of business assets

and contributions confirmed on oath.

Appendix B - Certified copy of documentary evidence including

names of family members holding decision-making powers in the

business confirmed on oath.

Appendix C - Certified copies of passports /I.D. Cards of family

members.

Appendix D - Where the family business is owned by the trustee

of a trust, an authenticated copy of the trust deed including the list of

beneficiaries to be delivered by the registered trustee of the family

trust.

Appendix E - Where the family business is held by a private

foundation an authenticated copy of the deed of foundation including

any addendum amending the original deed of foundation and the

beneficiary statement to be delivered by the administrator.

Appendix F - The lease agreement of the business.

Appendix G - Declaration by the family members that they have

been actively trading or in operation without interruption for a

minimum period of three (3) consecutive calendar years.

Appendix H - Any other document (Please specify).

Administration Fee of €100

Signature of Receiving Officer: .............................................

Second Schedule

(Article 13)

Annual return

1. Purpose.

The purpose of this annual return is to provide the Regulator

and any related competent authority with up to date information about

the registered family business, benefiting from incentives by means

of this Act.

2. Content and form.

The content and form of the annual return, with all the required

documents and Appendices as attachments, that each family business

shall duly file with the Regulator annually is as follows

Contents and Form of Annual Return of a registered family

business

(a)

Annual Return of ................... (insert official name)

(b)

Name of Family Business

(c)

Family Business Label

(d)

Name of Contact Person

(e)

Designation

(f)

Incentive applied for with the competent authority

(g) Date of approval of benefit from the competent

authority

(h) Any benefit applied for and refused (stating the

reason where provided).

Declaration of Completeness and Correctness

We hereby confirm that the details provided, including the

attached Appendices, are complete and truthful as to their contents.

Signature of family members

Name of family members

Date

Appendices

(Where applicable)

Appendix A - Revised and updated copy of Schedule 1,

indicating any amendments that have been made to any parts thereof,

and in such case, a declaration signed by at least two family members.

Appendix B - Copy of letter of refusal for benefit requested.

Passed by the House of Representatives at Sitting No. 420 of the

19th July, 2016.

A NĠLU F ARRUGIA

Speaker

R AYMOND S CICLUNA

Clerk of the House of Representatives

€2.70