INVESTMENT SERVICES ACT

CHAPTER 370

INVESTMENT SERVICES ACT

To regulate the carrying on of investment business and to make

provision for matters ancillary thereto or connected therewith.

19th September, 1994;

23rd September, 1994;

30th December, 1994;

8th July, 1995

ACT XIV of 1994 as amended by Acts: XXIV, XXV of 1995; Legal

Notices 191 of 1998 and 46 of 1999; Acts XVII of 2002, IV of 2003, XIII of

2004, XII of 2006; Legal Notice 318 of 2006; Act XX of 2007; Legal Notice

425 of 2007; Acts XVII of 2009, XIX of 2010, X of 2011; Legal Notice 251

of 2013; Act XX of 2013; Legal Notice 147 of 2014; Acts XXII of 2014, XXI

of 2015, XIX of 2016 and XXXI of 2017, XLIV of 2018, V of 2020, Act

XLVI, LXXI of 2021 and LXXII of 2021 , XXV of 2023 , XXXII of 2024 and

XI and XXIX of 2025.

PRELIMINARY

The short title of this Act is the Investment Services Act.

(Article 2)

Investment Services and Activities

1. Reception and Transmission of Orders in relation to one or

more instruments

The reception from a person of an order to buy, sell or subscribe

for instruments and the transmission of that order to a third party

for execution.

2. Execution of orders on behalf of clients

Acting to conclude agreements to buy or sell one or more

instruments on behalf of clients and includes the conclusion of

agreements to sell instruments issued by an investment services

licence holder or a credit institution at the moment of their

issuance.

3. Dealing on own account

Trading against proprietary capital resulting in conclusion of

transactions in one or more instruments.

4. Management of Investments

Managing or agreeing to manage assets belonging to another

person if those assets consist of or include one or more instruments

or the arrangements for their management are such that the person

managing or agreeing to manage those assets has a discretion to

invest any of those assets in one or more instruments.

Management of Investments may also constitute the selection or

agreement to select, on a discretionary basis, instruments by

reference to which benefits are wholly or partly payable under a

contract of insurance falling within class III - linked long term of

the Second Schedule to the Insurance Business Act.

Collective portfolio management of assets, belonging to a collective

investment scheme, where the arrangements for their management are

such that the person managing or agreeing to manage those assets has

discretion to invest in any movable and, or immovable property.

5. Trustee, Custodian or Nominee Services

(a) Acting as trustee, custodian or nominee holder of an

instrument, or of the assets represented by or

otherwise connected with an instrument, where the

person acting as trustee, custodian or nominee holder

is so doing as part of his providing any investment

service in paragraphs 1, 2, 3, 4 or 6 of this Schedule;

Provided that for the purposes of this sub-paragraph

any person who is authorised or otherwise exempt

from authorisation in the terms of article 43 or 43A of

the Trusts and Trustees Act shall not by virtue of

holding such assets be required to have a licence in

terms of this sub-paragraph if such person does not

provide an investment service and delegates all

activities which are investment services in terms of

this Act to a person who is licensed to provide such

services; or

(b) Holding an instrument or the assets represented by or

otherwise connected with an instrument as nominee,

where the person acting as nominee is so doing on

behalf of another person who is providing any

investment service in this Schedule or on behalf of a

client of such person, and such nominee holding is

carried out in relation to such investment service

Provided that for the purposes of this paragraph any

person who is authorised or otherwise exempt from

authorisation in the terms of article 43 or 43A of the

Trusts and Trustees Act shall not by virtue of holding

such assets be required to have a licence in terms of

this Act.

(c) Acting as trustee or custodian in relation to a

collective investment scheme.

6. Investment Advice

Giving, offering or agreeing to give, to persons in their capacity

as investors or potential investors or as agent for an investor or

potential investor, a personal recommendation in respect of one or

more transactions relating to one or more instruments.

For the purposes of this paragraph, a "personal recommendation"

shall mean a recommendation presented as suitable for the person

to whom it is addressed, or which is based on a consideration of the

circumstances of that person, and must constitute a

recommendation to take one of the following steps

(a) to buy, sell, subscribe for, exchange, redeem, hold or

underwrite a particular instrument;

(b) to exercise or not to exercise any right conferred by a

particular instrument to buy, sell, subscribe for,

exchange, or redeem an instrument;

(c) to select one or more instruments by reference to

which benefits are wholly or partly payable under a

contract of insurance falling within the meaning of

class III - ‘linked long term’, of the Second Schedule

to the Insurance Business Act.

A recommendation is not a personal recommendation if it is

issued exclusively through distribution channels or to the public.

7. Underwriting of instruments and, or placing of instruments

on a firm commitment basis

The underwriting or placing of instruments such that the person

providing the service assumes the risk of bringing a new securities

issue to the market by buying the issue from the issuer thereby

guaranteeing the sale of a certain number of shares to investors

8. Placing of Instruments without a firm commitment basis

The marketing of newly-issued securities or of securities which

are already in issue but not listed, to specified persons and which

does not involve an offer to the public or to existing holders of the

issuer’s securities’ - without assuming the risk of guaranteeing the

sale of a certain number of shares by buying the relative securities

from the issuer.

9. Operation of a Multilateral Trading Facility

The operation of a multilateral system which brings together

multiple third party buying and selling interests in instruments - in

the system and in accordance with non-discretionary requirements -

in a way that results in a contract.

10. The reception, transmission, and submission of a bid

relating to emission allowances

The reception, transmission, and submission of a bid by a person

on any auction platform which auctions emission allowances within

the meaning of Commission Regulation (EU) No 1031/2010 of 12

November 2010 on the timing, administration and other aspects of

auctioning of greenhouse gas emission allowances pursuant to

Directive 2003/87/EC of the European Parliament and of the

Council establishing a scheme for greenhouse gas emissions

allowances trading within the Community, as may be amended

from time to time.

11. Operation of an Organised Trading Facility

The operation of an OTF whereby multiple third-party buying

and selling interests in bonds, structured finance products, emission

allowances or derivatives are able to interact in the system in a way

that results in a contract.

(1)

In this Act, unless the context otherwise requires -

"agricultural commodity derivatives" means derivative contracts

relating to products listed in Article 1 and Annex I of Parts I to XX and

XXIV/1, to Regulation (EU) No. 1308/2013, as well as to products

listed in Annex I to Regulation (EU) No. 1379/2013 of the European

Parliament and of the Council of 11 December 2013 on the common

organisation of the markets in fishery and aquaculture products,

amending Council Regulations (EC) No. 1184/2006 and (EC) No.

1224/2009 and repealing Council Regulation (EC) No. 104/2000, as

amended from time to time;

"AIFM Directive" means Directive 2011/61/EU of the European

Parliament and of the Council of 8 June 2011 on Alternative

Investment Fund Managers and amending Directives 2003/41/EC and

2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/

2010, as amended from time to time, and includes any implementing

measures that have been or may be issued thereunder;

"ancillary services" means any of the services listed within the Third

Schedule;

"ancillary services undertaking" means an undertaking, the principal

activity of which consists of owning or managing property, managing

data processing services, or a similar activity which is ancillary to the

principal activity of one or more investment firms;

"Alternative Investment Fund or AIF" means a collective

investment scheme, including subfunds thereof, which raises

capital from a number of investors, with a view to investing it in

accordance with a defined investment policy for the benefit of

those investors, and which does not qualify as a UCITS Scheme in

terms of the UCITS Directive;

"binding legal instrument" means any directly applicable measures,

including, but not limited to, any implementing technical standards,

any regulatory technical standards or any similar measures, issued

under European Union legislation;

"Alternative Investment Fund Manager or AIFM" means a legal

person whose regular business is the management of one or more

AIFs;

"certificates" means those securities which are negotiable on the

capital market and which in case of a repayment of investment by the

issuer are ranked above shares but below unsecured bond instruments

and other similar instruments;

"client" means any natural or legal person to whom an investment

services licence holder provides investment or ancillary services;

"close links" means a situation in which two or more natural or legal

persons are linked by

(i)

participation in the form of ownership, direct or by

way of control, of 20% or more of the voting

rights or capital of an undertaking;

(ii) "control" which means the relationship between a

parent undertaking and a subsidiary, in all the

cases referred to in Article 22(1) and (2) of

Directive 2013/34/EU, or a similar relationship

between any natural or legal person and an

undertaking, any subsidiary undertaking of a

subsidiary undertaking also being considered to be

a subsidiary of the parent undertaking which is at

the head of those undertakings;

(iii) a permanent link of both or all of them to the

same person by a control relationship;

"the BRRD" means Directive 2014/59/EU of the European

Parliament and of the Council of 15 May 2014 establishing a

framework for the recovery and resolution of credit institutions and

investment firms and amending Council Directive 82/891/EEC, and

Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC,

2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and

Regulations (EU) No. 1093/2010 and (EU) No. 648/2012, of the

European Parliament and of the Council, as amended from time to

time, and includes any implementing measures, implementing

technical standards, regulatory technical standards, guidelines and

similar measures that have been or may be issued thereunder;

"collective investment scheme" means any scheme or

arrangement which has as its object or as one of its objects the

collective investment of capital acquired by means of an offer of

units for subscription, sale o r exchange and which h as t he

following characteristics

(a) the scheme or arrangement operates according to the

principle of risk spreading; and either

(b) the contributions of the participants and the profits or

income out of which payments are to be made to them

are pooled; or

(c) at the request of the holders, units are or are to be re-

purchased or redeemed out of the assets of the scheme

or arrangement, continuously or in blocks at short

intervals; or

(d) units are, or have been, or will be issued continuously

or in blocks at short intervals

Provided that an alternative investment fund that is not

promoted to retail investors and that does not have the characteristic

listed in paragraph (a) hereof shall only be deemed to be a collective

investment scheme if the scheme, in specific circumstances as

established by regulations under this Act, is exempt from such

requirement and satisfies any conditions that may be prescribed;

"collective investment scheme licence" means a licence for the

issue or creation of units or the carrying on of an activity by a

collective investment scheme issued under article 6;

"commodity derivatives" shall have the same meaning as that given

to the term by Article 2 of the MiFIR;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act;

"compliance with the group capital test" means compliance by a

parent undertaking in an investment firm group with the requirements

of Article 8 of the IFR;

"Conduct of Business Rules" refers to Rules issued by the competent

authority under various articles of this Act;

consolidated basis" means the same as the meaning assigned to it in

point (48) of Article 4(1) of the CRR;

"consolidating supervisor" means the same as the meaning

assigned to it in point (41) of Article 4(1) of the CRR;

"the CRD" means Directive 2013/36/EU of the European

Parliament and of the Council of 26 June 2013 on access to the

activity of credit institutions and the prudential supervision of

credit institutions and investment firms, amending Directive 2002/

87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as

amended from time to time, and includes any implementing

measures that have been or may be issued thereunder;

"credit institution" means a credit institution as defined in point (1)

of Article 4(1) of the CRR;

"the CRR," means Regulation (EU) No 575/2013 of the European

Parliament and of the Council of 26 June 2013 on prudential

requirements for credit institutions and investment firms and

amending Regulation (EU) No 648/2012, as amended from time to

time, and includes any implementing measures that have been or may

be issued thereunder;

"data reporting services provider" shall have the same meaning as that

assigned to it in point (36a) of Article 2(1) of MiFIR;

"depositary receipts" means those securities which are negotiable on

the capital market and which represent ownership of the securities of a

non-domiciled issuer while being able to be admitted to trading on a

regulated market and traded independently of the securities of the non-

domiciled issuer;

"derivatives" means those securities giving the right to acquire or

sell any transferable security or giving rise to a cash settlement

determined by reference to transferable securities, currencies, interest

rates or yields, commodities or other indices or measures; and referred

to in paragraphs 4 to 10 of the Second Schedule;

"Directive 2002/87/EC" means Directive 2002/87/EC of the

European Parliament and of the Council of 16 December 2002 on the

supplementary supervision of credit institutions, insurance

undertakings and investment firms in a financial conglomerate and

amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC,

92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC

"Directive 2013/34/EU" means Directive 2013/34/EU of the

European Parliament and of the Council of 26 June 2013 on the

annual financial statements, consolidated financial statements and

related reports of certain types of undertakings, as may be amended

from time to time;

"distributed ledger technology" shall have the same meaning as that

assigned to it in point (1) of Article 2 of the DLT Pilot Regime

Regulation;

"DLT Pilot Regime Regulation" means Regulation (EU) 2022/858

of the European Parliament and of the Council of 30 May 2022 on a

pilot regime for market infrastructures based on distributed ledger

technology, and amending Regulations (EU) No 600/2014 and (EU)

No 909/2014 and Directive 2014/65/EU, as amended from time to

time, and includes any implementing measures that have been or may

be issued thereunder;

"document" or "documentation" includes information recorded in

any form and, in relation to information recorded otherwise than in

legible form, references to its production include references to

producing a copy of the information in legible form;

"EBA" means the European Banking Authority established by

Regulation (EU) No. 1093/2010;

"EEA State" means a State which is a contracting party to the

agreement on the European Economic Area signed at Oporto on the

2nd May, 1992 as amended by the Protocol signed at Brussels on

the 17th March, 1993 and as amended by any subsequent acts;

"ESMA" means the European Securities and Markets Authority

established by Regulation (EU) No 1095/2010 of the European

Parliament and of the Council of 24 November 2010;

"ESRB" means the European Systemic Risk Board established by

Regulation (EU) No 1092/2010 of the European Parliament and of

the Council of 24 November 2010 on European Union macro-

prudential oversight of the financial system and establishing a

European Systemic Risk Board;

"EU parent financial holding company" means the same as the

meaning assigned to it in point (31) of Article 4(1) of the CRR;

"EU parent institution" means the same as the meaning assigned to

it in point (29) of Article 4(1) of the CRR;

"EU parent investment firm" shall have the same meaning as that

assigned to "Union parent investment firm" in point (56) of Article

4(1) of the IFR

"EU parent investment holding company" shall have the same

meaning as that assigned to "Union parent investment holding

company" in point (57) of Article 4(1) of the IFR;

"EU parent mixed financial holding company" means the same as

the meaning assigned to it in point (33) of Article 4(1) of the CRR;

"European investment firm" means an investment firm as

defined in Article 4(1) of the MIFID and as authorized by its

European regulatory authority within the meaning of Article 5 of

the Directive or authorized by a European regulatory authority in

an EEA State;

"European management company" has the same meaning assigned

to it in regulations made under this Act;

"European regulatory authority" means the body or bodies

designated by a Member State or EEA State other than Malta in

accordance with Article 44 of the AIFM Directive, Article 67 of the

MIFID, Article 97 of the UCITS Directive and Article 4 of the CRD

to carry out each of the duties provided for under the different

provisions of the said Directives;

"exempted person" means a person who for any reason is

exempted from any or all of the provisions of article 3;

"financial holding company" means the same as the meaning

assigned to it in point (20) of Article 4(1) of the CRR;

"financial institution" means a financial institution as defined in

point (14) of Article 4(1) of the IFR;

"group supervisor" means the supervisory authority of a Member

State or an EEA State, competent and responsible for the supervision

of compliance with the group capital test of EU parent investment

firms and investment firms controlled by EU parent investment

holding companies or EU parent mixed financial holding companies

Provided that, for the purposes of this definition, "EU parent

mixed financial holding companies" shall have the same meaning as

that assigned to "Union parent mixed financial holding company" in

point (58) of Article 4(1) of the IFR;

"home Member State or EEA State" means

(a) where the European investment firm is a natural person,

the Member State or EEA State in which the head office

of that person is situated; or

(b)

where the European investment firm is a legal person,

the Member State or EEA State in which its registered

office is situated; or

(c) where the European investment firm has, under its

national law no registered office, the Member State or

EEA State in which its head office is situated;

"host Member State or EEA State" means the Member State or

EEA State, other than the home Member State or EEA State, in which

an investment services licence holder has a branch or provides

investment services and, or activities;

"the IFD" means Directive (EU) 2019/2034 of the European

Parliament and of the Council of 27 November 2019 on the prudential

supervision of investment firms and amending Directives 2002/87/EC,

2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU,

as amended from time to time, and includes any binding legal

instruments, guidelines and other measures that have been or may be

issued thereunder;

"the IFR" means Regulation (EU) 2019/2033 of the European

Parliament and of the Council of 27 November 2019 on the prudential

requirements of investment firms and amending Regulations (EU) No.

1093/2010, (EU) No. 575/2013, (EU) No. 600/2014 and (EU) No. 806/

2014, as amended from time to time, and includes any binding legal

instruments, guidelines and other measures that have been or may be

issued thereunder;

"instrument" means any instrument, contract or right falling within

the Second Schedule and whether or otherwise issued in Malta,

including such instruments issued by means of distributed ledger

technology;

" investment advertisement" means any form or medium of

marketing activity or communication disseminated to the public by

means of all types of media, other than a prospectus, which promotes

the purchase or procurement of an investment service or instrument;

"investment agreement" means any agreement the making or

performance of which by either party constitutes an investment

service;

"investment firm" means an investment firm as defined in Article

4(1) of the MiFID;

"investment firm group" means an investment firm group as

defined in point (25) of Article 4(1) of the IFR;

"investment holding company" means an investment holding

company as defined in point (23) of Article 4(1) of the IFR;

"investment service" means any service and activity falling within

the First Schedule when provided in relation to an instrument

Provided that the service of Management of Investments in

terms of the First Schedule shall also include the collective portfolio

management of assets of a collective investment scheme when

provided in relation to an asset that is not an instrument within the

meaning of the Second Schedule;

"investment services licence" means a licence to provide an

investment service under article 6;

"Investment Services Rules" refers to Rules issued by the

competent authority under various articles of this Act;

"licence" means a collective investment scheme licence or an

investment services licence;

"licence holder" means a person who holds a licence;

" M a l t a ’s i n t e r n a t i o n a l c o m m i t m e n t s " m e a n s M a l t a ’s

commitments, responsibilities and obligations arising out of

m e m b e r s h i p o f , o r a ff i l i a t i o n t o , o r r e l a t i o n s h i p w i t h , a n y

international, global or regional organisations or grouping of

countries or out of any treaty, convention or other international

agreement, however called, whether bilateral, multilateral, to which

Malta is a party;

"management body" means the body or bodies of a licence holder,

including of an investment firm, a market operator or a data reporting

services provider, which are appointed in accordance with national

law and are empowered to set the strategy, objectives and overall

d i r e c t i o n o f t h e l i c e n c e h o l d e r, a n d o v e r s e e a n d m o n i t o r

management decision making, and includes the persons who

effectively direct the business of the licence holder;

"market operator" means a person or persons who manages and, or

operates the business of a regulated market and may be the regulated

market itself;

" M e m b e r St a t e " m e a n s a M e m b e r St a t e o f t h e E u r o p e a n

Communities;

" MIFID" means Directive 2014/65/EU of the European Parliament

and of the Council of 15 May 2014 on markets in financial instruments

and amending Directive 2002/92/EC and Directive 2011/61/EU, as

amended from time to time, and includes any implementing measures

that have been or may be issued thereunder;

"MiFIR" means Regulation (EU) No. 600/2014 of the European

Parliament and of the Council of 15 May 2014 on markets in financial

instruments and amending Regulation (EU) No. 648/2012, as may be

amended from time to time, and includes any implementing measures,

implementing technical standards, regulatory technical standards,

guidelines and similar measures that have been or may be issued

thereunder;

"Minister" means the Minister responsible for the regulation of

Financial Services;

"mixed-activity holding company" means a parent undertaking

other than a financial holding company, an investment holding

company, a credit institution, an investment firm, or a mixed financial

holding company within the meaning of Directive 2002/87/EC, the

subsidiaries of which include at least one investment firm;

"mixed financial holding company" means the same as the

meaning assigned to it in regulation 2 of the Financial Conglomerates

Regulations;

"multilateral system" means a multilateral system as defined in

point (11) of Article 2(1) of MiFIR;

"multilateral trading facility" or "MTF" means a multilateral system,

operated by an investment services licence holder or a market operator,

which brings together multiple third-party buying and selling interests

in instruments - in the system and in accordance with non-

discretionary rules - in a way that results in a contract in accordance

with Title II of MIFID;

"organised trading facility" or "OTF" means a multilateral system

which is not a regulated market or an MTF and in which multiple

third-party buying and selling interests in bonds, structured finance

products, emission allowances or derivatives are able to interact in the

system in a way that results in a contract in accordance with Title II of

MIFID.

"overseas regulatory authority" means an authority in a country

or territory outside Malta that is not a Member State or EEA State

which exercises any regulatory or supervisory function in relation

to financial services corresponding to a function of the competent

authority as defined in the Malta Financial Services Authority Act;

"parent financial holding company" means the same as the

meaning assigned to the term "parent financial holding company in a

Member State" in point (30) of Article 4(1) of the CRR;

"parent institution" means the same as the meaning assigned to the

term "parent institution in a Member State" in point (28) of Article

4(1) of the CRR;

"parent mixed financial holding company" means the same as the

meaning assigned to the term "parent mixed financial holding

company in a Member State" in point (32) of Article 4(1) of the CRR;

"parent undertaking" means a parent undertaking within the

meaning of Article 2(9) and 22 of Directive 2013/34/EU;

"participants" means the persons who participate in or receive, or

are to participate in or receive, profits or income arising from the

acquisition, holding, management or disposal of the property

comprised in a collective investment scheme or sums paid out of

such profits or income;

"prescribed" means prescribed by regulations made under this

Act;

"prospectus" has the meaning assigned to it in article 2 of the

Companies Act, and the word "shares" therein shall be read as

including a reference to the word "unit";

"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 referred to in Articles 9 and 10 of

Directive 2004/109/EC of the European Parliament and of the

Council of the 15 December 2004 on the harmonization of

transparency requirements in relation to information about issuers

whose securities are admitted to trading and amending Directive

2001/34/EC taking into account the conditions regarding the

aggregation thereof laid in that Directive, or which makes it

possible to exercise a significant influence over the management

of the company in which that holding subsists, and "qualifying

shareholder" shall be construed accordingly

Provided that in determining whether the criteria for a

qualifying shareholding are fulfilled, the competent authority shall

not take into account voting rights or shares which investment

services licence holders, European Investment Firms or credit

institutions may hold as a result of providing the service of

un de rw rit in g o r pl aci n g of fi n anc ial in stru me nt s on a firm

commitment basis in terms of point 6 of Section A to Annex 1 to

the MIFID, provided that those rights are, on the one hand, not

exercised or otherwise used to intervene in the management of the

issuer and, on the other, disposed of within one year of acquisition;

"regulated market" has the meaning assigned to it under the

Financial Markets Act;

"Regulation (EU) No. 1092/2010" means Regulation (EU) No.

1092/2010 of the European Parliament and of the Council of 24

November 2010 on European Union macro-prudential oversight of the

financial system and establishing a European Systemic Risk Board, as

amended from time to time, and includes any implementing measures

that have been or may be issued thereunder;

"Regulation (EU) No. 1093/2010" means Regulation (EU) No.

1093/2010 of the European Parliament and of the Council of 24

November 2010 establishing a European Supervisory Authority

(European Banking Authority), amending Decision No. 716/2009/EC

and repealing Commission Decision 2009/78/EC, as amended from

time to time, and includes any implementing measures that have been

or may be issued thereunder;

"Regulation (EU) No. 1094/2010" means Regulation (EU) No.

1094/2010 of the European Parliament and of the Council of 24

November 2010 establishing a European Supervisory Authority

(European Insurance and Occupational Pensions Authority), amending

Decision No. 716/2009/EC and repealing Commission Decision 2009/

79/EC, as amended from time to time, and includes any implementing

measures that have been or may be issued thereunder;

"Regulation (EU) No 1095/2010" refers to Regulation (EU) No

1095/2010 of the European Parliament and of the Council of 24

November 2010 establishing a European Supervisory Authority

(European Securities and Markets Authority), amending Decision No

716/2009/EC and repealing Commission Decision 2009/77/EC;

"Regulation (EU) No. 1227/2011" means Regulation (EU) No.

1227/2011 of the European Parliament and of the Council of 25

O c t o b e r 2 0 11 o n w h o l e s a l e e n e r g y m a r k e t i n t e g r i t y a n d

transparency;

"Regulation (EU) No. 648/2012" means Regulation (EU) No.

648/2012 of the European Parliament and of the Council of 4 July

2 0 12 o n O T C d e r iv a t iv e s , ce nt r a l co u nt e r p a r ti e s an d t r a de

repositories, as may be amended from time to time, and includes

any implementing measures, implementing technical standards,

regulatory technical standards, guidelines and similar measures that

have been or may be issued thereunder;

"Regulation (EU) No. 1308/2013" means Regulation (EU) No.

1308/2013 of the European Parliament and of the Council of 17

December 2013 establishing a common organisation of the markets

in agricultural products and repealing Council Regulations (EEC) No.

922/72, (EEC) No. 234/79, (EC) No. 1037/2001 and (EC) No. 1234/

2007;

"resolution entity" means the same as the meaning assigned to it in

sub-regulation (1) of regulation 2 of the Recovery and Resolution

Regulations;

"resolution group" means the same as the meaning assigned to it in

sub-regulation (1) of regulation 2 of the Recovery and Resolution

Regulations;

"Solvency II Directive" means Directive 2009/138/EC of the

European Parliament and of the Council of 25 November 2009 on

t h e tak in g- up a n d p ur s ui t of t he bu s in e s s o f In s ur a nc e an d

Reinsurance, as amended from time to time, and includes any

implementing measures that have been or may be issued thereunder;

"structured finance products" means those securities created to

securitise and transfer credit risk associated with a pool of financial

assets entitling the security holder to receive regular payments that

depend on the cash flow from the underlying assets;

"sub-consolidated basis" means the same as the meaning assigned

to it in point (49) of Article 4(1) of the CRR;

"subsidiary" has the same meaning as that given to the term by

article 2 of the Companies Act;

"systemic risk" means systemic risk as defined in point (10) of

Article 3(1) of the CRD;

"third country" means a country which is not a Member State or

an EEA State;

"trading venue" means a regulated market, an MTF or an OTF;

"UCITS" means undertakings for collective investment in

transferable securities in terms of the UCITS Directive as defined

herein;

"UCITS Directive" means Directive 2009/65/EC of the European

Parliament and of the Council of 13 July 2009 on the coordination

of laws, regulations and administrative provisions relating to

undertakings for collective investment in transferable securities

(UCITS) (recast), as amended from time to time, and includes any

implementing measures that have been or may be issued thereunder;

"UCITS management company" means a management company as

defined in point (b) of Article 2(1) of the UCITS Directive;

"unit" means any representation of the rights and interests of

participants in a collective investment scheme;

"wholesale energy product" means wholesale energy products as

defined in point (4) of Article 2 of Regulation (EU) No. 1227/2011;

"working days" shall not include Saturdays and the days referred

to in the National Holidays and Other Public Holidays Act.

(1A) For the purposes of applying the requirements and

supervisory powers laid down in this Act and any regulations and

Investment Services Rules made or issued thereunder transposing the

CRD, in any binding legal instruments issued under the CRD, or in the

CRR, on a consolidated or sub-consolidated basis in accordance with

this Act and any regulations and Investment Services Rules made or

issued thereunder transposing the CRD, any binding legal instruments

issued under the CRD, and in accordance with the CRR, the terms

"institution", "parent institution", "EU parent institution" and "parent

undertaking" shall also include

(a) financial holding companies and mixed financial

holding companies that have been granted approval in

accordance with article 10CA of this Act and, or

Article 21a of the CRD;

(b) designated institutions controlled by an EU parent

financial holding company, an EU parent mixed

financial holding company, a parent financial holding

company in a Member State or a parent mixed

financial holding company in a Member State where

the relevant parent is exempted in accordance with

article 10CA(5) of this Act and, or Article 21a(4) of

the CRD

(c) financial holding companies, mixed financial holding

companies or institutions designated pursuant to

article 16AA(1)(f) of this Act and, or Article 21a(6)(d)

of the CRD

Provided that for the purposes of this sub-article

(i)

the term "control" means the same as the

meaning assigned to it in point (37) of Article

4(1) of the CRR, and the term "controlled" shall

be construed accordingly

(ii) the term "institution" means the same as the

meaning assigned to it in point (3) of Article

4(1) of the CRR.

(1B) Reference to the "approval" of financial holding companies

or mixed financial holding companies in this Act and any regulations

and, or Investment Services Rules issued thereunder, means an

approval granted by the competent authority in terms of article 10CA

of this Act or an approval granted through the joint decision of the

competent authority and any European regulatory authority in terms of

article 10CA of this Act and Article 21a of the CRD as the case may

be.

(1C) Reference to the "exemption" of financial holding

companies or mixed financial holding companies in this Act and any

regulations and, or Investment Services Rules issued thereunder,

means an exemption granted by the competent authority in terms of

article 10CA of this Act or an exemption granted through the joint

decision of the competent authority and any European regulatory

authority in terms of article 10CA of this Act and Article 21a of the

CRD, as the case may be.

(2) In this Act and in any regulations made thereunder, if there

is any conflict between the English and Maltese texts, the English

text shall prevail.

(3) The objective of this Act is, in part, to transpose and

implement the provisions of the AIFM Directive, the BRRD, the

CRD, the MIFID, the MiFIR and the UCITS Directive, and any EU

Regulations or Directives on financial services and consequently this

Act and any regulations adopted thereunder shall be interpreted and

applied accordingly.

(1) The competent authority shall carry out its functions

under this Act and, in particular, shall ensure compliance with the

provisions of this Act.

(2) The competent authority shall also carry out the functions and

duties as competent authority for all purposes of the AIFM Directive,

the CRD, the CRR, the DLT Pilot Regime Regulation, the MIFID, the

MiFIR, the UCITS Directive, the IF D and the I FR, and the

Commission of the European Union, ESMA, the EBA and European

regulatory authorities shall be informed accordingly.

(2A) The competent authority shall have the expertise, resources,

operational capacity, powers and independence necessary to carry out

its functions and exercise its powers at law.

(3) Without prejudice to any other duty arising from this Act,

the AIFM Directive, the DLT Pilot Regime Regulation, the MIFID the

MiFIR, the UCITS Directive, the IFD or the IFR, the competent

authority shall

(a) notify ESMA of the complaint and redress procedures

which are available in Malta;

(b) notify the Commission of the European Union, ESMA

and the other European regulatory authorities that it is

the contact point in terms of article 17(1) and that it is

the authority designated to receive requests for

exchange of information or cooperation in terms of

this Act;

(c) send to ESMA and to the Commission of the European

Union, a list of the categories of bonds referred to in

Article 54(1) of the UCITS Directive together with the

categories of issuers authorised, in accordance with

the laws and supervisory arrangements mentioned in

that sub-paragraph, to issue bonds complying with the

criteria set out in Article 54 of the UCITS Directive. A

notice specifying the status of the guarantees offered

shall be attached to those lists;

(d) ensure that all information received under the third

paragraph of Article 51 of the UCITS Directive

aggregated in respect of all the management or

investment companies they supervise is accessible to

ESMA in accordance with Article 35 of Regulation

(EU) No 1095/2010, and ESRB in accordance with

Article 15 of Regulation (EU) No 1092/2010 for the

purpose of monitoring systemic risks at European

Union level;

(e) subject to the conditions laid down in Article 35 of

Regulation (EU) No 1095/2010, provide ESMA and

the ESRB with aggregated information relating to the

activities of AIFMs under their responsibility;

(f)

provide ESMA and other European regulatory

authorities with any information required for the

purposes of carrying out its duties under the AIFM

Directive.

(4) Without prejudice to the functions, powers and duties

assigned to the competent authority by means of this Act, the

competent authority shall also have the functions, powers and

duties assigned to it under the Malta Financial Services Authority

Act and under any regulations made thereunder for the purposes of

transposing the provisions of the BRRD.

LICENSING REQUIREMENTS

(Article 2)

Instruments

1. Transferable Securities.

Those classes of securities which are negotiable on the capital

market and include

(a) shares in companies and other securities equivalent to

shares in companies, partnerships or other entities, and

depository receipts in respect of shares;

(b) bonds or other forms of securitised debt, including

depository receipts in respect of such securities;

(c) any other securities giving the right to acquire or sell

any such transferable securities or giving rise to a cash

settlement determined by reference to transferable

securities, currencies, interest rates or yields,

commodities or other indices or measures.

2. Money Market Instruments.

Those classes of instruments which are normally dealt in on the

money market, such as treasury bills, certificates of deposit and

commercial papers and excluding instruments of payment.

3. Units in collective investment schemes.

Options, futures, swaps, forward rate agreements and any

other derivative contracts relating to securities, currencies, interest

rates or yields, emission allowances or other derivative instruments,

financial indices or financial measures which may be settled

physically or in cash.

5. Options, futures, swaps, forwards and any other derivative

contracts relating to commodities that must be settled in cash or

may be settled in cash at the option of one of the parties other than

by reason of default or other termination event;

6. Options, futures, swaps, and any other derivative contracts

relating to commodities, that can be physically settled provided that

they are traded on a regulated market, within the meaning of the

Financial Markets Act a Multilateral Trading Facility, or an

Organised Trading Facility, except for wholesale energy products

traded on an Organised Trading Facility that must be physically

settled;

7. Options, futures, swaps, forwards and any other derivative

contracts relating to commodities, that can be physically settled,

are not for commercial purposes, are not included in article 6 of

this S chedule, and, which h av e the characteristics of other

derivative instruments.

8. Derivative instruments for the transfer of credit risk.

9. Rights under a contract for differences or under any other

contract the purpose or intended purpose of which is to secure a

profit or avoid a loss by reference to fluctuations in the value or

designated for that purpose in the contract.

10. Options, futures, swaps, forward rate agreements and any

other derivative contracts relating to climatic variables, freight rates or

inflation rates or other official economic statistics that must be settled

in cash or may be settled in cash at the option of one of the parties

other than by reason of default or other termination event, as well as

any other derivative contracts relating to assets, rights, obligations,

indices and measures not otherwise mentioned in this Schedule, which

have the characteristics of other derivative financial instruments,

having regard to whether, inter alia, they are traded on a regulated

market, OTF, or an MTF;

11. Certificates or other instruments which confer property

rights in respect of any instrument falling within this Schedule.

12. Foreign exchange acquired or held for investment

purposes.

13. Emission allowances consisting of any units recognised for

compliance with the requirements of Directive 2 0 0 3 / 8 7 / E C

(Emissions Trading Scheme).

(1) No person shall provide, or hold himself out as

providing, an investment service in or from within Malta unless he

is in possession of a valid investment services licence.

(2) No body corporate, unincorporated body or association

formed in accordance with or existing under the laws of Malta,

shall provide or hold itself out as providing an investment service

in or from within a country, territory or other place outside Malta

unless it is in possession of a valid investment services licence.

(3) The competent authority may by notice in writing to any

person determine that -

(a) a service falls within the First Schedule when provided

in relation to an instrument;

(b) an instrument, contract or right falls within the Second

Schedule and whether or not issued in Malta; or

(c) a service falls within the Third Schedule;

and subject to any appeal under article 19 with respect to such

person the determination by the Competent Authority unless over

ruled by the Tribunal shall be conclusive for all purposes of this

Act.

(Article 2)

Ancillary Services

1. Safekeeping and administration of financial instruments

for the account of clients, including custodianship and related

services such as cash, collateral management and excluding

maintaining securities accounts at the top tier level;

2. Granting credits or loans to an investor to allow him to

carry out a transaction in one or more financial instruments, where

the firm granting the credit or loan is involved in the transaction;

3. Advice to undertakings on capital structure, industrial

strategy and related matters and advice and services relating to

mergers and the purchase of undertakings;

4. Foreign exchange services where these are connected to the

provision of investment services;

5. Investment research and financial analysis or other forms

of general recommendation relating to transactions in financial

instruments;

6. Services related to underwriting;

7. Investment services and activities as well as ancillary

services of the type included under Section A or B of Annex 1

related to the underlying of the derivatives included under points

(5), (6), (7) and (10) of Section C of MIFID where these are

connected to the provision of investment or ancillary services.

(1) Subject to the provisions of sub-article (3), no

collective investment scheme shall issue or create any units or

carry on any activity in or from within Malta unless there is in

respect of it a valid collective investment scheme licence.

(2) Subject to the provisions of sub-article (3), no collective

investment scheme formed in accordance with or existing under the

laws of Malta shall issue or create any units or carry on any activity

in or from within a country, territory or other place outside Malta

unless there is in respect of it a valid collective investment scheme

licence.

(3) No collective investment scheme shall be precluded by the

provisions of sub-article (1) from issuing or creating such units or

from taking such steps as may be necessary for the incorporation

or, as the case may be, the establishment of the scheme or from

taking such steps as may be necessary for securing the

authorisation of the scheme by the competent authority.

APPLICATION, GRANT, REVOCATION, ETC., OF LICENCES

An application for a licence shall be made in the form and

manner required by the competent authority and shall furthermore -

(a) contain or be accompanied by such information and

particulars, in addition to those required by this article,

as the competent authority may require or as may be

prescribed;

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

the competent authority, or as may be prescribed;

(c) contain the address in Malta for service on the

applicant of any notice or other document required or

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

(d) in the case of an investment services licence, be

accompanied by a programme of operations setting out

such matters as may be required to be set out by the

competent authority from time to time;

(e) in the case of a collective investment scheme licence,

specify the nature of the collective investment scheme

concerned; and

(f)

be accompanied by such fee as may be prescribed in

respect of the licence applied for.

(1) The competent authority may grant or refuse to grant a

licence applied for under this Act

Provided that the competent authority shall not -

(a)

(i)

grant an investment services licence unless it is

satisfied that the applicant is a fit and proper

person to provide the investment services

concerned and that the applicant will comply

with and observe regulations made under this Act

as well as any Investment Services Rules and any

Conduct of Business Rules issued by the

competent authority made under this Act and

which are applicable to him;

(ii) grant an investment services licence for the

provision of any investment service other than

acting as trustee or custodian in relation to a

collective investment scheme

(a) if the applicant is a body corporate, unless

it has both its head office and registered

office in Malta;

(b) if the applicant is a body corporate with no

registered office under its national law,

unless it has its head office in Malta; or

(c) if the applicant is not a body corporate

unless the applicant’s head office is in

Malta;

(iii) grant an investment services licence solely for

the provision of an ancillary service;

(b) grant a collective investment scheme licence unless it

is satisfied that the scheme will comply in all respects

with any Investment Services Rules and regulations

made under this Act and applicable to it and that its

directors, and officers, or in the case of a trust, its

trustees, are fit and proper persons to carry out the

functions required of them in connection with the

scheme;

(c) grant a licence to an applicant unless the relevant

European regulatory authorities have been consulted in

the instances referred to in article 17C;

(d) grant a licence to an applicant if there are objective

and demonstrable grounds for believing that the

INVESTMENT SERVICES

management body of the applicant may pose a threat to

its effective, sound and prudent management and to the

adequate consideration of the interest of its clients and

the integrity of the market;

(e) grant a licence to an applicant unless it is satisfied that

the members of the management body of the applicant

are of sufficiently good repute, possess sufficient

knowledge, skills and experience and commit sufficient

time to perform their functions with the applicant;

(f)

grant a licence to an applicant which has an investment

holding company or a mixed financial holding company

as its parent undertaking unless it is satisfied that the

members of the management body of such parent

undertaking are of sufficiently good repute and possess

sufficient knowledge, skills and experience to effectively

perform their duties, taking into account the specific role

of an investment holding company or mixed financial

holding company.

(2)

(a) In granting a licence the competent authority may

subject it to such conditions as it may deem

appropriate, and having granted a licence it may, from

time to time, vary or revoke any condition so imposed

or impose new conditions.

(b) For the better carrying out of the provisions of this

Act, and to transpose, implement and give effect to the

provisions and requirements of Directives, Regulations

and other legislative matters of the European Union

requiring transposition or implementation, the

competent authority may, from time to time, issue and

publish Investment Services Rules and Conduct of

Business Rules which shall be binding on licence

holders and others as may be specified therein. Such

Investment Service Rules and Conduct of Business

Rules may lay down additional requirements and

conditions in relation to activities of licence holders,

the conduct of their business, their relations with

customers, the public and other parties, their

responsibilities to the competent authority, reporting

requirements, financial resources, capital adequacy

and related requirements, and any other matters as the

competent authority may consider appropriate.

(3) When considering whether to grant or refuse to grant a

licence the competent authority shall, in particular, have regard to -

(a) the protection of investors and the general public;

(b) the protection of the reputation of Malta taking into

account Malta’s international commitments;

(c) the promotion of competition and choice; and

(d) in the case of a collective investment scheme licence,

the reputation and suitability of the applicant and all

other parties connected with the scheme.

(4) (a) Every investment services licence shall specify the

investment service which the holder thereof has been authorised to

provide, and shall, where applicable, cover one or more of the

ancillary services set out in the Third Schedule;

(b) Every collective investment scheme licence shall specify

the class of collective investment scheme to which the

licence relates.

(5) Without prejudice to the generality of sub-article (2), the

conditions to which the competent authority shall subject a licence

may be made applicable, or be prescribed to be applicable, to -

(a) all investment services licences or all collective

investment scheme licences, as the case may be;

(b) certain types of licences;

(c) all licences granted to certain types of licence holders;

(d) all licences in relation to particular services or

schemes, as the case may be.

(6) Within six months from the date of the submission of a

properly completed application form together with the requisite

documentation, the competent authority shall inform an applicant

in writing of its decision whether or not to grant a licence

Provided that, the competent authority shall inform a

UCITS management company which has submitted an application

for authorisation of a UCITS or where applicable a self-managed

UCITS, in writing, within two months of the submission of a

complete application whether or not the collective investment

scheme has been authorised. Where an investment company has not

designated a management company, this proviso shall not apply and

the first paragraph of this sub-article shall apply

Provided further that the competent authority shall inform

an AIFM in writing within three months of the submission of a

complete application whether or not authorisation has been granted.

The competent authority may prolong this period for up to three

additional months where it considers it necessary due to the

specific circumstances of the case and after having notified the

AIFM accordingly.

(7) Any requirement in this Act that a person be a fit and

proper person to carry out certain activities or functions shall be

interpreted as a requirement not only that such person be a fit and

proper person to carry out such activities or functions, but also that

any qualifying shareholder or members, director of officer of such

person, and, in the case of a trust, each one of its trustees, be a fit

and proper person to carry out such activities or functions.

(8)

(a) Where close links exist between an applicant and any

other person the competent authority shall

(i)

only grant a licence if it considers that such

close links do not prevent it from exercising

effectively its supervisory functions; and

INVESTMENT SERVICES

(ii) 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.

(b) The competent authority may from time to time, by

means of Investment Service Rules under this Act

define the circumstances in which "close links" are to

be regarded as existing between any two or more

persons.

(9) The competent authority shall establish a register of all

holders of an investment services licence. This register, which shall

be publicly available, shall also indicate the services in relation to

which each investment services licence was issued and shall be

updated on a regular basis.

(10) The competent authority shall notify ESMA whenever an

investment services licence has been granted by the competent

authority in terms of this article.

(1) The competent authority may at any time cancel or

suspend a licence in accordance with the provisions of this Act.

(2) In the case of an investment services licence, the competent

authority may cancel or suspend a licence -

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

proper person to provide the investment service he is

authorised to provide; or

(b) if it considers that the holder thereof does not fulfil the

requirements of, or has contravened, any of the

provisions of this Act or regulations made thereunder or

of any applicable Investment Services Rules or Conduct

of Business Rules issued by the competent authority, or

has failed to satisfy or comply with any obligation or

condition to which he or the licence is subject by

virtue of or under this Act; or

(c) if the competent authority has been furnished by or on

behalf of the licence holder with information which is

false, inaccurate or misleading, or if the licence holder

has obtained the licence by making false statements or by

any other irregular means; or

(d) if the licence holder has not commenced to provide the

service he has been authorised to provide within the

time provided for in the licence or has ceased to

provide such service; or

(e) if it considers it desirable to cancel or suspend the

licence for the protection of investors and the general

public, and the reputation of Malta taking into account

Malta’s international commitments; or

(f)

at the request of the licence holder; or

(g) in any of the circumstances under which the competent

authority would have been precluded from issuing the

licence under this Act or where under this Act it would

have been entitled to refuse the grant of such licence; or

(h) if the licence holder is declared bankrupt, or goes into

liquidation, or makes a composition with its creditors, or

is otherwise dissolved.

(3) In the case of a collective investment scheme licence, the

competent authority may cancel or suspend a licence -

(a) if it considers that the directors, officers or trustees of

the scheme are not fit and proper persons to carry out

the functions required of them in connection with the

scheme; or

(b) if it considers that the scheme to which the licence

refers does not fulfil the requirements of any provision

of this Act or of any Investment Services Rules or

regulations made thereunder, or there has been a

contravention of any such provision as aforesaid, or an

obligation or condition to which the scheme or the

licence is subject by virtue of or under this Act has not

been satisfied or complied with; or

(c) if information has been furnished to the competent

authority by or on behalf of or in relation to the

scheme which is false, inaccurate or misleading; or

(d) if the scheme has not commenced the activities which

it was authorised to carry on within the time provided

for in the licence or has ceased to carry on such

activities; or

(e) if it considers it desirable to cancel or suspend the

licence for the protection of investors and the general

public and the reputation of Malta taking into account

Malta’s international commitments; or

(f)

at the request of the manager or trustee or custodian of

the scheme, or their equivalent; or

(g)

if the scheme is declared bankrupt, or goes into

liquidation, or makes a composition with its creditors, or

is otherwise dissolved.

(4) The competent authority shall notify ESMA of any

cancellation of an investment services licence in terms of sub-

article (2).

(1)

Where the competent authority proposes -

(a) to vary any condition to which the licence is subject or

to impose a condition thereon; or

(b) to refuse an application for a licence or to cancel or

suspend a licence,

it shall give the applicant or, as the case may be, the licence holder

or the manager and trustee or custodian of a collective investment

scheme, or their equivalent, notice in writing of its intention to do

so, setting out the reasons for the decision it proposes to take.

(2) Every notice given under sub-article (1) shall state that the

recipient of the notice may, within such reasonable period after the

service thereof as may be stated in the notice (being a period of not

less than forty-eight hours and not longer than thirty days), make

representations in writing to the competent authority giving reasons

why the proposed decision should not be taken, and the competent

authority shall consider any representation so made before arriving

at a final decision.

(3) The competent authority shall as soon as practicable notify

its final decision in writing to any of the persons to whom notice is

to be given under sub-article (1).

(1)

The competent authority may decide to apply the

requirements of the CRR pursuant to point (c) of the first sub-

paragraph of Article 1(2) of the IFR to an investment firm to carry out

any of the activities listed in points (3) and (6) of Section A of Annex I

to MiFID, where the total value of the consolidated assets of such

investment firm is equal to or exceeds five billion euro

(€5,000,000,000), calculated as an average of the previous twelve (12)

months, and one or more of the following criteria apply

(a) such investment firm carries out those activities on

such a scale that the failure or the distress of the

investment firm could lead to systemic risk;

(b) the investment firm is a clearing member as defined in

point (3) of Article 4(1) of the IFR, or

(c)

the competent authority considers it to be justified in

light of the size, nature, scale and complexity of the

activities of the investment firm concerned, taking into

account the principle of proportionality and having

regard to one or more of the following factors

(i)

the importance of the investment firm for the

economy of Malta or of the European Union;

(ii)

the significance of the investment firm’s cross-

border activities;

(iii)

the interconnectedness of the investment firm

with the financial system.

(2)

Sub-article (1) shall not apply to commodity and emission

allowance dealers, collective investment undertakings or insurance

undertakings.

(3)

Where the competent authority decides to apply the

requirements of the CRR to an investment firm in accordance with

sub-article (1), that investment firm shall be supervised for compliance

with prudential requirements under Titles VII and VIII of the CRD as

transposed in national law.

(4)

Where the competent authority decides to revoke a decision

taken in accordance with sub-article (1), it shall inform the investment

firm without delay

Provided that, any decision taken by the competent authority

under sub-article (1) shall cease to apply where an investment firm no

longer meets the threshold referred to in that sub-article, calculated

over a period of twelve consecutive months.

(5)

For the purposes of this article, the term "investment firm"

means an investment firm licensed under this Act.

(6)

The competent authority shall inform the EBA without

delay of any decision taken pursuant to sub-articles (1), (3) and (4).

OBLIGATIONS OF LICENCE HOLDERS AND OTHERS

(1) The holder of an investment services licence, an

investment holding company or mixed financial holding company and

the manager of a collective investment scheme which has been

licensed under this Act, or any other person having responsibility

for the day to day administration or management of such a scheme,

shall provide the competent authority with particulars of any

changes in the information provided under this Act as soon as such

holder, manager or person becomes aware of such changes and

shall notify the competent authority, on a continuous basis, of any

changes or circumstances which give rise to the existence of close

links within the meaning in article 6.

(2) Every holder of a licence shall pay to the competent

authority such periodic fee, and within such time, as may from time

to time be prescribed.

(1) Any person who in Malta or from Malta provides to

licence holders in Malta, or to equivalent authorised persons and

schemes overseas, administrative services which do not themselves

constitute licensable activity under this Act, shall be required to

apply for recognition by the competent authority under this article,

and no person shall provide such services unless he is so

recognised.

(2) The competent authority may from time to time, issue

Investment Service Rules laying down the requirements and

conditions for granting recognition, providing for the refusal of

recognition and for the variation, cancellation and supervision of

reco gn iti on and g enerall y reg ulat in g the prov isio n of such

administrative services. Such Investment Service Rules may in

particular include provision for the following matters

(i)

establishing

which

activities

constitute

administrative services for the purposes of this

article;

(ii) the form and the content of applications to the

competent authority for recognition;

(iii) the application, annual and other fees payable in

respect of recognition;

(iv)

the obligation to supply documentation and

other information to the competent authority;

(v)

measures to allow the competent authority to

ensure compliance by recognised administrators

with this Act and Investment Service Rules

issued thereunder;

(vi)

arrangements for the exchange of information

with other regulatory bodies both in Malta and

overseas;

(vii) providing for the mutual recognition of persons

recognised as fit to provide such services outside

Malta;

(viii) to provide for the imposition of administrative

penalties up to a maximum of forty-five

thousand euro (€45,000) or for other

administrative sanctions in case of any breach of

the provisions of this article or of the applicable

Investment Services Rules or of any of the

conditions attached to a recognition certificate,

where any;

(ix) generally any other matter ancillary or

connected with the above.

(3) Where the competent authority refuses, varies, cancels or

suspends a recognition issued in terms of this article or imposes an

administrative penalty in terms of the applicable Investment

Services Rules, an appeal shall lie to the Financial Services

Tribunal and the provisions of article19(3) shall apply to such

appeal.

(1) Notwithstanding anything contained in an any other

law, any person or persons acting in concert (hereinafter referred to

in this Act as the "proposed licence acquirer") who have taken a

decision either to -

(a) acquire, directly or indirectly, a qualifying

shareholding in an investment services licence holder;

(b) increase, directly or indirectly, an existing

shareholding which is not a qualifying shareholding so

as to cause it to become a qualifying shareholding in

an investment services licence holder; or

(c) further increase, directly or indirectly, such qualifying

shareholding in an investment services licence holder

as a result of which the proportion of the voting rights

or of the capital held would reach or exceed twenty per

centum, thirty per centum or fifty per centum or so that

the investment services licence holder would become

its subsidiary,

(hereinafter referred to in this Act as the "proposed acquisition"),

shall notify the competent authority in writing of any such decision,

indicating the size of the intended shareholding and providing any

relevant information as and in the manner that the competent

authority may by Investment Services Rules require, including the

form in which such notification shall be made and the criteria

adopted by the competent authority in determining whether such

person is a fit and proper person.

(2) Notwithstanding anything contained in any other law, any

person who has taken a decision either to -

(a) dispose, directly or indirectly, of a qualifying

shareholding in an investment services licence holder;

(b) reduce, directly or indirectly, a qualifying

shareholding so as to cause it to cease to be a

qualifying shareholding; or

(c) reduce, directly or indirectly, a qualifying

shareholding so that the proportion of the voting rights

or of the capital held would fall below twenty per

centum, thirty per centum or fifty per centum or so that

the investment services licence holder would cease to

be its subsidiary,

shall notify the competent authority in writing of any such decision

indicating the size of the intended shareholding and providing any

relevant information as and in the manner that the competent

authority may, by Investment Services Rules require.

(3) Sub-articles (1) and (2) shall apply irrespective of whether

or not any of the relevancy shares listed on a regulated market

within the meaning of the Financial Markets Act or on an

equivalent market which is not situated in a Member State or an

EEA State.

(4) It shall be the duty of an investment services licence holder

to notify the competent authority forthwith upon becoming aware

that any person has taken any action set out in sub-articles (1) or

(2).

(5) If any person or any investment services licence holder

takes or decides to take any action set out in sub-articles (1) or (2)

without notifying the competent authority or obtaining its approval

in terms of article 10A, then, without prejudice to any other penalty

which may be imposed under this Act, the competent authority

shall have the power to make an order

(a) restraining such person or investment services licence

holder from taking, or continuing with, such action;

(b) declaring such action to be void and of no effect;

(c) requiring such person or investment services licence

holder to take such steps as may be necessary to

restore the position existing immediately before the

action was taken;

(d) restraining such person or investment services licence

holder from exercising any rights which such action

would, if lawful, have conferred upon them, including

the right to receive any payment or to exercise any

voting rights attaching to the shares acquired; or

(e) restraining such person or investment services licence

holder from taking any similar action or any other

action within the categories set out in sub-articles (1)

and (2).

(6) Without prejudice to any other provision of this Act, where

the influence exercised by any person acquiring or proposing to

acquire a qualifying shareholding is, or is likely to, operate against

the sound and prudent management of an investment services

licence holder, the competent authority may issue a notice of

objection and exercise any of the powers assigned to it under this

Act to put an end to such situation, including the power to issue

directives as it may deem reasonable and appropriate in the

circumstances.

(7) A copy of any notice served on the person concerned in

terms of sub-article (6) shall be served on the company to whose

shares it relates.

(8) The competent authority, may, by means of Investment

Services Rules issued under this Act, indicate the circumstances

when persons are to be regarded as "acting in concert".

(1) The competent authority shall, promptly and in any

event within two working days following receipt of the notification

required under article 10(1),as well as following the possible

subsequent receipt of the information referred to in sub-article (4),

acknowledge receipt thereof in writing to the proposed acquirer.

(2) The competent authority shall have a maximum of sixty

working days as from the date of the written acknowledgement of

receipt of the notification required under article 10(1) and all

documents required by the competent authority to be attached to

such notification (hereinafter referred to in this Act as the

"assessment period") to carry out an assessment on the basis of

such information as may be determined by Investment Services

Rules issued for this purpose.

(3) The competent authority shall inform the proposed acquirer

of the date of the expiry of the assessment period at the time of

acknowledging receipt.

(4) The competent authority may, during the assessment period

and no later than the fiftieth working day of such period, request

any further information that is necessary to complete the

assessment. Such a request shall be made in writing and shall

specify the additional information needed.

(5) During the period between the date of request for additional

information by the competent authority and the receipt of a

response thereto by the proposed acquirer, the assessment period

shall be interrupted. The interruption period shall not exceed

twenty working days. Any further requests by the competent

authority for completion or clarification of the information shall be

at its discretion but shall not result in an interruption of such

period.

(6)

The competent authority may extend the interruption

referred to in sub-article (5) up to thirty working days if the

proposed acquirer is

(a) a natural or legal person situated or regulated in

countries that are not Member States or EEA States; or

(b) a natural or legal person not subject to supervision under

the MIFID, the UCITS Directive, the CRD, the IFD, or

the Solvency Directive.

(7) The competent authority shall, upon completion of the

assessment referred to in sub-article (2) and not later than the date

of the expiry of the assessment period, issue a notice

(a) granting unconditional approval to the proposed

acquisition;

(b) granting approval to the proposed acquisition subject

to such conditions as the competent authority may

deem appropriate; or

(c) refusing the proposed acquisition.

(8) In making the assessment referred to in sub-article (2), the

competent authority shall neither impose any prior conditions in

respect of the level of shareholding that must be acquired nor

examine the proposed acquisition in terms of the economic needs of

the market.

(9) The competent authority may refuse the proposed

acquisition only if there are reasonable grounds for doing so on the

basis of the criteria set out in the Investment Services Rules

referred to in article 10(1) or if the information provided by the

proposed acquirer is incomplete.

(10) If the competent authority decides to refuse the proposed

acquisition, it shall, within two working days, and not exceeding

the assessment period, inform the proposed acquirer in writing

specifying the reasons for such decision. The competent authority

may, whether at the request of such proposed acquirer or not, issue

a public statement indicating such reasons.

(11) If the competent authority does not refuse the proposed

acquisition in writing within the assessment period, such proposed

acquisition shall be deemed to be approved.

(12) Without prejudice to the provisions of article 22, where a

qualifying shareholding in an investment services licence holder is

acquired notwithstanding the refusal of the competent authority, the

exercise of the corresponding voting rights shall be suspended and

any of the votes cast in contravention of this sub-article shall be

null and void.

(13) The competent authority may fix a maximum period for

concluding the proposed acquisition and extend it where

appropriate.

(14) Notwithstanding the provisions of sub-articles (1) to (6),

where two or more proposals to acquire or increase qualifying

shareholdings in the same investment services licence holder have

been notified to the competent authority, the latter shall treat the

proposed acquirers in a non-discriminatory manner.

(1) The competent authority shall work in full

consultation with the European regulatory authorities or overseas

regulatory authorities when carrying out the assessment referred to

in article 10A(2) if the proposed acquirer is one of the following

(a) a credit institution, insurance undertaking, reinsurance

undertaking, investment firm or UCITS management

company authorised in another Member State or EEA

State or in a sector other than that in which the

acquisition is proposed;

(b) the parent undertaking of a credit institution, insurance

undertaking, reinsurance undertaking, investment firm

or UCITS management company authorised in another

Member State or EEA State or in a sector other than

that in which the acquisition is proposed;

(c) a person controlling a credit institution, insurance

undertaking, reinsurance undertaking, investment firm

or UCITS management company authorised in another

Member State or EEA State or in a sector other than

that in which the acquisition is proposed.

(2) The competent authority shall, without undue delay,

provide any information which is essential or relevant for the

assessment referred to in article 10A(2) to the European regulatory

a ut h o r it y o r o ve r s e a s r e g ul a to r y a u th o r it y r e q ue s t i ng s u c h

information. Upon request, the competent authority shall

communicate to the European regulatory authority or overseas

regulatory authority all relevant information and shall

communicate on its own initiative all essential information. A

decision by the competent authority in terms of article 10A shall

indicate any views or reservations expressed by the European

regulatory authority or overseas regulatory authority responsible

for the proposed acquirer.

(1) Notwithstanding anything contained in any other law,

and without prejudice to article 10(1) and (2), the consent of the

competent authority given in writing shall be required before an

investment services licence holder may lawfully

(a) sell or dispose of its business or any significant part

thereof;

(b) merge with any other company, whether licensed under

this Act or not;

(c) undergo any reconstruction or division; or

(d) increase or reduce its nominal or issued share capital

or effect any material change in voting rights.

(2) It shall be the duty of all directors and qualifying

shareholders of an investment services licence holder to notify the

competent authority forthwith in writing, upon becoming aware

that such investment services licence holder intends to take any of

the actions set out in sub-article (1).

(3) Within three months of receipt of such notification or

receipt of such information as the competent authority may

lawfully require, whichever is the later, the competent authority

shall issue a notice -

(a) granting unconditional consent to the taking of the

action;

(b) granting consent to the taking of the action subject to

such conditions as the competent authority may deem

appropriate; or

(c) refusing consent to the taking of the action,

and if it refuses to grant consent, it shall inform the person or the

investment services licence holder concerned in writing for the

reason for its refusal.

(4) If any person or any investment services licence holder

takes or decides to take any action set out in sub-article (1) without

obtaining the consent of the competent authority, then, without

prejudice to any other penalty which may be imposed under this

Act, the competent authority shall have the power to make an

order

(a) restraining such person or investment services licence

holder from taking, or continuing with, such action;

(b) declaring such action to be void and of no effect;

(c)

requiring such person or investment service licence

holder to take such steps as may be necessary to

restore the position existing immediately before the

action was taken;

(d) restraining such person or investment services licence

holder from exercising any rights which such action

would, if lawful, have conferred upon them, including

the right to receive any payment or to exercise any

voting rights attaching to the shares acquired;

(e) restraining such person or investment services licence

holder from taking any similar action or any other

action within the categories set out in sub-article (1).

(1) Parent financial holding companies, parent mixed

financial holding companies, EU parent financial holding companies

and EU parent mixed financial holding companies, which are

established in Malta or in another Member State or EEA State and

which have an investment firm as a subsidiary, shall seek the approval

or exemption, as the case may be, of the competent authority acting, as

the consolidating supervisor, in accordance with this article. Other

financial holding companies or mixed financial holding companies,

established in Malta or in another Member State or EEA State and

which have an investment firm as a subsidiary, shall seek the approval

or exemption, as the case may be, of the competent authority, acting as

the consolidating supervisor, in accordance with this article where they

are required to comply with the C R D or the C R R on a sub-

consolidated basis

Provided that in accordance with article 10D where the

competent authority is not the consolidating supervisor, financial

holding companies and mixed financial holding companies established

in Malta and which have an investment firm as a subsidiary, shall seek

the approval or exemption, as the case may be, of the consolidating

supervisor determined in accordance with Article 111 of the CRD.

(2)

For the purposes of seeking an approval or exemption, as

the case may be, in terms of sub-article (1), financial holding

companies and mixed financial holding companies referred to therein

shall, where

(a) the competent authority is not the consolidating

supervisor but the financial holding company or the

mixed financial holding company is established in

Malta; or

(b) the financial holding company or the mixed financial

holding company is established in a Member State or

an EEA State other than Malta and the competent

authority is the consolidating supervisor,

provide the competent authority with the following information

(a) the structural organisation of the group of which the

financial holding company or the mixed financial

holding company, as the case may be, forms part, with

a clear indication of its subsidiaries and, where

applicable, parent undertakings, and the location and

type of activity undertaken by each of the entities

within the group;

(b) information regarding the nomination of at least two

persons effectively directing the financial holding

company or mixed financial holding company, as the

case may be, and compliance with the requirements on

the qualification of directors set out in Investment

Services Rules;

(c) the internal organisation and distribution of tasks

within the group;

(d) any other information that may be necessary to carry

out the assessments referred to in sub-articles (3) and

(4) as may be requested by the competent authority.

(3)

All applications for an approval or exemption, as the case

may be, in terms of this article shall be in such form and accompanied

by such information and shall conform with any such requirements as

may be established, from time to time, by Investment Services Rules.

(4)

Approval may be granted to a financial holding company or

a mixed financial holding company, as the case may be, pursuant to

this article only where all of the following conditions are fulfilled

(a) the internal arrangements and distribution of tasks

within the group are adequate for the purpose of

complying with the requirements imposed by this Act

and any regulations made and Investment Services

Rules issued thereunder transposing the CRD and by

the CRR on a consolidated or sub-consolidated basis

and, in particular, are effective to

(i)

coordinate all the subsidiaries of the financial

holding company or mixed financial holding

company, as the case may be, including, where

necessary, through an adequate distribution of

tasks among subsidiary institutions;

(ii) prevent or manage intra-group conflicts

(iii) enforce the group-wide policies set by the parent

financial holding company or parent mixed

financial holding company throughout the

group;

(b) the structural organisation of the group of which the

financial holding company or mixed financial holding

company, as the case may be, is part does not obstruct

or otherwise prevent the effective supervision of the

subsidiary institutions or parent institutions as

concerns the individual, the consolidated and, where

appropriate the sub-consolidated obligations to which

they are subject

Provided that the assessment of this criterion shall take into

account, in particular

(i)

the position of the financial holding company or

the mixed financial holding company, as the

case may be, in a multi-layered group;

(ii) the shareholding structure

(iii) the role of the financial holding company or

mixed financial holding company, as the case

may be, within the group;

(c) the requirements on the qualification of directors laid

down in Investment Services Rules, are complied with.

(5)

An exemption may be granted to a financial holding

company or mixed financial holding company, as the case may be,

pursuant to this article only where all of the following conditions are

(a) the financial holding company’s principal activity is to

acquire holdings in subsidiaries or, in the case of a

mixed financial holding company, its principal activity

with respect to institutions or financial institutions is

to acquire holdings in subsidiaries;

(b) the financial holding company or mixed financial

holding company, as the case may be, has not been

designated as a resolution entity in any of the group’s

resolution groups in accordance with the resolution

strategy determined by the relevant resolution

authority pursuant to the BRRD;

(c) a subsidiary credit institution is designated as

responsible to ensure the group’s compliance with

prudential requirements on a consolidated basis and is

given all the necessary means and legal authority to

discharge those obligations in an effective manner;

(d) the financial holding company or mixed financial

holding company, as the case may be, does not engage

in taking management, operational or financial

decisions affecting the group or its subsidiaries that

are institutions or financial institutions;

(e) there is no impediment to the effective supervision of

the group on a consolidated basis

Provided that where financial holding companies

or mixed financial holding companies are exempted

from approval in accordance with this sub-article, they

shall not be excluded from the perimeter of

consolidation as laid down in the provisions of this Act

and any regulations made and Investment Services

Rules issued thereunder transposing the CRD and in

the CRR.

(6)

Where the competent authority is the consolidating

supervisor, it shall monitor compliance with the conditions referred to

in sub-article (4) or, where applicable, sub-article (5) on an ongoing

basis.

(7)

(a)

Financial holding companies and mixed financial

holding companies shall provide the competent authority, where it is

acting as the consolidating supervisor, with the information required to

monitor on an ongoing basis the structural organisation of the group

and compliance with the conditions referred to in sub-article (4).

(b)

Financial holding companies and mixed financial

holding companies exempted in terms of sub-article (5) shall provide

the competent authority, where it is acting as the consolidating

supervisor, with the information required to monitor on an ongoing

basis the structural organisation of the group and compliance with the

conditions referred to in sub-article (5).

(c)

The competent authority shall share the information

received in terms of this sub-article with the European regulatory

authority where the financial holding company or the mixed financial

holding company, as the case may be, is established.

(8)

Where the competent authority is the consolidating

supervisor and has established that the conditions set out in sub-article

(5) are no longer met, the financial holding company or mixed

financial holding company, as the case may be, shall seek approval in

accordance with this article.

(9)

For the purpose of taking decisions on the approval or the

exemption from approval, as the case may be, referred to in sub-

articles (4), (5) and (8) and, or in sub-articles (3), (4) or (7) of Article

21a of the CRD, where

(i)

the competent authority is not the consolidating

supervisor but the financial holding company or

the mixed financial holding company, as the

case may be, is established in Malta; or

(ii) the financial holding company or the mixed

financial holding company, as the case may be,

is established in a Member State or an EEA State

other than Malta and the competent authority is

the consolidating supervisor,

the competent authority shall work together with the European

regulatory authority acting as the consolidating supervisor or with

the European regulatory authority in the Member State or EEA

State where the financial holding company or the mixed financial

holding company is established, as the case may be, in full

consultation.

(10) Where the competent authority is the consolidating

supervisor, it shall prepare an assessment on the matters referred to in

sub-articles (4), (5) and (8), as applicable, and shall forward that

assessment to the European regulatory authority in the Member State

or EEA State where the financial holding company or the mixed

financial holding company is established, as the case may be.

(11) The competent authority, whether acting as the

consolidating supervisor or whether it is in receipt of an assessment

referred to in Article 21a(8) of the CRD from the European regulatory

authority acting as the consolidating supervisor, shall do everything

within its power to reach a joint decision on the approval or the

exemption from approval, as the case may be, referred to in sub-

articles (4), (5) and (8) and, or in sub-articles (3), (4) and (7) of Article

21a of the CRD, with the European regulatory authority in the

Member State or EEA State where the financial holding company or

the mixed financial holding company is established or with the

European regulatory authority acting as the consolidating supervisor,

as the case may be, within two months of receipt of that assessment

Provided that the joint decision shall be duly documented

and reasoned and where the competent authority is the consolidating

supervisor, it shall communicate the joint decision to the financial

holding company or the mixed financial holding company, as the case

may be.

(12)

In the event of a disagreement between the competent

authority and the European regulatory authority acting as the

consolidating supervisor or the European regulatory authority in the

Member State or EEA State where the financial holding company or

the mixed financial holding company is established, as the case may

be, the competent authority shall refrain from taking the joint decision

referred to in sub-article (11) and shall refer the matter to the EBA in

accordance with Article 19 of Regulation (EU) No. 1093/2010. In

such cases, the competent authority shall adopt a joint decision with

the European regulatory authority acting as the consolidating

supervisor or with the European regulatory authority in the Member

State or EEA State where the financial holding company or the mixed

financial holding company is established, as the case may be, in

conformity with the decision of the EBA

Provided that the matter shall not be referred to the EBA

after the end of the two-month period referred to in sub-article (11) or

after a joint decision has been reached.

(13) In the case of mixed financial holding companies, where the

coordinator appointed in terms of Article 10 of Directive 2002/87/EC

is neither the competent authority, nor the European regulatory

authority acting as the consolidating supervisor, nor the European

regulatory authority in the Member State or EEA State where the

mixed financial holding company is established, the agreement of the

said coordinator shall be required for the purposes of the decisions or

joint decisions referred to in sub-articles (4), (5) and (8) and, or sub-

articles (3), (4) and (7) of Article 21a of the CRD, as applicable.

Where the agreement of the coordinator is required, the competent

authority shall refer any disagreements to the relevant European

Supervisory Authority, namely, to the EBA or the European

Supervisory Authority (European Insurance and Occupational

Pensions Authority) (EIOPA), established by Regulation (EU) No.

1094/2010, which shall take its decision within one month of receipt

of the referral. Any decision taken in accordance with this paragraph

shall be without prejudice to the obligations under Directive 2002/87/

EC or the Solvency II Directive.

(14) Where approval of a financial holding company or mixed

financial holding company, as the case may be, pursuant to this article

is refused and the competent authority is the consolidating supervisor,

the competent authority shall notify the applicant of the decision and

the reasons therefor within four months of receipt of the application, or

where the application is incomplete, within four months of receipt of

the complete information required for the decision. Refusal may be

accompanied, where necessary, by any of the measures referred to in

article 16AA

Provided that a decision to grant or refuse approval shall, in

any event, be taken within six months of receipt of the application.

(15)

For the purposes of this article

(a) the term "financial institution" means the same as the

meaning assigned to it in point (26) of Article 4(1) of

the CRR;

(b) the term "group" means a group as defined in point

(138) of Article 4(1) of the CRR;

(c) the term "institution" means an institution as defined

in point (3) of Article 4(1) of the CRR;

(d) the term "investment firm" means an investment firm

as defined in point (2) of Article 4(1) of the CRR;

(e) the term "parent undertaking" means a parent

undertaking as defined in point (15) of Article 4(1) of

the CRR;

(f)

the term "resolution authority" means an authority

designated by a Member State or an EEA State in

accordance with Article 3 of the BRRD;

(g) the term "subsidiary" means a subsidiary as defined in

point (16) of Article 4(1) of the CRR.

(16) The provisions of this article shall be without prejudice to

the provisions of article 10.

(1)

An investment firm established in Malta which is

part of a third-country group having as part of the same group one or

more credit institution or one or more other investment firm in Malta

or in another Member State or in an EEA State, shall have a single

intermediate EU parent undertaking that is established in Malta or in

another Member State or in an EEA State.

(2)

The competent authority may allow an investment firm

referred to in sub-article (1) to have two intermediate EU parent

undertakings where it determines that the establishment of a single

intermediate EU parent undertaking would

(a)

be incompatible with a mandatory requirement

for separation of activities imposed by the rules or the overseas

regulatory authority of the third country where the ultimate

parent undertaking of the third-country group has its head

office; or

(b)

render resolvability less efficient than in the case

of two intermediate EU parent undertakings according to an

assessment carried out by the relevant resolution authority of

the intermediate EU parent undertaking.

(3)

An intermediate EU parent undertaking shall be a credit

institution licensed in terms of article 7 of the Banking Act or

authorised in accordance with Article 8 of the CRD, or a financial

holding company or mixed financial holding company that has been

granted approval in accordance with article 11B of the Banking Act

and, or Article 21a of the CRD

Provided that, where the third-country group referred to in

sub-article (1) does not have a credit institution within the same group

or where a second intermediate EU parent undertaking must be set up

in connection with investment activities to comply with a mandatory

requirement as referred to in sub-article (2), the intermediate EU

parent undertaking or the second intermediate EU parent undertaking

may be an investment firm which holds an investment services licence

or an investment firm authorised in accordance with Article 5(1) of the

MIFID, that is subject to the BRRD.

(4)

Sub-articles (1), (2) and (3) shall not apply where the total

value of assets in the European Union of the third-country group is less

than forty billion euro (€40,000,000,000).

(5)

For the purposes of this article, the total value of assets in

the European Union of the third-country group shall be the sum of the

following

(a) the total value of assets of each investment firm and

credit institution in the European Union forming part of the

third-country group, as resulting from its consolidated balance

sheet or as resulting from their individual balance sheet, where

their balance sheet is not consolidated

(b)

the total value of assets of each branch of the

third-country group authorised in the European Union in

accordance with the CRD, MIFID or MiFIR.

(6)

The competent authority shall notify the EBA with the

following information in respect of each third-country group operating

in Malta

(a)

the names and the total value of assets of the

credit institutions and investment firms belonging to a third-

country group;

(b)

the names and the total value of assets

corresponding to branches authorised in Malta in accordance

with the provisions of national law transposing the CRD,

MIFID or MiFIR, and the types of activities that they are

licensed to carry out;

(c)

the name and the type as referred to in sub-article

(3) of any intermediate EU parent undertaking set up in Malta

and the name of the third-country group of which it is part.

(7)

An investment firm established in Malta forming part of a

third-country group shall meet at least one of the following conditions

(a)

it has an intermediate EU parent undertaking;

(b)

it is an intermediate EU parent undertaking;

(c)

it is the only investment firm in the European

Union of the third-country group and the third-country group

does not have any credit institutions in the European Union; or

(d)

it is part of a third-country group with a total

value of assets in the European Union of less than forty billion

euro (€40,000,000,000).

(8)

By way of derogation from sub-article (1), where a third-

country group operates through an investment firm established in

Malta and through one or more credit institutions or one or more other

investment firms in the European Union and with a total value of

assets equal to or greater than forty billion euro (€40,000,000,000) on

27 June 2019, the investment firm established in Malta shall ensure

that the intermediate EU parent undertaking referred to in sub-article

(1) or the two intermediate EU parent undertakings referred to in sub-

article (2), as the case may be, shall be established by 30 December

2023. (9)

For the purposes of this article

(a)

the term "branch" means a branch as defined in

point (17) of Article 4(1) of the CRR;

(b)

the term "group" means a group as defined in

point (138) of Article 4(1) of the CRR;

(c)

the term "investment firm" means an investment

firm as defined in point (2) of Article 4(1) of the CRR;

(d)

the term "parent undertaking" means a parent

undertaking as defined in point (15) of Article 4(1) of the CRR;

(e)

the term "resolution authority" means an

authority designated by a Member State or an EEA State in

accordance with Article 3 of the BRRD

(f)

the term "third-country group" means a group of which

the parent undertaking is established in a third country.

11.(1)(a) No collective investment scheme, whether licensed or

not, shall issue or cause to be issued a prospectus in or

from within Malta unless the prospectus has been

approved by the Competent Authority.

(b) No person, other than licence holders, may issue or

cause to be issued an investment advertisement in or

from within Malta unless its contents have been

approved by a licence holder.

(2) The competent authority may, from time to time, issue such

Conduct of Business Rules or directives to licence holders as it may

consider appropriate in order to set minimum standards and

requirements which are to be observed by licence holders when

issuing or approving investment advertisements or issuing a

prospectus in accordance with sub-article (1). Such Conduct of

Business Rules or directives may also include provision for such

exemptions or conditions as may be specified therein and may

make different provision for different cases or classes of cases,

under such terms and conditions as may be prescribed.

(3) The competent authority may impose such conditions,

limitations and restrictions on a licence holder with respect to the

issue or approval of investment advertisements, as it may consider

appropriate.

REGULATORY AND INVESTIGATORY POWERS

(1)(a)Ebda skema ta’ investiment kollettiv, liċenzjata jew le,

ma għandha toħroġ jew iġġiegħel li jinħareġ prospett

f’Malta jew minn Malta kemm-il darba l-prospett ma

jkunx approvat mill-awtorità kompetenti.

(b)

Ebda persuna, barra minn detenturi ta’ liċenza, ma

għandhom joħorġu jew iġiegħlu li jinħareġ reklam

għal investiment f’Malta, kemm-il darba l-kontenut

ma jkunx approvat minn detentur ta’ liċenza.

(2) L-awtorità kompetenti tista’, minn żmien għal żmien,

toħroġ dawk ir-Regoli tal-Kondotta tal-Operat jew direttivi lil

detenturi ta’ liċenza kif, jidhirlha xieraq sabiex tistabbilixxi

standards minimi u ħtiġiet li għandhom ikunu mħarsa minn

detenturi ta’ liċenza meta joħorġu jew japprovaw reklami dwar

investiment jew meta joħorġu prospett skont is-subartikolu (2).

Dawk ir-Regoli tal-Kondotta tal-Operat jew direttivi jistgħu wkoll

jinkludu dispożizzjonijiet għal dawk l-eżenzjonijiet jew

kondizzjonijiet skont kif ikun speċifikat fihom u jistgħu jagħmlu

dispożizzjonijiet differenti għal każijiet differenti jew għal

k l a s s i j i e t t a ’ k a ż i j i e t d i ff e r e n t i , t a ħ t d a w k i l - p a t t i j i e t u l -

kundizzjonijiet li jistgħu jiġu preskritti.

(3) L-awtorità

kompetenti

tista’

timponi

dawk

il-

kondizzjonijiet, limitazzjonijiet u restrizzjonijiet fuq detentur ta’

liċenza dwar il-ħruġ u l-approvazzjoni ta’ reklami ta’ investimenti,

hekk kif jidhrilha xieraq.

SETGĦAT REGOLATORJI U INVESTIGATTIVI

(1) The Minister, acting on the advice of the competent

authority, may make regulations to give effect to the provisions of

this Act, and without prejudice to the generality of the foregoing

may, by such regulations, in particular, do any of the following

(a) amend the definitions of "ancillary services", "collective

investment scheme" and "investment service" in article 2,

as well as the provisions of the First, Second and Third

Schedules;

(b) regulate investment services and collective investment

schemes, as well as services provided and activities

carried on in conjunction therewith or in relation

thereto; providing for any matter he may deem

expedient including the creation and exercise of rights

by or for the benefit of the public, the imposition of

duties and obligations on the holders of a licence or

persons responsible for the management or

administration thereof and the regulation of any fees

and, or any other charges imposed directly or

indirectly on investors; provide for the safekeeping

and custody of the property of collective investment

schemes and for the requirement to appoint a

custodian, and prescribe and regulate in the most

extensive manner the functions, duties, responsibilities

and obligations of the custodian; establish the

qualifications and other eligibility criteria necessary to

act as custodian, including residence qualifications;

provide for the protection of the property of the

schemes in the event of the insolvency of the

custodian, and for the purpose of this paragraph

"custodian" shall include a sub-custodian; require the

keeping of records with respect to the transactions and

financial position of collective investment schemes

and for the inspection of those records, and prescribe

reporting and disclosure requirements, including the

preparation of periodical reports with respect to the

schemes and the furnishing of those reports to the

shareholders, unit-holders or other participants in the

said schemes, and to others; and provide for the

regulation of the free circulation of units of collective

investment schemes and to regulate the management

companies of such schemes;

(c) establish schemes or other arrangements for the

compensation of investors in cases where licence

holders or any types thereof as may be specified, are

unable to satisfy their obligations towards investors or

claims in respect of any liability incurred by them in

connection with the carrying out of any activity in

regard to which they are licensed, and to regulate the

management and the financing of any such schemes or

arrangements and, the contributions and levies to be

paid thereto, to set the minimum and maximum levels

of compensation payable thereunder and may under

such schemes and arrangements distinguish between

different classes of investors and, exclude certain

classes from compensation, and to make provision for

the regulation of and for other aspect related to such

schemes or arrangements and may moreover provide

that such schemes or arrangements as may be

prescribed shall have a legal personality distinct from

that of the contributors thereto and of the competent

authority and provide for the judicial and legal

representation thereof; and such schemes shall be

exempt from the payment of income tax as from the

date of establishment of such schemes;

(d) define the criteria for determining whether a holding is

an indirect holding for the purposes of determining

whether a qualifying shareholding exists;

(e) regulate the promotion or sale by or on behalf of any

person, and by any means, of an investment service or

of a collective investment scheme or of any

instrument, including the criteria and procedures for

the granting or refusing of consent by the competent

authority pursuant to the provisions of article 11 of

this Act;

(f)

amend the provisions of article 18 on the

circumstances in which auditors are obliged to

communicate information to the competent authority,

to prescribe regulations governing the disclosure by

auditors of information pursuant to article 18 and to

establish supervisory and disciplinary procedures for

auditors in respect of their duties under the provisions

of article 18;

(g) regulate the drawing-up, approval, publication and

distribution in Malta of prospectuses relating to the

offer of transferable securities authorised or otherwise

approved, in a country or countries outside Malta and

to make provision for the recognition of such

prospectuses taking into account Malta’s international

INVESTMENT SERVICES

commitments;

(h) provide for and regulate the payment by any person,

body or scheme, as the case may be, of licence or other

fees and such other charges payable to the competent

authority in respect of any matter provided for, by or

under this Act or any regulations made under this article,

including the fees and charges in respect of any

permission,

licence,

authorisation,

registration,

exemption or other benefit, as well as any fees and

charges in respect of the competent authority’s

regulatory, supervisory or investigative functions under

this Act and any regulations made or Rules issued

thereunder, as may be prescribed.

(i)

exempt any person, service, instrument, collective

investment scheme, or advertisement from any one or

more of the provisions of this Act subject to such

variations, additions, adaptations and modifications as

may be prescribed and subject to such conditions or

other requirements, including other forms of

authorisation and notification procedures, as may be

prescribed;

(j)

(deleted by Act XXII. 2014.6.)

(k) transpose, implement and give effect to the provisions

and requirements of the AIFM Directive, the BRRD, the

CRR, the CRD, the MiFID, the MiFIR, the UCITS

Directive, the IFD, and the IFR;

(l)

establish financial resources requirements for licence

holders and to transpose, implement and give effect to

the provisions of the CRD and the CRR, as may be

amended from time to time, including the provision of

implementing technical standards as specified therein;

regulate the supervision on a consolidated basis, provide

for the consultation, co-ordination, co-operation and the

sharing and exchange of information with European

regulatory authorities and other third country regulatory

authorities as may be necessary; provide for the exchange

of information with the European Systemic Risk Board,

central banks which are members of the European

System of Central Banks, including the Central Bank of

Malta, exchange of information with the European

Banking Authority and the European Securities and

Markets Authority, and exchange of information with

other departments of government administrations in other

Member States responsible for law on the supervision of

institutions, financial institutions and insurance

undertakings and with inspectors acting on behalf of

those departments; provide for the establishment of

colleges of supervisors; provide for the exercise of

powers by the competent authority on investment

services licence holders, credit institutions, financial

holding companies, mixed financial holding companies

and mixed activity holding companies, or their effective

managers, as may be defined in the said regulations;

provide for the establishment and imposition of

administrative penalties on licence holders or others as

specified therein or other measures for the contravention

of any of the regulations, and to provide for appeals

therefrom to the Financial Services Tribunal; provide for

the obligations of the competent authority to report to the

European Banking Authority, the European Commission

and the European Insurance and Occupational Pensions

Authority, the European Securities and Markets

Authority as may be specified in the said regulations;

(m) provide for reporting and other requirements and

conditions which a person operating a multilateral

trading facility must satisfy, on a continuing and

ongoing basis and to establish the circumstances and

the manner in which requirements and conditions may

be varied, suspended or revoked, and to transpose the

requirements of the MIFID and the MiFIR thereon;

(n) 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; regulations made

under this paragraph, and strictly related to transposition

or implementation as aforesaid, may provide that any

provision of this Act or of any other law shall not apply

to matters falling under the regulations, and that in so far

as any of the provisions of the regulations are

inconsistent with the provisions of this Act or of any

other law, such provisions in any such regulations shall

prevail;

(o) provide that any one or more of the bodies mentioned in

Article 107(3) of the UCITS Directive may, in the

interests of consumers, and in accordance with the

applicable laws of Malta, take action before the courts or

administrative bodies of Malta, to ensure that the

provisions of this Act and the Investment Services Rules

and regulations issued hereunder transposing the UCITS

Directive are implemented;

(oa) establish and regulate limited partnerships not having legal

personality, and which the deed of partnership thereof

expressly limits their object either to the collective

investment of their funds in securities and in other

movable and immovable property, or in any of them, with

the aim of giving the partners the benefit of the results of

the management of their funds, and to matters ancillary or

incidental thereto, and which qualifies as a collective

investment scheme and is duly licensed, recognised,

exempted or otherwise regulated in terms of this Act; and

shall be distinct from limited partnerships as set out within

the provisions of the Companies Act. Regulations made

under this paragraph may provide that any provision of this

Act or of any other law shall not apply to matters falling

under the regulations, and that insofar as any of the

provisions of the regulations are inconsistent with the

provisions of this Act or of any other law, such provisions

in any such regulations shall prevail;

(p) prescribe anything that is to be or which may be

prescribed;

(q) provide for any matter incidental to or connected with

any of the above.

(2A) Regulations made under this article may also contain

provision for enabling a person who has entered, or offered to

enter, into an investment agreement with the holder of a licence to

rescind the agreement or withdraw the offer within such period and

in such manner as may be prescribed, and in particular, but without

prejudice to the generality of the foregoing, may make provision -

(a) for requiring the service of notice with respect to the

rights exercisable under the regulations;

(b) for the restitution of property and the making or

recovery of payments where those rights are exercised;

(c) for such other matters as are incidental to or connected

with any of the above.

(2B) Regulations made under this article may make provision

for the constitution of common funds for investment purposes in

the form of a collective investment scheme by contract or other

arrangement in writing and may exempt such funds from the

application of any article or provision of the Civil Code under Title

V of Part I of Book Second with such modifications and variations

as may be established.

(2C) Regulations made under this article may also make

p r o v i s i o n f o r t h e r e - o rg a n i s a t i o n a n d w i n d i n g - u p o f t h o s e

investment services licence holders to which such re-organisation

and winding-up is, or may be rendered, applicable in terms of the

BRRD.

(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 competent authority such powers of

adaptation of the regulations as may also be so specified.

(4) Where regulations have been issued in terms of this article,

the competent authority may issue Investment Services Rules and, or

Conduct of Business Rules within the meaning of article 6 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

(a) administrative penalties which may not exceed one

hundred and fifty thousand euro (€150,000) for each

infringement or failure to comply, as the case may be;

(b) 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; and

(c) administrative penalties and fines higher than one

hundred and fifty thousand euro (€150,000), where

deemed necessary or appropriate for any contravention

of or failure of compliance with any EU Directive or

EU Regulation or of any regulations made under this

article to transpose or to give effect to any EU

Directive or EU Regulation.

(5A) Regulations made under this article may prescribe

administrative penalties and fines as provided for in sub-article (5)(c),

for any breach of any provision of this Act or for any breach of any

Investment Services Rules or Conduct of Business Rules, transposing

and, or implementing any EU Directive or EU Regulation.

(6) Regulations made under this Act and any amendment or

revocation of such regulations, may be published in the English

language only.

(7) The exercise of any of the powers assigned under this

article shall be subject to any obligations or rights arising from

Malta’s international commitments.

(1)

Without prejudice to any powers of the competent

authority arising under any other law, the competent authority shall

have the power to require information from

(a) any person who is or was providing, or who appears to

be or to have been providing, an investment service;

(b) a collective investment scheme;

(c) any person who is or was carrying on, or who appears

to be or has been carrying on activities in connection

with such a scheme;

(d) any person who has issued, or appears to have issued

an advertisement falling within the provisions of

article 11(1);

(e) an auditor of a licence holder; or

(f)

any other person who appears to be in possession of

relevant information.

(1A) Without prejudice to sub-article (1), the competent authority

shall have the power to require information from

(a) investment firms established in Malta;

(b) investment holding companies established in Malta;

(c) mixed financial holding companies established in

Malta and their subsidiaries;

(d) mixed-activity holding

companies established

in

Malta;

(e) persons belonging to the entities referred to in points

(a) to (d);

(f)

third parties to whom the entities referred to in points

(a) to (d) have outsourced operational functions or

activities.

(1B) Without prejudice to the generality of sub-articles (1) and

(1A), the competent authority may, by notice in writing, require any

person referred to in the said sub-articles to do all or any of the

following

(a) to furnish to the competent authority, at such time and

place and in such form as it may specify, such

information and documentation as it may require,

including the power to require existing telephone and

existing data traffic records, with respect to any such

service, scheme or advertisement as aforesaid, or with

respect to any person with whom the licence holder

has close links within the meaning of article 6;

(b) to furnish to the competent authority any information

or documentation aforesaid verified in such manner as

it may specify;

(c) to attend before the competent authority, or before a

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

may specify, to answer questions and provide

information and documentation with respect to any

such service, scheme or advertisement as aforesaid."

(2) The competent authority may examine and make copies or

extracts of any documents furnished or provided under this article.

(3) Where the person required to provide information or

documentation under this article does not have the relevant

information or documentation, he shall disclose to the competent

authority where, to the best of his knowledge, that information or

documentation is, and the competent authority may require any

person, whether indicated as aforesaid or not, who appears to it to

be in possession of that information or documentation, to provide

it.

(4) A statement made and documentation provided in

pursuance of any requirement under this article may be used in

evidence against the person making the statement or providing the

documentation as well as against any person to whom they relate.

(5) The provisions of this article shall not apply to information

or documentation which is privileged in accordance with the

provisions of article 642(1) of the Criminal Code.

(6) The power to require the production of documentation

under the provisions of this article shall be without prejudice to any

lien or charge claimed by any person in relation to such

documentation.

(7) Where the competent authority has appointed a person

under sub-article (1)(c), such person shall, for the purposes of

carrying out his functions under his appointment, have all the

powers conferred on the competent authority by this article and a

requirement made by him shall be deemed to be and have the same

force and effect as a requirement of the competent authority.

(8) Without prejudice to the other provisions of this article, a

licence holder may be required to submit to the Central Bank of

Malta such information as the Bank may reasonably require for the

discharge of its duties under the Central Bank of Malta Act.

(1) The competent authority may, whenever it deems it

necessary or expedient, appoint an inspector or inspectors to

investigate and report on the affairs of any persons or scheme

referred to in article 13(1)(a) to (d) and (1A).

(2)

An inspector appointed under sub-article (1) -

(a) may also, if he thinks it necessary or expedient for the

purposes of that investigation, investigate the affairs of

any person or scheme mentioned in sub-article (1);

(b) shall have and may exercise all the powers conferred

on the competent authority by article 13, and any

requirement made by him shall be deemed to be and

have the same force and effect as a requirement of the

competent authority;

(c) may, and if so directed by the competent authority

shall, make interim reports and on the conclusion of

his investigation shall make a final report to the said

authority.

(3) The competent authority shall have power to order that all

expenses of, and incidental to, an investigation pursuant to this

article be paid by the persons or scheme concerned.

(4) For the purposes of this article inspectors may include an

advocate, a person authorised to carry on the profession of

accountant or auditor in terms of the Accountancy Profession Act,

or a person considered by the competent authority as possessing

suitable expertise to exercise such function.

(1) Without prejudice to any of the powers conferred on it

by articles 13 and 14, the competent authority may, whenever it

deems it necessary, and whether upon a report by an inspector

appointed under article 14 or not, give, by notice in writing, such

directives as it may deem appropriate in the circumstances; and any

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

with and otherwise give effect to any such directive within the time

and in the manner stated in the directive or further directive.

Provided that the competent authority may give any such

directive even where a licence holder, for whatever reason, ceases

to hold a licence granted in terms of this Act

Provided further that any directive given in terms of this article

shall, unless the competent authority otherwise directs, continue to apply

even when a licence holder, for whatever reason, ceases to hold a licence

granted in terms of this Act.

(2) Without prejudice to the generality of the foregoing

provisions of this article, a directive under this article may -

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

or impose any prohibition, restriction or limitation, or

any other requirement, including any requirement

emanating from European Union legislation, and confer

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

to any assets, or to any other thing whatsoever;

(b) require a collective investment scheme and the

manager of such a scheme, or his equivalent, and any

other person who may issue, redeem, sell or purchase

units in the scheme, to cease the issue, redemption,

sale, or purchase of units or all or any combination of

those activities, as may be specified in the directive or

further directive;

(c) require that any person having functions in relation to

the holder of a licence be prohibited, temporarily or

otherwise, suspended from carrying out activities

licensable under the Act, or removed or removed and

replaced by another person acceptable to the competent

authority;

(d) require a collective investment scheme or its directors

and shareholders, or the manager or trustee or

custodian of a scheme, or their equivalent, to wind it

up by such date and in accordance with such procedure

and other provisions as may be specified in the

directive or further directive;

(e) require a licence holder or any person who is or was

providing, or who appears to be or to have been

providing an investment service to cease operations

and to wind up its affairs, in accordance with such

procedures and directions as may be specified in the

directive, which may provide for the appointment of a

person to take possession and control of all documents,

records, assets and property belonging to or in the

possession or control of the licence holder or such

other person;

(f)

require a licence holder to submit a financial recovery

plan, as may be determined in the Investment Services

Rules, if it considers that the interest of investors,

consumers, creditors or other interested persons are likely

to be prejudiced owing to a deterioration in the financial

position of the licence holder;

(g) require the cessation of any practice that is contrary to

the provisions adopted in the implementation of the

AIFM Directive, the BRRD, the CRD, the MiFID, the

UCITS Directive, and the IFD;

(h) require the removal of a financial instrument from

trading, on trading arrangements within the meaning

of the MIFID, the MiFIR other than on regulated

markets in terms of the Financial Markets Act;

(i)

require the suspension of trading in a financial

instrument;

(j)

request any person to take steps to reduce the size of

the position or exposure;

(k) limit the ability of any person from entering into a

commodity derivative, including by introducing limits on

the size of a position any person can hold at all times in

accordance with Article 57 of MIFID

Provided that in applying paragraphs (d) and (e), the

competent authority may also appoint a competent person to act as

liquidator for the purposes of winding up the affairs of a licence holder

under this Act; and such person shall be the liquidator of the licence

holder for all purposes of law to the exclusion of any other person.

(3) The power to give directives under this article shall include

the power to vary, alter, add to or withdraw any directive, as well as

the power to issue new or further directives.

(4) Where the competent authority is satisfied that the

circumstances so warrant, it may at any time make public any

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

(1) Without prejudice to the powers conferred to the

competent authority under this Act, the competent authority may,

where it is satisfied that sufficient circumstances exist, proceed to

take any one or more of the following measures

(a) appoint a person to advise the licence holder in the

proper conduct of its business;

(b) appoint a person to take charge of the assets of the

licence holder, or any portion of them, for the purposes

of safeguarding the interests of investors, consumers,

creditors or, if any, shareholders, of the licence holder;

(c) appoint a person to assume control of the business of

the licence holder, either to carry on that business or to

INVESTMENT SERVICES

carry out such other function or functions in respect of

such business, or part thereof, including to take the

necessary action for the licence holder to be dissolved and

wound up, as the competent authority may direct;

(d) fix the remuneration to be paid by the licence holder to

any person appointed under article 15 or under this

article;

(e) do such other act as it may deem appropriate in the

circumstances to give better effect to the

implementation of the provisions of this article,

and having adopted any one or more of the measures aforesaid, the

competent authority may further proceed in any one or more such

measures, whether in addition thereto or in substitution therefor.

(2)

Where a person is appointed by the competent authority -

(a) under sub-article (1)(a), it shall be the duty of the

licence holder 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)(b), the licence holder shall

deliver to such person all the assets, whether movable

or immovable, of which he is placed in charge, and all

the powers, functions and duties of the licence holder

in respect of those assets, including, if such licence

holder is a legal person, those exercisable by the legal

person in a general meeting, or by the directors, or by

any other person, including the legal and judicial

representation of such legal person, 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)(c), the licence holder shall submit

its business to the control of such person and shall

provide such person with such facilities as may be

required to carry on that business or to carry out the

functions assigned to such person under the said

paragraph; and all the powers, functions and duties of

the licence holder, including, if such licence holder is

a legal person, those exercisable by the legal person in

a general meeting, or by the directors, or by any other

person, including for the purpose of the dissolution and

winding up of the licence holder as well as the legal and

judicial representation of such legal person in all matters,

shall be exercisable by and vest in such person to the

exclusion of any other person

Provided that the competent person shall not take any

decision for the purpose of the dissolution and winding up

of the licence holder unless the competent authority issues

a directive to that effect in terms of article 15, and any such

directive may contain such instructions, requirements and

conditions as the competent authority may consider

necessary, including with regard to the mode of winding

up.

(2A) Without prejudice to the powers of the competent authority

in terms of sub-article (1), the competent authority may also make

an application to the court for the dissolution and winding up by the

court of a licence holder where it appears to the competent

authority that a licence holder should be dissolved and wound up

by the court for the reason set out in article 214(2)(b)(iii) of the

Companies Act, and where the court accedes to the application the

relevant provisions of the Companies Act in relation to the

dissolution and winding up by the court and any other applicable

provisions of any other law shall apply.

(3) The competent authority may, where it feels it is in the best

interest of the public so to do, make or issue public statements or

notices giving warnings or information about any measure taken in

terms of this article.

(4) The competent authority may require the licence holder

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.

(5) Any measure adopted in terms of sub-article (1) shall remain in

force notwithstanding that a licence holder ceases to hold a licence for

whatever reason, unless the competent authority otherwise directs.

(1) Any officer, employee or agent of the competent

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

enter premises occupied by a person on whom a notice has been

served under article 13 or whose affairs are being investigated

under article 14, for the purpose of obtaining and, or verifying there

the information or documents required by that notice, or otherwise

for the purpose of the investigation, and of exercising any of the

powers conferred by the said articles.

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

authority has reasonable cause to believe that if such notice as is

referred to in sub-article (1) were served it would not be complied

with or that any documents to which it could relate would be

removed, tampered with or destroyed, such person may, on

producing, if required, evidence of his authority, enter any premises

referred to in sub-article (1) for the purpose of obtaining there any

info rmati on or docum ents specified in the au thori ty, being

information or documents that could have been required under such

notice as is referred to in sub-article (1).

(2A) Without prejudice to sub-articles (1) and (2), any officer,

employee or agent of the competent authority, on producing, if

required, evidence of his authority, may enter premises occupied by a

person on whom a notice has been served under article 13 and by any

other person included in the supervision of compliance with the group

capital test, where the competent authority is the group supervisor, in

order to conduct an inspection

Provided that the exercise of the right of entry under this

sub-article in relation to any person included in the supervision of

compliance with the group capital test where the competent authority

is the group supervisor, shall be subject to the prior notification of

other competent authorities concerned.

(3) For the purposes of any action taken under the provisions of

this article, the competent authority may request the assistance of

the Commissioner of Police, who may for such purpose exercise

such powers as are vested in him for the prevention of offences and

the enforcement of law and order.

(1) Without prejudice to any other powers assigned to the

competent authority in terms of this Act, where a licence holder or

the manager, secretary, director or any other person responsible for

a licence holder contravenes or fails to comply with any of the

conditions imposed in a licence, and, or where the competent

authority is satisfied that a person’s conduct amounts to a breach of

any of the provisions of this Act, regulations, Investment Services

Rules or Conduct of Business Rules issued thereunder, including

failure to cooperate in an investigation, the competent authority

may by notice in writing and without recourse to a court hearing

impose on the licence holder, manager, secretary, director, and, or

any other person as the case may be, an administrative penalty

w h i c h may not exceed one hundred and fifty thousand euro

(€150,000) for each infringement or failure to comply, as the case may

be.The provisions of article 16 (4) of the Malta Financial Services

Authority Act shall apply mutatis mutandis.

(2) Administrative penalties or other measures that may be

imposed by the competent authority on licence holders or others, as

may be specified, may be imposed in the form of a fixed penalty, a

daily penalty, or both.

(3) The imposition by the competent authority of an

administrative penalty in terms of this article shall be without

prejudice to any other consequence of the act or omission of the

offender under civil or criminal law

Provided that in all cases where the competent authority

imposes an administrative penalty in respect of anything done or

omitted to be done by any person and such act or omission also

constitutes a criminal offence, no proceedings may be taken or

continued against the said person in respect of such criminal

offence.

(4) The competent authority may, by means of a public

statement, disclose the name of t he person sanct io ned, the

p a r t i c u l a r b r e a c h o f t h e p r o v i s i o n o f t h i s A c t , regulations,

Investment Services Rules or Conduct of Business Rules issued

thereunder, and the penalty or administrative measure imposed. The

competent authority shall withhold such public disclosure where it

deems that such disclosure would seriously jeopardise the financial

markets, be detrimental to the interests of investors or cause

disproportionate damage to the parties involved.

(5) Where the competent authority has made a public statement

in terms of sub-article (4), it shall simultaneously report that fact to

ESMA.

(6) The competent authority shall annually provide ESMA with

aggregated information about all the administrative measures and

sanctions imposed in accordance with this article and shall upon

request provide the necessary information on the application of

administrative measures and imposition of penalties in the case of

breaches of the provisions adopted in the implementation of the

AIFM Directive.

(1) Without prejudice to any other power of the

competent authority under this Act or any other law, where the

competent authority is the consolidating supervisor and has

established that the conditions set out in article 10D(4) are not met or

have ceased to be met, the competent authority shall take the

appropriate supervisory measures to ensure or restore, as the case may

be, continuity and integrity of consolidated supervision and ensure

compliance with the requirements laid down in this Act and any

regulations made and Investment Services Rules issued thereunder

transposing the CRD, in any binding legal instruments issued under

the CRD, and in the CRR, on a consolidated basis. In the case of a

mixed financial holding company, the supervisory measures applied

by the competent authority as the consolidating supervisor shall, in

particular, take into account the effects on the financial conglomerate.

The supervisory measures referred to in this sub-article shall include

(a) withdrawing the approval granted to a financial

holding company or mixed financial holding company

in terms of article 10D;

(b) suspending the exercise of voting rights attached to the

shares of the subsidiary institutions held by the

financial holding company or mixed financial holding

company;

(c) issuing administrative measures or administrative

penalties, in terms of this Act and any regulations

made or Investment Services Rules issued thereunder,

against the financial holding company, the mixed

financial holding company or the directors and

managers, subject to the provisions of national law

transposing Articles 65 to 72 of the CRD;

(d) issuing instructions or directions to the financial

holding company or mixed financial holding company

to transfer to its shareholders the participations in its

subsidiary institutions;

(e) issuing a directive to the financial holding company or

mixed financial holding company in terms of article

15;

(f)

designating on a temporary basis another financial

holding company, mixed financial holding company or

institution within the group as responsible for ensuring

compliance with the requirements laid down in this

Act and, or any regulations made and, or Investment

Services Rules issued thereunder transposing the CRD,

in the CRD and, or in the CRR on a consolidated basis;

(g) restricting or prohibiting distributions or interest

payments to shareholders;

(h) requiring financial holding companies or mixed

financial holding companies to divest themselves

from, or reduce, holdings in institutions or other

financial sector entities;

(i)

requiring financial holding companies or mixed

financial holding companies to submit a plan on

return, without delay, to compliance;

(j)

restraining any person within financial holding

companies or mixed financial holding companies and,

or financial holding companies or mixed financial

holding companies from taking, or continuing to take,

any action as a result of which the conditions set out in

article 10D(4) are not met or have ceased to be met;

(k) requiring any person within financial holding

companies or mixed financial holding companies and,

or financial holding companies or mixed financial

holding companies to take such steps as may be

necessary to restore the position existing immediately

before any action, as a result of which the conditions

set out in article 10D(4) are not met or have ceased to

be met, was taken;

(l)

restraining any person within financial holding

companies or mixed financial holding companies and,

or financial holding companies or mixed financial

holding companies from exercising any rights which a

lawful action, as a result of which the conditions set

out in article 10D(4) are not met or have ceased to be

met, would have conferred upon them, including the

right to receive any payment or to exercise any voting

rights attaching to the shares acquired;

(m) any measure under article 15A

Provided that in exercising any of its powers under article

15A, the provisions of the said article shall apply mutatis mutandis,

and provided further that any reference to "the licence holder" shall be

deemed to be reference to "the financial holding company" and, or "the

mixed financial holding company", as applicable.

(2)

Where the competent authority intends to withdraw an

approval in accordance with sub-article (1)(a), it shall serve written

notice of its intention on the financial holding company or mixed

financial holding company; such notice shall specify the grounds upon

which the competent authority intends to take such action and shall

specify a period, being a period not less than forty-eight hours and not

more than thirty calendar days, in which the financial holding

company or mixed financial holding company shall be entitled to make

representations to the competent authority as to why such action

should not be taken. Unless the competent authority decides that the

matter is urgent, it shall not withdraw an approval before the expiry of

such period.

(3)

For the purpose of taking decisions on the supervisory

measures referred to in sub-article (1), where the financial holding

company or the mixed financial holding company is established in a

Member State or in an EEA State other than Malta and the competent

authority is the consolidating supervisor, the competent authority shall

work together with the European regulatory authority in the Member

State or EEA State where the financial holding company or the mixed

financial holding company is established, as the case may be, in full

consultation.

(4)

Where the competent authority is not the consolidating

supervisor but the financial holding company or the mixed financial

holding company is established in Malta, the competent authority

shall, for the purposes of taking decisions on the supervisory measures

referred to in Article 21a(6) of the CRD, work together with the

European regulatory authority acting as the consolidating supervisor,

in full consultation.

(5)

Where the competent authority is the consolidating

supervisor and where the financial holding company or the mixed

financial holding company is not established in Malta, the competent

authority shall prepare an assessment on the matters referred to in sub-

article (1), and shall forward that assessment to the European

regulatory authority in the Member State or EEA State where the

financial holding company or the mixed financial holding company is

established.

(6)

The competent authority, whether acting as the consolidating

supervisor or whether it is in receipt of an assessment referred to in

Article 21a(8) of the CRD from the European regulatory authority

acting as the consolidating supervisor, shall do everything within its

powers to reach a joint decision on the measures referred to in sub-

article (1) of this article and, or in Article 21a(6) of the CRD, with the

European regulatory authority in the Member State or EEA State where

the financial holding company or the mixed financial holding company

is established or with the European regulatory authority acting as the

consolidating supervisor, as the case may be, within two months of

receipt of that assessment

Provided that the joint decision shall be duly documented

and reasoned and where the competent authority is the consolidating

supervisor, it shall communicate the joint decision to the financial

holding company or the mixed financial holding company.

(7)

In the event of a disagreement between the competent

authority and the European regulatory authority acting as the

consolidating supervisor or with the European regulatory authority in

the Member State or EEA State where the financial holding company

or the mixed financial holding company is established, as the case may

be, the competent authority shall refrain from taking the joint decision

referred to in sub-article (6) and shall refer the matter to the EBA in

accordance with Article 19 of Regulation (EU) No. 1093/2010. In

such cases, the competent authority shall adopt a joint decision with

the European regulatory authority acting as the consolidating

supervisor or with the European regulatory authority in the Member

State or EEA State where the financial holding company or the mixed

financial holding company is established, as the case may be, in

conformity with the decision of the EBA

Provided that the matter shall not be referred to the EBA

after the end of the two month period referred to in sub-article (6) or

after a joint decision has been reached.

(8)

In the case of mixed financial holding companies, where the

coordinator appointed in terms of Article 10 of Directive 2002/87/EC

is neither the competent authority, nor the European regulatory

authority acting as the consolidating supervisor, nor the European

regulatory authority in the Member State or EEA State where the

mixed financial holding company is established, the agreement of the

said coordinator shall be required for the purposes of the decisions or

joint decisions referred to in sub-article (1) of this article and, or in

Article 21a(6) of the CRD, as applicable. Where the agreement of the

coordinator is required, the competent authority shall refer any

disagreements to the relevant European Supervisory Authority,

namely, to the EBA or to the European Supervisory Authority

(European Insurance and Occupational Pensions Authority) (EIOPA),

established by Regulation (EU) No. 1094/2010, which shall take its

decision within one month of receipt of the referral. Any decision

taken in accordance with this sub-article shall be without prejudice to

the obligations under Directive 2002/87/EC or the Solvency II

Directive.

(9)

For the purposes of this article

(a) the term "group" means a group as defined in point

(138) of Article 4(1) of the CRR;

(b) the term "institution" means an institution as defined

in point (3) of Article 4(1) of the CRR;

(c) the term "participation" means the same as the

meaning assigned to in point (35) of Article 4(1) of the

CRR; and

(d) the term "subsidiary" means a subsidiary as defined in

point (16) of Article 4(1) of the CRR.

Any decision taken under this Act by the competent

authority in terms of any provisions which transpose the AIFM

Directive, the BRRD, the CRD, the MiFID, the UCITS Directive,

and the IFD, including any regulations, regulations, Investment

Services Rules or Conduct of Business Rules issued thereunder, made

thereunder for the said transposition, shall state the grounds on

which such a decision has been based.

CO-OPERATION WITH REGULATORY AUTHORITIES AND

OTHER BODIES

(1) The competent authority shall act as the contact point

in terms of and for the purposes of Article 79(1) of the MIFID, and

it shall also exercise its powers and duties as provided for in the

UCITS Directive.

(1A) The competent authority shall cooperate with other local

regulatory authorities or bodies which are also responsible for the

supervision of credit institutions and financial institutions and shall

exchange with such local regulatory authorities or bodies, without

delay, any information which is essential or relevant to the exercise of

their functions.

(2) The competent authority shall cooperate with other

European regulatory authorities whenever necessary for the

purpose of carrying out its duties and exercising its powers under the

AIFM Directive, the BRRD, the CRD, the CRR, the MIFID, the

MiFIR, the UCITS Directive, the IFD and the IFR. It shall render the

necessary assistance to other European regulatory authorities, in

particular by exchanging information and cooperating in any

investigatory or supervisory function. In terms of the AIFM

Directive, the BRRD, the CRD, the MiFID, the UCITS Directive and

the IFD, the competent authority may use its powers for the purposes

of cooperation even in cases where the conduct under investigation

does not constitute an infringement of any provisions of this Act,

regulations, Investment Services Rules or Conduct of Business Rules

issued thereunder

Provided that the competent authority shall communicate

information to other European regulatory authorities where this is

relevant for monitoring and responding to the potential implications of

the activities of an individual AIFM or AIFMs collectively, for the

stability of systemically relevant investment services licence holders

and the orderly functioning of markets on which AIFMs are active.

ESMA and the ESRB shall be informed accordingly.

(2A) Without prejudice to the generality of sub-article (2), the

competent authority shall, for the purposes of its duties pursuant to the

IFR and the IFD as transposed in national law, exchange information

about investment firms with European regulatory authorities without

delay, including the following

(a) information about the management and ownership

structure of the investment firm;

(b) information about compliance with

own

funds

requirements by the investment firm;

(c) information about compliance with the concentration

risk requirements and liquidity requirements of the

investment firm;

(d) information about the administrative and accounting

procedures and internal control mechanisms of the

investment firm

(e) any other relevant factors that may influence the risk

posed by the investment firm

Provided that for the purposes of this sub-article the term

"investment firm" means an investment firm licensed under this Act.

(3) Upon receipt of a request from European regulatory

authorities designated as contact points within the individual

Member States or EEA States under Article 79(1) of the MIFID, the

competent authority shall immediately take the necessary measures

in order to gather the information required for the carrying out of

its duties pursuant to the MIFID and the MiFIR. If the competent

authority is not able to supply the required information

immediately, it shall notify the requesting European regulatory

authority of the reasons.

(4) At the time of communicating information to the European

regulatory authorities, whether designated as contact points or not,

the competent authority may stipulate that the information must not

be disclosed without its express agreement, in which case such

information may be exchanged solely for the purposes for which

the competent authority had given its agreement.

(5) Where a European regulatory authority exchanging

information with the competent authority stipulates at the time of

communication of the information that such information must not

be disclosed without its express agreement, such information may

be used by the competent authority solely for the purposes for

which the European regulatory authority would have given its

agreement.

(6) Information received by the competent authority from

contact points in the other Member States or EEA States may be

transmitted to other bodies or natural or legal persons, provided

that

(a) the express agreement of the contact points which

disclosed the information is obtained; and

(b) the information is used solely for the purposes for

which the contact points gave their agreement

Provided that in duly justified circumstances the competent

authority can transmit information to other bodies or natural or

legal persons without satisfying the conditions in paragraphs (a)

and (b), in which case the competent authority shall immediately

inform the contact point that sent the information.

(7) Where the competent authority receives confidential

information from contact points in the other Member States or EEA

States or from overseas regulatory authorities or auditors under

articles 17D and 18, or when other bodies or natural or legal

persons receive confidential information from the competent

authority, they may only use such confidential information in the

course of their duties, in particular

(a) to check that the conditions governing the taking-up of

the business of licence holders, including undertakings

contributing towards the business activity of UCITS are

met and to facilitate the monitoring, on a non-

consolidated or consolidated basis, of the conduct of

that business, especially with regard to the financial

resources requirements;

(b) to monitor the proper functioning of trading venues

within the meaning of the MIFID and the MiFIR;

(c) to impose penalties or adopt other administrative

measures and to consider representations received in

their regard;

(d) in appeals under article 19;

(e) to investigate complaints received from consumers in

terms of article 20 of the Malta Financial Services

Authority Act; or

(f)

in taking any decision in the implementation of the

UCITS Directive and the MIFID and the MiFIR; or

(g) to monitor the prudential rules set out in the IFD and

the IFR.

(8) Sub-article (7) of this article and article 26 shall not

preclude the competent authority from exchanging information, in

terms of the UCITS Directive, with European regulatory

authorities, where that information is to be divulged to

(a) authorities with public responsibility for the

supervision of credit institutions, investment

undertakings, insurance undertakings or other

financial organisations, or authorities responsible for

the supervision of financial markets;

(b) bodies involved in the liquidation or bankruptcy of

UCITS or undertakings contributing towards their

business activity, or bodies involved in similar

procedures; or

(c) persons charged with carrying out statutory audits of the

accounts of insurance undertakings, credit institutions,

investment services licence holders or other financial

institutions.

(9)

Sub-article (7) of this article and article 26 shall not preclude

the competent authority from exchanging information with European

regulatory authorities, or other overseas regulatory authorities or other

bodies and entities in pursuance of the requirements and terms of the

BRRD, CRD, the CRR, the IFD and the IFR, as may be prescribed.

(10) Without prejudice to the powers of the competent authority

under this Act or any other law, where the competent authority has

good reason to suspect that acts contrary to the provisions of the

AIFM Directive, the CRD, the CRR, the MiFID, the MiFIR, the

UCITS Directive, the IFD and the IFR are being or have been

carried out on the territory of another Member State or EEA State

by entities not subject to its supervision, it shall notify this in as

specific a manner as possible to the contact point in the other

Member State or EEA State and to ESMA

Provided that where the said suspected acts have been or are

suspected to have been committed by an AIFM in breach of the AIFM

Directive, the competent authority shall also inform the home Member

State and the host Member State of the AIFM, as the case may be, in as

specific a manner as possible.

(11) Where the information in the possession of the competent

authority had originated from a European regulatory authority or an

overseas regulatory authority, it may not be disclosed to a European

regulatory authority or to any other third party without the express

agreement of the European regulatory authority or the overseas

regulatory authority which had transmitted it and, where

appropriate, solely for the purposes for which that authority had

given its agreement.

(12) Where a European regulatory authority suspects that acts

carried out by entities not subject to its supervision and which are

contrary to the provisions of the AIFM Directive, the CRD, the CRR,

the MiFID, the MiFIR, the UCITS Directive, the IFD or the IFR are

being or have been carried out in Malta and notifies the competent

a uthority to t his effect, the competent author it y sh al l t ake

appropriate action. The competent authority shall inform the

notifying European regulatory authority and ESMA of the outcome of

any such action and, to the extent possible, of significant interim

developments

Provided that any such action taken by the competent

authority shall be without prejudice to the powers and functions of

the European regulatory authority that has forwarded the

information.

(13) Without prejudice to the foregoing provisions of this

article, the competent authority may exercise the following powers

at the request of or for the purpose of assisting a European

regulatory authority

(a) the power to impose, revoke or vary conditions on the

grant of a licence pursuant to the provisions of article

6(2);

(b) the power to cancel or suspend a licence under article

7(1);

(c) the powers of inquiry under article 13;

(d) the power to appoint inspectors under article 14;

(e) the powers of intervention under article 15;

(f)

the powers of entry under article 16;

(g) the power to communicate to the European regulatory

authority information which is in the possession of the

competent authority, whether or not as a result of the

exercise of any of the above powers.

(14) The competent authority shall have the powers conferred

upon it by Article 101(8) of the UCITS Directive.

(15) The competent authority may also cooperate with European

regulatory authorities with respect to facilitating the recovery of

administrative penalties.

(1) The competent authority may request the cooperation

of a European regulatory authority in carrying out its supervisory

functions or for an on-site verification or in an investigation in the

territory of the latter within the framework of their powers

Provided that in the case of a person holding a licence or

other equivalent authorisation from a European Regulatory

Authority and who is a remote member within the meaning of the

MIFID of a regulated market authorised in terms of the Financial

Markets Act, the competent authority may communicate with such

person directly, in which case the competent authority shall inform

the contact point of the home Member State of such person

accordingly.

(2) If, upon the request for cooperation by the competent authority

in terms of Article 54(2) of the AIFM Directive, Articles 52 and 118

of the CRD and Article 101(5) of the UCITS Directive, a verification

or an investigation is carried out in a Member State by a European

regulatory authority, the competent authority may request that its own

officers, employees or agents accompany the officials carrying out the

verification or investigation, and such officers, employees or agents

shall, however, be subject to the overall control of such Member State

on whose territory the said verification or investigation is being

conducted.

(3) A European regulatory authority may request the

c o o p e r a t i o n o f t h e c o m p et e n t a u t h o r i t y i n c a r r y i n g o u t i t s

supervisory functions or for an on-site verification or in an

investigation, in which case the competent authority shall, within

the framework of its powers

(a) carry out the verifications or the investigation itself,

and in respect of requests pursuant to Article 118 of

the CRD with the participation of the requesting

authority; or

(b) allow the requesting authority to carry out the

verification or investigation, and, it may also, in terms of

Article 54(2) of the AIFM Directive and Article 101(5)

of the UCITS Directive, request that its own officers,

employees or agents accompany the European regulatory

authority in carrying out the verification or investigation;

or

(c) allow inspectors or experts within the meaning of article

14 and auditors within the meaning of article 18 to carry

out the verification or investigation.

(4)

Without prejudice to any other provision of this Act, the

competent authority may request the cooperation of a European

regulatory authority to verify information about investment firms,

investment holding companies, mixed financial holding companies,

financial institutions, ancillary services undertakings, mixed-activity

holding companies or subsidiaries, including subsidiaries which are

insurance companies, that are located in the territory of the European

regulatory authority concerned, and such request shall be verified in

accordance with sub-article (6).

(5)

Without prejudice to any other provision of this Act, a

European regulatory authority may request the cooperation of the

competent authority to verify information about investment firms,

investment holding companies, mixed financial holding companies,

financial institutions, ancillary services undertakings, mixed-activity

holding companies or subsidiaries, including subsidiaries which are

insurance companies, that are located in Malta, and such request shall

be verified in accordance with sub-article (6).

(6)

Where a European regulatory authority makes a request in

terms of sub-articles (4) and (5), the competent authority shall, within

the framework of its powers

(a) carry out the verification itself;

(b) allow the European regulatory authority who made

that request to carry out such verification;

(c) request an auditor or expert to carry out the

verification impartially and to report the results

promptly

Provided that for the purposes of paragraphs (a) and (c), the

European regulatory authority that made the request shall be allowed

to participate in the verification.

(7)

Where a European investment firm carries out its activities

through a branch in Malta, the European regulatory authority of the

home Member State may, after having informed the competent

authority, carry out, itself or through intermediaries that it appoints for

that purpose, inspections of such a branch and on-site checks of the

information referred to in article 17(2A).

(8)

Without prejudice to sub-article (7), where Malta is the host

Member State, the competent authority shall, for supervisory purposes

and where the competent authority considers it to be relevant for

reasons of stability of the financial system in Malta, have the power to

carry out, on a case-by-case basis, on-site checks and inspections of

the activities carried out by branches of European investment firms on

its territory and require information from a branch about its activities

Provided that, before carrying out such checks and

inspections, the competent authority shall, without delay, consult the

European regulatory authority of the home Member State

Provided further that, as soon as possible following the

completion of those on-site checks and inspections, the competent

authority shall communicate to the European regulatory authority of

the home Member State the information obtained and findings that are

relevant for the risk assessment of the European investment firm

concerned.

The competent authority may refuse to act on a request for

cooperation in carrying out an investigation, onsite verification or

supervisory function under article 17A of this Act or to exchange

information with European regulatory authorities designated as

contact points under Article 44 of the AIFM Directive, or with

European regulatory authorities designated as contact points under

Article 79(1) of the MIFID, or with European regulatory authorities

designated under Article 101(1) of the UCITS Directive for the

purpose of carrying out duties and exercising powers thereunder only

where

(a) such an investigation, on-site verification, supervisory

function or exchange of information might adversely

affect the sovereignty, security or public policy of

Malta;

(b) compliance with the request is likely to affect

adversely its own investigation, enforcement activities

or, where applicable, any criminal investigation;

(c) judicial proceedings have already been initiated in

respect of the same actions and against the same

persons before the courts of Malta; or

(d) a final judgment has already been delivered in relation

to such persons for the same actions in Malta

In the case of such a refusal, the competent authority shall

notify the European regulatory authority and ESMA accordingly,

providing as detailed information as possible for such refusal.

(1) Prior to granting a licence to an applicant which is -

(a) a subsidiary of a person holding an investment services

licence or equivalent authorisation or of a market

operator or of a credit institution authorised in another

Member State or EEA State; or

(b) a subsidiary of the parent undertaking of a person

holding an investment services licence or an

equivalent authorisation or of a credit institution

authorised in another Member State or EEA State; or

(c) controlled by the same natural or legal persons which

control a holder of an investment services licence or

the holder of an equivalent authorisation or a credit

institution authorised in another Member State or EEA

State,

the competent authority shall consult with the relevant European

regulatory authorities.

(2)

Prior to granting a licence to an applicant which is -

(a) a subsidiary of a credit institution or insurance

undertaking authorised in another Member State or

EEA State; or

(b) a subsidiary of the parent undertaking of a credit

institution or insurance undertaking authorised in

another Member State or EEA State; or

(c) controlled by the same person, whether natural or

legal, who controls a credit institution or insurance

undertaking authorised in another Member State or

EEA State,

the competent authority shall consult with the European regulatory

authority responsible for the supervision of credit institutions or

insurance undertakings.

(3) Consultation between the competent authority and the

European regulatory authorities shall in particular take place when

assessing the suitability of the shareholders or members and the

reputation and experience of persons who effectively direct the

business involved in the management of another entity of the same

group. The competent authority shall exchange all information that

is of relevance to the other European regulatory authorities

involved regarding the suitability of shareholders or members and

the reputation and experience of persons who effectively direct the

business, both for the granting of a licence as well as for the

ongoing assessment of compliance with operating conditions.

The competent authority may refer to ESMA, situations

where a request relating to one of the following has been rejected

or has not been acted upon within a reasonable time

(a) to exchange information as provided for in article 17;

(b) to carry out a supervisory activity, an on-site

verification or an investigation, as provided for in

article 17A; and

(c) to seek authorisation for its officials to accompany

those of the European regulatory authority as provided

for in article 17A.

(1) The competent authority shall cooperate with ESMA

for the purposes of the AIFM Directive, the MIFID, the MiFIR and

the UCITS Directive in accordance with Regulation (EU) No 1095/

2010. (2) In the case of a disagreement between the competent

authority and a European regulatory authority on an assessment,

action or omission pertaining to either authority, in areas where the

AIFM Directive requires cooperation or coordination between

authorities from more than one Member State, the competent

authority may refer the matter to ESMA.

(3) The competent authority shall, without delay, provide ESMA

with all information necessary to carry out its duties under the AIFM

Directive, the MIFID, the MiFIR and the UCITS Directive in

accordance with Article 35 of Regulation (EU) No 1095/2010.

CO-OPERATION WITH OVERSEAS REGULATORY AUTHORITIES

AND OTHER BODIES

(1) Co-operation agreements with overseas regulatory

authorities or other authorities, bodies and natural or legal persons

in countries that are not Member States or EEA States may be

entered into only if the inform ation disclosed is subject to

guarantees of professional secrecy at least equivalent to those

required under article 26. Such exchange of information must be

intended for the performance of the functions of those overseas

regulatory authorities or other authorities, bodies and natural or

legal persons

Provided that the transfer of personal data to countries that

are not Member States or EEA States shall be in accordance with

the provisions of Chapter IV of Directive 95/46/EC of the European

Parliament and of the Council of 24 October 1995 on the protection

of individuals with regard to the processing of personal data and on

the free movement of such data.

(2) The competent authority may conclude cooperation

agreements providing for the exchange of information with

overseas regulatory authorities, other authorities or with bodies and

natural or legal persons in countries that are not Member States or

EEA States responsible for

(i)

the supervision of credit institutions, other

financial organisations, persons holding a

licence,

insurance undertakings, financial

institutions and financial markets, including

financial entities licensed to operate as central

counterparties where central counterparties have

been recognised under Article 25 of Regulation

(EU) No. 648/2012;

(ii) the liquidation and bankruptcy of persons

holding a licence or an equivalent authorisation

and other similar procedures;

(iii) carrying out statutory audits of the accounts of

persons holding a licence or an equivalent

authorisation and other financial institutions,

credit institutions and insurance undertakings, in

the performance of their supervisory functions,

or which administer compensation schemes, in

the performance of their functions;

(iv) overseeing the bodies involved in the liquidation

and bankruptcy of persons holding a licence or

an equivalent authorisation and other similar

procedures;

(v) overseeing persons charged with carrying out

statutory audits of the accounts of insurance

undertakings, persons holding a licence or an

equivalent authorisation, credit institutions and

other financial institutions

Provided that, for the purposes of this paragraph,

the term "financial insitutions" means both financial

institutions as defined in point (26) of Article 4(1) of

the CRR and as defined in point (14) of Article 4(1)

of the IFR;

(vi) overseeing persons active on emission allowance

markets for the purpose of ensuring a

consolidated overview of financial and spot

markets;

(vii) overseeing persons active on agricultural

commodity derivatives markets for the purpose

of ensuring a consolidated overview of financial

and spot markets.

(3) Where the information in the possession of the competent

authority had originated from a European regulatory authority or an

overseas regulatory authority, it may not be disclosed to an

overseas regulatory authority or to any other third party without the

express agreement of the European regulatory authority or the

overseas regulatory authority which had transmitted it and, where

appropriate, solely for the purposes for which that authority had

given its agreement.

(4) Without prejudice to the foregoing provisions of this

article, at the request of, or for the purposes of assisting an

overseas regulatory authority, the competent authority may exercise

the powers listed in article 17(13), and for the purposes of this sub-

article the words "European regulatory authority" shall be read as

"overseas regulatory authority".

The competent authority shall inform the Commission of

the European Union and ESMA of any general difficulties which

(a) an investment services licence holder encounters in

establishing itself or providing investment services

and, or performing investment activities in any

overseas country or territory; and

(b) UCITS encounter in marketing their units in any

overseas country or territory.

DUTY OF AUDITORS

(1)

An auditor of the holder of a licence shall have the

duty to report immediately to the competent authority any fact or

decision concerning that licence holder of which he becomes aware in

his capacity as auditor of such licence holder which –

(a) is likely to lead to a serious qualification or refusal of

the auditor’s report on the accounts of such licence

holder;

(b) constitutes or is likely to constitute a material breach

of this Act or any regulations or Rules issued

thereunder, including the legal or regulatory

requirements applicable to the licence holders in or

under this Act;

(c) may affect the continuous functioning of the licence

holder;

(d) may lead to the refusal to certify the licence holder’s

accounts or to the expression of reservations; or

(e) relates to any other matter which may be prescribed.

(2) An auditor of the licence holder shall report to the

competent authority any facts or decision as specified in sub-article

(1) of any person having close links with such licence holder within

the meaning in article 6, of which he becomes aware in his capacity

as auditor of the licence holder or of the person having such close

links.

(3) No duty (including the duty of professional secrecy) to

which an auditor of the holder of a licence may be subject, shall be

regarded as contravened by reason of his communicating in good

faith to the competent 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 licence

holder and which is relevant to any functions of the competent

authority under the provisions of this Act or is required to be

communicated by virtue of sub-article (1).

(4) The matters prescribed for the purposes of sub-article (1)(d)

may include matters related to persons other than the licence

holder.

(5) An auditor of a licence holder shall, in the absence of

compelling reasons not to do so, simultaneously report the

information specified in sub-articles (1) and (2), in accordance with

the provisions of sub-articles (3) and (4), to the management body

of the licence holder.

(6)

The competent authority may require the replacement of a

person referred to in sub-article (1) if that person acts in breach of his

obligations under paragraphs (a) to (d) of sub-article (1).

APPEALS, REMEDIES, SANCTIONS AND CONFIDENTIALITY

(1) In this article the Financial Services Tribunal means

the Tribunal established under article 21 of the Malta Financial

Services Authority Act.

(2) Subject to the provisions of this article, an appeal shall lie

to the Tribunal with respect to

(a) any notice in terms of article 3(3);

(b) any failure to inform an applicant within the terms of

article 6(6);

(c) any administrative penalty imposed under article 16A;

(d) any refusal, variation, cancellation or suspension of a

licence under article 8(3);

(e) any notice issued or any order made in terms of

articles 10, 10A and 10C;

(f)

any decision concerning an advertisement under article

11;

(g) any punishment or penalty imposed under article

12(5);

(h) any directive given under article 15; or

(i)

any measure taken in terms of article 15A(1), (2) and (4);

(j)

any measure taken in terms of paragraphs (a) to (l) of

article 16AA(1).

(3) The provisions of article 21 of the Malta Financial Services

Authority Actshall apply mutatis mutandis to appeals that may be

brought before the Tribunal under this article.

(4) In pursuance of the UCITS Directive, the Tribunal referred to

in this article shall also have the competence to hear appeals by

European m anagemen t companies , ex er c ising a f re e do m of

establishment or a freedom to provide services in Malta, from

decisions of the competent authority to take measures for breaches

incurred by European management companies and the phrases

"aggrieved person" and "appellant" in article 21 of the Malta

F i n a n c i a l S e r v i c e s A u t h o r i t y A c t s h al l i n c l u d e E u r o p e a n

management companies.

An investment agreement which is entered into -

(a) by a person in the course of providing an investment

service in contravention of the provisions of article 3

of this Act; or

(b) by the holder of an investment services licence or by

an exempted person in consequence of anything said

or done by a person in the course of providing an

investment service in contravention of the provisions

of article 3,

shall be unenforceable against the other party; and such other party

shall be entitled to recover any money paid, or other property

transferred by him under the agreement, or where such property

cannot be so recovered, such party shall be entitled to have it

replaced by its value at the time of the agreement, together with

compensation for any loss sustained by him in consequence of such

payment or transfer or the non-recovery of the property transferred

and any profits that may have accrued as a result of that money or

other property having been transferred by him

Provided that where on demand for a recovery under this

article, the court is satisfied that -

(i)

in a case falling under paragraph (a), the person

therein mentioned reasonably believed he was

not contravening the provisions of the said

article 3; or

(ii) in a case falling under paragraph (b), the licence

holder or exempted person neither knew nor

ought to have known that the agreement was

entered into as mentioned in that paragraph,

it may allow an investment agreement to which this article applies

to be enforced and the money or property paid or transferred

thereunder to be retained.

(1) If, on an application by the competent authority made

to the Civil Court, First Hall, the said court is satisfied -

(a) that there is reasonable likelihood that a person will

contravene any of the provisions of articles 3, 4 or 11

or of any regulations, Investment Services Rules and

Conduct of Business Rules issued under it, or will

contravene or fail to comply with any condition,

obligation, requirement, Investment Services Rules,

directive, or order made or given under any of the

provisions of this Act; or

(b) that a person has contravened any such provision or

has contravened or failed to comply with any such

condition, obligation, requirement, Investment Services

Rules, Conduct of Business Rules, directive, or order

and that steps could be taken to remedy the

contravention or failure,

the court may give such orders as it may deem appropriate to

restrain the contravention or, as the case may be, to require the

person referred to in paragraph (a) or (b), or any other person who

appears to the court to have been knowingly concerned in the

contravention, to take such steps as the court may direct.

(2) If, on an application made under sub-article (1), the court is

satisfied that a person has entered into any transaction in

contravention of any of the provisions of articles 3, 4 or 11, the

court may order that person and any other person who appears to

the court to have been knowingly concerned in the contravention to

take such steps as the court may direct for restoring the parties to

the position in which they were before the transaction was entered

into.

(3) If, on an application made under sub-article (1), the court is

further satisfied that -

(a) profits have accrued to any person as a result of the

contravention; or

(b) an investor has suffered loss or been otherwise

adversely affected as a result of that contravention,

the court may order the person responsible for the contravention to

pay into court such sum as appears to it to be just having regard to

the extent of the profit, loss or adverse effect as aforesaid, and

order such sum to be paid out as the court may direct to the persons

who have entered into transactions as a result of which profits have

accrued or losses or adverse effects have been suffered as

aforesaid.

(4) For the purposes of this article the court may order the

production by any person of such accounts and the provision of

such information, and verified in such manner, as the court may

deem appropriate.

(5) The provisions of this article shall be without prejudice to

any right of any aggrieved person to bring proceedings directly in

respect of any right such person may otherwise have independently

of the competent authority.

(1) Any person who contravenes or fails to comply with

any of the provisions of articles 3, 4, 9, 10, 11, 13, 15 or 26 or of

article 13 as applied by article 14, or of articles 13, 14 or 15 as

applied by articles 17 and 17D, or of any court order made under

article 21 or of any regulations made under articles 12 or 31, or

contravenes or fails to comply with any condition, obligation,

requirement, directive or order made or given under any of the

provisions of this Act, shall be guilty of an offence.

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

the provisions of this Act or of any regulations made thereunder, or

any condition, obligation, requirement, directive or order made or

given as aforesaid, furnishes information or makes a statement

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

material respect, or recklessly furnishes information or makes a

statement which is inaccurate, false or misleading in any material

respect, shall be guilty of an offence.

(3) Any person who is knowingly a party to the carrying on of

any investment service or of any activity by a collective investment

scheme with a fraudulent intent or for a fraudulent purpose, shall be

guilty of an offence.

(4) Any person who by any statement, promise or forecast

which he knows to be misleading, false or deceptive, or by any

dishonest concealment of material facts, or by the reckless making

(whether dishonest or otherwise) of any statement, promise or

forecast which is misleading, false or deceptive, induces or

attempts to induce another person to enter into or offer to enter into

an investment agreement, shall be guilty of an offence.

(5) Any person who with intent to avoid detection of the

commission of an offence under this Act removes, destroys,

conceals or fraudulently alters any book, document or other paper,

shall be guilty of an offence.

(6) Any person who intentionally obstructs a person exercising

rights conferred by this Act shall be guilty of an offence.

A person guilty of an offence under the provisions of

article 22 shall be liable on conviction to a fine (multa) not

exceeding four hundred and sixty-six thousand euro (€466,000) or to a

term of imprisonment not exceeding four years, or to both such fine

and imprisonment, unless such fine or term of imprisonment is

otherwise imposed under article 12(5).

(1) No proceedings for an offence under this Act shall be

commenced without the consent of the Attorney General.

(2) The provisions of this Act shall not affect any criminal

proceedings that may be competent under any other law.

(1) If it appears to the competent authority that a person

wh o h o l ds o r w h o h e l d a l i c e n c e , o r an y o t he r p e r s o n, ha s

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

made under this Act or has contravened or failed to comply with

any condition, obligation, requirement, Investment Services Rules,

Conduct of Business Rules, directive, or order made or given under

any of the provisions of this Act, the competent authority may

publish a statement to that effect.

(2) Nothing in this article shall restrict or otherwise prejudice

the powers of the competent authority under article 15(4).

(1) Other than for the proper discharge of their duties or

functions under this Act or any other Act, or as may be otherwise

provided in any other law, information obtained by the competent

authority or by its officers, employees or agents, as well as by

inspecto rs, audi tors and experts engag ed by th e com petent

authority for the purposes of, or pursuant to, any of the provisions

of this Act, or of any regulations, Investment Services Rules or

Conduct of Business Rules made thereunder, or in the discharge of

their duties or any functions, shall be treated as confidential and

protected by the duty of professional secrecy, and shall not be

disclosed to any other person, except in the following cases

(a) where the disclosure is required for the detection,

prevention or prosecution of criminal offences under

the criminal provisions of this Act or any other Act;

(b) where the information is disclosed by the competent

authority with a view to the institution of, or otherwise

for the purposes of any proceedings before any court or

tribunal;

(c) where the information is disclosed in civil or

commercial proceedings in relation to the bankruptcy

or dissolution and consequential winding up by the

Court of a licence holder, provided such information

does not concern third parties and is necessary for the

carrying out of the proceedings, or is disclosed to an

overseas body responsible for the liquidation and

bankruptcy of a person holding a licence or an

equivalent authorisation from a European regulatory

authority or an overseas regulatory authority;

(d) where a summary or collection of the information is

prepared or supplied in such a way as not to enable the

identity of any persons, including UCITS, their

management companies and custodians to whom the

information relates to be ascertained;

(e) where the information is disclosed to an auditor where

such disclosure would assist him in the exercise of his

functions under article 18;

(f)

where the information is provided to the Central Bank

of Malta in the exercise of its functions in terms of law;

(g) where the information is provided to such other local

or European or overseas regulatory, judicial or

enforcement authorities in the pursuance of serious

concerns of a regulatory or criminal nature; and

(h) where the competent authority publishes the outcome

of stress tests in accordance with Article 100 of the

CRD or Article 32 of Regulation (EU) No 1093/2010

and, or transmits the results to the EBA

Provided that this article shall not prevent the competent

authority from exchanging or transmitting confidential information

in accordance with the AIFM Directive, the BRRD, the CRD, the

CRR, the MIFID, the MiFIR, the UCITS Directive, the IFD and the

IFR, and with other Directives of the European Union applicable to

licence holders, credit institutions, pension funds, insurance and

reinsurance intermediaries, insurance undertakings, regulated

markets or market operators, including the exchange or transmission

of confidential information to ESMA or the ESRB

Provided further that this article shall not prevent the

competent authority fro m usin g such inform ati on for other

purposes where the body or person communicating information to

the competent authority consents thereto.

(1A) Notwithstanding the provisions of sub-article (1),

information obtained by the competent authority or by its officers,

employees or agents, as well as by inspectors, auditors and experts,

who are or were engaged by the competent authority, in the course of

their duties and, or pursuant to the IFR or the IFD as transposed in

national law, shall be treated as confidential and protected by the duty

of professional secrecy, and shall not be disclosed to any other person,

except in the following cases

(a) where it is necessary for the proper discharge of their

duties or functions under this Act or any other Act, or

as may be otherwise provided in any other law;

(b) where the information is disclosed in summary or

aggregate form, provided that individual investment

firms or persons cannot be identified, without

prejudice to cases covered by criminal law;

(c) in civil or commercial proceedings, where the

investment firm to which the information relates has

been declared bankrupt or is being compulsorily

wound up, such information does not concern third

parties and the disclosure of such information is

necessary for carrying out those proceedings;

(d) in proceedings initiated under article 19;

(e) to monitor the prudential rules set out in the IFD as

transposed in national law and in the IFR;

(f)

to impose penalties and other administrative measures;

(g) in an appeal against a decision of the competent

authority, including court proceedings;

(h) to the Commission of the European Union when the

information is necessary for the exercise of the powers

of the Commission of the European Union, or

(i)

to the EBA, ESMA, the ESRB, central banks of the

Member States or EEA States, the European System of

Central Banks and the European Central Bank, in their

capacity as monetary authorities, and, where

appropriate, public authorities responsible for

overseeing payment and settlement systems, where

that information is necessary for the performance of

their tasks.

(1B) Natural and legal persons and other bodies, other than those

mentioned in sub-article (1A), that receive information pursuant to the

IFR or the IFD as transposed in national law shall only use that

information for the purposes expressly provided by the competent

authority or by law.

(2) Without prejudice to the cases covered by criminal law, any

confidential information received by bodies or natural or legal

persons within the meaning of Article 81 of the MiFID, Article 15 of

the IFD, and of Article 102 of the UCITS Directive shall only be

used in the performance of their duties and for the exercise of their

functions. In addition, such information is to be used specifically

for the purpose for which such information was provided to them

and, or in the context of administrative or judicial proceedings

specifically related to the exercise of those functions

Provided that where a body or person communicating

information to the competent authority consents thereto, such

information may be used by the competent authority for other

purposes.

(3) The provisions of this article and of articles 17 and 17F of

this Act shall not preclude the competent authority from

transmitting to the Central Bank of Malta, the European System of

Central Banks and the European Central Bank, in their capacity as

monetary authorities, and, where appropriate, to recognised clearing

houses or other similar body performing clearing or settlement

services, to bodies which administer compensation schemes, and to

other public authorities responsible for overseeing payment and

settlement systems, confidential information intended for the

performance of their functions. Likewise, the competent authority

shall be entitled to the receipt of such information as it may require for

the purpose of performing its functions under the MIFID and the

MiFIR

Provided that where the exchange of information is carried out

in terms of the UCITS Directive, the express consent of the European

regulatory authority shall be obtained.

(4) Where an officer or an employee of a licence holder has reason

to believe that a transaction or a proposed transaction could involve

money laundering or the funding of terrorism, he shall act in

compliance with the reporting and other obligations set out in the

regulations made under article 12 of the Prevention of Money

Laundering Act and any procedures and guidance issued thereunder,

and such disclosure shall not constitute a breach of confidentiality.

MISCELLANEOUS

Deleted by Act V.2020.17.

A notice or other document to be given or served under this

Act, or any regulations, Investment Services Rules or Conduct of

Business Rules made thereunder, shall be deemed to have been duly

given or served on a person if -

(a) it has been delivered to him; or

(b) it has been left at the address furnished by him to the

competent authority, or to his last known address; or

(c) if it has been sent to him by post or by telefax at any of

the aforesaid addresses; or

(d) in the case of a body of persons, whether corporate or

unincorporate, or of a scheme or of a trust, if it has

been given or served in any of the manners aforesaid

to or on a secretary, clerk, manager, trustee or their

equivalent, or to any member of the governing body or

an appointed representative.

29. (Deleted by: XX. 2007.81.).

(Imħassar bl-Att XX. 2007.81.).

(1) Expatriate officers and employees of any licence

holder and the licence holder shall be exempt from the provisions

of the Social Security Act, in respect of remuneration paid or

attributed to such officers and employees by the licence holder for

services rendered exclusively in a managerial capacity or in a

function requiring special expertise which is not generally

available in Malta.

(2) In order to obtain the exemption provided for by sub-article

(1), the licence holder shall apply to the Department for Social

Security identifying the officers and employees concerned together

with such proof as the department may require that the conditions

of that sub-article are satisfied.

(3) Personal belongings and effects of an expatriate officer or

employee of a licence holder imported by him into Malta, not later

than six months from his first taking up residence, shall be exempt

from customs duty

Provided that duty shall become payable on anything

imported free of duty and subsequently sold, assigned or otherwise

transferred to a person resident in Malta.

(4) Furniture, equipment and other material required by a

licence holder and imported into Malta for its own use and purpose

shall be exempt from customs duty

Provided that duty shall become payable on anything

imported free of duty and subsequently sold, assigned or otherwise

transferred to a person resident in Malta.

(5) For the purposes of this article, "expatriate" means an

individual who is not a national of Malta, who has been posted to

Malta from abroad or recruited directly from abroad in order to be

employed by a licence holder, whose mission in Malta is of a

temporary nature and who has maintained the centre of his

economic interests outside Malta.

(1) A body corporate, formed, incorporated or registered

in a country outside Malta (hereinafter referred to as "foreign body

corporate"), and carrying on the business of a collective investment

scheme, which is similar in nature to a body corporate as known

under the laws of Malta (hereinafter referred to as "local body

corporat e"), and which would, if it were such a local body

corporate qualify to be authorised or recognised as a collective

investment scheme under this Act, may, subject to the specific

approval and authorisation of the competent authority, be continued

as a collective investment scheme under this Act and under the

applicable laws of Malta.

(2) The continuance of a foreign body corporate shall not take

place unless such continuance (or similar process, including

conversion) is permitted by the applicable laws of the foreign

jurisdiction and is in accordance with such provisions thereof as

may bring about such continuance (or similar process).

(3) Continuance may only take place if it is allowed by the

statute or equivalent instrument of the foreign body corporate to so

continue, and if it is approved in accordance with the procedure, if

any, established therein or in the applicable law of the foreign

jurisdiction for this purpose.

(4) The continuance of a foreign body corporate as a local body

corporate shall be effected by an instrument of continuance

containing, in addition to the declarations relating to the

continuance, the equivalent of a memorandum and articles or

equivalent constitutive document as may be required by this Act or

other applicable laws of Malta for the registration of such body

corporate in accordance with the type of local body corporate in

which it is to be continued, and showing on the face of it that the

continuance has been approved as provided in this article.

(5) The delivery of the instrument of continuance to the

Registrar of Companies shall, for all purposes of the laws of Malta,

be equivalent to the delivery of a deed of partnership or of a

memorandum and articles of a company, as the case may be, as if it

were a local body corporate to be registered under this Act; and the

Registrar shall treat it accordingly.

(6) Upon the delivery of the instrument of continuance and its

registration under this Act the body corporate shall cease to be a

body corporate under the jurisdiction of its previous registration

and shall continue its corporate existence under the laws of Malta,

and shall retain all its assets, rights and liabilities.

(7) Where continuance as aforesaid entitles or requires the

body corporate to redeem the interest of dissenting persons whose

approval is required, such interest may be redeemed on such terms

as may be agreed or as the courts in Malta may, on demand of either

party, establish.

(8)

(a) A local body corporate carrying on business as a

collective investment scheme authorised or otherwise

falling within the meaning of this Act, may, subject to

the specific approval and authorisation of the

competent authority, be continued as a foreign body

corporate, and the foregoing provisions of this article

shall apply mutatis mutandis.

(b) A local body corporate shall not cease to be a local

body corporate subject to Maltese jurisdiction until the

Registrar has received notice in writing of the

continuance (or other process) made as aforesaid and

unless and until, being satisfied that the requirements

of this article have been complied with, the Registrar

has registered such continuance and has, in

consequence thereof and by virtue of this article,

struck the name of the company off the register.

(9) The Minister may, acting on the advice of the competent

authority, make regulations for the better carrying out of the

provisions of this article.

Investment holding companies and mixed financial holding

companies shall be included in the supervision of compliance with the

group capital test.

(1)

Where two or more European investment firms that

are subsidiaries of the same parent undertaking, the head office of

which is in a third country, are not subject to effective supervision at

group level, the competent authority shall, together with any other

European regulatory authority involved, assess whether the European

investment firms are subject to supervision by the third-country

supervisory authority which is equivalent to the supervision set out in

the IFD as transposed in national law and in Part One of the IFR.

(2)

Where the assessment referred to in sub-article (1)

concludes that no such equivalent supervision applies, the competent

authority shall adopt appropriate supervisory techniques which

achieve the objectives of supervision in accordance with Article 7 or 8

of the IFR. Those supervisory techniques shall be decided by the

competent authority where it would have been the group supervisor

had the parent undertaking been established in the European Union,

after consulting the European regulatory authorities involved. Any

measures taken pursuant to this paragraph by the competent authority

shall be notified to the European regulatory authorities involved, to

EBA and to the Commission of the European Union.

(3)

Without prejudice to sub-article (2), where the competent

authority would have been the group supervisor had the parent

undertaking been established in the European Union, it may require

the establishment of an investment holding company or mixed

financial holding company in the European Union and apply Article 7

or 8 of the IFR to that investment holding company or mixed financial

holding company.

Where the parent undertaking of an investment firm licensed

under this Act is a mixed-activity holding company, the competent

authority may supervise transactions between such investment firm and

the mixed-activity holding company and the subsidiaries of the latter,

and require the said investment firm to have in place adequate risk

management processes and internal control mechanisms, including

sound reporting and accounting procedures to identify, measure, monitor

and control those transactions.