INNOVATIVE TECHNOLOGY ARRANGEMENTS AND SERVICES ACT *

ARRANGEMENTS AND SERVICES

CHAPTER 592

INNOVATIVE TECHNOLOGY ARRANGEMENTS

AND SERVICES ACT *

AN ACT to provide for the regulation of designated innovative

technology arrangements referred to in this Act, as well as of designated

innovative technology services referred to in this Act, and for the exercise by

or on behalf of the Malta Digital Innovation Authority of regulatory

functions with regard thereto.

1st November, 2018

ACT XXXIII of 2018. , as amended by Legal Notice 389 of 2020 .

The short title of this Act is the Innovative Technology

Arrangements and Services Act.

L.N. 389 of

(Articles 2 and 8)

2020. Innovative Technology Arrangements

The following shall be considered to be innovative technology

arrangements for the purposes of this Act

1. software and architectures which are used in designing

and delivering DLT which ordinarily, but not necessarily

(a) uses a distributed, decentralized, shared

and, or replicated ledger;

(b)

may be public or private or hybrids thereof;

(c) is permissioned or permissionless or

hybrids thereof;

(d) is secure to a high level against retrospective

tampering, such that the history of transactions cannot

be replaced;

(e)

is protected with cryptography; and

(f)

is auditable;

2. Software and other architectures, not necessarily used in

the context of DLT, smart contracts and related applications as well

as other similar arrangements, but which are used or meant to be

used, as a stand-alone or as part of a solution in sectors and areas

which are deemed to be of a risky or critical nature, where their

failure or misuse could amongst other things result in loss of life,

grave prejudice to the well-being and rights of natural persons,

significant asset loss or damage and significant damage to the

environment.

3. smart contracts and related applications, including

decentralised autonomous organisations, as well as other similar

arrangements;

4. any other innovative technology arrangement which may

be designated by the Minister, on the recommendation of the

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Authority, by notice from time to time.

(1)

Unless the context otherwise requires, terms and

phrases not defined in this Act shall have the same meaning as the

said terms and phrases are given in the Malta Digital Innovation

Authority Act.

(2)

In this Act, unless the context otherwise requires -

"this Act" means the Innovative Technology Arrangements

and Services Act, and includes any regulations made, and rules and

guidelines issued thereunder unless the context otherwise requires;

*This Act is repealed by Act XIX of 2024. See article 56.

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"administrator" means an officer or any person who is

appointed to carry out representative and fiduciary functions in the

control and administration of a legal organisation, and any person

who carries out such functions even if under another name, but shall

not include a technical administrator or a resident agent under this

Act or a VFA agent under the Virtual Financial Assets Act, and the

term "board of administrators" shall be construed accordingly;

"auditor" means a systems auditor of innovative technology

arrangements and related smart contracts recognised under this Act;

"Authority" means the Malta Digital Innovation Authority

established by the MDIA Act and any reference to the Authority

shall, unless the context otherwise requires, be construed as including

a reference to any person authorised by the Authority to act for or on

its behalf;

"innovative technology arrangement" means an arrangement

listed in the First Schedule;

"innovative technology service" means a service listed in the

Second Schedule, and "innovative technology service provider" shall

be construed accordingly;

"the MDIA Act" means the Malta Digital Innovation Authority

Act, and includes any regulations made, and rules and guidelines

issued thereunder, unless the context otherwise requires;

"Minister" means the Minister responsible for Digital

Economy;

"national competent authorities" are authorities, departments,

agencies or divisions of the Government or government entities

which carry out supervision, regulatory or assessment functions of

persons applying for any form of recognition under applicable law as

are listed in the First Schedule to the MDIA Act;

"systems auditor" means a person who, upon a written

engagement accepts to review and, or audit innovative technology

arrangements and smart contracts or parts thereof who may not

necessarily be an accountant or auditor with a practicing certificate

under the Accountancy Profession Act;

"technical administrator" means the person who, upon a

written engagement accepts to carry out specific functions relating to

the operation, of the whole or a designated part, of an innovative

technology arrangement as are established in this Act, in guidelines

issued by the Authority, as the same may be supplemented by the

conditions applicable to the certification of the particular certified

innovative technology arrangement.

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PART II

Principles of Recognition

(Article 2)

Innovative Technology Services

The following shall be considered to be innovative technology

services for the purposes of this Act

1. the review or audit services referred to in this Act

with reference to innovative technology arrangements

provided by system auditors;

2. the technical administration services referred to

in this Act with reference to innovative technology

arrangements provided by technical administrators.

(1)

The Authority shall administer the provisions of

this Act in line with the guiding principles and in furtherance of the

regulatory objectives established by MDIA Act. All the provisions of

the MDIA Act shall apply in relation to persons who are recognised

under this Act, including without limitations in so far as relates to the

powers vested in the Authority regarding recognition and

authorisations or refusal thereof, investigation, and enforcement and

also with regard to regulatory actions which may be taken.

(2) This Act provides for various methods of recognition

which the Authority may extend to varied types of innovative

technology arrangements and innovative technology services as are

referred to in the Schedules and this in accordance with the

provisions of this Act.

(3) Unless having the functions and, or the characteristics

referred to in the Schedules, it shall be presumed that the type or class

of innovative technology arrangement or service shall not be eligible

for recognition by the Authority under this Act.

(4)

In the event of reasonable doubt as to whether -

(a)

an innovative technology arrangement or

innovative technology service has the functions and, or the

characteristics referred to or is within the type or class of

arrangements or services referred to in the Schedules; or

(b)

the arrangement is sufficiently similar in scope

and functionality to an innovative technology arrangement as

defined in this Act; or

(c)

the arrangement includes but does not consist

solely of an innovative technology arrangement,

the Authority may, on a written application for a ruling regarding any

particular innovative technology arrangement or innovative

technology service, issue a ruling confirming or denying the

application, in part or in full.

In case of confirmation, the relevant innovative

technology arrangement or innovative technology service shall

thereby be considered to have the functions and, or the characteristics

referred to or be of the type or class of arrangements or services listed

in the Schedules and the applicant may proceed with an application

for recognition under the provisions of this Act.

(5)

The decision by the Authority to deny an application

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under this article shall be subject to review or appeal by the Tribunal

under the provisions of the MDIA Act and in case of a negative

determination of the appeal, the particular innovative technology

arrangement or innovative technology service shall not be eligible for

recognition unless such particular innovative technology arrangement

or innovative technology service is modified to fit within the scope of

the Schedules or until such time as the Schedules are amended to

include such type or class.

(Article 13)

Term of Validity of Authorisations

Certification of Innovative Technology Arrangements - 2 years

Registration of Systems Auditors - 2 years

Registration of Technical Administrators - 2 years

Unless expressly stated in a provision of this Act or

other special law, nothing in this Act shall be considered as

exempting any innovative technology arrangement or any innovative

technology service provider from the provisions of any other law,

including other regulatory laws requiring authorisations or similar

approvals

Provided that, on the basis of the principles of

simplification and avoidance of duplication, in the event that a

requirement under this Act is similar in scope to that under another

law and has been satisfactorily met by an applicant, the Authority

shall, if necessary with the written consent of the applicant, co-

ordinate with the other national competent authorities and rely on the

submissions and processes being carried out by the other authorities

in carrying out its duties under this Act.

(Article 8)

Provisions supplemental to article 8(4)(a)

1.0

Interpretation

1.0.1 Where an innovative technology arrangement and

related assets constitute the principal asset of the legal organisation,

the Authority may consider persons other than those -

(a)

holding the office of ''administrators'' as defined

in any special law applying to the relevant form of legal

organisation; or

(b)

being ''shareholders'' as defined in any special

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law applying to limited liability companies or partnerships en

commandite, the capital of which is divided into shares,

as coming within the ambit of the terms for the purposes of article

8(4)(a) and other articles in this Act, any other special laws the

Authority is entitled to administer or enforce or any rules or

guidelines which may refer to the same concept.

1.0.2 Where in any particular case and on analysis of an

arrangement it is not possible for any person to be identified as

falling within the above categories, then the Authority shall proceed

on the basis that there are none and may –

(a)

tailor the conditions of recognition to such

context; or

(b)

require that reference be made to any other

person who may be providing material operational services to

the arrangement or who may be receiving material economic

benefit from the operations of the arrangement.

1.0.3 The tests in this Schedule apply on an ongoing basis as

of the first working day of January and the first working day of June

of each calender year subject to being applied any other time when a

specific notification of any relevant change or an application relating

to changes in administrators or shareholders is being made to the

Authority.

1.0.4 The calculation of the nature and extent of ownership

or control stated hereunder shall be made on a direct or indirect basis.

In relation to a person holding such rights or powers such calculation

shall also, to the extent possible, be made on a cumulative basis

irrespective of in how many wallets or in what manner such rights

and powers may be held. If shares are held by an intermediary, then

the tests in this Schedule shall be applied to the beneficial owners

who shall be obliged to advise the administrators or the Authority of

their cumulative beneficial ownership interests. Until such time as the

technology of the arrangement can carry out such calculations, the

duty to declare totals of holdings in cases of multiple holdings, rights

or powers shall be that of a user who shall be advised of such duty in

any relevant documentation, including any whitepaper.

1.0.5 The term ''share'' means a right, recorded in a register

held by a legal organisation, which, unless otherwise stated in the

constitutive instrument of the particular legal organisation, entitles

the holder to participate in the capital and profits and to vote in the

relevant organ of a legal organisation, and shall include any

equivalent interest in any other form of legal organisation, including

but not limited to, partnership interests, participation rights in an

association, beneficial interests in a foundation, or tokens or other

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digital assets giving such rights in relation to a legal organisation or

in relation to an innovative technology arrangement.

1.0.6 It shall be lawful for the Authority to request

information as to whether the holders of shares have agreed to act in

concert in relation to any relevant matters outlined below and in such

case to treat the aggregation or group of such persons as the

administrators or qualifying shareholders for the purposes of this

Schedule.

1.1

Administrators

1.1.1

The term ''administrator'' shall not include

(a)

the technical administrator referred to in this Act

and such functionary is presumed to be outside the term unless

his role, powers and duties which are assumed by him in

writing in addition to those stated in this Act with reference to

the function of technical administrator and ancillary or related

roles, powers and duties qualify under sub-paragraph 1.1.3;

(b)

any user who has the right or power to express

his views or consent to a proposal in relation to the software

consisting of an innovative technology arrangement when such

user is a member of the user community and his holding or

functions do not permit him to influence decisions on his own.

A user shall be considered to be in a position to influence

decisions as an administrator if he holds a post within the

organisation which enables him to vote with a weighting of more than

25% in favour of or against material decisions relating to the

governance of the arrangement.

1.1.2 A person falling within sub-paragraph 1.1.3 shall not

be excluded from this term because the post or office to which he is

engaged is referred to under a different designation, whether he is

engaged with full or restricted powers, for a defined term or

indefinitely or against remuneration or not and at whatever level in

the innovative technology arrangement he may exercise such role,

powers or duties.

1.1.3 For the purposes of article 8(4)(a)(i), and without

prejudice to the manner in which any other rules under other laws

(including those relating to the prevention of money laundering) may

operate, the term ''administrator'' shall mean

(a)

a person who has powers of representation and

may generally bind the legal organisation in contract;

(b)

a person who has control of assets belonging to

the legal organisation and who has any powers in relation to

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the assets of any user which may be using the arrangement;

(c)

a person who has supervisory functions over the

operation of the software and may intervene in the normal

course of business to respond to queries by the users, in

particular for access to the software, access to and powers to

amend documentation evidencing the terms and conditions

applicable to participation on the arrangement, taking

decisions relating to on-boarding of persons onto the

arrangement, decisions on the application of mandatory laws

and generally on changes relating to the software itself when

prompted by the market in which it operates, the technical

administrator or the Authority, including taking final decisions

on proposed reorganisation or forks of the arrangement, and in

such cases whoever has the power to decide which underlying

blockchain or DLT software to use; and

(d)

a person having general governance functions in

relation to the arrangement, duties under any rules of an

exchange, duties of compliance with any mandatory laws

applicable to the context and other fiduciary obligations listed

in article 1124A of the Civil Code. (Cap. 16.)

2.1

Shareholders

2.1.1

The term ''shareholder'' shall not include

(a)

the technical administrator referred to in this

Act, even if he is given control rights and powers in relation to

his functions under this Act;

(b)

any user who has the right or power, including

through tokens, to express his views or consent to a proposal in

relation to the software consisting of an innovative technology

arrangement when such user is a member of the user

community and his holding or functions do not permit him to

influence decisions on his own.

A user shall not be so considered if the powers he has are

merely a mechanism involving a simple vote or expression of support

for actions of an ordinary nature intended to achieve consensus in a

democractic manner on matters relating to the purpose of the

organisation on which all users are allowed to vote.

2.1.2 For the purposes of article 8(4)(a)(ii), and without

prejudice to the manner in which any other rules under other laws

(including those relating to the prevention of money laundering) may

operate, the term ''shareholder''

(a)

shall include any holder of shares in a company,

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any partner in a partnership, any beneficiary under a

foundation or any other member in a co-operative or

association of persons who has a share in the capital or a share

in the profits of the legal organisation, and who may vote on

general matters raised for the holders thereof to express their

view;

(b)

shall refer to persons who have the power to vote

on a proposal to amend the software or architecture of an

innovative technology arrangement which can modify the

rights of the holders thereof other than on inconsequential

administrative aspects;

(c)

only includes a holder of tokens whether issued

with reference to the specific innovative technology

arrangement or otherwise, which

(i)

are issued by a legal organisation with

reference to an innovative technology arrangement

and which grants such rights to the holder thereof

with the intention of reflecting the same status and

powers in the legal organisation which owns the

innovative technology arrangement; or

(ii) qualify as ''equity'' in the legal organisation

or the arrangement, in that they give the holder

thereof a share in the capital and profits of, or in

relation to, the arrangement and voting powers in

relation to an innovative technology arrangement and

which enable him to vote in favour of material

decisions relating to defined matters established for

the continuing operations of the arrangement and has

A. a weighting of more than 25% of the

total tokens in issue;

B. under reserved powers, a veto or similar

power where he may determine the outcome of a

vote or a proposal due to special rights vested in

him notwithstanding that he may hold less than

25%,

and shall not include any other user or owner of

tokens or other digital assets even if they have a

voting right, a right to be granted additional tokens in

specified circumstances or any other power or right to

participate in specified circumstances.

3. The Authority may issue specific rules or guidelines on

the interpretation and application of the provisions of this Schedule

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and may further define administrators and shareholders for the

purposes of the Act

(1)

Any person who desires to obtain recognition for

any innovative technology arrangement or any innovative technology

service as stated in the Schedules may apply to the Authority by

making use of the relevant prescribed forms issued by the Authority

for the purpose or in the absence of a prescribed form, by an

application in writing providing the information required by the

Authority for such purpose with reference to the subject matter of the

application.

(2) An applicant shall provide all information,

documentation and assurances as may be required by the Authority to

permit the Authority to consider any application and determine the

suitability of the applicant to be recognised, depending on the

innovative technology arrangement or the innovative technology

service being the subject of the application.

(3) Once recognised, the applicant, or if different, the

person to whom the recognition has been issued, shall be bound to

fulfil all the conditions prescribed by this Act and the MDIA Act, any

regulations as well as any rules or other regulatory instruments in

force for as long as the recognition remains in force.

(1)

The Authority shall maintain an electronic

register, hereinafter referred to as ''the Register'', of all recognitions

issued or obtained under this Act and this in accordance with article

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27(5) of the MDIA Act.

(2) The Register shall be divided into such parts, and each

part with such classes, as the Authority shall from time to time

determine, so as to represent the different types of recognition

granted to applicants.

(3) The Register shall provide all such details as the

Authority shall consider necessary to identify the relevant applicant

and the activities being carried out.

(4) The Register shall be available to the public on the

website of the Authority.

PART III

Certification of Innovative Technology Arrangements

(1)

The Authority may certify different innovative

technology arrangements for one or more specified purposes and with

reference to

(a)

qualities;

(b)

features;

(c)

attributes;

(d)

behaviours; or

(e)

aspects,

as may be determined by the Authority, and which shall be stated in

the certification.

(2) The issue of a certification for one purpose, quality and

feature, attribute and behaviour or other aspect shall neither operate

as a certification for different purposes, qualities and features,

attributes and behaviours or aspects nor shall it bar the issue of other

certifications for other purposes, qualities and features, attributes and

behaviours or aspects.

(3) The Authority shall from time to time establish

guidelines on the purposes, qualities and features, attributes and

behaviours or aspects for which it will and, or will not issue

certifications and in so doing shall also establish the basis for the

particular certifications or refusals.

It shall also establish guidelines on other matters such as

the review processes and the timing of such reviews for the purposes

of maintaining in place any certifications it may issue.

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(4) The Authority may designate, and make public, any

international or other standards of certification it may rely on when

issuing its own certification under this Act.

(5) The Authority may amend the guidelines referred to

above from time to time including to enhance the qualitative

standards of its reviews but such amendments shall not, except with

the consent of any applicant with a pending application or the holder

of the certification, come into force prior to the lapse of at least six

(6) months after the publication of such amendments and, in any case,

shall only apply from the next review due under the relative

guidelines immediately after the lapse of the said six (6) months.

(6) Once certified, an innovative technology arrangement

shall be granted a Certificate under this Act which shall state the

details of how the innovative technology arrangement is identified,

including any public key or a brand name, and the Certificate shall be

given a unique number for purposes of identification.

(7) The certified innovative technology arrangement shall

post the Certificate on the arrangement, in a specific location which

shall be notified to the Authority, in an easily accessible and legible

format so it can be viewed and understood by all users of the

innovative technology arrangement.

(8) When a Certificate is issued in favour of an innovative

technology arrangement it shall be presumed to refer to all parts of

the innovative technology arrangement which are described as

constituting the arrangement in the application unless expressly

stated otherwise, in which case, it shall refer only to the specific parts

designated as the subject of the certification.

(1)

Any innovative technology arrangement which

is referred to in the First Schedule, or in relation to which the

Authority has issued a written ruling on eligibility under article 3,

may at any time be the subject of an application to the Authority for

certification.

(2) The Authority may certify any innovative technology

arrangement when it is satisfied that the general and the specific

requirements of this article have been satisfied.

(3) The general requirements are intended to meet the

standards of legality, integrity, transparency, compliance and

accountability generally established for innovative technology

arrangements by the Authority reflecting the principles of the MDIA

Act and this Act, and confirmation that none of the circumstances

referred to in article 29 of the MDIA Act arise, and shall be assessed

by the Authority based on its own reviews of all persons involved, all

documentation available and the software it may access as would any

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user thereof.

(4) The specific requirements shall establish to the

satisfaction of the Authority that

(a)

the innovative technology arrangement is fit and

proper for the purposes for which it declares in the application

to have been established and having the qualities, attributes,

features, behaviours or aspects also therein declared; and when

owned or controlled by a legal organisation

(i)

any administrator of such organisation, if

any, is a fit and proper person to carry out his

functions as administrator; and

(ii) if there are shareholders in any legal

organisation which owns or controls the innovative

technology arrangement, any shareholder holding

more than twenty-five per cent (25%) of the shares or

ownership interests in the said legal organisation or

who, through provisions of the statute, has special

voting or other rights permitting him to exercise

effective control over the activities of the legal

organisation, (hereinafter referred to as a "qualifying

shareholder") shall be a fit and proper person,

the above being subject to the more detailed provisions of the Fourth

Schedule and any rules or guidelines issued pursuant or in relation to it;

(b)

the software comprising the innovative

technology arrangement, or such parts of it as are designated in

applicable rules or otherwise in writing by the Authority, has

been reviewed by a registered systems auditor, or registered

systems auditors, who are independent from all persons

owning, administering, operating or otherwise involved in the

innovative technology arrangement, and the Authority has

been provided with positive assurance by the systems auditor,

or when more than one, each systems auditor, in relation to the

matter of audit and review on which he has been engaged.

The systems auditor shall confirm that the

innovative technology arrangement meets reasonable

standards with reference to -

(i)

the specific purposes, qualities, features,

attributes, behaviours or aspects of the innovative

technology arrangement;

(ii)

all authorisations or powers granted to -

(A)

the Authority or other national

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competent authority, if any; or

(B)

the technical administrator; or

(C) the

innovative

technology

arrangement itself,

exist as stated and operate as intended; and

(iii) compliance with any rules and regulations

made under this Act and any guidelines issued by the

Authority applicable to the particular type of

innovative technology arrangement, as well as any

conditions established by the Authority in the

particular case.

The Authority may at its discretion,

cumulatively or alternatively, require a high level review or

audit on the characteristics of the innovative technology

arrangement when, in the opinion of the Authority, the specific

purposes, behaviours or aspects of the relevant innovative

technology arrangement

(i)

need to be considered holistically in view

of its complexity; or

(ii) are not susceptible for reasons acceptable

to the Authority, to the review and assurance

described above,

and in such cases the level of the review or audit and the

relative assurances shall be expressly stated in the certification

and prominently reflected in the website of the applicant, if

any, the innovative technology arrangement and in the Register

of the Authority.

(c)

the innovative technology arrangement has a

registered technical administrator in office at all times, and

who is able to demonstrate to the Authority the ability of the

innovative technology arrangement to satisfy -

(i)

all pre-requisites for the certification which

may be granted to it under this Act;

(ii) its ability to meet standards on a continuing

basis and to address critical matters, and how to

address them, as are stated in guidelines, if any, by the

Authority in the event they occur;

(iii) its ability to vary parameters or

functionalities where the objective of the system is to

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address mandatory legal requirements which may

reasonably be predicted to change over time; and

(iv)

with reference to matters, if any, upon

which -

(A)

the technical administrator;

(B)

the Authority or other national

competent authorities; or

(C)

any other designated person,

may be given the discretion or may be required to

intervene and which are addressed by the software, all

authorisations or powers required to carry out such

interventions exist and operate as intended;

(d)

the innovative technology arrangement is in a

position to -

(i)

comply with and observe any innovative

technology authorisation rules and regulations

applicable to it, any guidelines issued by the

Authority as well as any conditions established by the

Authority in the particular case; and

(ii) carry out any obligations imposed upon it

by applicable law, including those relating to the

prevention of money laundering and the financing of

terrorism, the protection of personal data, the respect

of the rights of consumers and other mandatory laws;

and

(iii) has in-built technology features, to enable

the technical administrator to intervene in a

transparent and effective manner in the event of -

(A)

a material cause of loss to any user;

or

(B)

a material breach of law,

so as to ensure that the cause of loss or breach of law

is satisfactorily addressed to the best of his abilities

and to ensure it does not occur or re-occur, and in

case of unjustifiable failure by the technical

administrator, on the intervention of the Authority;

(e)

the specific purposes, qualities, features,

attributes, limitations, conditions, terms of service and

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behaviours or aspects of the relevant innovative technology

arrangements and on the basis of which a user is invited to

participate in, rely on or use the innovative technology

arrangement are stated in the English language in an easily

accessible and intelligible format. On such matters as are

stated, in case of conflict between the English language and

the underlying code of the innovative technology arrangement,

the English language shall prevail. Where the applicant wishes

to use multiple languages for this purpose, in case of conflict

between languages, the English language version shall prevail.

(5)

In the case of -

(a)

DLTs

or

other

innovative

technology

arrangements which are in operation, or at a very advanced

stage of development, on the date of the coming into force of

this Act; and

(b)

open, decentralised, public and permission-less

DLTs, and other similar innovative technology arrangements,

where compliance with one of the requirements stated in this article

is not practicable within short time frames due to technical challenges

as shall be confirmed by a systems auditor registered under this Act,

if the Authority considers the circumstances of the case appropriate,

the Authority may, on the basis of the recommendation of the said

systems auditor and the agreement of the applicant identify -

(a)

the issues on which there is non-compliance with

the legal requirements stated in this article;

(b)

the matters which need to be overcome for such

issues to be addressed;

(c)

the manner in which such issues may be

addressed as would satisfy the Authority of compliance with

this article; and

(d)

the time frame within which the issues are to be

addressed,

and proceed to issue a certification of the said innovative technology

arrangement conditionally upon compliance within the time frames

agreed with the applicant and subject to the additional condition that

a systems auditor who has been registered under this Act and who

maintains such recognition at all relevant times issues a positive

assurance that the necessary actions and modifications have been

made to the innovative technology arrangement to achieve the agreed

outcomes and compliance with this article.

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The condition shall be recorded in the certification.

(6) When the Authority proceeds to certify the innovative

technology arrangement under this Act it shall enter its name in the

Register of recognised innovative technology arrangements, under

such category as it may determine.

(7) The innovative technology services providers referred to

above shall be appointed by any person who is an applicant,

developer or owner of the innovative technology arrangement or in

case the innovative technology arrangement is held within a legal

organisation, by the legal representative of the organisation.

(8) When an innovative technology arrangement is held

within a legal organisation, whether with legal personality or not, the

certification shall be made in the name of the legal organisation and

where it does not qualify as a legal organisation, the Certificate shall

be made out to the applicant, if so requested, and also to the technical

administrator, who has been registered under this Act and who

maintains such recognition at all relevant times, who has been

engaged in respect to the innovative technology arrangement.

PART IV

Registration of Service Providers

(1)

The Authority may accept to register persons

providing different innovative technology services as shall be stated

in the registration. The registration for the provision of one type of

service shall not bar the registration of the same person to provide

other types of services.

(2) The Authority shall from time to time establish

guidelines on the purposes for which it will register innovative

technology service providers and in so doing shall also establish the

requirements for the particular registrations. It shall also establish

other aspects such as the review processes and the timing of such

reviews for the purposes of maintaining in place any registrations it

may accept.

(3) The Authority may designate and make public any

international or other standards of service it may rely on when

considering a registration of services providers under this Act.

(4) The Authority may amend the guidelines referred to

above from time to time including to enhance the qualitative aspects

or purposes of its reviews but such amendments shall not come into

force prior to the lapse of at least six (6) months after the publication

of such amendments and, in any case, shall only apply from the next

review due under the relative guidelines immediately after the lapse

of the said six (6) months.

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(5) Once registered, a service provider shall be granted a

Certificate of Registration which shall state its name and address and

have a unique number for purposes of identification and shall list the

class or classes of services which the applicant has been registered to

provide.

(6) The registered service provider shall post the Certificate

of Registration on its website, if it has one, as well as on any

innovative technology arrangement to which it renders its services

and this shall be posted thereon in an easily accessible and legible

format so it can be viewed and understood by all users of the

innovative technology arrangement.

(7) The registration of an innovative technology service

provider may be made in relation to persons, being individuals or

legal organisations, whether having legal personality or not, and may

be carried out -

(a)

personally;

(b)

through the resources of the organisation;

(c)

through delegates approved by the Authority;

(d)

through technology systems

Provided that in cases referred to in paragraphs (b) and

(c), apart from the name of the registered innovative technology

services provider approved by the Authority, the individual who is

approved to provide the services shall also be named in the

registration and related certificates.

(1)

Any innovative technology service provider who

is referred to in the Second Schedule, or in relation to which the

Authority has issued a written ruling on eligibility under article 3,

may at any time apply to the Authority to be registered under this

Act.

(2) The Authority may register any innovative technology

service provider when it is satisfied that the innovative technology

service provider

(a)

is fit and proper for the provision of the services

it declares he is providing or intends to provide and, when

organised as a legal organisation, any shareholder holding

more than twenty-five per cent (25%) of the voting shares

shall be a fit and proper person and any administrator of such

legal organisation shall be a fit and proper person to carry out

such activities or functions or the role such person has

assumed with regard to the legal organisation;

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(b)

has the qualifications and, or experience which

the Authority requires for registration as a provider of services

in the particular class applied for;

(c)

has sufficient technical resources or third party

support, personally, through delegates or through automated

systems, and is in a position to comply with and observe any

innovative technology authorisation rules and regulations

applicable to him, any guidelines issued by the Authority as

well as any conditions established by the Authority in the

particular case.

(3) The Authority shall not register an innovative

technology service provider if the circumstances referred to in article

29 of the MDIA Act arise.

(4) When the Authority proceeds to register the innovative

technology service provider under this Act, it shall enter his name in

the Register of recognised innovative technology service providers,

under such category as it may determine.

(5) When an innovative technology service provider has

been constituted as a legal organisation, whether with legal

personality or not, the registration shall be made in the name of the

legal organisation and where the service is carried out personally by

such service provider, the registration shall be made in the name of

the service provider himself.

(6) Innovative technology service providers registered

under the provisions of this article shall be considered to be

professionals who act as fiduciaries in relation to the information

submitted to them by any customers and shall also be bound by the

provisions of the Professional Secrecy Act and shall act accordingly.

(1)

Every innovative technology service provider

and every person who may be designated to carry out any role in any

innovative technology arrangement, even if not recognised under this

Act, shall respect the following principles of best practice in relation

to his or its activities.

(2)

In carrying on its operations, it shall

(a)

conduct its business with honesty and integrity;

(b)

pay due regard to the rights, interests and needs

of each and all its customers and must communicate with them

in a way that is fair, clear and not misleading;

(c)

manage and control its business effectively, and

conduct its business with due skill, care and diligence; and

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(d)

have effective arrangements in place, through

human resources, including third party delegates or

contractors, financial resources as well as technology facilities

to be able to meet its operational and compliance obligations.

PART V

Miscellaneous Provisions

(1)

Any person who has been recognised following

an application under this Act and holds -

(a)

a Certificate for an innovative technology

arrangement;

(b)

a Certificate of Registration as an innovative

technology service provider; or

(c)

any other form of recognition which is issued by

the Authority,

shall provide the Authority with particulars of any material changes

in the information provided to the Authority in the application

processes under this Act within thirty (30) days of such changes.

For the purpose of this article "material changes" with

reference to an innovative technology arrangement shall include

(a)

any alternations of any of the software on which

an assurance has been provided by a systems auditor;

(b)

any development altering the rights of users;

(c)

any

development

altering

the

rights,

authorisation and powers of the technical administrator or the

Authority; and

(d)

any change in the technical administrator.

Furthermore, it shall generally be taken to include

(a)

any change in an administrator of a relevant

legal organisation;

(b)

any change in a qualifying shareholder;

(c)

any change in the person with reference to whom

a certification or a Certificate of Registration has been issued;

and

(d)

any other matter which shall be declared to be

material by the Authority in guidelines issued from time to

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time.

(2) In so far as an innovative technology arrangement is

concerned, the holder of the Certificate shall also provide the

Authority with a declaration by a registered systems auditor and a

registered technical administrator that they are aware of the material

changes which have been made to the information previously

provided to the Authority and that such changes do not affect the

content of their review, assurances or declarations provided to the

Authority for the purposes of the certification of the relevant

innovative technology arrangement or, to the extent that the changes

result in additional features which have not been reviewed and do not

fall within the parameters of existing assurances and declarations

issued by them as required under article 8

(a)

the systems auditor has carried out the review as

required under the said article and provides the relative

assurances with reference to the changes; and

(b)

the technical administrator has reviewed the

changes and confirms the continuing validity of his declaration

issued for the purpose of the certification of the innovative

technology arrangement.

(3) In so far as a Certificate of Registration as an innovative

technology service provider is concerned, the holder of the

Certificate of Registration shall also provide the Authority with all

information which shall be relevant in order to enable the Authority

to update the Certificate of Registration with the new information

after carrying out such processes as would be applicable as though it

were a new application with regard to the new information.

(1)

The Authority shall act in an open and

transparent manner in considering applications and shall seek to

provide reasonable information on the progress of an application and,

in case of refusal, reasons for such refusals to accept any application

under this Act.

(2) Failure to take a decision on an application within three

(3) months of an application shall be deemed to be a refusal and the

applicant shall enjoy the rights of appeal under the MDIA Act from

such date.

(1)

All authorisations under this Act shall be for the

periods of validity and effect as stated in the Third Schedule and shall

be presumed to expire on the first working day after the relevant

anniversary of the date of authorisation as appears on the certificate

confirming the authorisation.

(2) It shall be the duty of an innovative technology

authorisation holder to ensure that the authorisation is kept valid and

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effective and will be renewed at least within the last three months of

its duration and in any case prior to expiry, by

(a)

submitting

the

information

assurances,

declarations and other materials or taking such actions as are

required by the Authority for renewals of the relevant

authorisations and in particular to demonstrate that the

applicant is still in compliance with the Act and the conditions

of its authorisation;

(b)

in case of innovative technology arrangements,

carrying out the audits and reviews and obtaining the

necessary declarations from the registered auditor and the

registered technical administrator; and

(c)

by paying to the Authority the relevant fees.

(1) When the persons making an application for any

form of recognition are not ordinarily resident in Malta, such

applicant is required to appoint in writing prior to registration, a

resident agent who -

(a)

is habitually resident in Malta;

(b)

is not interdicted or incapacitated or is an

undischarged bankrupt;

(c)

has not been convicted of any of the crimes

affecting public trust or of theft or of fraud or money

laundering or of knowingly receiving property obtained by

theft or fraud; and

(d)

has satisfied the Authority that he is a person

capable of carrying out the functions stated under this Act.

(2) In case of a legal organisation, such organisation shall be

considered as not being habitually resident in Malta for the purposes

of this article if none of

(a)

the members of its board of administrators or

secretary; and

(b)

its senior officers, being the chief executive

officer, the chief operations officer or its chief technology

officer,

are habitually resident in Malta.

(3) The holder of an innovative technology authorisation

shall ensure that it has a validly appointed resident agent at all times

when there is no person involved in the administration of the holder

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who is resident in Malta

Provided that

(a)

if both the innovative technology arrangement

and the technical administrator appointed with reference to it

are not resident in Malta, the appointment of a resident agent

for the technical administrator shall satisfy the requirement

under this article also for the innovative technology

arrangement for as long as such technical administrator is

engaged and the engagement of the resident agent is made by

the technical administrator also for the innovative technology

arrangement on being authorised to do so; and

(b)

when an innovative technology arrangement is

made up of several constituent parts - DLT and smart contracts

- which may each obtain a certification under this Act, it shall

be lawful for all applicants to designate the main constituent

part and thereafter all the ancillary parts shall be deemed to

satisfy the requirements of this article if the engagement of the

resident agent with reference to the main constituent part

names all the ancillary parts and confirms that the applicant is

authorised to do so with reference to the said ancillary parts.

(4) Notices of the appointment, resignation or removal of

the resident agent shall be filed with the Authority in the prescribed

form, and until such form is issued by means of a notification in

writing and where a notice of appointment is given it shall be

accompanied by the acceptance in writing of the resident agent of

such appointment.

(5) The Authority may at any time refuse or reject any

notice of an appointment which it considers is not in compliance with

this Act and in such case the applicant or the innovative technology

authorisation holder, as the case may be, shall immediately appoint

another resident agent.

(1)

It shall be the function of the resident agent, on

behalf of the innovative technology authorisation holder, to -

(a)

act as the channel of communication between the

innovative technology authorisation holder and the Authority

and other Maltese government departments and authorities;

(b)

sign and file with the Authority and other

Maltese government departments and authorities all

declarations and forms required in terms of Maltese law;

(c)

act as the judicial representative of the

innovative technology authorisation holder for judicial

proceedings in Malta, and any notice whether by the Authority

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or any other authority, sent to the resident agent at his last

registered address, shall be deemed to have been duly received

by and notified to the innovative technology authorisation

holder.

(2) The resident agent shall not be personally liable for non-

compliance by the innovative technology authorisation holder with

any law, nor for any misrepresentation made in any submissions or

documents issued by the applicant, even if authenticated by the

resident agent for the purposes of the application or any other law,

unless the resident agent has personally undertaken such liability for

the compliance in writing or has himself wilfully or recklessly made

a false declaration.

(3) The resident agent shall neither be responsible for any

court, legal or related costs in the event of any judicial proceedings

filed against him in his capacity as judicial representative of the

holder of the innovative technology arrangement or any of its

officers, by whosoever they may have been filed.

(1)

Without prejudice to the express powers enjoyed

by an innovative technology authorisation holder in his engagement,

the resident agent shall have the power, on behalf of the innovative

technology authorisation holder, to -

(a)

sign and file applications, declarations, notices,

returns and any other document required in terms of Maltese

law;

(b)

apply for the certification of an innovative

technology arrangement or for the registration of an innovative

technology service provider under this Act and for the

revocation or cancellation of an authorisation, and to perform

any ancillary act in relation thereto;

(c)

pay all relative fees and taxes payable in terms

of Maltese law;

(d)

do all other things as may be considered

conducive or ancillary for the certification or registration or

other form of recognition under this Act or for the

maintenance of such recognition;

(e)

authenticate documents issued by the innovative

technology authorisation holder; and

(f)

receive formal notification on behalf of the

innovative technology authorisation holder when notifications

are required under the provisions of this Act or any other law

or any agreement

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Provided that with reference to any written

authorisation, certification or registration certificate, while it

shall not be prohibited that the resident agent take possession

and hold the original for safekeeping, and for amendment or

revisions by the Authority, it shall not be lawful for the

innovative technology authorisation to be issued in the name

of the resident agent, even if he is formally authorised for such

purpose.

For the purposes of this article the term "innovative

technology authorisation holder" shall be presumed to include also an

applicant for such authorisation.

(2) The resident agent shall be deemed to have all the

necessary powers to provide binding undertakings to the Authority on

matters relating to the recognition by the Authority on behalf of the

innovative technology authorisation holder and the Authority is

authorised to act accordingly; provided that nothing in this Act shall

imply any power of a resident agent to execute any document relating

to an undertaking involving liability unless expressly authorised to do

so in writing.

(3)

The innovative technology authorisation holder may

restrict any of the above powers of the resident agent

Provided that where the innovative technology

authorisation holder limits such powers he shall file with the

Authority a declaration to that effect in the prescribed form and such

limitation shall not have effect with regard to third parties until it is

so filed and recorded in the Register held by the Authority with

reference to innovative technology authorisations.

(4) Unless expressly prohibited from doing so in the terms

of his own engagement, the resident agent may delegate and appoint

in writing another person to act in specific matters on his behalf

provided that in so doing the resident agent shall not be relinquishing

the functions, powers and responsibilities conferred on him under this

Part.

(5) The terms of engagement and the appointment or

removal or resignation of a resident agent shall be recorded in the

Register held by the Authority with reference to the innovative

technology authorisations.

(1)

A resident agent may resign by giving at least

fifteen days’ notice (or such other shorter period as the innovative

technology authorisation holder or the Authority may consent to) in

writing to the innovative technology authorisation holder and the

Authority.

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(2) The innovative technology authorisation holder may

remove the resident agent by giving at least fifteen days’ notice (or

such other shorter period as the Authority may consent to) in writing

to the Authority.

(3) The Authority shall have the power to appoint, on a

limited and temporary basis, a resident agent on behalf of the

innovative technology authorisation holder in case of failure of the

innovative technology authorisation holder to appoint such an agent

and such resident agent shall seek to establish contact with the

persons who have duties in relation to the governance of the

innovative technology arrangement so they can appoint a resident

agent of their choice

Provided that in such case and that in sub-article (4), the

appointee shall be an advocate with a valid warrant to practice law in

Malta.

(4) Where the innovative technology authorisation holder is

in default of his obligations under this Act, the Authority may,

without prejudice to any other action that can be taken under this Act,

apply to the Civil Court, First Hall for the appointment of a curator to

act as resident agent until such time as another resident agent is

validly appointed or the arrangement ceases to be certified.

Every holder of an innovative technology authorisation

shall pay to the Authority such fees on initial application and on

renewal thereafter as may from time to time be prescribed.

(1)

The Minister may, acting on the advice of the

Authority, make regulations to give effect to the provisions of this

Act and to prescribe anything which may be prescribed in terms of

this Act and to provide for any matter consequential, incidental to or

connected therewith.

(2) Without prejudice to the generality of the foregoing the

Minister may, on the advice of the Authority, by such regulations

(a)

further regulate certifications of innovative

technology arrangements;

(b)

further regulate registrations of innovative

technology services providers, including the statement of what

independence and other qualities, if any, are required for the

carrying out of their functions and the definition of such terms;

(c)

prescribe any forms relating to any of the

applications and processes involved in certification and

registration;

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(d)

prescribe any fees which may be applicable to

applications;

(e)

insert and amend any definitions in this Act;

(f)

amend, substitute or revoke any of the

Schedules;

(g)

issue rules or guidelines in relation to the

Register of recognitions kept under this Act;

(h)

define the criteria for determining whether a

holding is an indirect holding and, or for the purposes of

determining whether a qualifying holding exists;

(i)

define the criteria for determining whether the

systems and security access protocols of applicants or

authorisation holders, as applicable, meet or are maintained to

the appropriate high international standards that may be

established from time to time;

(j)

further regulate resident agents and their

functions and duties and prescribe how such functions are to

be carried out keeping in view the functions and duties of a

VFA agent under the Virtual Financial Assets Act, when such

person is appointed under and for the purposes of such Act;

(k)

lay down rules for the notification of any

activities in or from Malta by or relating to innovative

technology arrangements or services when such arrangements or

services are subject to recognition by the Authority under the

MDIA Act or this Act and recognition is not sought by the

relevant persons based on their decision not to or based on the

fact that they enjoy authorisation in another country; and

(l)

establish the circumstances in which any persons

involved in connection with an authorisation holder, including

any systems auditor or technical administrator, are obliged to

communicate information to the Authority, prescribe

regulations governing the disclosure by systems auditors or

technical administrators of information and establish

supervisory and disciplinary procedures for system auditors

and technical administrators in respect of their duties.

(3) Regulations made under this article may be made

subject to such exemptions or conditions as may be specified therein,

may make different provision for different cases, circumstances or

purposes and may give to the Authority such powers of adaptation of

the regulations as may also be so specified.

(4)

Where regulations have been made in terms of this article,

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the Authority may issue guidelines for the better carrying out and to

better implement the provisions of the regulations.

Amended by: 