Interest Rate (Financial Transactions) Order, 2005 (financialtransactions)

L.N. 323 of 2005

CIVIL CODE

(CAP.16)

Interest Rate (Financial Transactions) Order, 2005

IN exercise of the powers conferred by article 1855A(2) of the

Civil Code, the Prime Minister and Minister of Finance, with the advice

of the Central Bank of Malta, has made the following Order>-

The title of this Order is the Interest Rate (Financial Citation.

Transactions) Order, 2005.

In this Order, unless the context otherwise requires>

Interpretation.

“financial transactions” means>

(a) contracts for differences, derivative contracts

including options, forwards, swaps, foreign currency exchange

contracts and similar agreements<

(b) securities lending transactions, sale and buy back

agreements, repurchase and reverse repurchase agreements

and similar agreements<

(c) obligations linked to the performance of any asset,

a basket of assets, a currency, an index, a right or an obligation,

any price, value, formula or other market recognised value

reference<

(d) prime brokerage agreements and other agreements

entered into by collective investment schemes, in relation to

the administration, management or custody of the assets of

collective investments<

(e) loans, overdrafts and other financial agreements or

facilities which are entered into for the purpose of, or in

connection with, any of the transactions specified in sub-

paragraphs (a) to (d) above<

(f) guarantee, suretyship, indemnity, insurance and

other similar undertakings which are entered into for the

purpose of, or in connection with, any of the transactions

specified in sub-paragraphs (a) to (d) above< and

(g) pledges, hypothecs, mortgages and other charges

and any other collateral agreements, whether by way of title

transfer or otherwise, which are entered into for the purpose

of, or in connection with, any of the transactions specified in

sub-paragraphs (a) to (d) above<

“designated entity” means>

(a)

a public authority, including>

(i) public sector bodies charged with or

intervening in the management of public debt< and

(ii) public sector bodies authorised to hold

accounts for customers>

Provided that for the purposes of this paragraph “public

authority” does not include publicly guaranteed undertakings,

being a company or other entity whose obligations are by

law guaranteed by the Government, except for those falling

within the meaning of paragraphs (b) to (i) of this definition<

(b) a central bank, the European Central Bank, the

Bank for International Settlement, a multilateral development

bank, the International Monetary Fund and the European

Investment Bank<

(c) a credit institution as defined in Article 1(1) of

Directive 2000#12#EC, including the institutions listed in

article 2(3) of that Directive<

(d) an investment firm as defined in Article 1(2) of

Council Directive 93#22#EC of the 10 th May, 1993 on

investment services in the securities field<

(e) a financial institution as defined in Article 1(5) of

Directive 2000#12#EC<

(f) an insurance undertaking as defined in Article 1(a)

of Council Directive 92#49#EEC of the 18 th June, 1992 on the

coordination of laws, regulations and administrative

provisions relating to direct insurance other than life assurance

and a life assurance undertaking as defined in Article 1(a) of

Council Directive 92#96#EEC of the 10 th November, 1992 on

the coordination of laws, regulations and administrative

provisions relating to direct life assurance<

(g) an undertaking for collective investments in

transferable securities (UCITS) as defined in Article 1(2) of

Council Directive 85#611#EEC of the 20 th December, 1985

on the coordination of laws, regulations and administrative

provisions relating to undertakings for collective investments

in transferable securities (UCITS)<

(h) any other collective investment scheme which is

licensed, recognised or otherwise exempt in terms of the

Investment Services Act or otherwise licensed or authorised Cap. 370.

by a foreign authority in a recognised jurisdiction<

(i) a management company as defined in Article 1a(2)

of Directive 85#611#EEC as amended by Directive

2001#107#EC< or

(j) a central counterparty, settlement agent or clearing

house and a person, other than a natural person, who acts in a

trust or representative capacity on behalf of any one or more

persons that includes any bondholders or holders of other

forms of securitised debt or any institution as defined in

paragraph (a) to (i)<

“recognised jurisdiction” means any country having

appropriate legislative and enforcement measures for the regulation

and supervision of financial business taking into account that

country’s membership of, or any declaration or accreditation by,

any international organisation laying down internationally accepted

standards for the regulation and supervision of financial business

or otherwise as may be approved by the Central Bank of Malta.

The provision of article 1855A(1) of the Civil Code are hereby Extension of

provisions of article

extended >

1855A of the Civil

Code.

(a) to debts and other obligations which may arise from

financial transactions where one of the parties is a designated entity

as defined in this Order which is licensed or otherwise operating

in Malta or in a recognised jurisdiction or where the transaction is

approved by the Central Bank of Malta in terms of article 4 hereof<

(b) to debts and other obligations arising in connection with

the financing or operation of an aircraft, including when secured

by an aircraft mortgage registered in Malta<

(c) in addition to the obligations referred to in article 1852(5)

of the Civil Code, to any debts or obligations whatsoever, whether

arising from a loan for consumption (mutuum), guarantee,

indemnity, suretyship or otherwise, when>

(i) such obligations arise under the law of a country

other than Malta, or are regulated by such law< and

(ii) the interest rate and, or compounding of interest

are in accordance with market conditions prevailing in such

other country or with international market conditions< and

(iii) the amount is denominated and payable in a

foreign currency,

so that the provisions of the Civil Code, in so far as they limit or

restrict the charging or the rate of interest and the compounding of

interest, shall not apply to such debts and obligations.

When a financial transaction is entered into by two or more

parties neither of which is a designated entity, the provisions of article

3(1) hereof shall only apply if the transaction is approved by the Central

Bank of Malta upon an application in writing by any party to the

transaction, and the submission of such information as may be required

by the Central Bank of Malta.

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