Interest Rate (Exemption) Regulations, 2009

VER|JONI ELETTRONIKA

L.N. 142 of 2009

CIVIL CODE

(CAP. 16)

Interest Rate (Exemption) Regulations, 2009

IN exercise of the powers conferred by article 1855A of the

Civil Code (Cap. 16), the Minister for Justice and Home Affairs, in

conjunction with the Minister of Finance, the Economy and

Investment, has made the following regulations:-

(1) The title of these regulations is the Interest Rate Citation and

commencement.

(Exemption) Regulations, 2009.

(2) These regulations shall be deemed to have come into force

on 24th March, 2009.

For the purposes of these regulations, unless the context Interpretation.

otherwise requires

"company" includes any commercial partnership registered

under the Companies Act and any equivalent partnership or similar Cap. 386.

entity established under foreign law;

"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;

VER|JONI ELETTRONIKA

(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 paragraphs

(a) to (d) of this definition;

(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 paragraphs (a) to (d) of this definition; 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

paragraphs (a) to (d) of this definition;

"designated entity" means -

(a) the Central Bank of Malta, the European Central

Bank, the Bank for International Settlement, a multilateral

development bank, the International Monetary Fund and the

European Investment Bank;

(b) a bank or credit institution licensed under the

Banking Act, or otherwise licensed or authorised by a foreign

authority in a recognised jurisdiction or a credit institution

within the meaning of Article 4 of Directive 2006/48/EC;

(c)

an investment services licence holder under the

Investment Services Act, or otherwise licensed or authorised by

a foreign authority in a recognised jurisdiction or an investment

firm within the meaning of Article 4 of Council Directive 2004/

39/EC including a management company within the meaning of

Article 1a (2) of Directive 85/611/EEC as amended by Directive

2001/107/EC;

(d) an undertaking for collective investments in

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

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

the coordination of laws, regulations and administrative

provisions relating to undertakings for collective investments in

transferable securities (UCITS) whether licensed in terms of the

Investment Services Act or authorised in a Member State or

EEA State;

VER|JONI ELETTRONIKA

(e)

any other collective investment scheme which is

licensed, recognised or otherwise exempt in terms of the

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

a foreign authority in a recognised jurisdiction;

(f)

a financial institution licensed in terms of the

Financial Institutions Act or a financial institution within the Cap. 376.

meaning of Article 4 of Directive 2006/48/EC;

(g) a company authorised under the Insurance Business Cap. 403.

Act or an insurance undertaking as defined in Article 1 (a) of

Council Directive 92/49/EEC of the 18th 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 of Directive 2002/

83/EC of the European Parliament and of the Council of 5

November 2002 concerning life assurance or a reinsurance

undertaking or captive reinsurance undertaking as defined in

Article 2 of Directive 2005/68/EC of the European Parliament

and of the Council of 16 November 2005 on reinsurance and

amending Council Directives 73/239/EEC, 92/49/EEC as well

as Directives 98/78/EC and 2002/83/EC;

(h) a listed company within the meaning of the

Financial Markets Act or an issuer of a financial instrument Cap. 345.

listed on a regulated market within the meaning of Directive

2004/39/EC;

(i)

a central counterparty, settlement agent or clearing

house; or

(j)

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

trust or representative capacity on behalf of any entity as

defined in paragraphs (a) to (i) of this definition or on behalf of

any bondholders or holders of other forms of securitised debt;

"Member State" means a Member State of the European

Community;

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

agreement on the European Economic Area signed at Oporto on the

2nd May, 1992 as adjusted by the Protocol signed at Brussels on 17th

March, 1993 and as amended by any subsequent acts;

"OECD country" means any country that is a member of the

Organisation for Economic Co-operation and Development

established in 1961;

VER|JONI ELETTRONIKA

"recognised jurisdiction" means a Member State or an EEA

State or any OECD country.

(1) The provisions of Title IV and Title XVII of Part II

of Book Second of the Civil Code or of any other part of the Civil

Code or of any other law in so far as they limit or restrict the charging

of interest and the compounding of interest shall not apply to any

(a) debts and other obligations which may arise from

financial transactions where one of the parties is a designated

entity

Provided that no party to the financial transaction

may be a natural person;

(b) debts and other obligations secured by a mortgage

registered or recognised under the Merchant Shipping Act or the

Civil Aviation Act;

(c)

debts and other obligations where -

(i) such obligations arise under a contract

governed or otherwise regulated by the law of a country

other than Malta; and

(ii) the agreed rate of interest and, or

compounding of interests are in accordance with

international market conditions prevailing at the time that

the debt or the obligation has been contracted; and

(iii) the payor of interest is not a natural person;

(d) security

(including

guarantees,

suretyships,

indemnities and other similar undertakings, pledges, privileges,

hypothecs, mortgages and any other collateral arrangements,

whether by way of title transfer or otherwise) which is governed

by Maltese law and which is entered for the purpose of, or in

connection with, any transaction specified in paragraph (c);

(e)

debts and obligations arising from the offer of

financial instruments within the meaning of the Financial

Markets Act where the issuer of such instruments is a body

corporate or similar entity and the total consideration of the

financial instruments offered is at least two million Euro;

VER|JONI ELETTRONIKA

(f)

debts and obligations arising from transactions

entered into between companies or undertakings forming part of

the same group of companies and, or undertakings; or where a

debt or other obligation arises from a transaction entered into by

a natural person and a company in which he has a controlling

interest and the obligation to pay interest is an obligation

undertaken by the company towards the natural person. The

reference to "group" and "undertaking" shall have the same

meaning as in article 2 of the Companies Act.

(2) In this regulation "controlling interest" refers to the right at

least to exercise majority of voting rights at general meetings or to

appoint a majority of the directors.

It shall be lawful for the amount of interest due in respect Amount of

of any debt or other obligation listed in regulation 3 to exceed the interest

exceed capital.

amount of capital due.

Notwithstanding anything else contained in any other law, Interest rates of

credit and financial institutions within the meaning of regulation 2 credit

financial

may determine the rate of interest payable on deposits held by credit institutions.

institutions, and the rate of interest that they may charge on loans,

advances and any other credit facility as well as in the issue of

debentures or debenture stock or other instruments creating or

acknowledging indebtedness.

Where any contract, arrangement, scheme, transaction or Rescission of

any provision thereof which purports to benefit from any of the contract,

arrangement,

exemptions set out in these regulations is artificial, fictitious or scheme or

transaction

simulated, it shall to that extent be without effect and the provisions which is

of these regulations shall not apply thereto and any such contract, artificial, etc.

arrangement or scheme shall not be binding unless the contract,

arrangement or scheme is capable of continuing in existence without

such provision.

These regulations shall apply without prejudice to the Savings.

instances where by law or commercial custom the prohibition against

the charging of interest exceeding the amount of the capital did not

apply.

The Interest Rate (Financial Transactions) Order, 2005 is Revocation of

the Interest Rate

hereby revoked

(Financial

Transactions)

Provided that for the purposes of regulation 3(c)(iii) of the Order, 2005.

said Interest Rate (Financial Transactions) Order, 2005, any amount

denominated and payable in Euro, at any time prior to the entering

into force of these regulations, shall be deemed to satisfy the

requirement that the amount be denominated and payable in a foreign

currency.

VER|JONI ELETTRONIKA

Mitbug] fl-Istamperija tal-Gvern fuq karta ri`iklata - Printed at the Government Printing Press on recycled paper

€0.56