Retirement Pensions (Control of Assets) Regulations, 2015

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,364, 6 ta’ Jannar, 2015 B 21

L.N. 7 of 2015

RETIREMENT PENSIONS ACT

(CAP. 514)

Retirement Pensions (Control of Assets) Regulations, 2015

IN exercise of the powers conferred by paragraph (b) of sub-

article (1) of article 37 of the Retirement Pensions Act, the Minister

for Finance, acting on the advice of the Malta Financial Services

Authority, has made the following regulations:-

Part I

Preliminary

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

commencement.

Pensions (Control of Assets) Regulations, 2015.

(2) These regulations shall come into force on the 1st January

2015.

(1) Any reference in these regulations to the Act is a Interpretation.

reference to the Retirement Pensions Act, and subject to the Cap. 514.

provisions of sub-regulation (2) of this regulation, the provisions of

article 2 of the said Act shall also apply to these regulations.

(2) In these regulations unless the context otherwise requires -

"assets" means movable and immovable property of any kind;

"competent authority" refers to the Malta Financial Services

Authority established under the Malta Financial Services Authority Cap. 330.

Act;

"control of assets" means the holding or control of assets

belonging to, or on behalf, of a customer, by a person hereinafter

referred to as the subject person, acting in the course of rendering a

service under the Act, and includes custody of assets;

"custodian" means an entity maintaining custody of the assets of

a retirement scheme or retirement fund in accordance with regulations

15 and 16;

"customer" means any retirement scheme or retirement fund

whose assets are held under the control of a subject person;

"subject person" means a person who is in possession of a

licence under the Act, or is acting under an exemption from the

requirement of such a licence, to control the assets of a retirement

scheme or a retirement fund, and includes a custodian.

(3) For the purposes of regulations 10 and 21, "group

company", in relation to a subject person, means any body corporate

which is the subject person’s subsidiary or parent company, or a

subsidiary of the subject person’s parent company; and the terms

"parent" and "subsidiary" shall be construed in accordance with

article 2(2) of the Companies Act.

These regulations shall not apply where the custody of the

assets are entrusted to a retirement scheme established as a trust and

the custodian or the subject person is a trustee, and in such cases the

provisions of the Trust and Trustees Act shall apply.

Part II

General

(1) A subject person having the control of assets

belonging to a customer in the course of rendering a service under the

Act to such customer, shall hold such assets solely for and on behalf

of and in the interest of the customer.

(2) Notwithstanding anything stated in article 1894 of the

Civil Code or in the agreement entered into between the subject

person and the customer or the fact that a customer’s assets held

under the control of a subject person are registered in the name of or

title thereof vests in or is otherwise vested in the subject person, such

assets shall be deemed to constitute a distinct patrimony, separate

from that belonging to the subject person and from that of other

customers the assets of whom are also held under the control of the

subject person.

(3) Except as expressly provided in the agreement entered into

between the subject person and the customer and notwithstanding the

provisions of the Civil Code, the control of assets belonging to a

customer by a subject person shall not give or be deemed or construed

to give to the subject person any rights over such assets nor shall it

create any form of loan between the subject person and the customer

and this notwithstanding the nature of the assets or the rights or

obligations of the subject person in relation to the assets.

(1) A customer whose assets are held under the control

of a subject person enjoys a right of ownership in such assets

notwithstanding that they may be registered in the name of and title

thereof vests in or is otherwise vested in the subject person. Where

such assets are held by the subject person as part of a common pool of

identical assets or are otherwise held in a clients’ or common account,

the customer shall enjoy an undivided share in ownership of all the

assets held collectively by the subject person in such a pool or

account.

(2) The records, accounts and other statements held or issued

by the subject person in terms of regulation 8(3) shall, saving any

proof to the contrary, constitute evidence of their contents and of the

right of ownership of the customer as provided in sub-regulation (1)

hereof.

(1) The creditors of a subject person shall have no claim Assets held

or right of action on or against the assets held under the control of the under

not subject to

subject person for and on behalf of and in the interest of any customer the

creditors of the

and such assets shall not be affected in any manner by the provisions subject person.

of laws and regulations in force, including those regulating the

insolvency or bankruptcy of the subject person.

(2) Without prejudice to sub-regulation (1), in the event of any

such insolvency or bankruptcy or related order or resolution, or in the

event that the competent authority so requires, the subject person or

any administrator or receiver or other officer appointed to represent it

by any court or otherwise shall, on demand of any customer or of the

competent authority, immediately transfer the control, possession and

title of all assets held by or in the name of the subject person on

behalf of the customer to another subject person or to such other

person as may be instructed by the customer or by the competent

authority.

(3) In the event that any assets held under the control of the

subject person are, at the request of any creditor of the subject person,

made subject to any precautionary or executive act or warrant granted

by any Court in terms of the Code of Organisation and Civil Cap. 12.

Procedure, the customer on whose behalf such assets are being held

or the competent authority may, by application to the Court, request

the release of the assets from such act or warrant and the Court shall,

on production of evidence as it may deem fit, accede to the

application without undue delay.

(1) The delivery of the assets of a customer to a subject Applicability of

person and from a subject person to a customer or to another subject the

Documents and

person for the purpose of the control of assets in terms of these Transfers

and the Income

regulations shall not be deemed to constitute a chargeable transfer for Tax Act.

the purposes of the Duty on Documents and Transfers Act, and for the Cap. 364.

purposes of article 5(1) of the Income Tax Act, where the delivery of Cap.123.

such assets does not constitute a change in the beneficial owner of the

assets.

(2) For the purpose of this regulation, beneficial owner means

a person who is the real owner of, or who is otherwise beneficially

entitled to the assets held under control by the subject person, as is

provided in regulation 5.

Part III

Control of Assets

(1) A subject person having the control of assets

belonging to a customer shall safeguard such assets and the interests

of the customer therein.

(2) The subject person shall carry out such functions and

duties as shall be required in accordance with these regulations, the

terms and conditions of the agreement entered into with the customer,

the conditions of licensing which may be required by the competent

authority, and such other requirements as may be laid down by the

latter from time to time.

(3) The subject person shall maintain proper and adequate

records and accounts of all customers’ assets held under control. The

records and accounts shall identify the customers to whom such assets

belong and shall clearly indicate that the assets of every customer are

separate and distinct from the assets belonging to the subject person

and from other customers’ assets held by the subject person.

(4) The subject person entrusted with the control of assets

belonging to customers shall, to every extent reasonably possible,

segregate in a proper manner the assets of every customer from the

assets belonging to the subject person and from the assets of other

customers

Provided that the subject person may, in accordance with

the terms and conditions of the agreement entered into with the

customer, the conditions of any licensing, and such other

requirements as may be laid down by the competent authority and

without prejudice to the customer’s right of ownership over the assets

held under control, place and keep such assets in a common pool of

identical assets or otherwise deposit them in a clients’ account or in a

common account.

(5) The subject person shall make appropriate arrangements

for the protection of customers’ assets held under control and shall

ensure that such assets are placed under adequate systems to

safeguard such assets from damage, misappropriation or other loss

and which permit the delivery of such assets only in accordance with

the terms and conditions of the agreement entered into with the

customer.

(6) Where it is not possible for the subject person to carry out

any of the duties specified in this regulation due to the nature of the

assets and of the arrangements whereby control is exercised, the said

duties may be varied with the written consent of the customer or in

accordance with the terms and conditions of the agreement entered

into with the customer, the conditions of licensing which may be

required by the competent authority, and such other requirements as

may be laid down by the latter from time to time.

(1) A subject person having the control of assets Liability of the

belonging to customers shall be liable for any loss or prejudice subject person.

suffered by the customers due to the subject person’s fraud, wilful

default or negligence, including the unjustifiable failure to perform in

whole or in part the subject person’s obligations arising under these

regulations, under the terms and conditions of the agreement entered

into with the customers, from the conditions of licensing which may

be required by the competent authority, and such other requirements

as may be laid down by the latter from time to time.

(2) For the purposes of this regulation, "subject person"

includes such other subject person to whom functions, duties or assets

may be delegated or entrusted in terms of regulation 10.

(3) This regulation shall not apply to a custodian as defined in

regulation 2(2).

(1) A subject person may, with the prior written Subject person

approval of the competent authority, delegate part of the functions may

functions and

and duties under regulation 8 to another subject person who is duties

assets to another

qualified and competent to take the control of customers’ assets and subject person.

may entrust or deposit all or part of a customer’s assets held under

control with such other subject person.

(2) The liability of the subject person for its own acts or

omissions under regulation 9 shall not be affected or reduced as a

result of the subject person delegating functions and duties or

entrusting all or part of the assets belonging to a customer, to another

subject person.

(3) Where the subject person delegates or entrusts functions,

duties or assets in terms of sub-regulation (1) to a person which is a

group company, without prejudice to the liability of such person, the

subject person shall be liable for any loss or prejudice suffered by the

customers as a result of the acts, omissions or insolvency of such

person.

(4) Where the subject person delegates or entrusts functions,

duties or assets in terms of sub-regulation (1) to a person which is not

a group company, without prejudice to the liability of such person, the

subject person shall be liable for any loss or prejudice suffered by the

customers as a result of the acts or omissions of such person unless

the subject person can prove that such person was and remains

qualified and competent to carry out the functions and duties

delegated and that the subject person exercised reasonable care to

oversee that the functions and duties delegated were undertaken by

such person competently.

(5) The liability of the subject person under sub-regulations

(3) and (4) may be varied or reduced with the written consent of the

customer or in accordance with the terms and conditions of the

agreement entered into with the customer, the conditions of licensing

which may be required by the competent authority, and such other

requirements as may be laid down by the latter from time to time

Provided that the subject person shall disclose fully to the

customer any risks that may be associated with the nature of the

arrangements whereby control is to be exercised and that the

agreement with the customer clearly defines the extent of liability of

the subject person.

(6) This regulation shall not apply to a custodian as defined in

regulation 2(2).

(1) Where reasonably required by the nature of the

assets and of the arrangements whereby control is to be exercised, a

subject person may, with the written consent of the customer or in

accordance with the terms and conditions of the agreement entered

into with the customer, in accordance with the conditions of licensing

which may be required by the competent authority, and with such

other requirements as may be laid down by the latter from time to

time, make use of any market clearing system, settlement system, de-

materialised book entry system, centralised custodial depository or

similar system for the purpose of the control of assets in terms of

these regulations.

(2) Such systems as are provided for in sub-regulation (1) may

also be used to effect all transactions including conveyance,

assignment, transfer, transmission and pledging of assets held under

the control of the subject person and the law of the country in which

the system is maintained shall apply to the validity of such

transactions notwithstanding the provisions of any other law.

(3) The agreement with the customer shall clearly define the

extent of liability of the subject person for any losses that may be

incurred by the customer as a result of the use of such systems.

The amount and purpose of any charge, fee or expense to

be charged by the subject person shall be specified in the agreement

entered into with the customer.

(1) Without prejudice to any requirements as may be Termination of

laid down by the competent authority, an agreement for the control of the

assets.

assets belonging to a customer may be terminated by the customer, by

the subject person, or by order of the competent authority.

(2) Upon the termination of an agreement for the control of

assets, the subject person shall convey for no consideration the assets

held for the customer, as instructed by the customer or by the

competent authority, without prejudice to the subject person’s right to

payment of any lawfully due fees or expenses in terms of the

agreement entered into with the customer and to any obligations

arising in favour of the customer thereunder.

Part IV

Custody of Assets

The provisions of Parts I and II and regulations 8 and 11 to Applicability.

13 of Part III shall apply to the custody of assets of retirement

schemes and retirement funds under this Part, and for the purposes of

this Part, unless the context otherwise requires, any references in

Parts I, II and III to "control of assets" shall be construed to refer to

"custody of assets".

Where a custodian is appointed, the custodian shall be

Persons acting

as custodians.

(a) an entity providing the services of a custodian to a

retirement scheme or a retirement fund in terms of a licence

issued under the Act; or

(b) an entity constituted in a Member State or EEA State

and operating from a Member State or EEA State other than

Malta, and duly authorised in accordance with Directive 2004/

39/EC of the European Parliament and of the Council of 21

April 2004 on markets in financial instruments or Directive

2006/48/EC of the European Parliament and of the Council of

14 June 2006 relating to the taking up and pursuit of the

business of credit institutions (recast), or accepted as a

depositary for the purposes of 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), as amended from time to time, and carries

on such services in Malta by way of freedom of establishment

or freedom of services under the respective Directives providing

the services of a custodian to a retirement scheme or a

retirement fund; or

(c)

an entity which is subject to an equivalent level of

regulatory supervision in the jurisdiction where its operations

take place, having the business organisation, systems,

experience and expertise deemed necessary by the competent

authority for it to undertake custody services and which satisfies

any additional criteria which may be set out in Pension Rules

issued by the competent authority from time to time.

(1) The custody of all the assets of a retirement scheme

shall be entrusted to the person responsible for the operation,

administration and management of the retirement scheme or to a

custodian appointed by an instrument in writing with the approval of

the competent authority.

(2) The custody of all the assets of a retirement fund set up as

an investment company with variable share capital shall be entrusted

to the board of directors of the retirement fund or to a custodian

appointed by an instrument in writing with the approval of the

competent authority.

(1) The custodian shall take custody of all the assets of

any retirement scheme or retirement fund and shall safeguard such

assets and the interests of the retirement scheme or retirement fund

and of the holders of units or members, beneficiaries or investors in

the retirement scheme or retirement fund.

(2) In addition to the functions and duties specified in

regulation 8, the custodian shall carry out the functions required in

accordance with the terms and conditions of the agreement appointing

it as custodian, the deed or other instrument establishing or regulating

the retirement scheme or retirement fund and the conditions of

licensing by the competent authority of the retirement scheme or

retirement fund, and such other requirements as may be laid down by

the competent authority from time to time.

In the exercise of its functions, duties and responsibilities,

the custodian shall act independently of the retirement scheme or

retirement fund and, or of the investment manager of such retirement

scheme or retirement fund and shall act solely in the interest of the

holders of units or of members, beneficiaries or investors in the

retirement scheme or retirement fund and of the retirement scheme or

retirement fund itself

Provided that the custodian shall act upon the instructions

of the retirement scheme or retirement fund and, or of any other

person responsible for the operation, administration and management

of the retirement scheme or retirement fund respectively, and, or of

the investment manager of such retirement scheme or retirement

fund, and the retirement scheme or retirement fund, the investment

manager of such retirement scheme or retirement fund and any other

person responsible for the operation, administration and management

of the retirement scheme or retirement fund respectively shall act

upon the instructions of the custodian only to the extent required by

the conditions of its licence, such other requirements as may be laid

down by the competent authority and by the conditions of the deed or

other instrument establishing the retirement scheme or retirement

fund.

Except as may be authorised by the competent authority, a Administration

person shall not act as a member of the board of directors of the and

management of

retirement scheme or retirement fund or of the investment manager, investment

manager and

or similar organ or as an officer responsible for the administration and custodian.

management of the investment manager and at the same time hold a

similar position with the custodian.

(1) The custodian shall be liable for any loss or Liability of the

prejudice suffered by the retirement scheme or retirement fund, or the custodian.

members, beneficiaries or investors in the retirement scheme or

retirement fund which is due to the custodian’s fraud, wilful default

or negligence including the unjustifiable failure to perform in whole

or in part the custodian’s obligations arising under these regulations,

the terms and conditions of the agreement appointing the custodian,

the deed or other instrument establishing or regulating the retirement

scheme or retirement fund, the conditions of licensing which may be

required by the competent authority, and such other requirements as

may be laid down by the latter from time to time.

(2) For the purposes of this regulation, custodian includes such

other persons to whom functions, duties or assets may be delegated or

entrusted in terms of regulation 21.

(1) The custodian may, with the prior written approval Custodian may

of the competent authority and with the consent of the retirement delegate

functions and

scheme or retirement fund, or with the consent of any other person duties

assets to another

responsible for the operation, administration and management of the person.

retirement scheme or fund respectively, delegate all or part of the

functions and duties under regulation 17 to another person and, may

entrust or deposit all or part of the assets of the retirement scheme or

retirement fund held in custody with such other person.

(2) The liability of the custodian for its own acts or omissions

under regulation 20 shall not be affected or reduced as a result of the

custodian delegating functions and duties or entrusting all or part of

the assets of the retirement scheme or retirement fund, to another

person in terms of sub-regulation (1).

(3) Where the custodian delegates or entrusts functions, duties

or assets in terms of sub-regulation (1) to a person which is a group

company, without prejudice to the liability of such person, the

custodian shall be liable for any loss or prejudice suffered by the

retirement scheme or retirement fund or by the members,

beneficiaries or investors in such retirement scheme or retirement

fund, as a result of the acts, omissions or insolvency of such person.

(4) Where the custodian delegates or entrusts functions, duties

or assets in terms of sub-regulation (1) to a person which is not a

group company, without prejudice to the liability of such person, the

custodian shall be liable for any loss or prejudice suffered by the

retirement scheme or retirement fund or by the members,

beneficiaries or investors in such retirement scheme or fund, as a

result of the acts or omissions of such person unless the custodian can

prove that such person was and remains qualified and competent to

carry out the functions and duties delegated to it and that the

custodian exercised reasonable care to oversee that the functions and

duties delegated were undertaken by such person competently.

(5) The liability of the custodian under sub-regulations (3) and

(4) may be varied or reduced with the written consent of the

retirement scheme or retirement fund or with the consent of any other

person responsible for the operation, administration and management

of the retirement scheme or fund respectively, and in accordance with

the terms and conditions of the agreement appointing the custodian,

the deed or other instrument establishing or regulating the retirement

scheme or fund, the conditions of licensing which may be required by

the competent authority, and such other requirements as may be laid

down by the latter from time to time

Provided that the custodian shall disclose fully to the

retirement scheme or retirement fund, any risks that may be

associated with the nature of the custody arrangements, and the

agreement appointing the custodian clearly defines the extent of

liability of the custodian. Any such risks shall also be fully disclosed

to the retirement scheme or retirement fund and to the members,

beneficiaries or investors in the retirement scheme or fund.

The termination of the appointment of the custodian in

accordance with the provisions of regulation 13 shall not come into

effect prior to the appointment of another custodian, and the

conveyance of the assets held in custody by the outgoing custodian to

the new custodian.

€0.45