RETIREMENT PENSIONS (CONTROL OF ASSETS) REGULATIONS

SUBSIDIARY LEGISLATION 514.03

RETIREMENT PENSIONS (CONTROL OF ASSETS)

REGULATIONS

1st January, 2015 *

LEGAL NOTICE 7 of 2015, as amended by Legal Notices 47 of 2020 and

214 of 2021.

Part I

Preliminary

The title of these regulations is the Retirement Pensions

(Control of Assets) Regulations.

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

reference to the Retirement Pensions Act, and subject to the

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

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 retirem ent scheme or retirement fund i n 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;

"European IORP" means an IORP as defined in Article 6(1) of

the Occupational Pensions Directive which has been registered or

authorised by a European regulatory authority;

"European regulatory authority" means the body or bodies

designated by a Member State or an EEA State, other than Malta, to

carry out the duties provided for in the Occupational Pensions

Directive;

"Occupational Pensions Directive" means Directive (EU) 2016/

2341 of the European Parliament and of the Council of 14 December

2016 on the activities and supervision of institutions for occupational

retirement provision (IORPs) (recast), as may be amended from time

to time, and includes any implementing measures, implementing

technical standards, regulatory technical standards and any similar

*see regulation 1(2) of these Regulations, as originally promulgated.

measures that have been or may be issued thereunder;

"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 ownersh ip of the customer as provided in sub-

regulation (1) hereof.

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

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

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

customer and such assets shall not be affected in any manner by the

provisions 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 Organization

and Civil 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

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

subject person for the purpose of the control of assets in terms of

these regulations shall not be deemed to constitute a chargeable

transfer for the purposes of the Duty on Documents and Transfers

Act, and for the purposes of article 5(1) of the Income Tax Act,

where the delivery of 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

c u s t o m e r, t h e c o n d i t i o n s o f a n y l i c e n s i n g , a n d s u c h o t h e r

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 belonging

to customers shall be liable for any loss or prejudice 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 approval

of the competent authority, delegate part of the functions and duties

under regulation 8 to another subject person who is qualified and

competent to take the control of customers’ assets and 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 de legated and tha t the subje ct p erson e xe rcised

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 laid

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

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

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

(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 established in another Member State or EEA

State and operating from a Member State or EEA State

other than Malta, and duly authorised to carry out

custodian services in accordance with Directive 2013/36/

EU of the European Parliament and of the Council of 26

June 2013 on access to the activity of credit institutions

and the prudential supervision of credit institutions and

investment firms, or Directive 2014/65/EU of the

European Parliament and of the Council of 15 May 2014,

on markets in financial instruments, 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)

or Directive 2011/61/EU of the European Parliament and

of the Council of 8 June 2011 on Alternative Investment

Fund Managers, as amended from time to time, and

carries on such services in relation to a retirement scheme

or a retirement fund pursuant to the respective EU

Directives, as applicable; or

(c) an entity established in a non-Member State or non-EEA

State, which the competent authority considers to be

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.

The custodian shall

(a) 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 numbers,

beneficiaries or investors in the retirement scheme or

retirement fund, and

(b) have oversight duties in relation to retirement schemes

which shall be carried out in accordance with the Pension

Rules.

(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

retiremen t fund and, or of th e in vestmen t m anager 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

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

retirement scheme or retirement fund or of the investment manager,

or similar organ or as an officer responsible for the administration

and 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 prejudice

suffered by the retirement scheme or retirement fund, or the

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 cust odian, 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) At the request of a European regulatory authority of a

European IORP, the competent authority shall prohibit the free

disposal of assets held by a custodian located in Malta in

accordance with Article 48 of the Occupational Pensions Directive.

(2) For the purposes of this regulation, "custodian" means an

entity maintaining custody of the assets of a European IORP and, or a

Maltese IORP.

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

the competent authority and with the 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, 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

c a n p r o v e t h a t s u c h p e r s o n w as a n d r e m a i n s q u a l i f i e d a n d

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.