Trusts and Trustees Act (Cap. 331), article 43

43. (1) Except as provided in terms of subarticles (6) and (7), any person operating in or from Malta, who receives property up on trusts or accepts to act as a trustee or co-trustee of a trust and who - (a) receives or is entitled to rem uneration for so acting, or (b) does so on a regular and habitual basis, or (c) holds himself out to be a trustee, shall require authorisation by the Authority in terms of this A ct irrespective of the proper law of the trusts they hold and whet her or not all or part of the tru st property is in Malta: Provided that in the event of reasonable doubt as to what constitutes acting as a trustee on a regular and habitual basis , the matter shall be conclusively d etermined by the Authority. (2) The Authority may issue rules to establish when trustees are considered as receiving remune ration, when activity is done on a regular or habitual basis and when a person holds himself out a s a trustee. (3) Any person may apply in writing to the Authority to be authorised as a trustee and the Authority may grant authorisati on upon being satisfied that the conditions laid down in this arti cle have been met and such authorisation may be general or may be restricted to particular specified activities. (4) The conditions referred to in sub-article (3) shall consist of the following and shall be satis fied on an ongoing basis: (i) in the case an applican t is a body corporate: (a) its objects are limited to: acting as trustee and carrying on activities ancillary or incidental thereto, and does not include objects which are not compatible with the services of a trustee; and (b) its actual activities are compatible and connected with the serv ices of a trustee; and (c) the directors of the company or, in the case of a body corporate other than a company, any other persons entrusted with the management and administration thereof, are not less than three in number and are individuals who are approved persons; and (d) the body corporate must have a minimum capital of fifteen thousand euro (€15,000), which it shall maintain throughout its duration; and (e) the body corporate shall maintain insurance cover TRUSTS AND TRUSTEES [CAP. 331. 35 at all times which cover shall be proportionate to t h e n a t u r e a n d s i z e o f t h e t r u s t e e ’ s b u s i n e s s operations; and (f) the body corporate has established adequate systems for maintainin g proper records of the identity and residence of beneficiaries, the dealings and the assets in connection with trusts and compliance with applicable law; and (g) any person who has a direct or indirect interest in the body corporate which represents ten percent (10%) or more of the capital or, in the case of a company, every person who has a qualifying shareholding, is approved by the Authority as being fit and proper; and (h) the name of the body corporate is not inconsistent with its trustee activity; and (i) where the body corporate is not registered in Malta, it must be constituted or incorporated in an approved jurisdiction: Cap. 529. Provided that, notwithstanding the provisions of paragraphs (a) and (b), pe rsons authorised in terms o f s u b - a r t i c l e ( 1 ) m a y a c t a s c o m p a n y s e r v i c e providers as defined in the Company Service Providers Act , subject to any rules or regulations which may be applicable under this Act; (ii) in the case of an applicant who is an individual that such individual - (a) operates in or from Malta; (b) is an approved person; and (c) has established adequate systems for maintaining proper records of the identity and residence of beneficiaries, and of the dealings and the assets of trusts and compliance with applicable law; and (d) has a minimum capital of fifteen thousand euro (€15,000) which the individual shall maintain for as long as he is authorised; and (e) shall maintain insurance cover at all times which cover shall be proportionate to the nature and size of the trustee’s business operations. (5) A trustee shall notify the Authority of any change or circumstance which would have a bearing upon his status as an authorised person and in the case of a body corporate, of any c hange in its charter, statute, memoran dum or articles of association or other instrument constituting the body corporate, directors or members, and in the case of commercial partnerships in Malta such changes shall not be registered unless and until they are so no tified to and approved by the Authority. (6) ( a) The following persons shall not be required to obtain 36 CAP. 331.] TRUSTS AND TRUSTEES authorisation in terms of this Act to act as a trustee in the course of carrying on the activities for which they are licensed, provided that the provision of trustee services is incidental and ancillary to the main activities for which they are licensed: Cap. 371. (i) a person who is in possession of a valid licence issued in terms of the Banking Act ; or Cap. 370. (ii) a person who is licenced in terms of the Investment Services Act to hold clients’ monies or assets; or Cap. 403. Cap. 487. (iii) a person who is authorised in terms of the Insurance Business Act or enrolled in the Brokers List under the Insurance Distribution Act to hold clients’ monies or assets; or (iv) a person with an equivalent licence to (i) to (iii) issued by the relevant regulatory authority in an approved jurisdiction; or Cap. 345. (v) a person who is in possession of an authorisation to operate a central securities depository in terms of the Financial Markets Act . Cap. 234. (b) A person approved by the Authority for Transport in Malta to act as a trustee of a shipping trust or a shipping foundation as defined in article 84Z of the Merchant Shipping Act s h a l l n o t r e q u i r e a n y f u r t h e r authorisation in terms of this Act; Cap. 514. (c) A person licensed in terms of the Retirement Pensions Act to act as a Retirement Scheme Administrator acting as a trustee to reti rement schemes shall not require further authorisation in terms of this Act provided that such trustee services are limited to retirement schemes: Provided that where a person, who is in possession of a licence in terms of paragraphs ( a), (b) or (c), intends providing trustee services as one of its main activities, it shall require authorisation i n terms of this Act. (7) Without prejudice to the obligation of any person to obtain authorisation in terms of any other law which may be applicable , and to the provisions of article 43A(11), the provisions of this ar ticle, article 43A and article 43B shall not apply - (a) to a person when acting as a trustee under trusts created for the purpose of holding security in the form of hypothecs, pledges, assignments, mandates or otherwise, granted in relation to any financial transaction for the benefit of lenders or other creditors in such transaction; (b) to a person when acting as trustee of any movable property held as security and for the benefit of persons whose entitlement is conditional or determinable in terms of the trust or the contract in relation to which TRUSTS AND TRUSTEES [CAP. 331. 37 the holding was created; (c) to a liquidator, curator in bankruptcy or court appointed administrator acting in the course of the liquidation, bankruptcy or administration; (d) to a person in possession of a warrant to carry out the profession of an advocate, notary public, legal procurator or certified p ublic accountan t but only if acting as a trustee is limited to what is necessary and incidental in the course of carrying out his profession and does not otherwise hold himself out as a trustee to the public; provided he shall be obliged to maintain proper records of clients’ assets for a period of not less than ten years from the date of termination of the trust or the trusteeship, whichever e vent occurs earlier, or such longer period as established by any other law governing his profession; Cap. 370. (e) to persons when acting as trustees of a unit trust which is a collective investment scheme which is recognised in terms of the Investment Services Act or which is exempt from licensing in term s of the said Act and the establishment of w hich is notified to the Authority; (f) to an individual acting as a trustee under charitable trusts provided he is not remunerated and does not hold himself out as providing such services; (g) any person acting as a co-trustee when another trustee or, if more than one, the majority of the trustees are authorised in terms of this article; (h) to companies or other legal entities, established in an approved jurisdiction, the directors of which must be approved persons, and which are wholly owned, including as trustees, and controlled by authorised trustees in terms of this article and which are established solely for the purpose of holding trust p r o p e r t y a n d a n c i l l a r y a c t s , t h e d e t a i l s o f w h i c h a r e notified in writing to the Authority by an authorised trustee; (i) to a party to a contract wh o agrees to receive or hold property as trustee in the c ontext of or ancillary to the performance of a contract provided that the trustee does not otherwise hold himself out as a trustee to the public and is not remunerated therefor; (j) to a person holding one or more shares in a company registered in Malta when such shares do not have any special voting rights and their aggregate nominal value does not exceed five euro or its equivalent in any other currency. (8) A person herein referred to may apply to the Authority and the Authority shall authorise in terms of this article: (i) a person with a licence or authorisation equivalent to subarticle (6)( a)(i) to (iii) issued 38 CAP. 331.] TRUSTS AND TRUSTEES by the Authority or the relevant regulatory authority in an approved jurisdiction and who will be acting as trustee not in the course of its ordinary business for which they are licensed; (ii) a person having a licence or authorisation to act as a trustee issued by th e relevant regulatory authority in an approved jurisdiction; or Cap. 514. (iii) a person registered under the Retirement Pensions Act as a retirement scheme administrator: Provided such person whether Maltese or foreign notifies the Authority, in writing, of its intention to act as a trustee in Malta at least forty-five days prior to commencing activities in Malt a, and who receives a confirmation fr om the Authority that it does not object thereto. A notification under this subarticle shall outline the proposed activities and shall be accompanied by such informatio n as may be required by the Au thority from time to time. T o the extent that the Authority lays down any restrictions or conditions for such activities, on initial response to a not ification or at any other time, such restr ictions and conditions shall co me into effect as stated in the res ponse or by subsequent notice o f the Authority. (9) ( a) The holding upon trust of: (i) securities or interests in or issued by a commercial partnership registered in Malta, other than securities which are listed or traded on a regulated market or on a multilateral system established in Malta or in a recognised jurisdiction, or (ii) immovable property in Malta, (either of which is hereinaft er referred to as "relevant property") by trustees who are not authorised in terms o f t h i s A c t s h a l l b e p e r m i t t e d o n l y i f a p e r s o n authorised in terms of sub-articles (3), (8), (12)(a) or notaries authorised to act as qualified persons in terms o f a n y r e g u l a t i o n s i s s u e d p u r s u a n t t o t h i s A c t , (hereinafter referred to as a "qualified person") is engaged in writing by the trustee to carry out the compliance functions referred to in paragraph ( b) on an indefinite basis with sp ecific reference to such relevant property, and such agreement is notified to the Authority prior to any acquisition of such relevant property taking place and shall be accompanied by such information as may be required by the Authority from time to time; For the purposes of this sub-article: (i) "recognised jurisdiction" shall mean: (a) an EEA State, an EU Member State, or TRUSTS AND TRUSTEES [CAP. 331. 39 Switzerland; (b) any country that is a member of the Organisation for Economic Co-operation and Development (OECD); (c) a country that is a signatory of the IOSCO Multilateral Memorandum of Understanding; or (d) any other jurisidiction with whom the Authority has a Memorandum of Understanding covering securities; Cap. 345. (ii) "regulated market" and "multilateral system" shall have the same meaning assigned to them by the Financial Markets Act . (b) The qualified person shall ensure due compliance with all fiscal, prevention of money laundering and other legal obligations in connection with relevant property and shall notify the Authority in the event that he resigns, has his engagement terminated or is otherwise hindered in performing his duties hereunder. (c) Paragraphs ( a) and ( b) shall also apply to the holding of relevant property by a mandatory for another person. (d) If at any time there is no qua lified person to carry out the functions as required by this subarticle, the Court may appoint a qualified person on the application of the Authority or any interested person. (e) The Authority may issue rules from time to time prescribing the form and conditions of such notification and functions of qualified persons. (10) No transactions in relation to relevant proper ty, including assignments of beneficial interests in a trust, shall take plac e without the prior written c onsent of a qualified person: Provided that nothing in this article shall imply that a qualified person is himself a trustee or that he is jointly and severally liable for the perform ance of obligati ons of the trus tee in relation to relevant propert y or related transactions. (11) The requirement for a qua lified person shall not apply - (a) to the holding of one or more shares in a company when they do not have any special voting rights and their aggregate nominal value does not exceed five euro or its equivalent in any other foreign currency; or (b) to the holding by trustees named and appointed by a will creating the tr ust in respect of the initial period of six months from the date of acceptance by the trustee in respect of the estate of the testator unless it is necessary to enter into any transaction in relation to relevant property, other than the initial transfers or declarations by the trust ee to assume ownership and control of the trust propert y, in which case a qualified 40 CAP. 331.] TRUSTS AND TRUSTEES person shall be appointed prior thereto. (12) Without prejudice to the nat ure of the legal relationship i n any particular case, for the purposes of this article, any pers on resident or operating in or from Malta, who - (a) acts as a mandatory in the holding of securities and, or immovable property for another person; or (b) acts as an administrator, a trustee, director or similar functionary, exercising control over the assets, by whatever name he may be called, of a private interest foundation, shall, not being a person referred to in subarticle (6), requir e authorisation in terms of this article, irrespective of the ext ent of his activities, whether remunera tion is payable therefor or whe ther he holds himself out as providing such services or not. For the purposes of this subarticle a "private interest foundation" is a foundation established or operating in Malta f or the benefit of a private interest or purpose which is not charitabl e. (13) Any person which intends to act as a mandatory in terms of sub-article (12) shall apply in writing to the Authority for authorisation and the Authority may grant authorisation upon be ing satisfied that the conditions pr escribed hereunder have been me t, and which conditions shall be satisfied on an ongoing basis: (i) in the case an applican t is a body corporate: (a) its objects are limited to acting as a mandatory and carrying on activities ancillary or incidental thereto, and does not in clude objects which are not compatible with the services of a mandatory; and (b) its actual activities are compatible and connected with the servi ces of a mandatory; and (c) the directors of the company or any other person entrusted with the management and administration of the body corporate are not less than three in number and are individuals who are approved persons; and (d) the body corporate must have a minimum capital of fifteen thousand euro (€15,000) which it shall maintain throughout its duration; and (e) the body corporate shall maintain insurance c o v e r a t a l l t i m e s w h i c h c o v e r s h a l l b e proportionate to the nature and size of the trustee’s business operations; and (f) the body corporate has established adequate systems for maintaining proper records of the identity and residence of the ultimate beneficial owners, of any transactions relating to the securities and, or immovable property subject to the mandate and of compliance with the applicable law; and TRUSTS AND TRUSTEES [CAP. 331. 41 (g) any person who has a direct interest in the body corporate which exceeds ten percent (10%) or more of the capital or, in the case of a company, every person who has a qualifying shareholding, is approved by the Authority as being fit and proper; and (h) the name of the body corporate is not inconsistent with its activity of mandatory; and (i) where the body corporate is not registered in Malta, it must be constituted or incorporated in an approved jurisdiction; Cap. 529. Provided that notwithstanding the provisions of paragraphs (a) and (b), pe rsons authorised in terms o f s u b - a r t i c l e ( 1 ) m a y a c t a s c o m p a n y s e r v i c e providers as defined in the Company Service Providers Act subject to any rules or regulations which may be applicable under this Act; (ii) in the case of an applicant who is an individual, that such individual: (a) operates in or from Malta; and (b) is an approved person; and (c) has a minimum capital of fifteen thousand euro (€15,000) which the individual shall maintain for as long as he i s authorised; and (d) shall maintain insurance cover at all times which cover shall be proportionate to the nature and size of his business operations; and (e) has established adequate systems for maintaining proper records of the identity and residence of the ultimate beneficial owners, of any transactions relating to the securities and, or immovable property subject to the mandate and of compliance with the applicable law. (14) Any person authorised in terms of sub-article (12)( a) shall notify the Authority of any change or circumstance which would have a bearing upon his status as an authorised person and in t he case of a body corporate, of any change in its charter, statute , memorandum or articles of ass ociation or other instrument constituting it, directors or members. In the case of commercia l partnerships registered in Malta such changes shall not be registered unless and until they are so notified to and approved by the Authority. (15) Any person who intends to act as an administrator, trustee, director or similar functionary b y whatever name he may be call ed, exercising control over the assets of a private foundation shal l apply in writing to the Authority for authorisation and the Authority may grant authorisation upon being satisfied that the conditions prescribed hereunder have been met: (i) in the case where an appl icant is a bod y corporate: 42 CAP. 331.] TRUSTS AND TRUSTEES (a) its objects are limited to acting as administrator, trustee, director or similar functionary by whatever name he may be called, exercising control over the assets of a private foundation and carrying on activities ancillary or incidental thereto, and does not in clude objects which are not compatible with such an activity; and (b) its actual activities are compatible and connected with the services of an administrator, trustee, director or similar functionary by whatever name he may be called exercising control over the assets of a private foundation; and (c) the directors of the company or any other person entrusted with the management and administration of the body corporate are not less than three in number and are individuals who are approved persons; and (d) the body corporate has established adequate systems for maintaining proper records of the identity and residence of beneficiaries, of any transactions relating t o t h e a s s e t s o f t h e foundations and of compliance with the applicable law; and (e) any person who has a direct interest in the body corporate which exceeds ten percent (10%) or more of the capital or in the case of a company, every person who has a qualifying shareholding, is approved by the Authority as being fit and proper; and (f) the name of the body corporate is not inconsistent with its activity of administrator, trustee, director or similar functionary, by whatever name he may be called, exercising control over the assets of a private foundation; and (g) where the body corporate is not registered in Malta, it shall be constituted or incorporated in an approved jurisdiction: Cap. 529. Provided that notwithstanding the provisions of paragraphs (a) and (b), pe rsons authorised in terms of sub-article (1) may act as company service providers as defined in the Company Service Providers Act, subject to any rules or regulations which may be applicable under this Act. (ii) in the case of an applican t who is an individual, that such individual - (a) operates in or from Malta; and (b) is an approved person; and (c) has established adequate systems for maintaining proper records of the identity and TRUSTS AND TRUSTEES [CAP. 331. 43 residence of beneficiaries, of any transactions relating to the assets of the foundations and of compliance with the applicable law. (16) Any person authorised i n terms of sub-article (12)( b) shall notify the Authority of any change or circumstance which would have a bearing upon his status as an a uthorised person, and in the c ase of a company, of any change in its charter, statute, memorandum or a rticles of association or other instrumen t constituting the company, di rectors or members, and in the case of c ommercial partnerships register ed in Malta such changes shall not be registered unless and until the y are so notified to and approve d by the Authority. (17) Nothing in this article shall imply that a person held to b e a trustee under a constructive or resulting trust or as a result of any statutory provision or judicial declaration has acted in breach of this Act during any period prior to his becoming aware of such trusts and in such a case it shall be a defence against prosecu tion under this Act to prove that the said person was unaware of his duties hereunder. Private trustees and notarial procedure. Added by: XX. 1994.4. Substituted by: XIII. 2004.29. Amended by: L.N. 424 of 2007; XI. 2014.21. Cap. 55.