Investment Services Act (Cap. 370), article 12

12. (1) The Minister, acting on the advice of the competent authority, may make regulations to give effect to the provision s of this Act, and without prejudice to the generality of the forego ing may, by such regulations, in particular, do any of the followin g: (a) amend the definitions of "ancillary services", "collective investment scheme" and "inves tment service" in article 2, as well as the provisions of the First, Second and Third Schedules; (b) regulate investment servi ces and collective investment schemes, as well as services provided and activities carried on in conjunction therewith or in relation thereto; providing for any matter he may deem expedient including the creation and exercise of rights by or for the benefit of the public, the imposition of duties and obligations on the holders of a licence or persons responsible for the management or administration thereof and the regulation of any fees and, or any other charges imposed directly or indirectly on investors; provide for the safekeeping and custody of the property of collective investment schemes and for the requirement to appoint a custodian, and prescribe and regulate in the most extensive manner the functions, duties, responsibilities and obligations of the custodian; establish the qualifications and other eligibility criteria necessary to act as custodian, including residence qualifications; provide for the protection of the property of the schemes in the event of the insolvency of the custodian, and for the purpose of this paragraph "custodian" shall include a sub-custodian; require the keeping of records with respect to the transactions and financial position of collective investment schemes and for the inspection of t hose records, and prescribe reporting and disclosure requirements, including the preparation of periodical r eports with respect to the schemes and the furnishing of those reports to the INVESTMENT SERVICES [CAP. 370. 37 shareholders, unit-holders or other participants in the said schemes, and to others; and provide for the regulation of the free circulation of units of collective investment schemes and to regulate the management companies of such schemes; (c) establish schemes or other arrangements for the compensation of investors in cases where licence holders or any types thereof as may be specified, are unable to satisfy their obligations towards investors or claims in respect of any liability incurred by them in connection with the carrying out of any activity in regard to which they are licensed, and to regulate the management and the financing of any such schemes or arrangements and, the contributions and levies to be paid thereto, to set the minimum and maximum levels of compensation payable thereunder and may under such schemes and arrangements distinguish between different classes of inves tors and, exclude certain classes from compensation, and to make provision for the regulation of and for other aspect related to such schemes or arrangements and may moreover provide that such schemes or arrangements as may be prescribed shall have a legal personality distinct from that of the contributors thereto and of the competent authority and provide for the judicial and legal representation thereof; and such schemes shall be exempt from the payment of income tax as from the date of establishment of such schemes; (d) define the criteria for det ermining whether a holding is an indirect holding for the purposes of determining whether a qualifying shareholding exists; (e) regulate the promotion or s ale by or on behalf of any person, and by any means, o f an investment service or of a collective investment scheme or of any instrument, including the criteria and procedures for the granting or refusing of consent by the competent authority pursuant to the provisions of article 11 of this Act; (f) amend the provisions of article 18 on the circumstances in which a uditors are obliged to communicate information to the competent authority, to prescribe regulations governing the disclosure by auditors of information pursuant to article 18 and to establish supervisory and disciplinary procedures for auditors in respect of their duties under the provisions of article 18; (g) regulate the drawing-up, approval, publication and distribution in Malta of prospectuses relating to the offer of transferable secur ities authorised or otherwise approved, in a country or countries outside Malta and to make provision for the recognition of such prospectuses taking into acc ount Malta’s international 38 CAP. 370.] INVESTMENT SERVICES commitments; (h) provide for and regulate the payment by any person, body or scheme, as the case may be, of licence or other fees and such other charges payable to the competent authority in respect of any matter provided for, by or under this Act or any regulations made under this article, including the fees and charges in respect of any permission, licence, authorisation, registration, exemption or other benefit, as well as any fees and charges in respect of the competent authority’s regulatory, supervisory or investigative functions under this Act and any regulations made or Rules issued thereunder, as may be prescribed. (i) exempt any person, service, instrument, collective investment scheme, or adve rtisement from any one or more of the provisions of this Act subject to such variations, additions, adaptations and modifications as may be prescribed and subject to such conditions or other requirements, including other forms of authorisation and notificat ion procedures, as may be prescribed; (j)( deleted by Act XXII. 2014.6 .) (k) transpose, implement and give effect to the provisions and requirements of the AIFM Directive , the BRRD , the CRR, the CRD, the MiFID , the MiFIR , the UCITS Directive , the IFD, and the IFR; (l) establish financial resources requirements for licence holders and to transpose, implement and give effect to the provisions of the CRD a n d t h e CRR, as may be amended from time to time, including the provision of implementing technical standards as specified therein; regulate the supervision on a consolidated basis, provide for the consultation, co-ordination, co-operation and the sharing and exchange of information with European regulatory authorities and other third country regulatory authorities as may be necessar y; provide for the exchange of information with the European Systemic Risk Board, central banks which are members of the European System of Central Banks, including the Central Bank of Malta, exchange of information with the European Banking Authority and the European Securities and Markets Authority, and exchange of information with other departments of government administrations in other Member States responsible for law on the supervision of institutions, financial institutions and insurance undertakings and with inspectors acting on behalf of those departments; provide for the establishment of colleges of supervisors; pro v i d e f o r t h e e x e r c i s e o f powers by the competent authority on investment services licence holders, credit institutions, financial holding companies, mixed financial holding companies and mixed activity holding companies, or their effective INVESTMENT SERVICES [CAP. 370. 39 managers, as may be defined in the said regulations; provide for the establishment and imposition of administrative penalties on licence holders or others as specified therein or other measures for the contravention of any of the regulations, and to provide for appeals therefrom to the Financial Ser vices Tribunal; provide for the obligations of the competen t authority to report to the European Banking Authority, the European Commission and the European Insurance and Occupational Pensions Authority, the European Securities and Markets Authority as may be specified in the said regulations; (m) provide for reporting and other requirements and conditions which a person operating a multilateral trading facility must satisfy, on a continuing and ongoing basis and to establish the circumstances and the manner in which requirements and conditions may be varied, suspended or revoked, and to transpose the requirements of the MIFID and the MiFIR thereon; (n) transpose, implement and give effect to the provisions and requirements of Direct ives, Regulations and any other legislative measur es of the European Union requiring transposition and, or implementation, as they may be amended from time to time, including any implementing measures that have been or may be issued thereunder and relating to licence holders and others as may be specified therein; regulations made under this paragraph, and strictly related to transposition or implementation as aforesaid, may provide that any provision of this Act or of any other law shall not apply to matters falling under the regulations, and that in so far as any of the provisions of the regulations are inconsistent with the provisions of this Act or of any other law, such provisions in any such regulations shall prevail; (o) provide that any one or more of the bodies mentioned in Article 107(3) of the UCITS Directive m a y , i n t h e interests of consumers, and in accordance with the applicable laws of Malta, take action before the courts or administrative bodies of Malta, to ensure that the provisions of this Act and the Investment Services Rules and regulations issued hereunder transposing the UCITS Directive are implemented; 40 CAP. 370.] INVESTMENT SERVICES Cap. 386. (oa) establish and regulate limited partnerships not having legal personality, and which the deed of partnership thereof expressly limits their object either to the collective investment of their funds in securities and in other movable and immovable property, or in any of them, with the aim of giving the partners the benefit of the results of the management of their funds, and to matters ancillary or incidental thereto, and which qualifies as a collective investment scheme and is duly licensed, recognised, exempted or otherwise regulated in terms of this Act; and shall be distinct from limited partnerships as set out within the provisions of the Companies Act . Regulations made under this paragraph may provide that any provision of this Act or of any other law shall not apply to matters falling under the regulations, and that insofar as any of the provisions of the regulations are inconsistent with the provisions of this Act or of any other law, such provisions in any such regulations shall prevail; (p) p r e s c r i b e a n y t h i n g t h a t i s t o b e o r w h i c h m a y b e prescribed; (q) provide for any matter incidental to or connected with any of the above. (2A) Regulations made under t his article may also contain provision for enabling a person who has entered, or offered to enter, into an investment agreement with the holder of a licence to rescind the agreement or withdraw the offer within such period and in such manner as may be prescribed, and in particular, but wit hout prejudice to the generality of t he foregoing, may make provisio n - (a) for requiring the service of notice with respect to the rights exercisable under the regulations; (b) for the restitution of property and the making or recovery of payments where those rights are exercised; (c) for such other matters as a re incidental to or connected with any of the above. Cap. 16. (2B) Regulations made under this article may make provision for the constitution of common f unds for investment purposes in the form of a collective investment scheme by contract or other arrangement in writing and may exempt such funds from the application of any article or provision of the Civil Code under Title V of Part I of Book Second with such modifications and variatio ns as may be established. (2C) Regulations made under this article may also make provision for the re-organisation and winding-up of those investment services licence holders to which such re-organisati on and winding-up is, or may be rendered, applicable in terms of t he BRRD . (3) Regulations made under this article, may be made subject to such exemptions or conditions as may be specified therein, may make different provision for different cases, circumstances or purposes and may give to the competent authority such powers of INVESTMENT SERVICES [CAP. 370. 41 adaptation of the regulations a s may also be so specified. (4) Where regulations have been issued in terms of this article, the competent authority may issue Investment Services Rules and , or Conduct of Business Rules within the meaning of article 6 of th is Act for the better carrying out and to better implement the provisi ons of the regulations. (5) Regulations made under this article may impose: (a) administrative penalties which may not exceed one hundred and fifty thousand euro (€150,000) for each infringement or failure to comply, as the case may be; (b) punishments or other penalties in respect of any contravention or failure o f compliance not exceeding a fine (multa) of one hundred and fifty thousand euro (€150,000) or imprisonment for a term not exceeding one year, or both such fine and imprisonment; and (c) administrative penalties and fines higher than one hundred and fifty thousand euro (€150,000), where deemed necessary or appropriate for any contravention of or failure of compliance with any EU Directive or EU Regulation or of any regulations made under this article to transpose or to give effect to any EU Directive or EU Regulation. Added by: XXXI. 2017.51. (5A) Regulations made under this article may prescribe administrative penalties and fines as provided for in sub-artic le (5)(c), for any breach of any provision of this Act or for any breach o f any Investment Services Rules or Conduct of Business Rules, transpo sing and, or implementing any EU Directive or EU Regulation. (6) Regulations made under thi s Act and any amendment or revocation of such regulations, may be published in the English language only. (7) The exercise of any of the powers assigned under this article shall be subject to any obligations or rights arising f rom Malta’s international commitments. Power of competent authority to require information. Amended by: XVII. 2002.147; XX. 2007.65; XX. 2013.40; LXXII.2021.14.