Investment Services Act (Cap. 370), article 2

2. (1) In this Act, unless the c ontext otherwise requires - "agricultural commodity derivatives" means derivative contracts relating to products listed in A rticle 1 and Annex I of Parts I to XX and XXIV/1, to Regulation (EU) No. 1308/2013 , as well as to products listed in Annex I to Regulation (EU) No. 1379/2013 of the Europ ean Parliament and of the Council of 11 December 2013 on the common organisation of the markets in fishery and aquaculture products, amending Council Regulations (EC) No. 1184/2006 and (EC) No. 1224/2009 and repealing Council Regulation (EC) No. 104/2000, as amended from time to time; "AIFM Directive " means Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/ 2010 , as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "ancillary services" means any of the services listed within th e Third Schedule; "ancillary services undertaking" m eans an undertaking, the prin cipal activity of which consists of owning or managing property, mana ging data processing services, or a similar activity which is ancill ary to the principal activity of one or more investment firms; "Alternative Investment Fund or AIF" means a collective investment scheme, including subfunds thereof, which raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and which does not qualify as a UCITS Scheme in terms of the UCITS Directive ; 2 CAP. 370.] INVESTMENT SERVICES "binding legal instrument" means any directly applicable measur es, including, but not limited to, any implementing technical stand ards, any regulatory technical standards or any similar measures, iss ued under European Union legislation; "Alternative Investment Fund Manager or AIFM" means a legal person whose regular business is the management of one or more AIFs; "certificates" means those securi ties which are negotiable on t he capital market and which in case of a repayment of investment b y the issuer are ranked above shares b ut below unsecured bond instrum ents and other similar instruments; "client" means any natural or legal person to whom an investmen t services licence holder provides investment or ancillary servic es; "close links" means a situation in which two or more natural or legal persons are linked by: (i) participation in the form of ownership, direct or by way of control, of 20% or more of the voting rights or capital of an undertaking; (ii) "control" which means the relationship between a parent undertaking and a subsidiary , in all the cases referred to in Article 22(1) and (2) of Directive 2013/34/EU , or a similar relationship between any natural or legal person and an undertaking, any subsidiary undertaking of a subsidiary undertaking also being considered to be a subsidiary of the parent undertaking which is at the head of those undertakings; (iii) a permanent link of both or all of them to the same person by a con trol relationship; "the BRRD " means Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC , and Directives 2001/24/EC , 2002/47/EC , 2004/25/EC , 2005/56/EC , 2007/36/EC , 2011/35/EU , 2012/30/EU and 2013/36/EU , and Regulations (EU) No. 1093/2010 and (EU) No. 648/2012 , of the European Parliament and of the Council, as amended from time to time, and includes any implementing measures, implementing technical standards, regulatory technical standards, guidelines and similar measures that have been or may be issued thereunder; "collective investment sch eme" means any scheme or arrangement which has as its object or as one of its objects th e collective investment of capital acquired by means of an offer of units for subscription, sale o r exchange and which has the following characteristics: (a) the scheme or arrangement operates according to the principle of risk sp reading; and either (b) the contributions of the participants and the profits or INVESTMENT SERVICES [CAP. 370. 3 income out of which payments are to be made to them are pooled; or (c) at the request of the holders, units are or are to be re- purchased or redeemed out of the assets of the scheme or arrangement, continuously or in blocks at short intervals; or (d) units are, or have been, or will be issued continuously or in blocks at short intervals: Provided that an alternative investment fund that is not promoted to retail investors and that does not have the charact eristic listed in paragraph ( a) hereof shall only be deemed to be a collective investment scheme if the scheme, in specific circumstances as established by regulations under this Act, is exempt from such requirement and satisfies any conditions that may be prescribed ; "collective investment scheme licence" means a licence for the issue or creation of units or the carrying on of an activity by a collective investment schem e issued under article 6; "commodity derivatives" shall ha ve the same meaning as that giv en to the term by Article 2 of the MiFIR ; Cap. 330. "competent authority" means the Malta Financial Services Authority established by the Malta Financial Services Authority Act ; "compliance with the group capital test" means compliance by a parent undertaking in an inves tment firm group with the require ments of Article 8 of the IFR; "Conduct of Business Rules" refers to Rules issued by the compe tent authority under various articles of this Act; consolidated basis" means the same as the meaning assigned to i t in point (48) of Article 4(1) of the CRR; "consolidating supervisor" means the same as the meaning assigned to it in point (41) of Article 4(1) of the CRR; "the CRD " means 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, amending Directive 2002/ 87/EC and repealing Directives 2006/48/EC and 2006/49/EC , as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "credit institution" means a credit institution as defined in p oint (1) of Article 4(1) of the CRR; "the CRR," means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institu tions and investment firms and amending Regulation (EU) No 648/2012 , as amended from time to time, and includes any implemen ting measures that have been or may be issued thereunder; 4 CAP. 370.] INVESTMENT SERVICES "data reporting services provider" shall have the same meaning as that assigned to it in point (36a) of Article 2(1) of MiFIR; "depositary receipts" means those securities which are negotiab le on the capital market and which represent ownership of the securit ies of a non-domiciled issuer while being able to be admitted to trading on a regulated market and traded independently of the securities of the non- domiciled issuer; "derivatives" means those securities giving the right to acquir e or sell any transferable security or giving rise to a cash settlem ent determined by reference to trans ferable securities, currencies, interest rates or yields, commodities or other indices or measures; and referred to in paragraphs 4 to 10 of the Second Schedule; "Directive 2002/87/EC " means Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on t he supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate a nd amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC "Directive 2013/34/EU " means Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, con solidated financial statements and related reports of certain types of undertakings, as may be ame nded from time to time; "distributed ledger technology" s hall have the same meaning as that assigned to it in point (1) of Article 2 of the DLT Pilot Regim e Regulation; "DLT Pilot Regime Regulation" m eans Regulation (EU) 2022/858 of the European Parliament and o f the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed le dger technology, and amending Regulations (EU) No 600/2014 and (EU) No 909/2014 and Directive 2014/65/EU, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "document" or "documentation" includes information recorded in any form and, in relation to information recorded otherwise tha n in legible form, references to its production include references t o producing a copy of the information in legible form; "EBA" means the European Banki ng Authority established by Regulation (EU) No. 1093/2010 ; "EEA State" means a State which is a contracting party to the agreement on the Europ ean Economic Area signed at Oporto on the 2nd May, 1992 as amended by the Protocol signed at Brussels on the 17th March, 1993 and as amended by any subsequent acts; "ESMA" means the European Securities and Markets Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Coun cil of 24 November 2010; INVESTMENT SERVICES [CAP. 370. 5 "ESRB" means the European Systemic Risk Board established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro- prudential oversight of the financial system and establishing a European Systemic Risk Board; "EU parent financial holding co mpany" means the same as the meaning assigned to it in point (31) of Article 4(1) of the CRR; "EU parent institution" means the same as the meaning assigned to it in point (29) of Article 4(1) of the CRR; "EU parent investment firm" shall have the same meaning as that assigned to "Union parent investment firm" in point (56) of Art icle 4(1) of the IFR "EU parent investment holding company" shall have the same meaning as that assigned to "Union parent investment holding company" in point (57) of Article 4(1) of the IFR; "EU parent mixed financial holding company" means the same as the meaning assigned to it in poi nt (33) of Article 4(1) of the CRR; "European investment firm" means an investment firm as defined in Article 4(1) of the MIFID and as authorized by its European regulatory authority within the meaning of Article 5 o f the Directive or authorized by a European regulatory authority in an EEA State; "European management company" has the same meaning assigned to it in regulations made under this Act; "European regulatory authority" means the body or bodies designated by a Member State or EEA State other than Malta in accordance with Article 44 of the AIFM Directive , Article 67 of the MIFID , Article 97 of the UCITS Directive and Article 4 of the CRD to carry out each of the duties p rovided for under the differen t provisions of the said Directives; "exempted person" means a person who for any reason is exempted from any or all of the provisions of article 3; "financial holding company" means the same as the meaning assigned to it in point (20) of Article 4(1) of the CRR; "financial institution" means a financial institution as define d in point (14) of Article 4(1) of the IFR; "group supervisor" means the s upervisory authority of a Member State or an EEA State, compete nt and responsible for the superv ision of compliance with the group capital test of EU parent investme nt firms and investment firms controlled by EU parent investment holding companies or EU parent mixed financial holding companie s: 6 CAP. 370.] INVESTMENT SERVICES Provided that, for the purposes of this definition, "EU parent mixed financial holding companies" shall have the same meaning as that assigned to "Union parent mixed financial holding company" in point (58) of Article 4(1) of the IFR; "home Member State or EEA State" means: (a) where the European investment firm is a natural person, the Member State or EEA State in which the head office of that person is situated; or (b) where the European investment firm is a legal person, the Member State or EEA State in which its registered office is situated; or (c) where the European investment firm has, under its national law no registered office, the Member State or EEA State in which its head office is situated; "host Member State or EEA State " means the Member State or EEA State, other than the home Member State or EEA State, in wh ich an investment services licence ho lder has a branch or provides investment services and, or activities; "the IFD " means Directive (EU) 2 019/2034 of the European Parliament and of the Council of 27 November 2019 on the pruden tial supervision of investment firms a nd amending Directives 2002/87 /EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or ma y be issued thereunder; "the IFR " means Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the pruden tial requirements of investment firms and amending Regulations (EU) No. 1093/2010, (EU) No. 575/2013, (EU) No. 600/2014 and (EU) No. 80 6/ 2014, as amended from time to time, and includes any binding le gal instruments, guidelines and other measures that have been or ma y be issued thereunder; "instrument" means any instrument, contract or right falling wi thin the Second Schedule and whether or otherwise issued in Malta, including such instruments issued by means of distributed ledger technology; "investment advertisement" means any form or medium of marketing activity or communication disseminated to the public by means of all types of media, other than a prospectus, which pro motes the purchase or procurement of an investment service or instrum ent; "investment agreement" means any agreement the making or performance of which by either p arty constitutes an investment service; "investment firm" means an investm ent firm as defined in Articl e 4(1) of the MiFID ; INVESTMENT SERVICES [CAP. 370. 7 "investment firm group" means an investment firm group as defined in point (25) o f Article 4(1) of the IFR; "investment holding company" means an investment holding company as defined in point (23) of Article 4(1) of the IFR; "investment service" means any service and activity falling wit hin the First Schedule when provided in relation to an instrument: Provided that the service of Management of Investments in terms of the First Schedule shal l also include the collective p ortfolio management of assets of a collective investment scheme when provided in relation to an asset that is not an instrument with in the meaning of the Second Schedule; "investment services licence" means a licence to provide an investment service under article 6; "Investment Services Rules" refers to Rules issued by the competent authority under va rious articles of this Act; "licence" means a collective investment scheme licence or an investment services licence; "licence holder" means a person who holds a licence; "Malta’s international commitments" means Malta’s commitments, responsibilities and obligations arising out of membership of, or affiliation to, or relationship with, any international, global or regional organisations or grouping of countries or out of any treaty, convention or other internation al agreement, however called, whether bilateral, multilateral, to which Malta is a party; "management body" means the body or bodies of a licence holder, including of an investment firm, a market operator or a data re porting services provider, which are appointed in accordance with natio nal law and are empowered to set the strategy, objectives and overa ll direction of the licence hold er, and oversee and monitor management decision making, a nd includes the persons who effectively direct the busin ess of the licence holder; "market operator" means a person or persons who manages and, or operates the business of a regulated market and may be the regu lated market itself; "Member State" means a Member State of the European Communities; " MIFID " means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instr uments and amending Directive 2002/92/EC and Directive 2011/61/EU , as amended from time to time, and i ncludes any implementing measur es that have been or may be issued thereunder; "MiFIR " means Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in fina ncial instruments and amending Regulation (EU) No. 648/2012 , as may be amended from time to time, and includes any implementing measur es, implementing technical standards, regulatory technical standard s, 8 CAP. 370.] INVESTMENT SERVICES guidelines and similar measures that have been or may be issued thereunder; "Minister" means the Minister re sponsible for the regulation of Financial Services; "mixed-activity hold ing company" means a parent undertaking other than a financial holding company, an investment holding company, a credit institution, an investment firm, or a mixed financial holding company within the meaning of Directive 2002/87/EC , the subsidiaries of which include a t least one investment firm; S.L. 330.06. "mixed financial holding company" means the same as the meaning assigned to it in regulation 2 of the Financial Conglomerates Regulations ; "multilateral system" means a multilateral system as defined in point (11) of Article 2(1) of MiFIR; "multilateral trading facility" or "MTF" means a multilateral s ystem, operated by an investment services licence holder or a market o perator, which brings together multiple third-party buying and selling i nterests in instruments - in the system and in accordance with non- discretionary rules - in a way that results in a contract in ac cordance with Title II of MIFID ; "organised trading facility" or "OTF" means a multilateral syst em which is not a regulated market or an MTF and in which multiple third-party buying and selling interests in bonds, structured finance products, emission allowances or derivatives are able to intera ct in the system in a way that results in a contract in accordance with T itle II of MIFID. Cap. 330. "overseas regulatory authority" me ans an authority in a country or territory outside Malta that is not a Member State or EEA St ate which exercises any regulatory or supervisory function in relat ion to financial services correspondi ng to a function of the compet ent authority as defined in the Malta Financial Services Authority Act ; "parent financial holding company" means the same as the meaning assigned to the term "parent financial holding company in a Member State" in point (30) of Article 4(1) of the CRR; "parent institution" means the same as the meaning assigned to the term "parent institution in a Member State" in point (28) of Ar ticle 4(1) of the CRR; "parent mixed financial holding company" means the same as the meaning assigned to the term "parent mixed financial holding company in a Member State" in point (32) of Article 4(1) of the CRR; "parent undertaking" means a parent undertaking within the meaning of Article 2(9) and 22 of Directive 2013/34/EU ; "participants" means the persons who participate in or receive, or are to participate in or receive, profits or income arising fro m the INVESTMENT SERVICES [CAP. 370. 9 acquisition, holding, management or disposal of the property comprised in a collective investment scheme or sums paid out of such profits or income; "prescribed" means prescribed by regulations made under this Act; Cap. 386. "prospectus" has the meaning assigned to it in article 2 of the Companies Act , and the word "shares" therein shall be read as including a reference to the word "unit"; "qualifying shareholding" means a direct or indirect holding i n a company which represents ten p er centum or more of the share capital or of the voting rights referred to in Articles 9 and 10 of Directive 2004/109/EC of the European Par liament and of the Council of the 15 December 2004 on the harmonization of transparency requirements in rel ation to information about iss uers whose securities are admitted to trading and amending Directive 2001/34/EC taking into account the conditions regarding the aggregation thereof laid in that Directive, or which makes it possible to exercise a significant influence over the manageme nt of the company in which that holding subsists, and "qualifying shareholder" shall be construed accordingly: Provided that in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not take into account voting rights or shares which investment services licence holders, Europ ean Investment Firms or credit institutions may hold as a result of providing the service of underwriting or placing of financial instruments on a firm commitment basis in terms of point 6 of Section A to Annex 1 to the MIFID , provided that those rights are, on the one hand, not exercised or otherwise used to intervene in the management of the issuer and, on the other, dispos ed of within one year of acquis ition; Cap. 345. "regulated market" has the meaning assigned to it under the Financial Markets Act ; "Regulation (EU) No. 1092/2010 " means Regulation (EU) No. 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Boar d, as amended from time to time, and i ncludes any impl ementing measur es that have been or may be issued thereunder; "Regulation (EU) No. 1093/2010 " means Regulation (EU) No. 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No. 716/2009/EC and repealing Commission Decision 2009/78/EC, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "Regulation (EU) No. 1094/2010 " means Regulation (EU) No. 1094/2010 of the European Parliament and of the Council of 24 10 CAP. 370.] INVESTMENT SERVICES November 2010 establishing a European Supervisory Authority (European Insurance and Occupatio nal Pensions Authority), amend ing Decision No. 716/2009/EC and repealing Commission Decision 2009 / 79/EC, as amended from time to time, and includes any implement ing measures that have been or may be issued thereunder; "Regulation (EU) No 1095/2010 " refers to Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC; "Regulation (EU) No. 1227/2011 " means Regulation (EU) No. 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency; "Regulation (EU) No. 648/2012 " means Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 Jul y 2012 on OTC derivatives, central counterparties and trade repositories, as may be amended from time to time, and includes any implementing measures, imple menting technical standards, regulatory technical standards, gu idelines and similar measures that have been or may be issued thereunder; "Regulation (EU) No. 1308/2013 " means Regulation (EU) No. 1308/2013 of the European Parliament and of the Council of 17 December 2013 establish ing a common organis ation of the markets in agricultural products and repealing Council Regulations (EEC) No. 922/72 , (EEC) No. 234/79 , (EC) No. 1037/2001 and (EC) No. 1234/ 2007 ; S.L. 330.09. "resolution entity" means the same as the meaning assigned to i t in sub-regulation (1) of regulation 2 of the Recovery and Resolution Regulations ; S.L. 330.09. "resolution group" means the same as the meaning assigned to it in sub-regulation (1) of regulation 2 of the Recovery and Resolution Regulations ; "Solvency II Directive " means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance, as amended from time to time, and includes any implementing measures that have b een or may be issued thereunde r; "structured finance products" m eans those securities created to securitise and transfer credit risk associated with a pool of f inancial assets entitling the security holder to receive regular payment s that depend on the cash flow fro m the underlying assets; "sub-consolidated basis" means th e same as the meaning assigned to it in point (49) of Article 4(1) of the CRR; Cap. 386. "subsidiary" has the same meaning as that given to the term by article 2 of the Companies Act ; INVESTMENT SERVICES [CAP. 370. 11 "systemic risk" means systemic r isk as defined in point (10) of Article 3(1) of the CRD; "third country" means a country which is not a Member State or an EEA State; "trading venue" means a regulated market, an MTF or an OTF; "UCITS" means undertakings for collective investment in transferable securit ies in terms of the UCITS Directive as defined herein; "UCITS Directive " means Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordinati on of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (recast), as amended fro m time to time, and includes an y implementing measures that have been or may be issued thereunde r; "UCITS management company" means a management company as defined in point (b) of Article 2(1) of the UCITS Directive ; "unit" means any representation of the rights and interests of participants in a collect ive investment scheme; "wholesale energy product" mean s wholesale energy products as defined in point (4) of Article 2 of Regulation (EU) No. 1227/2011 ; Cap. 252. "working days" shall not include Saturdays and the days referre d to in the National Holidays and Other Public Holidays Act . (1A) For the purposes of applying the requirements and supervisory powers laid down in this Act and any regulations an d Investment Services Rules made o r issued thereunder transposing the CRD, in any binding legal instruments issued under the CRD, or in the CRR, on a consolidated or sub-consolidated basis in accordance wit h this Act and any regulations and Investment Services Rules made or issued thereunder transposing the CRD, any binding legal instruments issued under the CRD , and in accordance with the CRR , the terms "institution", "parent instituti on", "EU parent institution" an d "parent undertaking" shall also include: (a) financial holding companies and mixed financial holding companies that have been granted approval in accordance with article 10CA of this Act and, or Article 21a of the CRD; (b) designated institutions controlled by an EU parent financial holding company, an EU parent mixed financial holding company, a parent financial holding company in a Member State or a parent mixed financial holding company in a Member State where the relevant parent is exempted in accordance with article 10CA(5) of this Act and, or Article 21a(4) of the CRD (c) financial holding companies, mixed financial holding companies or institutions designated pursuant to article 16AA(1)(f) of this Act and, or Article 21a(6)(d) 12 CAP. 370.] INVESTMENT SERVICES of the CRD: Provided that for the purpos es of this sub-article: (i) the term "control" means the same as the meaning assigned to it in point (37) of Article 4(1) of the CRR, and the term "controlled" shall be construed accordingly (ii) the term "institution" means the same as the meaning assigned to it in point (3) of Article 4(1) of the CRR. (1B) Reference to the "approval" of financial holding companies or mixed financial holding companies in this Act and any regula tions and, or Investment Services Rules issued thereunder, means an approval granted by the competent authority in terms of article 10CA of this Act or an approval granted through the joint decision o f the competent authority and any European regulatory authority in te rms of article 10CA of this Act and Article 21a of the CRD as the case may be. (1C) Reference to the "exemption" of financial holding companies or mixed financial hol ding companies in this Act and any regulations and, or Investment Services Rules issued thereunder , means an exemption granted by th e competent authority in terms of article 10CA of this Act or an exemption granted through the jo int decision of the compet ent authority and any European regulatory authority in terms of article 10CA of this Act and Article 21a of the CRD, as the case may be. (2) In this Act and in any regulations made thereunder, if there is any conflict between the English and Maltese texts, the Engl ish text shall prevail. (3) The objective of this Act is , in part, to transpose and implement the provisions of the AIFM Directive , the BRRD , the CRD, the MIFID , the MiFIR and the UCITS Directive , and any EU Regulations or Directives on financial services and consequentl y this Act and any regulations adopted thereunder shall be interpreted and applied accordingly. Competent authority. Added by: XVII. 2002.137. Substituted by: X. 2011.24. Amended by: XX. 2013.36; XXII. 2014.3; XXI. 2015.12; XXXI. 2017.45; LXXII.2021.6; XXV .2023.40.