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Banking Act (Cap. 371) Deposit Guarantee Scheme Regulations, 2003. (L.N. 7 Of 2003 )

BANKING ACT (Cap. 371)
Deposit Guarantee Scheme Regulations, 2003

Arrangement of regulations

1. Citation and date of commencement.
2. Interpretation.
3. Establishment of the Deposit Guarantee Scheme.
4. Functions of the Scheme.
5. Composition of the Management Committee.
6. Powers and duties of the Management Committee.
7. Investment Management and administrative support agreements.
8. Publication of Financial Statements.
9. Meetings of the Committee.
10. Source and Application of funds.
11. Participants.
12. Contributions to the Scheme.
13. Determination.
14. Application for Compensation.
15. Verification of claims.
16. When funds appear to be inadequate.
17. Limit of Compensation.
18. Eligible Deposits.
19. Compensation paid to be deducted from compensation payable.
20. Claimants.
21. Claims.
22. Subrogation.
23. Joint ownership.
24. Consumer Information.
25. Advertisements.
26. Power of the Management Committee to obtain information.
27. Confidentiality.
28. Failure to comply with obligations.
29. Procedures to investigate complaints.
30. Power to issue directives and guidelines.
31. Exemption from liability for damages.
32. Financial Year end of the Scheme.
33. Audit.
34. Cooperation with other authorities.
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First Schedule
List of Exclusions Second Schedule Contributions Third Schedule New members

L.N. 7 of 2003

BANKING ACT (Cap. 371)
Deposit Guarantee Scheme Regulations, 2003
IN exercise of the powers conferred by article 3 of the Banking Act the Minister of Finance, acting on the advice of the Malta Financial Services Authority, as the competent authority appointed for the purposes of that Act, has made the following regulations>-
1. The title of these regulations is the Deposit Guarantee Scheme Regulations, 2003, and shall come into force on such date as the Minister may by Order in the Gazette establish, and different dates may be appointed for different provisions or different purposes of these regulations.
2. (1) In these regulations, unless the context otherwise requires
-
“Act” means the Banking Act;
“branch” shall have the same meaning as that assigned to the words in article 2 of the Act and, for the purposes of these regulations, is a place of business which forms a legally dependent part of a credit institution and from which some or all of the activities for which the credit institution has been authorised are conducted. All the places of business set up in any one country by a credit institution whose head office is in Malta or in another country shall be regarded as a single branch;
“business of banking” shall have the same meaning as that assigned to the words in article 2 of the Act;
“Central Bank” means the Central Bank of Malta as defined by the Central Bank of Malta Act;
“competent authority” means the competent authority under the Act;
“credit institution” shall have the same meaning as that assigned to the words in article 2 of the Act.
“deposit” shall have the same meaning as that assigned to the words in article 2 of the Act;
“depositor” means a person who has entrusted a deposit to a credit institution subject to the exclusions listed in the First Schedule to these regulations;
“eligible deposit” shall have the same meaning assigned to it by regulation 18 of these regulations;
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Cap. 371

Citation and date of commencement.

Interpretation.

Cap. 371

Cap. 204

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Cap. 330

Establishment of the Deposit Guarantee Scheme.

“Financial Services Tribunal” means the Tribunal established in terms of the Malta Financial Services Authority Act;
“joint account” means an account opened in the names of two or more persons or over which two or more persons have rights that may be exercised under the signature of one or more of those persons;
“Management Committee” means the Compensation Schemes Management Committee established under regulation 3 of these regulations;
“participant” means a credit institution participating in the
Scheme in terms of regulation 11 of these regulations;
“the Scheme” means the Deposit Guarantee Scheme established under regulation 3 of these regulations.
3. (1) There shall be established a Deposit Guarantee
Scheme.
(2) The Scheme shall be a body corporate having a distinct legal personality and shall be capable, subject to the provisions of the Act and of these regulations, of entering into contracts of borrowing or otherwise incurring indebtedness for the purposes of its functions, of acquiring, holding and disposing of any kind of property for the purposes of its functions, of suing or being sued and of doing all such things and entering into all such transactions as are incidental or conducive to the exercise or performance of its functions.
(3) The Scheme shall be managed and administered by and be under the general control of the Management Committee appointed in terms of regulation 5 of these regulations.
(4) The legal and judicial representation of the Scheme shall vest in the chairperson of the Management Committee:

Functions of the

Scheme.

Provided that and without prejudice to the foregoing, that the Management Committee may vest any one or more of its members or of the officers or agents of the Scheme with legal or judicial representation.
4. Without prejudice to any other power or function conferred on it by these regulations or by any other law, it shall be the function of the Scheme>
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(a) to establish and maintain, after consultations with the competent authority, arrangements for the making of payments to depositors in accordance with these regulations;
(b) to maintain a fund or funds out of which payments shall be made to depositors and to meet such other payments or expenses as may be paid out of the fund or funds in accordance with these regulations;
(c) to place contributions made by participants and any other funds managed and administered by the Scheme on deposit or to invest such contributions and funds;
(d) to advise the competent authority on matters relating to compensation of depositors; and
(e) to process claims for compensation by depositors as expeditiously as possible and to ensure that compensation is paid out without undue delay.
5. (1) The Management Committee shall be appointed by the competent authority and shall consist of a chairperson and not more than six other members including>
(a) an officer, not below managerial grade, performing duties with the competent authority possessing the necessary expertise and experience in financial services;
(b) one person nominated by an association or other body representing persons holding a licence under the Investment Services Act and recognised for such purpose by the competent authority;
(c) one person nominated by an association or other body representing credit institutions and recognised for such purpose by the competent authority;
(d) an officer, not below managerial grade, performing duties with the Central Bank; and
(e) a person, who because of his experience, qualifications or activities is considered as being able to state and represent the point of view of consumers:

Composition of the Management Committee.

Cap. 370

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Provided that whenever for any reason whatsoever, the associations or other bodies representing licence holders and credit institutions referred to in paragraphs (b) and (c) of sub-regulation 1 of this regulation fail to nominate, within the time given to it by the competent authority, the person it is required to nominate, the competent authority shall appoint the persons, or the remaining person, at its discretion.
(2) The members of the Management Committee shall be appointed from among persons who, in the view of the competent authority, have proven experience and are qualified in financial services, management, or possess any other relevant professional or commercial knowledge and experience.
(3) The member of the Management Committee nominated by an association or other body representing licence holders and the member nominated by an association or other body representing credit institutions shall not be eligible for appointment if he has a financial or other interest as is likely to affect prejudicially the discharge by him of his functions under these regulations.
(4) Every member of the Management Committee, including the chairperson, shall hold office, for such period and upon such terms and conditions as may be determined by the competent authority and indicated in the letter of appointment. Such term of office shall be of not less than three years and not more than five years. Every member of the Management Committee, including the chairperson, shall be eligible for re-appointment.
(5) A member of the Management Committee may be relieved of office by the competent authority on the grounds of inability to perform the functions of his office, whether due to infirmity of mind or of body, or of misbehaviour; and for the purposes of this paragraph, repeated and unjustified non-attendance of meetings of the Management Committee may be deemed to amount to misbehaviour.
(6) A member of the Management Committee may resign from office by letter addressed to the competent authority.
(7) The competent authority may fill any vacancy occurring in the Management Committee for any reason whatsoever, but having regard to the provisions of sub-regulation (1) of this regulation.
(8) Notice of the names of the members of the Management Committee (and any resignation, dismissal and new appointment) shall be published in the Gazette.
(9) The competent authority shall establish any remuneration to be paid to the members of the Management Committee.
(10) The Consumer Complaints Manager appointed in terms of Article 20 of the Malta Financial Services Authority Act shall serve as secretary to the Management Committee and shall be responsible to make the necessary preparations for the meetings of the Committee and to keep the minutes thereof.
6. (1) The Management Committee shall have the power to appoint officers or agents of the Scheme and to grant them such powers or authority as it may deem appropriate. In consultation with the competent authority, the Management Committee may, for the better fulfilment of its purpose, delegate specific parts of its business to be conducted on its behalf by such body or person and under such arrangement or arrangements as it may deem appropriate.
(2) The Management Committee may place contributions made by participants in terms of regulation 12 of these regulations and any other funds managed and administered by it on deposit or may invest such contributions, having regard to the need for prudence.
(3) The Management Committee may take out insurance policies, borrow or otherwise incur indebtedness on behalf of the Scheme for the purposes of the Scheme’s functions, in any way and under any terms it may consider appropriate, provided such borrowings do not exceed 30 per cent of the net asset value of the Scheme.
(4) The Management Committee shall cause proper books of account to be kept so that the financial position of the Scheme can be ascertained with reasonable accuracy at any time.
7. Without prejudice to sub-regulation (1) of regulation 6 the Management Committee shall enter into such investment management and administrative support agreements as may be approved by the competent authority by not later than three months from the coming into force of these regulations.
8. (1) The Management Committee shall prepare and approve annual forecast statements of the expected costs and revenues of the Scheme, and shall make available such forecast statements to all participants.
(2) The Management Committee shall submit to the competent authority an annual report on the discharge of its functions and on the operation of the Scheme within two months from the financial year end of the Scheme. Such annual report shall give details of the
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Cap. 330

Powers and duties of the Management Committee.

Investment management and administrative support agreements.

Publication of Financial Statements.

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Cap. 386

Meetings of the

Committee.

exercise by the Management Committee of its powers of management and shall include, inter alia -
(a) a statement showing the payments in and payments out of the Scheme during its immediate previous financial year; and
(b) annual audited financial statements in accordance with International Accounting Standards, and the provisions of the Companies Act, where relevant.
(3) The Management Committee shall publish in at least two daily newspapers, one of which shall be in the Maltese language, its annual report and audited financial statements within four months from the financial year end of the Scheme.
(4) The Management Committee shall prepare a half yearly report to the competent authority giving details of the exercise of its powers of management, together with a report on the financial situation of the Scheme but which need not be accompanied by an auditors’ report.
(5) The books of account shall be kept at the offices of the Scheme or at such other place or places as the Management Committee thinks fit, and shall be made available to participants and to the public on request.
9. (1) The meetings of the Management Committee shall be held as often as may be required but not less frequently than once every three calendar months.
(2) Meetings of the Management Committee shall be convened by the chairperson either on his own initiative or at the written request of any two members of the Management Committee.
(3) The Management Committee shall only conduct business if at least three members (which shall include the chairperson or, in his absence, the member nominated by the competent authority) are present.
(4) For the purpose of decisions of the Management Committee, each member shall have one vote. Voting shall be by simple majority of the members present, save that in the case of sub-regulation (3) of regulation 6 and sub-regulation (1) of regulation 8, where a majority vote shall be equivalent to at least two-thirds of the votes of those present. In the event of an equality of votes, the chairperson shall have a second or casting vote.
(5) Subject to the foregoing provisions of this regulation, the Management Committee shall have power to regulate its own proceedings and may also establish such procedures or make such rules as it may deem appropriate for the better fulfilment of its purposes.
(6) The Management Committee may invite any person who in its opinion possesses specialised knowledge or expertise on a particular subject, to attend any meeting and take part in the discussions.
10. (1) In terms of regulation 4 of these regulations, the Scheme shall establish and maintain a fund or a number of funds out of which payments shall be made in accordance with these regulations.
(2) The sources of funding shall include:
(a) contributions levied from participants of the
Scheme by the Management Committee;
(b) money paid as administrative fees by all participants, as may be prescribed;
(c) money received as income from the investment of the assets of the fund;
(d) money borrowed by the Management Committee for the purposes of the Scheme;
(e) money received by the Management Committee on any insurance policy it takes out; and
(f) any other money required to be paid in to the fund or funds, received or recovered by the Management Committee for the purposes of the Scheme.
(3) There shall be paid out of the funds:
(a) money determined by the Management Committee as compensation for depositors;
(b) money required for the repayment of (or interest on or charges in connection with) any money borrowed or for the payment of premia on any insurance policies taken out, for the purposes of the Scheme;
(c) the costs incurred in administering and managing the Scheme; and
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Source and Application of funds.

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Participants.

Contributions to the

Scheme.

(d) any other money paid out by the Management
Committee for the purposes of the Scheme.
(4) The Management Committee shall hold, manage and apply the fund or funds in accordance with these regulations.
11. (1) Every credit institution which is licensed in Malta under the Act shall participate in and contribute to the Scheme, including a branch of a credit institution operating in another country.
(2) In the case of a participant whose head office is situated in a country outside Malta, as well as branches of a credit institution having their head office in Malta but operating outside Malta, and where there is supplementary cover by a corresponding scheme in that other country, the Management Committee shall enter into a bilateral agreement with the authority responsible for the management and administration of the scheme in that other country stipulating, inter alia, the rules and procedures to be followed for the payment of compensation to depositors.
(3) Participation in the Scheme does not exclude the possibility that particular credit institutions may have to participate also in another compensation or similar schemes set up under a different law and governed by another competent authority or other body, in Malta or abroad.
(4) When a credit institution becomes a member of the Scheme after the coming into force of these regulations, the Management Committee shall determine all the relative obligations and conditions of the new participant as set out in the Third Schedule to these regulations.
12. (1) Participants shall pay such contributions to the Scheme as prescribed in the Second Schedule to these regulations, as the same may be amended or varied from time to time by the competent authority, in consultation with the Management Committee.
(2) The Management Committee may specify different rates or amounts of contributions or different bases for the calculation of contributions for different classes or categories of credit institutions.
(3) Without prejudice to the generality of sub-regulation (2) of this regulation, the Management Committee, when specifying different rates or amounts of contributions or bases for the calculation of contributions for different classes or categories of credit institutions or for different credit institutions within the same class or category, may take into account any money or deposits in accounts entrusted to such a credit institution and any financial or accounting records as may be specified from time to time, before or after the coming into force of these regulations.
13. (1) The competent authority shall make a determination within 21 days of the occurrence of the following circumstances, whichever is the earlier>
(a) where it appears to the competent authority that a participant is unable, for the time being, for reasons which are directly related to its financial circumstances to meet its obligations arising from claims by its depositors and to have no early or foreseeable prospect of being able to do so, or has otherwise suspended payment; or
(b) in respect of a credit institution which has its head office in Malta and, in respect of which an order has been made by the Courts of Malta for its winding-up or liquidation under the laws of Malta.
(2) The competent authority may, by way of guidelines, establish those circumstances or criteria which it may consider in arriving at a decision as to whether it will make a determination in terms of sub- regulation (1) of this regulation.
(3) On the day the determination is made, the competent authority shall inform the Management Committee in writing of its determination. The Management Committee may take additional measures it deems necessary or appropriate within its powers under these regulations.
(4) The competent authority shall immediately inform any other compensation scheme relating to financial services activities, as may be established under any other law and regulated by other competent authority or other body, which it believes may be effected by such determination.
(5) In making a determination in accordance with sub- regulation (1) of this regulation, the competent authority shall have regard to any report of officers or agents authorised by it on the state of affairs of the credit institution, and any other information in its possession.
14. (1) On being informed by the competent authority that a determination has been made under sub-regulation (1) of regulation 13 the Management Committee shall publish a notice in at least two local newspapers, informing depositors of the credit institution concerned of such determination and of the manner in which claims supported by documentary evidence are to be submitted.
(2) The right of a depositor for compensation shall not be forfeited if the depositor has been unable to assert his right to compensation within any prescribed time-limits as may be announced.
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Determination.

Application for

Compensation.

B 122

Verification of claims.

(3) The Management Committee may, following an application for compensation being made to it by a depositor, accept or refuse to provide compensation in accordance with these regulations.
(4) The Management Committee shall proceed to pay compensation for verified claims within three months of the date of the determination given in terms of sub-regulation (1) of regulation 13:
Provided that the Management Committee may, in exceptional circumstances, apply to the competent authority for an extension of this period by a further period of up to three months, and up to two further periods of up to three months each thereafter.
15. (1) The Management Committee shall make its own administrative arrangements for verifying claims. These arrangements shall include>
(a) providing a clearly understandable application form for claimants (in English and Maltese in Malta, and in the official language or languages of a third country where a branch of a credit institution is established);
(b) providing for the exercise of the Management Committee’s right of subrogation under regulation 22 of these regulations; and
(c) requiring claimants to give: (i) their identity and address;
(ii) the capacity in which they claim;
(iii) evidence of the eligible deposits as defined in regulation 18 of these regulations; and
(iv) any other information reasonable required by the Management Committee.
(2) The Management Committee may refuse to make a payment for compensation in respect of an eligible deposit until the person claiming to be entitled to the deposit informs the Management Committee as to the capacity in which he is the beneficial owner of the deposit and provides satisfactory documentary evidence and information to allow the Management Committee to determine the amount of compensation payable.
(3) The Management Committee may decide to delay payment to a claimant until determination of any criminal charge brought against
the claimant, depositor, or any person entitled to or interested in respect of an eligible deposit under the provisions of the Prevention of Money Laundering Act or a corresponding law of a country outside Malta.
16. Whenever it appears to the Management Committee that the funds for the time being held by the Scheme are inadequate for the Management Committee to exercise its functions, the Management Committee may require a special contribution to be made to the Scheme by participants in accordance with the Second Schedule to these regulations. Such special contribution shall be provided to the Scheme within 30 calendar days of their being requested.
17. The total amount of compensation that may be paid out to any depositor shall be the lesser of ninety per cent (90%) in respect of that depositor’s eligible deposits, or up to the Maltese liri equivalent of
20,000 Euros converted on the basis of the official closing middle rate
issued by the Central Bank of Malta prevailing on the date of settlement of the claim.
18. For the purposes of these regulations, “eligible deposits”, in relation to every depositor with a credit institution, means the total liability of the credit institution remaining due to every such depositor, including any interest or premium accrued thereon, up to the date of the notice of determination under regulation 13 of these regulations, in an account denominated in Maltese Lira held in Malta (or in a branch of a licensed credit institution other than in Malta) which is>-
(a) not an “interbank deposit”, that is a deposit with a credit institution by other credit institutions on its own behalf and on its own account;
(b) not part of the participant’s own funds within the meaning of any directive issued by the competent authority to regulate own funds;
(c) not a deposit arising out of transactions in connection with which a criminal conviction has been obtained for money laundering in terms of the Prevention of Money Laundering Act;
(d) not a deposit for which the depositor has, on an individual basis, obtained from the same credit institution rates and financial concessions which have helped to aggravate its financial situation; and
(e) a deposit made by a person or persons excluded under the First Schedule to these regulations.
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Cap. 373

When funds appear to be inadequate.

Limit of

Compensation.

Eligible Deposits.

Cap. 373

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Compensation paid to be deducted from compensation payable.

Claimants.

19. (1) In calculating the amount of eligible deposit, the Management Committee shall take account of any legal and contractual conditions attached to the respective deposits and shall deduct from the total liability of the credit institution>-
(a) any payments made to the depositor from a deposit guarantee scheme elsewhere in respect of such liability;
(b) any payments made to the depositor under a policy of professional indemnity insurance held by the credit institution in respect of such liability;
(c) the amount of any liability of the depositor to that credit institution in respect of which a right of set-off against the said deposit existed immediately before the notice of determination issued in terms of regulation 13 of these regulations or in respect of which such a right would have existed had the said deposit been repayable on demand and such liability fallen due immediately before the issue of such a notice of determination; or
(d) any payments made under any other law, whether in
Malta or abroad, in respect of such liability.
(2) Without prejudice to the aforesaid:
(a) any right of set-off shall only be possible where claims are properly documented, can be settled easily, are not subject to dispute and were established well before the notice of determination issued in terms of regulation 13 of these regulations.
(b) any compensation in respect of an eligible deposit shall only be payable as and when the deposit becomes due.
20. (1) Depositors may make a claim against the Scheme in terms of these regulations. Depositors listed in the First Schedule to these regulations are excluded from submitting claims to the Scheme.
(2) Cover shall be provided for claims arising out of a participant’s inability to repay money owed to or belonging to depositors and held on their behalf in connection with banking business.
(3) Claimants will not be able to claim against more than one scheme in respect of a single claim. Where a claim has been made under two or more compensation schemes, the Management Committee shall conclusively determine under which scheme the claimant is eligible for compensation.
(4) Claims shall be made in such form, and shall be accompanied by such documentation or information, as the Management Committee may determine and make public from time to time.
21. (1) Where the Management Committee is of the opinion that either a depositor is not eligible for compensation in whole or in part because such depositor falls within the list of exclusions in the First Schedule to these regulations or such deposit is not an eligible deposit in terms of regulation 18 of these regulations, the Management Committee shall give notice in writing to such depositor of that opinion and the reasons therefor and the steps that may be taken by the depositor under sub-regulation (2) of this regulation.

Claims.

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(2) A depositor to whom a notice under sub-regulation (1) of this regulation has been given in accordance with this regulation may, within 21 calendar days of being so given, apply to the Financial Services Tribunal to have the relevant exclusion or deduction to which the notice relates revoked or amended.
22. (1) Where the Scheme has made a payment to an eligible depositor, the Scheme shall be subrogated to the rights and remedies of that eligible depositor against the credit institution.
(2) Prior to or simultaneously with payment, depositors shall confirm in writing to the Management Committee that:
(a) they have not received any payment from any other scheme or from the credit institution concerned in respect of the same loss;
(b) they will provide any assistance the Management Committee may ask to enable the Management Committee to exercise its rights and remedies against the credit institution; and
(c) their rights and remedies against the credit institution in respect of the claims paid are subrogated in favour of the Management Committee.
23. (1) Where two or more persons are jointly entitled to an eligible deposit, each of these persons shall be treated as having a separate deposit of an amount produced by dividing the amount of the deposit to which such persons are jointly entitled by the number of persons so entitled, unless there exists specific evidence or special contractual provisions determining the particular entitlements of such persons in which case such evidence shall be taken into account in determining their entitlements.

Subrogation.

Joint ownership.

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Consumer

Information.

Advertisements.

Power of the Management Committee to obtain information.

Confidentiality. Cap. 377

(2) Where a person is acting as trustee or nominee for one or more persons under a deed of trust or other similar agreement, the eligible deposit comprising the claim shall be deemed to belong to the beneficial owners equally, unless there exists specific evidence or special contractual provisions determining the beneficial interests of such persons in which case such evidence shall be taken into account in determining their entitlements, and provided in any event that ownership is proved to the entire satisfaction of the Management Committee.
24. The Management Committee shall ensure that the general public is fully informed about the operation of the Scheme arrangements and that such information is imparted to the public as widely and effectively as possible and as determined by the Management Committee.
25. (1) Credit institutions shall make available to current and prospective depositors adequate and clear information concerning the applicability of the Scheme together with such other particulars as may from time to time be specified by the competent authority in a manner and form specified by the competent authority>
Provided that a credit institution shall not advertise or cause to be advertised the fact that deposits placed with a credit institution are protected by or through the Scheme except with the prior written consent of the competent authority.
(2) The competent authority may from time to time, specify the information that credit institutions are to provide to depositors regarding the Scheme and its operations, as well as the manner and form in which such information should be provided.
26. (1) The Management Committee shall have the right to request participants, either directly or through the competent authority, to submit such data and information in the form it requests relevant for the proper administration of the Scheme, within such time as the Management Committee may require. The duty of co-operation extends to any successor of the participant, including any person or persons who have continuing responsibility for the affairs of the participant.
(2) Without prejudice to any other regulation contained in these regulations, participants who fail to comply with the Management Committee’s request for information or data within 15 calendar days shall be liable to an administrative penalty not exceeding Lm1,000 as may be imposed by the competent authority.
27. (1) Members of the Management Committee and persons appointed under sub-regulation (1) of regulation 6 shall be subject to the provisions of the Professional Secrecy Act and shall keep confidential
any information obtained by them in the course of performing their duties under these regulations, and shall not reveal any information to any person, credit institution, association or entity except as may be allowed by these regulations or any other law or by Court order.
(2) The duty of confidentiality shall not be contravened in the case of:
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(a) exchange of information between the Management Committee and competent authorities in other countries, or the competent authorities for the management and administration of corresponding schemes in other countries, provided that the relevant information is necessary for the discharge of their duties under these regulations; and
(b) any use or disclosure as is otherwise reasonably needed to enable the Management Committee and its officers or agents to perform their duties under and carry out the functions contemplated by these regulations.
28. (1) The Management Committee shall notify the competent authority where a credit institution fails to comply with the obligations imposed on it by and under these regulations and in co-operation with the competent authority shall take all measures appropriate, including the imposition of penalties to ensure that the credit institution meets its obligations.

Failure to comply with obligations.

(2) If these measures fail to secure compliance on the part of the credit institution, the Management Committee shall with the express consent of the competent authority, give not less than twelve months’ notice of the competent authority’s intention to restrict or withdraw the credit institution’s licence under the Act. The Scheme shall continue to provide cover during such period.
(3) After the restriction or withdrawal of a licence, cover shall continue to be provided in respect of eligible deposits effected up to the date of restriction or withdrawal.
29. The Management Committee shall establish and maintain adequate internal procedures to investigate complaints against it by credit institutions and by depositors.
30. (1) The competent authority may issue directives and guidelines to credit institutions for the purposes of these regulations.
(2) Such directives and guidelines may contain such incidental, supplementary and consequential provisions as appear to the competent authority to be expedient for any purpose of these regulations.

Procedures to investigate complaints.

Power to issue directives and guidelines.

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Exemption from liability for damages.

Financial Year end of the Scheme.

Audit.

Cooperation with other authorities.

31. The Management Committee and officers or agents of the Scheme shall not be liable in damages for anything done or omitted in the discharge of functions under these regulations unless it is shown that the act or omission was in bad faith.
32. The financial year end of the Scheme shall be an accounting period of twelve months ending on the thirty-first day of December of each year.
33. The accounts of the Scheme shall be audited by auditors appointed by the Management Committee from among persons who are qualified to be appointed as auditors of a company under the law for the time being in force in Malta, as if the Scheme were such a company.
34. The competent authority and the Management Committee shall consult the relevant competent authorities and the persons responsible for compensation schemes in other countries outside Malta and seek to reach agreement with those authorities and persons about>-
(a) the procedures to be followed if a participant defaults;
(b) the amounts of compensation payable, after deductions if any, under each scheme; and
(c) any other aspect which is deemed appropriate for the proper management and administration of the schemes.

First Schedule

The following shall be excluded from claiming against the Scheme:
(a) Professional and institutional depositors, consisting of:
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(i) Credit Institutions carrying on the business of banking under the Banking Act;
(ii) Financial Institutions as defined in article 2 of the Financial
Institutions Act;
(iii) Persons holding an investment services licence under article 6 of the Investment Services Act;
(iv) Insurance undertakings licensed to carry on the business of insurance under the Insurance Business Act;
(v) Collective investment schemes as defined in article 2 of the
Investment Services Act;
(vi) Pension and retirement funds as defined in the Special Funds
Act; and
(vii) Other categories of local and/or foreign professional and institutional depositors, whether resident or non-resident in Malta, as may be determined by the competent authority from time to time;
(b) National and international institutions, governments and administrative authorities;
(c) Local and municipal councils or authorities;
(d) Directors and managers of the relevant credit institution and members of the credit institution with personal liability, persons holding 5% or more of the capital of such credit institution, the auditors of the credit institution and persons of the same description with respect to a company forming part of the same group of companies as the credit institution;
(e) Close relatives, that is, ascendants or descendants or spouse and third parties acting on behalf of the depositors referred to in paragraph (d) of this Schedule;
(f) Other companies in the same group of companies as the credit institution; (g) Debt securities issued by the same institution and liabilities arising out of
own acceptances and promissory notes; and
(h) Depositors who, in the view of the Management Committee, have any responsibility for or have taken advantage of certain facts relating to a credit institution which gave rise to the credit institution’s financial difficulties or contributed to the deterioration of its financial situation.
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Second Schedule

All credit institutions participating in the Scheme shall make contributions to the
Scheme as follows:
(a) Initial Contribution;
(b) Supplementary Contributions; (c) Special Contributions.
The minimum amount held by the Scheme and which should be available for compensation shall be Lm1 million, established over a period of time not exceeding five years from the coming into force of these regulations.

Initial Contributions

An Initial Contribution shall be paid by participants within 30 calendar days from the coming into force of these regulations.
The minimum amount of the Initial Contribution shall be of Lm10,000 per participant.
The Management Committee may, in consultation with the competent authority, waive or postpone part or all of the payment of this Initial Contribution.

Supplementary Contribution

The level of Supplementary Contributions for each participant shall be calculated by applying the percentage determined by the Management Committee on the eligible deposits held by the participant as at its most recent financial year end.
The minimum amount of Lm1 million shall be contributed proportionately in accordance with the participants’ share of total eligible deposits over a period of five years, commencing from the date on which these regulations will come into force.
The formula applicable for participants for the yearly contribution for the first five years to attain the minimum amount of the Scheme shall be as shown hereunder. For the sake of clarification, Year 1 shall be deemed to be the year in which these regulations come into force.
B 131
Year Formula
1 0.1% of Eligible Deposits (as at the most recent financial year end)
5
2 (0.1% of Eligible Deposits as at financial year end of Year 1) less
(Year 1 contribution)
4
3 (0.1% of Eligible Deposits as at financial year end of Year 2)
less (Year 1 + Year 2 contributions)
3
4 (0.1% of Eligible Deposits as at financial year end of Year 3)
less (Year 1 + Year 2 + Year 3 contributions)
2
As from Year 5 onwards, participants would need to ensure that their aggregate proportional contribution would amount to 0.1% of their respective eligible deposits as at the previous financial year end.
If the amount contributed in any subsequent year (i.e. from Year 5 onwards) is less than 0.1% minimum, the participant shall be required to make an additional supplementary contribution.
A participant would not be eligible for a refund if the 0.1% of eligible deposits for a particular year represent an amount which is less than the aggregate amount contributed.
Payment of supplementary contributions shall be within 21 calendar days from service to each participant, of a written notice, specifying the amount due.
Special Contributions
The Management Committee may, at any time during the financial year of the Scheme, levy Special Contributions from participant in order to meet commitments of the Scheme.
The Management Committee may, at the end of its financial year and during which special contributions have been levied, refund part or all of such Special Contributions not utilised, or not expected to be utilised for the following 12 months, to participants pro rata and according to the amounts of special contributions made. No interest shall be payable on Special Contributions refunded to participants.
B 132
Payment of special contributions shall be within 30 calendar days from service to each participant, of a written notice, specifying the amount due.
Maximum limit for contributions
When the amount held by the Scheme (and which is available for compensation) is about to reach, or has reached, Lm3 million, the Management Committee shall, with the approval of the competent authority, consider whether current and future circumstances merit a revision of the supplementary contributions made by participants and whether participants are to cease further cash payments of supplementary contributions to the Scheme.
Participants shall not be required to make any supplementary or special contributions, if the total of its contributions to date (Initial, Supplementary and Special), after deducting any refund of Special Contributions, exceeds 0.3% of the total eligible deposit liabilities.
After Year 5, the difference between the “capped” level of 0.3% and the amount paid in supplementary contributions (as at the date from which participants have ceased payment of supplementary contributions on a decision of the Management Committee), shall be considered by the Management Committee to be funds “on call” and shall either be held as a capital reserve by the participant or as a contingent liability.
In this respect and upon further consultation with participants, the competent authority shall issue guidelines to participants determining how such funds “on call” should be treated.
In any case, participants shall ensure that such funds are made available to the
Scheme within 30 calendar days from the time when a call is made on such funds.
Other conditions
A credit institution which has ceased to be a participant of the Scheme shall not be entitled to a refund of any contributions made from the date it became a participant of the Scheme except where otherwise stated in this schedule.

Third Schedule

B 133
When a credit institution becomes a participant of the Scheme after the coming into force of these regulations, the Management Committee shall levy as soon as possible an Initial Contribution of an amount to be determined as follows:
When the new participant does not have a deposit base at the time it joins the Scheme, the Initial Contribution shall be the minimum amount specified in the Second Schedule to these regulations.
Where a credit institution which becomes a participant has a deposit base, the amount of the Initial Contribution shall be calculated on the total Eligible Deposit liabilities at the time it becomes a participant with such a percentage as the Management Committee considers appropriate in order for the participant to reach the levels of compensation with the other participants, taking into account any Initial and Supplementary Contributions up to the date when the credit institution becomes a participant.
The Management Committee shall determine a time schedule for the payment of the Initial Contribution taking into consideration the particular circumstances of the new participant.
Without prejudice to the aforesaid, the Management Committee may, in consultation with the competent authority, waive or postpone part or all of the payment of this Initial Contribution.

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