Home | Databases | WorldLII | Search | Feedback Maltese Laws

The Trusts (Amendment) Act, 2004 (Bill No. 30)

C 583

A BILL

entitled

AN ACT to amend the Trusts Act, Cap. 331

BE IT ENACTED by the President, by and with the advice and consent of the House of Representatives, in this present Parliament assembled and by the authority of the same, as follows>-
PART 1
1. (1) The short title of this Act may be cited as the Trusts (Amendment) Act, 2004 and this Part shall be read and construed as one with the Trusts Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
2. Article 1 of the principal Act shall be deleted and substituted by the following new Article>
“1. This Act may be cited as the Trusts and Trustees Act.”.
3. Article 2 of the principal Act shall be amended as follows>- (a) in subarticle (1) thereof>

Short title and commencement.

Substitution of article 1 of the principal Act.

Amendment of article 2 of the principal Act.

C 584
(i) in the definition of “the Act” and wherever it appears in the English text of the principal Act, the words “Malta Financial Services Centre” shall be substituted by the words “Malta Financial Services Authority” wherever they occur<
(ii) immediately after the definition of “the Act” the following new definition shall be inserted>-
“ “approved jurisdiction” means a jurisdiction which has been approved by the Authority for the purposes of this Act<”<
(iii) immediately after the definition of “approved jurisdiction” the following new definition shall be inserted>-
“ “approved person” means a person of good reputation possessing experience and qualifications in financial, fiduciary, accounting or legal services and approved by the Authority as being fit and proper to carry out the duties of a trustee<”<
(iv) immediately after the definition of “approved person” the following new definition shall be inserted>-
“ “the Authority” means the Malta Financial
Services Authority<”<
(v) the definition of “the Centre” in the English text shall be deleted<
(vi) immediately after the definition of “breach of trust”
there shall be added the following new definition>-
“ “charitable purpose” means any charitable and philanthropic purpose, and without prejudice to the generality of the aforesaid, includes in particular>
(a) the advancement of education, including physical education and sports<
(b) the advancement of religion< (c) the advancement of health<
(d) social and community advancement<
(e) the advancement of culture, arts and national heritage<
(f) the advancement of environmental protection and improvement<
(g) the promotion of human rights, conflict resolution and reconciliation<
but does not include a political purpose<
For the purposes of this definition “political purpose” means the promotion of the interests of a political party or a political candidate, whether at local, national or international level, or to seek or oppose changes in the law or government policy or decisions except when such law or government policies or decisions directly concern the achievement of charitable purposes<”<
(vii) immediately after the definition of “charitable purpose” the following new definition shall be inserted>
“ “commercial transaction” means the following transactions and any transactions connected or ancillary thereto>
(a) securities offerings, whether to the public or for private placement, portfolio management and custody of investment instruments<
(b) the securitisation of assets<
(c) the grant of real or personal security interests including hypothecs, mortgages, privileges, pledges and guarantees<
(d) collective investment schemes<
(e) employee benefit or retirement schemes or arrangements<
(f) syndicated loan agreements and other multi-creditor banking facilities<
(g) insurance policies and the payment of proceeds thereunder<
(h) timeshare and multi-property structures, and
(i) such other commercial transactions as may be prescribed in a Notice issued by the Minister<”<
C 585
C 586
(viii) for the definition of “the Convention” there shall be substituted the following new definition>-
“ “the Convention” means the Hague Convention on the law applicable to trusts and on their recognition, which was adopted by the Hague Conference on Private International Law on the 20 October 1984, and which came into force on the 1 January 1992 set out in all material parts in the Schedule to this Act<”<
(ix) immediately after the definition of “the
Convention” the following new definition shall be inserted>
“ “corporate trustee” means a trustee which is a legal person wherever incorporated<”<
(x) for the definition of “the Court” there shall be substituted the following new definition>
“ “Court” means the Civil Court in its voluntary jurisdiction unless otherwise indicated or unless the context refers to any court seized of a matter in which case it is the court where the matter arises<”<
(xi) the definition of “immovable property situated in
Malta” shall be deleted<
(xii) immediately after the definition of “foreign trust”
the following new definition shall be inserted>
“ “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 international agreement, however called, whether bilateral or multilateral, to which Malta is a party<”<
(xiii) immediately after the definition of “Malta’s international commitments” the following new definition shall be inserted>
“ “Maltese trust” means a trust whose proper law is the law of Malta<”<
(xiv) the definition of “nominee company” shall be deleted<
(xv) immediately after the definition of “Minister” the following new definition shall be inserted>
“ “operating in Malta” means the existence of an office, branch, or other centre of professional or commercial activities of a regular nature in Malta and does not include one or more unconnected and sporadic acts<”<”
(xvi) the definition of “qualified person” shall be deleted<
(xvii) immediately after the definition of “property”
there shall be inserted the following new definition>-
“ “recognised investment exchange” shall have the same meaning assigned to it by the Financial Markets Act<”<
(xviii) immediately after the definition of “recognised investment exchange” there shall be inserted the following new definition>-
“ “remuneration” means any compensation or reward for acting as a trustee to be paid out of trust property in accordance with the terms of trust, or otherwise, other than the reimbursement of expenses of the trustee or the indemnification in favour of the trustee for expenses, liabilities and other claims<”<
(xix) for the definition of “resident in Malta” there shall be substituted the following new definition>
“ “resident in Malta” shall mean, in case of an individual, a person whose habitual residence is in Malta and in case of a company, a company registered in Malta<”<
(xx) immediately after the definition of “settlor” the following new definition shall be inserted>
“ “terms of a trust” means the written or oral terms of a trust, expressed or implied, and any other terms made applicable by the proper law<”<
C 587
C 588
(xxi) for the definition of “trustee” there shall be substituted the following new definition>-
“ “trustee” in relation to property, means the person or persons holding or in whom the property is vested on terms of trust in accordance with the provisions of this Act or is otherwise deemed to be a trustee under this Act<”<
(xxii) immediately after the definition of “unilateral declaration of trust” the following new definition shall be inserted>
“ “unit trust” means any trust established for the purpose of, or having the effect, or providing, for persons having funds available for investment, facilities for the participation by them as beneficiaries under the trust, in any profits or income arising from the acquisition, holding, management or disposal of any property whatsoever, being a collective investment scheme as defined in the Investment Services Act, 1994.”<
(b) subarticle (4) thereof shall be deleted< and
(c) subarticle (5) thereof shall be re-numbered as subarticle (4).

Amendment of article 3 of the principal Act.

4. Article 3 of the principal Act shall be amended as follows>-
(a) in subarticle (1) thereof, for the words “holds or” there shall be substituted the words “holds, as owner or” and for the words “or for a purpose which is not for the benefit of the trustee” there shall be substituted the words “or for a charitable purpose which is not for the benefit only of the trustee”< and
(b) subarticle (2) shall be substituted by the following new subarticle (2) >
“(2) The trust property shall constitute a separate fund owned by the trustee, distinct and separate from the personal property of the trustee and from other property held by the trustee under any other trust.”<
(c) immediately after subarticle (3) the following new subarticles (4) to (6) shall be inserted<
“(4) The holding of property under trusts shall have the following legal effects>
(a) that personal creditors of the trustee shall have no recourse against the trust property<
(b) that the trust property shall not form part of the trustee’s personal estate upon his insolvency or bankruptcy< and
(c) that the trust property shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustee’s estate upon his death.
(5) A trustee shall be entitled to appear or act in his capacity as trustee before any court, any notary or any person acting in an official capacity. Where the trustee desires to register property, movable or immovable, or documents of title to them, he shall be entitled to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed.
(6) Trusts create fiduciary obligations upon the trustee in favour of the beneficiary of the trusts. The settlor of trusts shall have no rights in relation to trust property except as provided by this Act.”.
5. Article 5 of the principal Act shall be amended as follows>- (a) in subarticle (2) by the deletion of the words “the
Convention” and the insertion of the words “this Act” in their stead<
(b) in subarticle (3) by the deletion of the words “from the law of Malta”.
6. Immediately after article 5 of the principal Act, there shall be inserted a new article 5A as follows>-
C 589

Amendment of article 5 of the principal Act.

Addition of new article 5A to the principal Act.

“Applicability of

Convention.

5A. (1) The provisions of articles 1 to 12, 14, 15,
16 (the first paragraph only), 17, 18 and 22 (the first paragraph only) of the Convention as set out in the Schedule to this Act shall have the force of law in Malta.
C 590

Cap. 374

(2) Those provisions shall, so far as applicable, have effect not only in relation to the trusts described in article 2 and 3 of the Convention but also in relation to any other trusts of property arising under the law of another country.
(3) In Article 17 of the Convention, the reference to a State includes a reference to any country or territory (whether or not a party to the Convention) which has its own system of law.
(4) Article 22 of the Convention shall not be construed as affecting the law to be applied in relation to anything done or omitted before the coming into force of the Recognition of Trusts Act, 1994.
(5) Nothing in the Convention shall have any effect on the interpretation of the laws of Malta relating to fiscal matters.”.

Substitution of article 6 of the principal Act.

7. Article 6 of the principal Act shall be deleted and substituted by the following new articles 6, 6A and 6B>

“Validity and recognition of trusts.

6. (1) When the proper law of a trust is the law of Malta as the chosen applicable law of the trust or as determined in accordance with Article 7 of the Convention, notwithstanding the provisions of any other law, the validity of the trust, its construction, its effects and the administration of the trust shall be governed by this Act and other provisions of Maltese law on trusts.
(2) When the proper law of a trust is a foreign law as the chosen applicable law of the trust or as determined in accordance with Article 7 of the Convention, notwithstanding the provisions of any other law, the validity of the trust, its construction, its effects and the administration of the trust shall be governed by such foreign law and shall be recognised and given effect to in Malta in accordance with the Convention and this Act.
(3) The administration of a trust may be regulated by a law different from the proper law of the trust.
(4) Trusts created or recognised in accordance with this Act are not prohibited by articles 331, 757 to
761 and 1776 of the Civil Code.

Mandatory Rules to prevail

(5) Article 586 of the Civil Code shall not affect any term of a trust because it relates to the inheritance of the settlor or because a disposition relating to property under trusts is to take effect after the death of the settlor.
(6) Subject to the provisions of article 11 and subarticle (7) of article 21 of this Act, when a commercial transaction includes the appointment of a trustee to hold property under trusts in relation to such transaction, the trust shall operate in accordance with the express terms of the trust instrument.
6A. (1) Subject to the provisions of subarticle (2) of this article, in the case of a trust governed by Maltese law, where the law of Malta contains provisions with regard to the following matters>-
(i) the protection of minors or incapable parties<
(ii) the personal and proprietary effects of marriage<
(iii) succession rights, testate and intestate, especially the indefeasible shares of spouses, ascendants and descendants<
(iv) the transfer of title to property and security interests in property<
(v) the protection of creditors in matters of insolvency<
(vi) the protection, in other respects, of third parties acting in good faith<
which cannot be derogated from by voluntary act, such laws shall prevail over the terms of the trust unless otherwise expressly provided in this Act or in other provisions of applicable law relating to trusts and related matters.
(2) To the extent that there exist rules of mandatory application the courts shall apply such mandatory rules subject to the provisions of article 6B.
C 591
C 592
(3) When a trust is governed by Maltese law and has no connection to Malta by reason of the domicile of the settlor at the time of settlement of the property on trust or the situs of the property, when immovable, the trust shall be governed by the provisions of this Act except that the provisions of subarticle (1) above shall not apply in any manner. In such cases no regard shall be had to>–
(i) the domicile, habitual residence, registration, authorisation or place of business in Malta of the trustee or any protector or any person rendering administration, accounting or other services to the trustee, or
(ii) the fact that the proper law of the trust is
Maltese Law< or
(iii) the situs of property in Malta, when movable< or
(iv) the place of execution of the deed of trust, any documents relating to the trusts or the trust property or other transaction documents is Malta.
(4) In the case of a foreign trust, the provisions of subarticle (1) of this article shall only apply to such trust when the settlor is domiciled in Malta at the time of creation of the trust, subject always to the rules stated in article 6B of this Act.
(5) In the case of a foreign trust, when the settlor of such a trust is not domiciled in Malta at the time of the creation of the trust, the provisions of this Act shall apply only in so far as they regulate the recognition or otherwise in Malta of the effects of such trust.
(6) To the extent that there exist rules of mandatory application in the law applicable in the circumstances in terms of Maltese private international law, the courts of Malta may apply such mandatory rules subject to the provisions of article 6B of this Act.
(7) When a court is requested to recognise a foreign judgement which enforces any rules of mandatory application as referred to in subarticle (6), the court may accede to such request subject to the provisions of article 6B of this Act.

Management of conflict provisions

6B. (1) In order to ensure that the provisions of applicable law which cannot be derogated from by voluntary act are applied in a manner which preserves the trust relationship as far as possible, the following rules shall apply>-
(a) the application of the mandatory rules shall not produce the failure or invalidity of the trust, and where possible, the trust shall continue under the same terms in relation to property which is unaffected by such mandatory laws. Subject to any order of the court, the affected property shall be held by the trustee in trust for the settlor absolutely, or if he is dead, for his heirs<
(b) the trustee shall be empowered to -
(i) vary the terms of the trust in so far as relates to the nature or the extent of benefit, or
(ii) do such acts as are necessary and legally permissible,
so that the beneficiary derives the benefits in accordance with the intentions expressed by the settlor in the trust instrument in a manner compatible with the mandatory rules and any property which becomes free from trusts for any reason shall be held by the trustee in trust for the settlor absolutely, or if he is dead, for his heirs<
(c) for the purposes of resolving conflicts between the trust relationship and any mandatory provisions and to enable the continuance of the trust as specified in paragraphs (a) and (b) above, the terms of the trust, where silent, shall be deemed to include>-
(i) the power, without any obligation to do so, of the trustee to reduce the trust assets and return all or part of them to the settlor or the estate of the settlor so as to achieve compliance with such provisions of law<
(ii) the power of the trustee to enter into arbitration and mediation agreements and to reach a compromise to disputes and claims by third parties< and
C 593
C 594

Substitution of article 7 of the principal Act.

(iii) the power to seek directions from the
Court on such matters<
such powers being exercisable notwithstanding any contrary provisions of the trust and, provided the trustee acts honestly, in good faith and reasonably, such acts shall not constitute a breach of trust.
(d) the property of the settlor which is not settled in trust should first be utilised, to the extent possible, to meet the claims of any person seeking to invalidate or reduce a trust<
(e) notwithstanding any other applicable law, the trustee may meet a valid claim being made against the trust property, whether voluntarily or as a result of a court direction, order or judgement, by a payment of value in money and shall not be obliged to return property settled in trust in kind<
(f) any person who succeeds in reducing the property under trusts or obtains a court order to invalidate a trust in part or who enjoys the benefits of an arrangement with the trustee as provided in paragraph (c) above, shall forfeit the benefits under the trusts, unless the terms of the trust expressly state otherwise or the trustee considers it unreasonable in the circumstances and obtains the consent of the Court to maintain in force trusts in favour of such person subject to such conditions as the Court may consider appropriate<
(g) in any event and notwithstanding any provision of law, a trustee shall not be subject to an obligation to pay or return more than the trust property held by him under trust, after deducting any fees and costs, and he shall not be subject to any obligation to account for any distributions made by him in good faith prior to having written notice of any claim.”.
8. Article 7 of the principal Act shall be deleted and substituted by a new article as follows>-

“Creation of trust.

7. (1) Within the meaning of article 3 of this Act, a trust may come into existence in any manner.
(2) Without prejudice to the generality of subarticle (1), a trust may come into existence unilaterally or otherwise by oral declaration, or by an instrument in writing including by a will, by operation of law or by a judicial decision>
Provided that where assets are held, acquired or received by a person for another on the basis of oral arrangements of a fiduciary nature, express or implied, there shall be presumed to be a mandate regulated by Title XVIII of Book Second of the Civil Code or a deposit regulated by Title XIX of Book Second of the Civil Code, as the case may be, unless there is evidence of an intention to create an oral trust.
(3) A unilateral declaration of trust is a declaration in writing made by a trustee stating that it is the trustee of a trust, containing all the terms of the trust as well as the names or the information enabling the identification of all the beneficiaries.
(4) A unit trust shall be created by a written instrument.”.
9. Article 8 of the principal Act shall be deleted and substituted by a new article as follows>-
C 595

Substitution of article 8 of the principal Act.

“Jurisdiction of the Maltese Courts.

8. (1) The Courts of Malta shall have jurisdiction where>-
(a) the trust is a Maltese trust< or
(b) the trustee is resident in Malta or is a trustee authorised by the Authority, or is otherwise constituted in terms of Maltese law< or
(c) any trust property is situated in Malta< or
(d) administration of any trust property is carried on in Malta.
(2) Notwithstanding the provisions of the Code of Organization and Civil Procedure, when the trust instrument contains a provision granting jurisdiction to the courts of the country the law of which expressly governs the trust, the Courts in Malta shall, on demand of any party to the proceedings, provided it is made in limine litis, stay
C 596

Substitution of article 9 of the principal Act.

proceedings which may be instituted in Malta in favour of the chosen forum>
Provided that the court may in any case issue such interim orders for the protection of any interested party as it considers appropriate, and provided further that the court shall enjoy a discretion on whether to stay the proceedings if the trust property consists of immovable property in Malta or the settlor or the beneficiaries are domiciled and resident in Malta.
(3) Subject to the above, the provisions of Sub-title III of Title II of Book Third of the Code of Organization and Civil Procedure (“Of Pleas to the Jurisdiction”) shall apply.”.
10. Article 9 of the principal Act shall be deleted and substituted by the following new article 9>-

“Rights of

Beneficiaries

9. (1) A beneficiary has an entitlement, called a beneficial interest, in or to the trust property, as the case may be. The beneficiary may enjoy the beneficial interest subject to the terms of the trust and the provisions of this Act and any other provisions of law applicable to trusts.
(2) Rights of a beneficiary are personal to him and, subject to any applicable laws and only as stated in the terms of the trust, creditors, spouses, heirs or legatees of the beneficiary may have rights only to the extent of the beneficiary’s entitlements under the trusts and have no other rights in relation to the trust property or the trustee.
(3) The interest of a beneficiary under a trust shall be deemed to be movable property, even if the trust property includes immovable property.
(4) A person shall not be entitled to benefit under a trust unless he is>–
(a) identifiable by name< or
(b) ascertainable by reference to a class or to a relationship to some person, whether or not living at the time which under the terms of the trust is the time by reference to which members of a class are to be determined<
and if there are no beneficiaries identifiable or ascertainable as aforesaid the trust shall, unless the purpose of the trust is a charitable purpose, fail.
(5) Persons who are not yet conceived at the time of the settlement of property under trusts may be named as beneficiaries or form part of a class of beneficiaries but their rights arise only once they are born viable.
(6) A settlor of a trust may also be a beneficiary under the trust.
(7) The terms of the trust may provide for the addition of a person as a beneficiary, the exclusion of a beneficiary from benefit, or the imposition on a beneficiary of an obligation as a condition for benefit.
(8) When the trustee is granted the power to add a person as a beneficiary such power shall be valid on condition that such person is identifiable by name or forms part of a class of persons the members of which are reasonably individually identifiable, such identification to be given either in the trust instrument or in any other written instrument, signed by the settlor, whether binding or not on the trustee.
(9) A person who may be added as a beneficiary in terms of a power granted to the trustee shall not enjoy any rights in relation to the trust property or against the trustee and shall not be considered a beneficiary in any manner until appointed as a beneficiary by the trustee.
(10) It shall be lawful for a trustee to be granted the discretion as to which beneficiaries are to benefit, the quantity of any benefit, at what time and in what manner beneficiaries are to benefit and such other powers relating to the appointment, application or advancement of trust property.
(11) A beneficiary in whose favour a discretion to appoint or advance property may be exercised shall have no rights in or to specific trust property until such time as such discretion is exercised by the appointment, application or advancement of such trust property in favour of such beneficiary>
Provided that nothing in this subarticle shall be construed as excluding the duty of the trustee to properly and fairly consider all such beneficiaries in the exercise of his discretion.
C 597
C 598

Substitution of article 10 of the principal Act.

(12) A beneficiary may, by instrument in writing, disclaim his whole interest and such a disclaimer shall be irrevocable.
(13) Subject to the terms of the trust, a beneficiary may disclaim part of his interest, whether or not he has received some benefit from his interest< in any such case, but subject to the terms of the trust, a disclaimer may, by the instrument by which the interest is disclaimed, be made revocable, and shall then be capable of revocation in the manner and under the circumstances therein mentioned or referred to.
(14) Subject to the terms of the trust, a beneficiary may, by instrument in writing, sell, charge, transfer or otherwise deal with his interest in any manner.
(15) The provisions of this article shall apply to testamentary trusts notwithstanding the provisions of articles
688, 693 and 695 and any other provisions of the Civil Code.”.
11. Article 10 of the principal Act shall be deleted and substituted by the following new article>-

“Additional Trust Property

10. (1) Subject to the terms of the trust, a trustee may accept the settlement of any additional property under the same terms of the trust.
(2) The trust property shall be such property as is settled in trust by the settlor, that subsequently added, all fruits therefrom and property which represents the original or added property.”.

Amendment of article 11 of the principal Act.

12. Article 11 of the principal Act shall be amended as follows >-
(a) for the marginal note thereof, there shall be substituted the following “Failure of a trust.”<
(b) in subarticle (1) for the words “be invalid and unenforceable in Malta” there shall be substituted the word “fail”<
(c) by the deletion of subarticle (2) and its substitution by a new subarticle (2) as follows>-
“(2) Trusts shall fail if any court declares that their purpose or the terms of trust are not possible, or illegal, immoral or contrary to public policy, or otherwise tainted by
error, fraud or violence, or any other reason which invalidates legal acts according to the laws of Malta.”<
(d) by the deletion of subarticle (3) and its substitution by a new subarticle as follows>-
“(3) The Court may declare the failure of all or of only one or more purposes or terms of the trust and shall have the power to direct that the purposes or terms which can be properly separated from the failed purposes or terms continue to be valid and enforceable subject to any directive it may give.”<
(e) Immediately after subarticle (5) there shall be added a new subarticle (6) as follows>-
“(6) Property as to which a trust has wholly or partially failed shall, subject to any order of any court or a direction issued in terms of article 38C, be held by the trustee in trust for the settlor absolutely, or if he is dead, for his heirs.”.
13. Subarticle (2) of article 12 of the principal Act shall be amended by the addition of “or to a unit trust” after the words “for a charitable purpose”.
14. Article 13 of the principal Act shall be amended as follows>- (a) the current article should be re-numbered as subarticle
C 599

Amendment of article 12 of the principal Act.

Amendment of article 13 of the principal Act.

(1)<
(b) in sub-paragraph (c) of subarticle (1) as renumbered, the words “of his creditors.” shall be substituted by the words “of his creditors< or”<
(c) immediately following sub-paragraph (c) there shall be added a new sub-paragraph (d) as follows >-
“(d) not liable to attachment under a garnishee order issued against the trustee or to termination without the prior consent of the Court, when the interest is expressed to be for the maintenance of the beneficiary or as a pension.”< and
(d) immediately after subarticle (1) as re-numbered there shall be added a new subarticle (2) as follows >
“(2) In the case of a testamentary trust and where the benefit to the beneficiary consists in an annuity or pension or
C 600

Amendment of article 15 of the principal Act.

Amendment of article 16 of the principal Act.

Amendment of article 18 of the principal Act.

the use and enjoyment of property and the enjoyment of fruits therefrom, the terms of the trust may make the interests of the beneficiary>-
(a) subject to restriction on alienation or dealing< (b) not liable to attachment under a garnishee
order served on the trustee as garnishee< or
(c) not liable to termination without the prior consent of the Court.”.
15. Immediately after subarticle (3) of article 15 of the principal Act there shall be added new subarticles (4) and (5) as follows>-
“(4) Where trusts have been settled by more than one settlor and are expressed to be revocable, such trusts may only be revoked with the express consent of all settlors.
(5) Unless the terms of a trust expressly provide that the trust is revocable or capable of variation, the settlor may not revoke or amend the trust instrument.”.
16. The marginal note to article 16 of the principal Act shall be substituted by the following>-
“Lapse of interest or termination.”.
17. Article 18 of the principal Act shall be amended as follows>- (a) in subarticle (1) thereof, after the words “as may be
so provided.” there shall be added the following additional
paragraph>-
“The fact that there may not be a trustee in office at any time shall not operate as a cause of invalidity or termination of any trusts and in such cases the matter shall be determined by the terms of the trust and the provisions of this article.”<
(b) subarticle (2) shall be substituted by the following new subarticle (2) as follows>-
“(2) A trustee may be a natural person provided he is of full age and legal capacity and not under any legal
impediment to so act. A trustee may also be a juridical person the objects of which include acting as a trustee.”<
(c) immediately after subarticle (6) there shall be added the following new subarticle (7)>-
“(7) In the case of death of a trustee, his heirs or testamentary executor shall be bound to immediately transfer all trust property to a successor trustee appointed in terms of the trust instrument or by the Court. In the case of the insolvency, dissolution or winding up of a corporate trustee, such obligation shall be performed by any person having authority to bind the corporate trustee being, a director, liquidator, provisional administrator or similar functionary and this irrespective of any proceedings or formalities applicable upon such events. Until such time as such obligation is performed, all persons in control of trust property shall be obliged to preserve the trust assets and shall be bound by fiduciary obligations towards the beneficiaries.”.
18. Article 19 of the principal Act shall be amended as follows>- (a) subarticle (1) shall be deleted and substituted by the
following>-
“(1) No one is obliged to accept an appointment as trustee, but if any person who is so appointed does any act or thing in relation to the trust property consistent with the status of a trustee of that property, such person shall be deemed to have accepted the appointment as trustee.”< and
(b) in subarticle (2) for the words “nominee company which” there shall be substituted the words “trustee who”.
19. Article 20 of the principal Act shall be amended as follows>- (a) subarticle (1) shall be deleted and substituted by the
following>-
“(1) Subject to the provisions of subarticle (2) of this article, a trustee may resign as trustee by notice in writing to his co-trustees and in the case of there being no other trustee, to the beneficiaries or, if impracticable, to at least one beneficiary, or if there are none to whom notice can be given, to the settlor or to the trustee’s duly appointed successor and the resignation shall take effect on delivery of the aforesaid notice.”< and
C 601

Amendment of article 19 of the principal Act.

Amendment of article 20 of the principal Act.

C 602

Amendment of article 21 of the principal Act.

(b) paragraph (c) of subarticle (3) shall be deleted and substituted by the following>-
“(c) steps are taken for the winding up of, or declaration of bankruptcy, of the person acting as trustee.”.
20. Article 21 of the principal Act shall be amended as follows>- (a) by the substitution of subarticle (2) with the following >-
“(2) Subject to the provisions of this Act, trustees shall carry out and administer the trust according to its terms< and, subject as aforesaid, the trustees shall ensure that the trust property is vested in them or is under their control and shall, so far as reasonable and subject to the terms of the trust, safeguard the trust property from loss or damage>
Provided that the granting of security by assignment or pledge as authorised by the terms of the trust is permitted>
Provided further that the transfer by the trustee of trust property to a legal entity wholly owned or controlled, directly or indirectly, by the trustee or to another trust of which he is the sole trustee or to another trustee under trusts for the sole benefit of the trustee, shall be permitted and in such case the duties and liabilities of the trustee under this Act or the deed of trust shall not be diminished or otherwise affected in any manner whatsoever.”<
(b) paragraph (c) of subarticle (3) shall be substituted by the following>
“(c) on his own account, with a person related to him by affinity or consanguinity in the direct line or up to the third degree in the collateral line or with a partner in any partnership, enter into any transaction related to trust property.”<
(c) subarticle (4) shall be substituted by the following>
“(4) Trustees shall keep accurate accounts and records of their trusteeship and shall, upon a request by any beneficiary, disclose such accounts and records to such beneficiary and shall, subject to the terms of the trust, provide a copy of such accounts within a reasonable time of a request>
Provided that it shall be lawful for a beneficiary to suspend such rights in favour of an independent third party in cases where the beneficiary is required to do so by any agreement or by law as
a result of any existing or potential conflict of interest, and this for such time as the said conflict of interest subsists and under such conditions as may be agreed or are otherwise applicable.”< and
(d) subarticle (5) shall be amended by the substitution of the words “identifiable therefrom.” with “identifiable therefrom>” and the insertion of a new proviso as follows>
“Provided that trustees may, if expressly permitted by the terms of the trust, or in any case where the trust property consists of fungible things, place and keep trust property in a common pool of identical assets or in a clients’ or common account.”<
(e) immediately after subarticle (5) there shall be added new subarticles (6) and (7) as follows>-
“(6) Trustees shall not enjoy any benefits under any trust of which they are the sole trustee without the prior authority of>-
(a) the Authority, in case of a trustee authorised in terms of article 43 or not required to be authorised in terms of subarticle (6) of article 43 of this Act< or
(b) the Court, in any other case>
Provided that in case of an express fixed trust in favour of the trustee, only prior notification in writing to the Authority shall be required>
Provided further that a transfer of property by the trustee to another trust of which he is the sole trustee or sole beneficiary, shall not be deemed to be a benefit under this subarticle>
Provided further that remuneration for acting as a trustee or indemnification for expenses, liabilities and other claims shall not be treated as a benefit under a trust>
Provided further that this subarticle shall not apply to a trustee holding property in relation to a commercial transaction.
(7) Notwithstanding the provisions of this Act and other provisions which cannot be derogated from by voluntary act, when a commercial transaction includes the appointment of a trustee to hold property in relation to such transaction, the duties and liabilities of trustees as stated in this Act may
C 603
C 604

Amendment of article 22 of the principal Act.

Amendment of article 29 of the principal Act.

be varied by the terms of the trust and shall be regulated exclusively by the express terms of the trust or any applicable legislation>
Provided that nothing in this subarticle shall permit a trustee to be exonerated from the effects of, or be indemnified for, his own fraud, wilful misconduct or gross negligence.”.
21. Article 22 of the principal Act shall be amended as follows>- (a) the current provision shall be re-numbered as subarticle (1)<
(b) the words “to be recorded in writing>” shall be amended to read “to be recorded in writing.”<
(c) the proviso to subarticle (1) shall be deleted< and
(d) immediately after new subarticle (1) as renumbered there shall be inserted a new subarticle (2) as follows>-
“(2) Trust property shall at all times vest in the co-trustees in possession between them pro indiviso.”.
22. Article 29 of the principal Act shall be amended as follows> (a) subarticles (2) and (3) shall be deleted<
(b) subarticle (1) shall be renumbered as subarticle (2)<
(c) subarticle (2) as renumbered shall be amended as follows>- (i) the words “of such duty>” shall be substituted by the
words “of such duty.”< and
(ii) sub-paragraph (d) and the proviso thereto shall be deleted< (d) a new subarticle (1) shall be inserted immediately before
subarticle (2) as renumbered>-
“(1) A trustee shall, so far as is reasonable and within a reasonable time of receiving a request in writing to that effect, provide full and accurate information as to the state and amount of the trust property, including the accounts of the trust, and subject to subarticle (2) hereof, the conduct of the trust administration to>-
(a) the Court<
(b) subject to the terms of the trust, the settlor< (c) the protector of the trust<
(d) subject to the terms of the trust, any beneficiary of the trust who is of full age and capacity, or if a minor, to his lawful guardian or representative<
(e) subject to the terms of the trust, any charity referred to by name for the benefit of which the trust was established< and
(f) in case of a trust established for a charitable purpose, the
Attorney General or the relevant authority under applicable law.”<
(e) immediately after subarticle (2) as re-numbered, there shall be added the following new subarticles (3) to (12)>-
“ (3) Unless the terms of the trusts expressly determine the time when and the method how beneficiaries are to be informed of their entitlement under a trust, the trustee shall be obliged to inform any beneficiary of his entitlement, in writing, within a reasonable time of his accepting to act.
(4) When the terms of the trust grant a discretion in terms of subarticle (10) of article 9 of the Act, the terms of the trust may suspend until such time as a discretion is exercised in their favour the duty of the trustee to inform such beneficiaries that they may benefit under the trust or that they form part of a class of beneficiaries which may so benefit. The terms of the trust may also indicate the time when and the method of how such beneficiaries are to be informed.
(5) If the trust instrument expressly prohibits notification of information to beneficiaries or to those persons that form part of a class from among which beneficiaries may be appointed, without reference to any point in time, ascertained or ascertainable, such term shall be construed as implying a duty of the trustee to inform such beneficiaries within a reasonable time after the death of the settlor.
(6) Should the trustee consider providing information as required by the preceding subarticles to be prejudicial to the beneficiaries of the trust or any of them, the trustee may apply to the Court and the Court may release the trustee from the obligation to inform under such conditions as it may consider appropriate.
(7) The duty to inform as above provided shall not arise if the trustee is in possession of information which reasonably
C 605
C 606
demonstrates that those entitled to such information have already been informed or are already aware of such information.
(8) In the case of a trust established for charitable purposes, the duty to inform either unnamed beneficiaries forming part of a class or persons forming part of a class of persons who may be appointed as beneficiaries in terms of a power of the trustee, shall not arise notwithstanding the terms of the trust unless, in case of the unnamed beneficiaries the trustee establishes that there exist less than ten beneficiaries appertaining to such class of beneficiaries. Furthermore, in the absence of any indication to the contrary, the unnamed beneficiaries or persons who may be added as beneficiaries in terms of a power shall be assumed to be persons who carry on relevant charitable activities principally in Malta.
(9) The trustee shall carry out the duty to inform to the best of his abilities and at the expense of the trust and in the event it appears to the trustee that such exercise will be too costly or burdensome, the trustee may apply to the Court for directions and the Court shall be empowered to release the trustee from such duty under such conditions as it considers appropriate.
(10) The suspension of the duty of a trustee to inform beneficiaries as provided in this article shall not reduce the rights of beneficiaries or the duties and liability of the trustee towards such beneficiaries in terms of this Act.
(11) Persons who may be added as beneficiaries in terms of a power referred to in subarticle (7) of article 9 of this Act shall have no right of information until such time as they are appointed beneficiaries by the trustee pursuant to such power.
(12) In the case of a trust to hold property in relation to a commercial transaction, the duties of the trustee relating to the provision of information and the rights of beneficiaries to such information may be determined by the terms of trust, in which case the preceding subarticles of this article shall not apply.”<
(f) The marginal note to the article shall be deleted and shall be substituted by the following new marginal note>-
“Duty of trustee to provide information.”.
23. Article 37 of the principal Act shall be amended as follows >- (a) paragraph (b) of subarticle (2) shall be deleted and
substituted by a new paragraph (b) as follows>-
“(b) make any declaration as to the validity or enforcement of a trust, the existence of any resulting or constructive trust, breach of trust or failure of a trust<”
(b) in subarticle (3) thereof for the words “Attorney General.” there shall be substituted the words “Attorney General or by any other person having a lawful interest>”<
(c) immediately after subarticle (3) thereof there shall be inserted the following new proviso>
“Provided that in cases where the duty to inform a beneficiary of his interest in a trust has been suspended in terms of article 29 of this Act and until such suspension is in force, and in the absence of a protector of a trust, the settlor of a trust may also make an application to the Court in terms of this subarticle. Whilst dealing with such application the Court may determine whether the suspension of rights to information as aforesaid be maintained in force in full or in part for all or some of the beneficiaries.”.
24. Immediately after article 37 of the principal Act there shall be inserted the following new article 37A>
“37A. (1) Where any court makes an order on the demand of a beneficiary who has been prejudiced as a result of bad faith on the part of the trustee in the operation of a trust relationship or in relation to trust property, the court shall have the power to restore the position to what it was had the action complained of not been taken or otherwise to protect his interests.
(2) When a person domiciled in Malta is obliged to pay maintenance in terms of the Civil Code and is a beneficiary under a discretionary trust, the court shall have such powers as are necessary to review the exercise of discretion by the trustee and give due consideration to the rights of persons entitled to claim maintenance.”.
25. Article 38 of the principal Act shall be amended as follows>-
C 607

Amendment of article 37 of the principal Act.

Insertion of new article 37A of the principal Act.

Amendment of article 38 of the principal Act.

C 608

Addition of new articles 38A, 38B and 38C to the principal Act.

(a) subarticle (1) thereof shall be substituted by the following new subarticle (1) as follows>-
“(1) There shall be no appeal from any decree, order, declaration or direction of the Civil Court in its voluntary jurisdiction given under the provisions of this Act.”<
(b) subarticle (2) thereof shall be re-numbered as subarticle (6)< (c) immediately after subarticle (1) thereof there shall be
inserted the following new subarticles (2) to (5)>-
“(2) Such decrees, orders, declarations or directions shall remain in force until they are substituted or varied by the Civil Court in either its voluntary or contentious jurisdiction.
(3) During the hearing of an application before the Court the trustee or applicant shall at the earliest opportunity disclose to the Court all material facts known to him which may be relevant to the application including the existence of any “res judicata” or pending judicial action given or commenced in Malta or before a foreign court.
(4) All applications to the Court shall be notified to the trustee and the applicant shall furthermore notify all persons who he considers having an interest in the subject matter of the application. The Court shall have the power to order notification to all other persons who it considers may have an interest as it deems fit.
(5) The Court shall hear the trustee and any interested parties as it considers appropriate.”.
(d) the marginal note to the article shall be substituted by the following new marginal note>-
“Applications, enforcement and hearings.”.
26. Immediately after article 38 of the principal Act there shall be inserted the following new articles 38A, 38B and 38C>-

“Confiden- tiality.

38A. (1) All proceedings under these sections shall be held in camera and only the parties to the proceedings, the trustees, the beneficiaries, if they prove they have an interest in the proceedings to the satisfaction of the Court, and their respective advocates and legal procurators shall be allowed in court during the hearings.

Rules of

Court.

Directions from the Authority.

(2) Any decree or judgement of the Court shall preserve the confidentiality of the proceedings and shall only reveal such facts as may be necessary to make the same intelligible and enforceable by the parties and the trustees.
(3) All applications, responses, affidavits, opinions, statements and other documents or evidence shall be kept by the Registrar of the Court in a confidential manner and no access shall be given thereto except with the written consent of the Court.
(4) The Court may order the notification of any order to the depository notary as is referred to in article 43A of this Act if it considers it appropriate in the circumstances.
38B. The Board established under article 29 of the Code of Organisation and Civil Procedure may make Rules of Court concerning applications made under or in terms of this Act.
38C. Without prejudice to any other obligations arising under any other law, a trustee may apply to the Authority for directions concerning the manner in which he may or should act in connection with any matter concerning the trust or its property when such matter relates to the fulfillment of his obligations relating to the prevention of money laundering. Any bona fide communication or disclosure made in terms of this article shall not be treated as a breach of the duty of professional secrecy or any other restriction, whether imposed by statute or otherwise, upon the disclosure of information and any information disclosed in terms of this Article shall be used only in connection with investigations of money laundering.”.
C 609
27. Immediately after subarticle (2) of article 40 of the principal
Act there shall be added new subarticles (3) to (6) as follows>-
“(3) A person dealing with a trustee in relation to trust property need not -
(a) enquire into the terms of the trust< or
(b) obtain the consent of the beneficiaries or any other person<
and shall, subject to being in good faith, be entitled to rely on declarations made by the trustee with regard to any matters therein stated.

Amendment of article 40 of the principal Act.

C 610

Amendment of article 40A of the principal Act.

Substitution of articles 42 till 48 of the principal Act.

(4) The trustee may furnish to any person a certificate containing the following information without being in breach of any confidentiality obligations>-
(a) that the trust exists and the date the trust instrument was executed<
(b) the identity and address of the current trustee<
(c) that the trustee is duly authorised and empowered to carry out the relevant transaction and has obtained all necessary consents, if any<
(d) the revocability or irrevocability of the trust and, if revocable, that the trust has not been revoked.
(5) When there is more than one trustee, a certificate may be signed and authenticated by any trustee.
(6) Any trustee who issues any certificate containing any statement which he knows or ought to know is false shall be guilty of an offence and shall on conviction be liable to the punishment of imprisonment for a term not exceeding two years or to a fine (multa).”.
28. Article 40A of the principal Act shall be amended as follows> (a) in subarticle (1) thereof, instead of the words “in breach
of trusts.” there shall be substituted the words “in breach of trusts>”<
and
(b) immediately after subarticle (1) of the said article there shall be added the following new proviso>-
“Provided that an alienation of immovable property by the trustee as provided by article 958A of the Civil Code shall not give rise to the rights provided in this article in favour of any person claiming a right of legitim.”.
29. For article 42, the heading “Registration of Trusts”, articles
43 and 43A following it, the heading “Fiscal and other Exemptions”, articles 44 and 46A following it, the heading “Nominee Companies” and articles 47 and 48 following it, of the principal Act there shall be substituted the following>-

Trustees.

Requirements for

“REGULATION OF TRUSTEES
42. Persons may carry on the activities as trustees either in a professional or in a private capacity and, as the case may be, shall be subject to the provisions of articles 43 and 43A of this Act.
43. (1) Except as provided in terms of subarticles (6)
C 611

Authorisation and (7) of this article, any person, resident or operating in

of Trustees.

Malta, or a corporate trustee, who receives property upon trusts or accepts to act as a trustee or co-trustee of a trust and who>-
(a) receives or is entitled to remuneration 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 Act irrespective of the proper law of the trusts they hold and whether or not all or part of the trust 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 determined by the Authority.
(2) The Authority may issue Rules to establish when trustees are considered as receiving remuneration, when activity is done on a regular or habitual basis and when a person holds himself out as a trustee.
(3) Any person, whether an individual or a company may apply in writing to the Authority to be authorised as a trustee and the Authority may grant authorisation upon being satisfied that the conditions laid down in this article have been met and such authorisation may be general or may be restricted to particular specified activities.
(4) The conditions referred to in the preceding subarticle are that>-
(i) in the case an applicant is a company>-
C 612
(a) its objects include 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 services of a trustee< and
(c) the directors of the company are not less than three in number and are individuals who are approved persons< and
(d) the company has established adequate systems for maintaining proper records of the identity and residence of beneficiaries, the dealings and the assets in connection with trusts and compliance with applicable law< and
(e) every person who has a direct or indirect interest in the company, is an approved person< and
(f) the name of the company is not inconsistent with its trustee activity<
(ii) in the case of an applicant who is an individual that such individual -
(a) is resident in Malta or operating in 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.
(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 corporate trustee, of any change in its charter, statute, memorandum or articles of association or other instrument constituting the company, directors or members, and in case of companies registered in Malta such changes shall not be registered unless and until they are so notified to and approved by the Authority.
(6) (a) The following persons shall not be required to obtain authorisation in terms of this Act to act as a trustee in the course of carrying on the activities for which they are licenced>-
(i) a person who is in possession of a valid licence issued in terms of the Banking Act< or
(ii) a person who is licenced in terms of the Investment Services Act to hold clients’ monies or assets< or
(iii) a person who is authorised in terms of the Insurance Business Act or enrolled in the Brokers List under the Insurance Brokers and Other Intermediaries 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.
(b) A person approved by the Malta Maritime Authority to act as a trustee of a shipping trust or a shipping foundation as defined in article 84Z of the Merchant Shipping Act shall not require any further authorisation in 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, the provisions of this article and article
43A 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 the holding was created<
C 613
C 614
(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 public accountant 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 five years or longer period as established by any other law governing his profession<
(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 terms of the said Act and the establishment of which 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 property and ancillary acts, the details of which are notified in writing to the Authority by an authorised trustee<
(i) to a party to a contract who agrees to receive or hold property as trustee in the context 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 individual nominal value does not exceed one Maltese lira 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 sub-paragraph (i) to (iii) of paragraph (a) of subarticle (6) issued 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< or
(ii) a person having a licence or authorisation to act as a trustee issued by the relevant regulatory authority in an approved jurisdiction>
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 Malta, and who receives a confirmation from the Authority that it does not object thereto.
A notification under this subarticle shall outline the proposed activities and shall be accompanied by such information as may be required by the Authority from time to time.
To the extent that the Authority lays down any restrictions or conditions for such activities, on initial response to a notification or at any other time, such restrictions and conditions shall come into effect as stated in the response or by subsequent notice of the Authority.
(9) (a) The holding upon trust of >
(i) securities or interests in or issued by a Maltese legal entity, other than securities which are listed on the Malta Stock Exchange or other recognised investment exchange< or
(ii) immovable property in Malta
C 615
C 616
(hereafter referred to as “relevant property”) by trustees who are not authorised shall be permitted only if a person>-
(aa) authorised in terms of sub articles (3)
and (8) of this article, or
(bb) not required to be authorised under subarticle (6) (a) and (7) (e), (g) and (h) of this article,
(hereafter referred to as a “qualified person”) is engaged in writing by the trustee to carry out the compliance functions referred to in paragraph (b) of this subarticle on an indefinite basis with specific 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.
(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) of this subarticle shall also apply to the holding of relevant property by a mandatory for another person.
(d) If at any time there is no qualified 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 property, including assignments of beneficial interests in a trust, shall take place without the prior written consent of a qualified person>
Provided that nothing in this section shall imply that a qualified person is himself a trustee or that he is jointly and severally liable for the performance of obligations of the trustee in relation to relevant property or related transactions.
(11) The requirement for a qualified 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 individual nominal value does not exceed one Maltese Liri or its equivalent in any other foreign currency< or
(b) to the holding by trustees named and appointed by a will creating the trust 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 trustee to assume ownership and control of the trust property, in which case a qualified person shall be appointed prior thereto.
(12) Without prejudice to the nature of the legal relationship in any particular case, for the purposes of this article, any person who>-
(a) acts as a mandatory in the holding of 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 foundation,
shall, not being a person referred to in subarticle (6) of this article, require authorisation in terms of this article, irrespective of the extent of his activities, whether remuneration is payable therefor or whether he holds himself out as providing such services or not.
For the purposes of this subarticle a “private foundation” is a foundation established or operating in Malta for the benefit of a private interest or purpose which is not charitable.
C 617
C 618

Private Trustees and Notarial Procedure. Cap. 50.

(13) Nothing in this article shall imply that a person held to be 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 prosecution under this Act to prove that the said person was unaware of his duties hereunder.
43A. (1) In this article the term “Notarial Law”
means the Notarial Profession and Notarial Archives Act.
(2) An individual who agrees to act as a trustee
because>-
(a) he is related to the settlor, by consanguinity or affinity in the direct line up to any degree or in the collateral line up to the fourth degree inclusively, or
(b) he has known the settlor for at least ten years and, in both cases,
(i) is not remunerated, even indirectly, except as permitted by any rules issued by the Authority<
(ii) does not hold himself out as a trustee to the public, and
(iii) does not act habitually as trustee, in any case in relation to more than five settlors at any time,
(hereafter referred to as a “private trustee”) may act as a trustee without the need for authorisation in terms of the preceding article, subject to the conditions stated in subarticle (3) of this article.
(3) A private trustee shall be permitted to act as trustee under the following conditions which shall apply as the case may be>
(i) in the case of a testamentary trust, that within six months of accepting to act as trustee, he shall draw up an inventory by notarial deed in terms of Part IIIA of the Notarial Law and shall declare in the deed that the inventory includes all the property under the trust and an extract of the will containing all the terms of the said trust shall be annexed to the said notarial deed<
(ii) in the case of an inter vivos trust, the trust must be created by a notarial trust deed<
(iii) where property, other than immovable property, is added to the trust by a settlor or any other person, in terms of article 10 of this Act or by declaration of the trustee, such addition shall be recorded by a notarial trust deed on delivery of the additional property to the trustee, if practicable, but in any case not later than 14 working days of receipt of such property by the trustee. In the case of immovable property the addition of property shall be carried out by a notarial act, an authenticated copy of which shall be delivered to the depository notary for safekeeping and registration with the trust documents within such time.
(iv) records of meetings with beneficiaries, advisors or protectors, the exercise of discretion by the trustee in appointing or removing a beneficiary, in reducing, distributing or advancing trust property, in the termination of the trust for any reason, or other material events shall be rendered in writing and shall, together with any annual accounts and Court decrees, orders, declarations or directions which may be issued in relation to trust property, be delivered to the depositary notary<
(v) in all cases, the trustee shall declare the facts applicable to himself to show that he does not require authorisation to act as a trustee in terms of this Act and is not disqualified in terms of article 53 of this Act, after the notary has warned him as to the importance of the truthfulness of such declarations<
(vi) in the case of a trust relating to relevant property for the purposes of subarticle (9) of article 43 of this Act, the depositary notary shall ascertain that the provisions of article 43 are observed by the trustee.
(4) Where the trustee is a private trustee, the notary public who publishes a will containing a testamentary trust or receives a notarial trust deed inter vivos shall be the sole depository of all acts referred to in the preceding subarticle and such notary shall be known as the depository notary>
C 619
C 620
Provided that if such notary public is appointed as a trustee in the deed creating the trust and accepts to so act, such notary shall ensure that the deed of trust names another notary public to carry out the functions of the depositary notary.
(5) Notwithstanding any other law relating to the profession of notaries public, a notary who receives a will or notarial trust deed shall not be precluded from being appointed as the trustee in such deed but if a notary is a trustee he may not act as the depository notary or the notary keeper>
Provided that should the depositary notary be appointed trustee subsequent to the creation of a trust, his acceptance to act shall be conditional on such notary delivering all trust documents to another depositary notary to the satisfaction of the Authority and as provided in subarticle (9).
(6) All documents relative to a trust shall be submitted to the depository notary within 15 days of coming into existence or of coming into possession of the trustee or of the date of relevant event to which the document refers, as the case may be. On receipt of any such document the notary shall declare in writing on the document the date, time, and place of receipt. Such declaration shall, until the contrary is proved, be evidence of its content. All such documents shall be held for safekeeping and registration in the manner as may be laid down by the Authority from time to time.
(7) The trust deed and all documents relative to a trust filed with a depository notary shall be confidential. The depository notary shall not be obliged to provide information on the trust deed or any other document relative thereto except as provided by this Act and with the written consent of the trustee or upon an order of the Court.
(8) Where in terms of Notarial Law a notary keeper has been appointed instead of the depository notary, the notary keeper shall be the depository notary relative to the trust and a reference to the depository notary in this or any other law shall be construed accordingly.
(9) The trustee may, by notice in writing to the notary and to the Authority, substitute the depositary notary or the notary keeper in his capacity as the depositary notary and the latter shall deliver to the substitute depositary notary all documents in his possession in the preceding subarticles
and, in case of public deeds, authenticated copies thereof and this within 30 days from the date of the receipt of such notice, unless otherwise ordered not to do so by the Authority. The substituted notary may request a written receipt and keep copies of the documents delivered to the appointed depository notary but shall keep such copies secure and in strict confidence and shall not provide access to any person other than the serving depository notary, the trustee or the Authority.
(10) A notary who fails to observe the provisions of this article shall be guilty of an offence and shall on conviction be liable to a fine (ammenda) of not less than LM50 and not more than LM100>
Provided that no proceedings shall be instituted where the notary, upon a notice in writing by the Authority admits liability to pay such fine at its maximum amount.
(11) When a trust is created in accordance with the provisions of this article, the trustee shall remain subject to the requirements set out in relation to the depository notary until the termination of the trust even if the trustee becomes authorised or is substituted by a trustee authorised or not required to be authorised in terms of article 43 of this Act.
(12) When a trust is not created in accordance with the provisions of this article and a private trustee is subsequently appointed to office, it shall be a condition to his acceptance to act that a notarial deed of acceptance be executed in such manner that the provisions of this article are observed as far as possible at that stage, reference being made to the settlor for the purposes of the note of enrollment and a full inventory, of the trust property being transferred to the trustee, being attached.
(13) If any person wishes to create a trust and appoints a trustee other than a private trustee and also wishes that the provisions of this article apply, such person may choose to do so by notifying the notary public that it is his wish that the provisions of this article apply and that the notary act as depository notary under the provisions of this article. In such case the notary shall request the trustee to declare, in lieu of the declaration in sub-paragraph (v) of subarticle (3) above, that he is authorised, or not required to be authorised, in terms of article 43 and is aware of his obligations under this article. In such cases the requirement of article 50 of the Notarial Law to the effect that the Notary registers a Note of
C 621
C 622
enrollment relating to the creation of the trust shall not apply if the settlor expressly exempts him from such duty.
(14) In all cases the Court may exercise the power to appoint, remove, susbstitute and give directions to a depositary notary on the application of the depositary notary, any interested person or the Authority.
APPLICATION, GRANT, REVOCATION, ETC. OF AUTHORISATION

Application for

44. An application for authorisation in terms of article

authorisation. 43 shall be made in the form and manner required by the

Authority and shall furthermore>-
(a) contain or be accompanied by such information and particulars, in addition to those required by this article, as the Authority may require or as may be prescribed<
(b) be verified in the manner and to the extent required by the Authority, or as may be prescribed<
(c) contain the address in Malta for service on the applicant of any notice or other document required or authorised to be served on him by or under this Act<
(d) be accompanied by such fee as may be prescribed in respect of the authorisation applied for.

Power to refuse or grant authorisation.

45. (1) The Authority may grant or refuse to grant authorisation applied for under this Act.
(2) In granting authorisation the Authority may subject it to such conditions as it may deem appropriate, and having granted authorisation it may, from time to time, vary or revoke any condition so imposed or impose new conditions.
(3) When considering whether to grant or refuse authorisation the Authority shall, in particular, have regard to>-
(a) the protection of settlors and beneficiaries< and

Power to cancel or suspend authorisation.

(b) the protection of the reputation of Malta taking into account Malta’s international commitments< and
(c) the promotion of competition and choice.
(4) Without prejudice to the provisions of subarticle (8) of article 43, the Authority shall notify any applicant of its decision whether to grant or refuse to grant the licence applied for within three months from the receipt of a complete application made in compliance with the applicable provisions of this Act.
(5) Any requirement in this Act that a person be an approved person to carry out certain activities or functions shall be interpreted as a requirement that, in the case of a legal entity, any director or officer of such person, and, in the case of a trust, each one of its trustees, be an approved person to carry out such activities or functions.
46. The Authority may at any time cancel or suspend an authorisation in accordance with the provisions of this Act>-
(a) if it considers that the holder thereof is not or is no longer an approved person to act as a trustee< or
(b) if it considers that the holder thereof does not fulfil the requirements of, or has contravened, any of the provisions of this Act or of any rules or regulations made thereunder, or has failed to satisfy or comply with any obligation or condition to which he or the authorisation is subject by virtue of or under this Act< or
(c) if the Authority has been furnished by or on behalf of the authorised trustee with information which is false, inaccurate or misleading< or
(d) if the authorised trustee has not commenced activities within the term which may be provided for in the authorisation or has ceased to provide such service< or
(e) if it considers it desirable to cancel or suspend the authorisation for the protection of the general public or the reputation of Malta taking into account Malta’s international commitments< or
C 623
C 624

Notification of proposed refusal, variation, cancellation or suspension of an authorisation.

(f) at the request of the authorised trustee< or
(g) in any other circumstances under which the Authority would have been precluded from issuing an authorisation under this Act or where it would have been entitled to refuse the grant of such authorisation.
46A. (1) Where the Authority proposes-
(a) to vary any condition to which the authorisation is subject or to impose a condition thereon< or
(b) to refuse an application for an authorisation or to cancel or suspend an authorisation<
it shall give the applicant or, as the case may be, the authorised trustee notice in writing of its intention to do so, setting out the reasons for the decision it proposes to take.
(2) Every notice given under subarticle (1) of this article shall state that the recipient of the notice may, within such reasonable period after the service thereof as may be stated in the notice, being a period of not less than forty-eight hours and not longer than thirty days, make representations in writing to the Authority giving reasons why the proposed decision should not be taken, and the Authority shall consider any representation so made before arriving at a final decision.
(3) The Authority shall as soon as practicable notify its final decision in writing to the applicant or the authorised trustee, as the case may be.
REGULATORY AND INVESTIGATORY POWERS

Power to require information.

47. (1) Notwithstanding any other provision of this Act, the Authority may, by notice in writing, require any person who is or was acting, or who appears to be or to have been acting as trustee, or who was providing services which require authorisation according to this Act, and any other person who appears to be in possession of relevant information to do all or any of the following>-
(a) to furnish to the Authority, at such time and place and in such form as it may specify, such information and documentation as it may require with respect to any such activities as aforesaid<
(b) to furnish to the Authority any information or documentation aforesaid verified in such manner as it may specify<
(c) to attend before the Authority, or before a person appointed by it, at such time and place as it may specify, to answer questions and provide information and documentation with respect to any such activities as aforesaid.
(2) The Authority may take copies of any documents furnished or provided under this article.
(3) Where the person required to provide information or documentation under this article does not have the relevant information or documentation, he shall disclose to the Authority where, to the best of his knowledge, that information or documentation is, and the Authority may require any person, whether indicated as aforesaid or not, who appears to it to be in possession of that information or documentation, to provide it.
(4) A statement made and documentation provided in pursuance of any requirement under this article may be used in evidence against the person making the statement or providing the documentation as well as against any person to whom they relate.
(5) Except as provided for in article 642(1) of the Criminal Code and of article 588(1) of the Code of Organization and Civil Procedure, the provisions of this article shall apply to all information or documentation notwithstanding the provisions of the Professional Secrecy Act.
(6) The power to require the production of documentation under the provisions of this article shall be without prejudice to any lien or charge claimed by any person in relation to such documentation.
(7) Where the Authority has appointed a person under paragraph (c) of subarticle (1) of this article, such person shall, for the purposes of carrying out his functions under his appointment, have all the powers conferred on the Authority by this article and a requirement made by him shall be deemed to be and have the same force and effect as a requirement of the Authority.

Cap. 377

Cap. 9

Cap. 12

C 625
C 626

Power to issue directives.

Re-numbering and amendment of article 49 of the principal Act.

48. (1) Without prejudice to any of the powers conferred on it by this Act, the Authority may, whenever it deems it necessary, give, by notice in writing, such directives as it may deem appropriate in the circumstances< and any person to whom or to which the notice is given shall obey, comply with and otherwise give effect to any such directive within the time and in the manner stated in the directive.
(2) Without prejudice to the generality of the foregoing provisions of this article, a directive under this article may>-
(a) require anything to be done or be omitted to be done, or impose any prohibition, restriction or limitation, or any other requirement, and confer powers, with respect to any transaction or other act, or to any assets, or to any other thing whatsoever<
(b) require that any person having functions of a trustee be removed or replaced by another person acceptable to the Authority<
(c) require a trustee to cease operations and to wind up its affairs, in accordance with such procedures and directions as may be specified in the directive, which may provide for the appointment of a person to take possession and control of all documents, records, assets and property belonging to or in the possession or control of the authorised trustee.
(3) The power to give directives under this article shall include the power to vary, alter, add to or withdraw any directive, as well as the power to issue new or further directives.
(4) Where the Authority is satisfied that the circumstances so warrant, it may at any time make public any directive it has given under any of the provisions of this article.”.
30. Article 49 of the principal Act shall be amended as follows>- (a) it shall be re-numbered as article 56 and shall be
transposed in the principal Act in its proper numerical sequence in
accordance with its renumeration<
(b) in sub-paragraph (b) of subarticle (1) thereof, the words “nominee companies” and “companies” wherever they appear, shall be deleted and substituted by the word “trustees”<
(c) sub-paragraph (e) of subarticle (1) thereof shall be re- numbered as sub-paragraph (o)<
(d) immediately after sub-paragraph (d) of subarticle (1) thereof there shall be added the new sub-paragraphs (e) to (n) as follows>-
“(e) to further regulate the activities of trustees as well as the services provided and activities carried on or 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 beneficiaries or settlors and the imposition of duties and obligations on persons authorised to act as trustees<
(f) to establish the requirements relating to the books of account to be maintained by trustees, the form and content of accounts which trustees are obliged to prepare, which accounts have to give a true and fair view of the assets under trusts, the requirements of review or audit on such accounts, the duties of auditors who may be engaged and related matters<
(g) to exempt any activities or classes of persons from the requirements of articles 43 and 43A of this Act and to impose conditions he may deem fit for eligibility for exemption<
(h) without prejudice to any rules which may apply in terms of the Investment Services Act, to establish rules applicable to the responsibilities of trustees of unit trusts under this Act, the issue of units, the rights and responsibilities of unit holders and any other matters which may need to be regulated relating to unit trusts<
(i) to regulate any matters in connection with the use of trusts in commercial transactions, to establish conditions for such use including the prohibition of such use, and to amend the definition of commercial transactions in the Act<
(j) to regulate any matter in relation to security trustees and security trusts, including the definition of what constitutes fair and reasonable actions in relation to enforcement of security trustees<
C 627
C 628

Insertion of new article 49 of the principal Act.

(k) to regulate trusts which provide for maintenance of persons or for the provision of annuities or pensions<
(l) to regulate the accumulation of income and distribution of income and capital by trustees and ancillary matters<
(m) to regulate the duties of private trustees and the duties and functions of depository notaries, procedures to be adopted for the safekeeping and registration of all documents filed with such notary in relation to a trust and all ancillary matters<
(n) to regulate matters in relation to trusts created by holders of public office and such other persons as may be prescribed, including the qualifications of the trustees, the powers of appointment of such trustees, the powers and duties of such trustees, the rights of beneficiaries and third parties in such cases and all ancillary matters<”< and
(e) in subarticle (2) thereof, for the words “Regulations and rules” there shall be substituted the words “Regulations”.
31. Immediately after article 48 there shall be inserted a new article 49 as follows>

“Exchange of information and collaboration. Cap. 330

49. (1) In relation to trustees, the provisions of article
17 of the Malta Financial Services Authority Act shall apply

mutatis mutandis.

(2) The Authority may exercise the powers granted to it by virtue of this Act at the request of or for the purposes of assisting an overseas regulatory authority>
(a) where the assistance is required by the overseas regulatory authority for the purposes of the exercise of one or more of its regulatory functions< or
(b) where so required within the terms of
Malta’s international commitments< or
(c) where so required within the terms of undertakings assumed in bilateral or multilateral agreements for the exchange of information and other forms of collaboration with overseas regulatory authorities including a request under a memorandum of understanding concluded with the Authority.”.
32. Articles 50, 51, 52 and 53 of the principal Act shall be deleted and substituted by the following new articles 50 to 53>-
C 629

Substitution of articles 50, 51, 52 and 53 of the principal Act with new articles 50 to

“Right of entry.

50. (1) Any officer, employee or agent of the

53.

Authority, on producing, if required, evidence of his authority, may enter premises occupied by a person on whom a notice has been served under this Act for the purpose of obtaining the information or documents required by that notice, or otherwise for the purpose of the investigation, and of exercising any of the powers conferred upon it.
(2) Where any officer, employee or agent of the Authority has reasonable cause to believe that if such notice as is referred to in subarticle (1) of this article were served it would not be complied with or that any documents to which it could relate would be removed, tampered with or destroyed, such person may, on producing, if required, evidence of his authority, enter any premises referred to in subarticle (1) of this article for the purpose of obtaining from there any information or documents specified in the authority, being information or documents that could have been required under such notice as is referred to in subarticle (1) of this article
(3) For the purposes of any action taken under the provisions of this article, the Authority may request the assistance of the Commissioner of Police, who may for such purpose exercise such powers as are vested in him for the prevention of offences and the enforcement of law and order.
SANCTIONS

Offences.

51. (1) Any person who contravenes or fails to comply with any of the provisions of this Act, or contravenes or fails to comply with any authorisation, condition, obligation, requirement, directive or order made or given under any of the provisions of this Act, shall be guilty of an offence.
(2) Any person who for the purposes of, or pursuant to, any of the provisions of this Act or of any rules or regulations made thereunder, or any condition, obligation, requirement, directive or order made or given as aforesaid, furnishes information or makes a statement or declaration which he knows to be inaccurate, false or misleading in any material respect, or recklessly furnishes information or makes a statement which is inaccurate, false or misleading in any material respect, shall be guilty of an offence.
C 630

Power to issue rules.

(3) Any person who with intent to avoid detection of the commission of an offence under this Act, removes, destroys, conceals or fraudulently alters any book, document or other paper, shall be guilty of an offence.
(4) Any person who intentionally obstructs a person exercising rights conferred by this Act shall be guilty of an offence.
(5) Any person who acts or purports to act as a trustee in Malta without being authorised to do so by the Authority, when so required in terms of this Act, shall be guilty of an offence.
(6) Any person who is guilty of an offence under subarticles (1), (2), (3), (4) and (5) of this article and, saving any higher punishment which may be provided under any other law, shall be liable, on conviction, to a fine (multa) not exceeding two hundred thousand liri or to a term of imprisonment not exceeding four years, or to both such fine and imprisonment.
(7) Where a trustee contravenes or fails to comply with any of the conditions imposed in an authorisation issued under article 43, or the conditions imposed in article 43A, or contravenes or fails to comply with any directive, obligations or other requirement made or given by the Authority, the Authority may impose an administrative penalty which may not exceed forty thousand Maltese liri.
(8) A breach or non-observance by any person of any provision of this Act relating to the authorisation of such person to act as a trustee or otherwise shall not in any manner prejudice the validity or enforceability of a trust or affect the duties and responsibilities of such person in terms of this Act.
RULES
52. The Authority may issue Rules governing trustees, whether authorised or not required to obtain authorisation in terms of this Act, the operations of trustees in Malta, and on the qualifications to act as trustees. The Rules shall be binding on the trustees and other persons as may be specified therein. The Rules may lay down additional requirements and conditions in relation to the activities of trustees, their
responsibilities to the Authority, a code of conduct, and any other matters as the Authority may consider appropriate, including the form and content of accounting records to be kept by trustees.
C 631

Disqualification orders.

53. (1) The court, upon the application of the
Authority, may make a disqualification order against any
person who is found guilty of an offence under this Act or any other law, other than an offence punishable only with a fine, or who has infringed any requirement of this Act.
(2) The court, upon the application of the Authority or any interested person, may also make a disqualification order against any person if it is satisfied that his conduct as a trustee of a trust, either taken alone or taken together with his conduct as a trustee of any other trust or trusts, makes him unfit to be a trustee.
(3) A disqualification order made under this article may be for a minimum period of one year and a maximum period of fifteen years.
(4) For the purposes of this article, a disqualification order is an order whereby a person shall not, without leave of the court -
(a) be a trustee of a trust or a private foundation< or
(b) be delegated any functions, duties or powers of a trustee< or
(c) perform or exercise any functions or otherwise act in a fiduciary capacity in relation to a mandate, trust or a private foundation.
(5) A notice of a disqualification order made under this article shall>-
(a) be delivered by the Registrar of Courts to the Authority<
(b) be furthermore recorded in a register to be kept for this purpose by the Authority and which shall be open for public inspection.
C 632

Insertion of new articles 54 to 56 of the principal Act.

(6) Any person who, while being subject to a disqualification order, acts in contravention thereof, shall be guilty of an offence and liable on conviction to a fine (multa) of not more than twenty thousand liri or imprisonment for a term not exceeding three years or to both such fine and imprisonment.
(7) The provisions of this article shall be without prejudice to any other offences or remedies which may exist under any other law.”.
33. Immediately after article 53 there shall be inserted the following new articles 54 to 56>-

“Persons not qualified to act as trustees.

Appeals.

54. A person shall not be qualified for appointment or to hold office as trustee if>-
(a) he is interdicted or incapacitated or is an undischarged bankrupt<
(b) he has been convicted of any of the crimes affecting public trust or of theft or of fraud or of knowingly receiving property obtained by theft or fraud<
(c) he is a minor< or
(d) he is subject to a disqualification order under article 53.
APPEALS
55. (1) In this article, the “Financial Services
Tribunal” means the Tribunal established in terms of article
21 of the Malta Financial Services Authority Act, and the term “Tribunal” shall be construed accordingly< and the provisions of the said article 21 shall, except in so far as any of them is incompatible with the provisions of this article, apply to appeals made to the Financial Services Tribunal under this Act.
(2) Any person who is aggrieved by a decision of the
Authority>-
(a) to refuse the issue of an authorisation<
(b) to impose or vary any condition of an authorisation<

Meaning of term trustee.

(c) to impose or vary any restriction< (d) to revoke an authorisation<
(e) to make any order under this Act,
may appeal against the decision to the Financial Services Tribunal within such period and under such conditions as are established under the Malta Financial Services Authority Act.
(3) An appeal against a decision of the Authority shall not suspend the operation of that decision.
56. For the purpose of articles 44 till 55 of this Act the term ‘trustee’ shall be construed as including those persons referred to in subarticle (12) of article 43.”.
C 633
34. Instead of the Schedule to the Act there shall be substituted the Schedule to this Act.
35. (1) The following provisions in this Part shall apply in relation to registered trusts, trustees of unregistered trusts, licensed nominees and nominee companies as referred to in the principal Act as in force immediately before the coming into force of this Part and the Malta Financial Services Centre Act as retained in force by Act XVII of 2002 (hereinafter referred to as “the applicable law”).
(2) Upon the coming into force of this Part no further trusts shall be registered in terms of the principal Act as in force immediately before the coming into force of this Part.
(3) All trusts registered prior to the coming into force of this Part shall continue to be regulated by the principal Act as in force immediately before the coming into force of this Part for a maximum period of ten years from the date of their registration and they shall continue to enjoy the rights and exemptions and other privileges due as provided by the principal Act as in force immediately before the coming into force of this Part.
(4) A trustee of a registered trust in relation to which the period of ten years has expired prior to the coming into force of this Part shall amend the trust deed in consultation with the settlor, any protector or other interested parties so as to achieve compliance with the principal Act as amended by this Part within a maximum period of two years from the coming into force of this Part.

Substitution of Schedule to the principal Act.

Transitory

Provisions.

Registered

Trusts.

C 634

Trustees of unregistered trusts.

(5) A trustee of a registered trust in relation to which the said period of ten years is due to expire on or after the coming into force of this Part shall amend the trust deed in consultation with the settlor, any protector or other interested party so as to achieve compliance with the principal Act as amended by this Part within a maximum period of two years from the expiry of the said period of ten years.
(6) Notwithstanding the provisions of subarticles (4) and (5) hereof, a trustee of a registered trust may at any time prior to the lapse of said period of ten years amend the trust deed as aforesaid to achieve compliance with the principal Act as amended by this Part and such amendment shall imply a waiver of all rights and exemptions and other privileges contemplated by the provisions of the principal Act as in force immediately before the coming into force of this Part.
(7) The trustee of any trust, other than a registered trust, which is in existence on the date of the coming into force of this Part, and to which the provisions of subarticle (1) of article 43 of the principal Act as amended by this Part applies, shall, within two years of such date, do all such acts as may be necessary to comply with the provisions of the principal Act including>-
(a) applying for and obtaining authorisation as a trutee in terms of article 43 of the principal Act as amended by this Part< or
(b) making the relevant declarations and preparing such inventory of trust assets as required by article 43A of the principal Act as amended by this Part< or
(c) notifying the Authority of his activities to the extent necessary<
or
(d) cease to act as a trustee in Malta unless he obtains authorisation as required by the principal Act as amended by this Part.

Licensed Nominees.

(8) Nothing validly done in relation to a trust prior to the coming into effect of this Part shall be affected hereby and no action carried out prior to the coming into force of this Part and, without prejudice to any trust regulated by a foreign law and the provisions of the Recognition of Trusts Act, no relationship in existence prior to the coming into force of this Part shall be treated as a trust relationship unless it unambigouosly appears from the relationship that it was intended to create a trust relationship.
(9) On the coming into force of this Part, no further licences to act as a licensed nominee shall be issued in terms of the applicable law and all existing valid licences issued up to such date shall expire upon the lapse of two years from the coming into force of this Part.
C 635
(10) (a) Upon the lapse of six months from the coming into force of this Part and until the expiry date referred to in subarticle (9) hereof, no licensed nominee shall undertake any new nominee activities and licensed nominees shall only continue to service existing arrangements<
(b) A licensed nominee shall, prior to the lapse of two years from the coming into force of this Part>-
(i) either apply for authorisation under article 43 of the principal Act as amended by this Part<
(ii) or cease its business activities>Provided that if such licensed nominee does not obtain authorisation to act as a trustee under Article 43, such licensed nominee shall be obliged to ensure that all rights of property held under trusts or other arrangements are transferred in the form required by law to a person who is duly authorised to act as trustee in terms of Article 43 or that the provisions of article 43A are fully complied with, as the case may be.
(11) Notwithstanding any limitation in any memorandum and articles of association of any licensed nominee company in terms of the applicable law, any such company may at any time apply for and may be granted authorisation to act as a trustee in terms of the principal Act as amended by this Part.
(12) Upon the issue, in terms of Article 43 of the principal Act as amended by this Part, of authorisation to any such company to act as a trustee in terms of Article 43 of the said Act, any licence issued pursuant to the applicable law shall expire and be cancelled and shall be surrendered to the Authority.
(13) Upon the coming into force of this Part no further warrants to act as a nominee company shall be issued in terms of the applicable law.
(14) (a) Where upon the coming into force of this Part, a nominee company is solely performing the functions of liquidator of offshore companies, it shall immediately submit its warrant to the Authority for modification and such warrant shall continue to be renewed only in relation to the functions of liquidator and until such time as the nominee company completes the winding up of such offshore companies, whereupon the nominee company shall immediately surrender its modified warrant to the Authority for cancellation.
(b) A nominee company solely performing the functions of liquidator as aforesaid shall not act as trustee in any manner

Nominee

Companies.

C 636
and shall not be entitled to apply for authorisation to act as trustee in terms of the principal Act as amended by this Part.
(15) (a) Where upon the coming into force of this Part, a nominee company is solely performing the functions of trustee of registered trusts, the warrant of such nominee company shall be renewable for a maximum period of two years from the coming into force of this Part and such nominee company shall, during the said period, continue to be regulated by the principal Act as in force prior to the coming into force of this Part and by the relevant provisions of the applicable law.
(b) A nominee company solely performing the functions of trustee as aforesaid shall, prior to the lapse of the period of two years from the coming into force of this Part>
(i) either apply for authorisation to act as trustee under article 43 of the principal Act as amended by this Part,
(ii) or cease to act as trustee>
Provided that where such nominee company does not obtain authorisation to act as trustee under article 43, it shall be bound to ensure that all the rights of property under trusts and all other arrangements are transferred in the form required by law to a person authorised to act as trustee in terms of article 43 or that the provisions of article 43A are fully complied with, as the case may be.
(16) Where upon the coming into force of this Part, a nominee company is performing both the functions of liquidator of offshore companies and also the functions of trustee of registered trusts, the provisions of subarticle (12) shall mutatis mutandis apply to such nominee company in respect of its functions of trustee and the provisions of paragraph (a) of subarticle (11) shall mutatis mutandis apply to such nominee company in respect of its functions of liquidator, and the modification of its warrant as provided for in paragraph (a) of subarticle (11) shall be required only in respect of any period following the lapse of two years from the coming into force of this Part, during which the nominee company continues to act as liquidator of offshore companies.
(17) The Authority shall have the power to require such changes to the memorandum and articles of association of any licensed nominee or any nominee company applying for authorisation, including a change in name to the extent considered necessary, so as to more suitably reflect its status, provided that any such changes shall not affect the authorisation of the company to act as a trustee in terms of the principal Act as amended by this Part or the functions as liquidator of a nominee company under the applicable law.
Part II
AMENDMENTS TO THE CIVIL CODE, CAP. 16
36. (1) This Part amends and shall be read and construed as one with the Civil Code, hereinafter in this Part referred to as “the Code”.
(2) This Part shall come into force on such date as the Minister responsible for justice may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
37. Article 20 of the Code shall be amended as follows>-
(a) in subarticle (3) thereof, immediately following the words “property” there shall be added the words “and any income accruing under a trust”< and
(b) in subarticle (5) thereof, immediately after the word “him” the following words shall be added “as well as to any beneficial interest under a trust.”.
38. Article 163 of the Code shall be amended as follows >-
(a) in sub-paragraph (f) thereof, for the words “or negligent.”
there shall be substituted the words “or negligent<”< and
(b) immediately after sub-paragraph (f) thereof there shall be inserted the new sub-paragraph (g) as follows>-
“(g) persons who are trustees of property for the benefit of the minor.”.
39. Immediately after article 958 of the Code there shall be added a new Title IIIA and the additional new articles 958A to 958J as follows>-
“Title IIIA
Of Trusts and their Effects
C 637

Amendments to the

Civil Code, Cap. 16.

Amendment of article 20 of the Code.

Amendment of article 163 of the Code.

Addition of new articles 958A to

958J to the Code.

Trusts and applicable rules.

958A. (1) Property under trusts shall be regulated by the special law on trusts and to the extent applicable, the rules of this Code relating to trusts.

Transactions relating to property in trusts.

(2) (a) Transactions relating to property including>
(i) the settlement of property under trusts, even when effected by unilateral declaration or resulting from a judgement or order of a court<
C 638

Disposition by trustees of property.

Statutory Trust in favour of legitimary making claim.

(ii) the distribution, application, or advancement of property by a trustee to a beneficiary<
(iii) the reversion of property to a settlor or his estate when a trust fails or is terminated<
(iv) the assignment, vesting or transfer of property under trusts from a trustee to another trustee under the same trusts,
shall be subject to the special laws relating to trusts and their effects when such transactions arise by operation of law or are carried out in the form and manner required by applicable law.
(b) When such transactions are intended to transfer the ownership or other rights to or in property from one person to another , such transactions shall comply with all applicable requirements for the transfer of ownership of such property, including the provisions of article 996 when applicable, and when so carried out shall>
(i) be effective modes of transfer of ownership or other rights to or in such property<
(ii) result in the creation or termination of legally enforceable interests in or to such property in favour of such persons as provided by the special laws relating to trusts< and
(iii) be operative against third parties.
(c) The sole consideration for the validity of such transactions may be the imposition or assumption, the performance, or the termination, as the case may be, of legally enforceable obligations on or by a trustee in relation to such property.
(3) A trustee may validly dispose of and transfer trust property to third parties notwithstanding any right of legitim arising out of the application of Articles 615 to 653 and the other provisions of this Code relating to reduction of trust property.
(4) In any case where, after the death of the settlor, the trustee is formally notified of a claim for legitim in circumstances where trust property is to be sold, the trustee shall hold on trust for the benefit of any claimant of such

Trustee to hold for legitimary for five years.

Limitation on rights of enjoyment of benefit.

Reduction of settlements.

right a sum in money based on the net transfer value of the property at the time of transfer until the claim for legitim is determined or otherwise lapses.
(5) If trust property subject to a claim for legitim or, where it has been sold, the proceeds thereof, have already been distributed to any beneficiary, the legitimary claim may be made against such beneficiary as though he were an heir, legatee or donee as the case may be, and if there remains any property under such trusts, proportionately between the trust property and the beneficiary.
(6) The trustee’s obligation to retain the value as stated in subarticle (4) shall operate for a peremptory period of five years from the date of death of the decujus. This shall not prejudice the right of any claimant with respect to other property forming part of the inheritance but not settled in trust.
958B (1) Trusts for the benefit of a person who is not capable of receiving property, whether by testamentary disposition or donation, under the provisions of this Code, absolutely or more than as permitted by this Code, are subject to reduction in full or for the excess in accordance with this article>
Provided that in case of members of monastic orders or religious corporations of regulars the provisions of article 611 shall apply to trusts in favour of such persons mutatis mutandis.
(2) Subject to the provisions of article 6B of the Trusts and Trustees Act, except in cases where the trustee exercises a power of variation or otherwise acts so as to be in conformity with the provisions of this Code, trust settlements shall be reduced to the portion permitted by law if at the time of the opening of succession of the settlor they are found to exceed the disposable portion of his estate>
Provided that when trust property is reduced, the excess property shall be held by the trustee absolutely for the heirs of the settlor or for the benefit of the person entitled thereto as the case may be.
(3) When the beneficiary entitled to property which is in excess of what is permissible at law is a spouse of the settlor, such excess property shall be held under separate trust for use and enjoyment of fruits for the lifetime of such
C 639
C 640

Benefit of Discussion of other Property.

spouse and subject to the terms of the trust, thereafter for the heirs of the settlor absolutely.
(4) The rules laid down in article 621 and in articles
647 to 653, relating to the reduction of testamentary dispositions, shall be observed with regard to the reduction of trust settlements, subject to the provisions of this Title.
(5) The reduction of a settlement can only be demanded by those for whose benefit the law has reserved a portion of the property of the deceased, and by their heirs or other persons claiming under them and -
(a) saving article 1240, such persons cannot waive such right during the lifetime of the settlor, whether by an express declaration or by consenting to such settlements<
(b) donees, legatees or creditors of the deceased cannot demand the reduction of settlements or benefit by it<
(c) trusts forming part of a commercial transaction cannot be reduced in any manner until the completion of the commercial transaction, after which the residual property shall be subject to the rules stated in this article.
(6) No reduction of settlements can take place until the value of all the property disposed of under any will has been exhausted and when such reduction takes place, it shall be made commencing with the last settlement and so on successively, from the last to the previous settlements.
(7) The right arising upon a reduction of trust property is to receive value and there shall be no right to restitution of property in kind.
(8) To the extent not already distributed prior to notice of a claim, the trustee shall restore the fruits of such part of the settlement which exceeds the disposable portion from the day of the opening of succession of the settlor if the action for reduction has been brought within the year, otherwise from the day of the demand. In the case referred to in subarticle (4) of article 958A, the claimant shall be entitled to interest on the value retained for his benefit at the rate paid by banks on savings accounts from the date of the notification of his claim on the trustee or from the date of receipt of proceeds by the trustee whichever is the later.

Effects of claim for legitim.

(9) Saving the provisions of the Trusts and Trustees Act, unless the terms of the trust expressly exclude such effects>
(a) a person claiming the legitim from a trustee shall lose any benefit under the trust< and
(b) the provisions of subarticle (4) of article 620 of this Code shall apply in relation to any gains received under the terms of the trust.
(10) Where the benefit to the beneficiary consists in the use and enjoyment of property and the enjoyment of fruits therefrom or a life annuity and it appears that the value of the trust fund exceeds the disposable portion of the estate of the settlor, the persons entitled to the legitim may claim either >-
(a) the legitim and lose all benefits under the trust and any will, if any< or
(b) receive from the trustee after the death of the said beneficiary and notwithstanding any terms of the trust, an amount equal to the said legitim and interest at 5% per annum, without compounding, up to the value of the trust property remaining on such event and in such case shall not be entitled to any benefits under the will or the trust. Any further remainder of trust property shall thereafter be applied according to the terms of the trust< or
(c) opt not to claim and enjoy all benefits under any trust and any will.
(11) When, in the case contemplated in the preceding subarticle, the beneficiary is subject to a mental or physical disability which renders him incapable of sustaining himself, if it appears to the trustee that the trust property is not susceptible of division, sale or reduction to fulfil the claims of a legitimary in terms of paragraph (a) of subarticle (10) above without materially prejudicing the interests of the said beneficiary, the trustee may apply to the Court and the Court may order that the property not be sold, divided or reduced until the death of the said beneficiary. Furthermore, and in such case >-
C 641
C 642

Prescription.

Persons

(a) the beneficiary shall not be entitled to demand the reduction of the trust settled in his favour and claim the legitim, and
(b) any other legitimary shall be entitled to apply paragraph (b) of subarticle (10) at the time of death of the beneficiary unless he had opted as stated in sub-paragraph (c) thereof within five years of the death of the settlor.
(12) The legitimaries may choose any of the above options by notice in writing to the trustee and to the other heirs or executors of the estate.
(13) The action for reduction, whether against trustees or against third parties, shall be barred by the prescription on the lapse of five years to be reckoned from the day of the opening of the succession. The aforesaid time shall also run against minors and persons interdicted and shall not be capable of suspension or interruption by judicial act or otherwise.
958C. (1) The provisions of article 605 shall apply to

unworthy of trusts in the same manner as it applies to wills, and on the

under trusts. events contemplated therein, trusts in favour of such a person shall be subject to termination on the demand of the trustee or any interested person.

(2) Notwithstanding that a trust may have been settled without the reservation of the right of revocation or variation, a settlor may demand the variation of the terms of trust on the grounds specified in article 1787 and the provisions of articles 1788 and 1790 of this Code and those of article 15 of the Trusts and Trustees Act shall apply.

Application of rules to donations and settlements.

958D. When there exist both donations and settlements, for purposes of determining the order of transactions and other matters for the purpose of reduction of>-
(a) donations in terms of Sub-title VI of Title XIV
of Part II of Book Second, and
(b) of settlements in terms of this Title,
donations and settlements shall be treated as forming part of the same type of transactions and they shall be subject to reduction commencing with the latest in date unless the settlor#donor has expressly stated an order he wishes to be applied for such purpose.

Trust property subject to collation.

Trustees and Testamentary Executors.

Property in Malta, Maltese or foreign trust, foreign domiciliary.

958E. (1) For the purposes of the calculation of the value of an estate for any purposes of this Code, including for the benefit of a claimant of a legitim and of an heir for the purposes of collation amongst co-heirs, any settlement of property under trust shall also be included in the estate>
Provided that the settlor of property in trust may exempt such settlement from collation in terms of article 914>
Provided further that if the property settled in trust for the benefit of an heir is collated in the interest of the other co-heirs, such property as has been collated shall thereafter be held by the trustee under separate trust absolutely for the benefit of such heir.
958F . (1) A trustee appointed in terms of a testamentary trust shall not be considered to be a testamentary executor and the provisions of articles 762 to 778 shall not apply to testamentary trustees.
(2) When a person is appointed as trustee and also as an executor, such executorship shall be regulated in terms of this Code until such time as the executorship is fulfilled upon the delivery or registration of any relevant assets to or in the name of the trustee.
958G. (1) Where movable or immovable property situated in Malta has been settled in trust, under the laws of Malta or otherwise, by a person who is not domiciled in Malta at the time of settlement -
(a) such person shall be deemed to have had capacity to do so if at the time of such transfer or disposition he was of full age and sound mind under the law of his domicile and the law of Malta< and
(b) no provision in this Code relating to inheritance or succession to such property including, but without prejudice to the generality of the foregoing, rights to legitim or similar rights applicable under this Code shall apply to such trust property, at such time or subsequently< and
(c) the beneficiaries shall be deemed to have capacity to benefit.
C 643
C 644

Non- applicability of right of redemption.

Limitation of

(2) Once property has been settled in trust it shall not be affected by a change of domicile of the settlor, even if the settlor subsequently becomes domiciled in Malta.
(3) For the purposes of this article “legitim” means the legal rule restricting the right of a person to dispose of his property during his lifetime so as to preserve such property for distribution at his death, or having similar effect.
958H. The right of redemption as provided for in article
912 of this Code shall not apply when the transfer of the undivided share of an inheritance shall consist of a settlement of such right under trusts, the beneficiaries of which are the settlor himself, his heirs or the other heirs of the estate or a distribution or reversion thereof to such persons.
958I. The provisions of articles 1000 and 1001 shall

applicability not be interpreted as creating any limitation on the power of

1000 and

1001.

Non- applicability of article

1483.

any person to settle a trust or a person to accept to act as trustee under a trust for the benefit of a beneficiary, on the binding nature and effect of any trust or on the enforceablility of such rights as arise under a trust by a beneficiary.
958J. The right of a debtor of a litigious right in terms of article 1483 of this Code shall not arise when the settlement involves the assignment of a litigious right under trusts for the benefit of the creditor or creditors who have assigned the debt.”.

Addition of new articles 1124A and

1124B to the Code.

40. Immediately after article 1124 of the Code, there shall be added the new sub-title and the following new articles 1124A and 1124B>-
“VII. OF FIDUCIARY OBLIGATIONS

Fiduciary obligations.

1124A (1) Fiduciary obligations arise in virtue of law, contract, quasi-contract, trusts, assumption of office or behaviour whenever a person (the “fiduciary”)>-
(a) owes a duty to protect the interests of another person< or
(b) holds, exercises control or powers of disposition over property for the benefit of other persons, including when he is vested with ownership of such property for such purpose< or
(c) receives information from another person subject to a duty of confidentiality and such person is aware or ought, in the circumstances, reasonably to have been aware, that the use of such information is intended to be restricted.
(2) A person who is delegated any function by a fiduciary and is aware, or should, from the circumstances, be aware, of the fiduciary obligations shall also be treated to be subject to fiduciary obligations.
(3) Fiduciary obligations arise from behaviour when a person>-
(a) without being entitled, appropriates or makes use of property or information belonging to another, whether for his benefit or otherwise< or
(b) being a third party, acts, being aware, or where he reasonably ought to be aware from the circumstances, of the breach of fiduciary obligations by a fiduciary, and receives or otherwise acquires property or makes other gains from or through the acts of the fiduciary.
(4) Without prejudice to the duty of a fiduciary to carry out his obligations with utmost good faith and to act honestly in all cases, a fiduciary is bound, subject to express provision of law or express terms of any instrument in writing excluding or modifying such duty, as the case may be >-
(a) to exercise the diligence of a bonus pater familias in the performance of his obligations<
(b) to avoid any conflict of interest<
(c) not to receive undisclosed or unauthorised profit from his position or functions<
(d) to act impartially when the fiduciary duties are owed to more than one person<
(e) to keep any property as may be acquired or held as a fiduciary segregated from his personal property and that of other persons towards whom he may have similar obligations<
C 645
C 646

Ownership by a Fiduciary.

(f) to maintain suitable records in writing of the interest of the person to whom such fiduciary obligations are owed<
(g) to render account in relation to the property subject to such fiduciary obligations< and
(h) to return on demand any property held under fiduciary obligations to the person lawfully entitled thereto or as instructed by him or as otherwise required by applicable law.
(5) In addition to any other remedy available under law, a person subject to a fiduciary obligation who acts in breach of such obligation shall be bound to return any property together with all other benefits derived by him, whether directly or indirectly, to the person to whom the duty is owed.
(6) The obligation to return property derived from a breach of a fiduciary duty shall apply also to all property into which the original property has been converted or for which it has been substituted.
1124B. (1) When the ownership of property is vested in a person who holds it subject to fiduciary obligations, third parties may act in relation to such person as though he were the absolute owner thereof.
(2) When a person holds property subject to fiduciary obligations, such property is not subject to the claims or rights of action of his personal creditors, nor of his spouse or heirs at law.
(3) A person dealing with a fiduciary in relation to property subject to fiduciary obligations need not>-
(a) enquire into the terms of his authority< or
(b) obtain the consent of the person to whom the fiduciary duties are owed or any other person,
and shall, subject to being in good faith, be entitled to rely on declarations made by the fiduciary with regard to his authority.
(4) The fiduciary may furnish to any person dealing with him a certificate containing the following information without being in breach of any confidentiality obligations>-
(a) that the authority exists, the date the relevant instrument was executed and that the authority has not been revoked<
(b) a declaration that he is authorised to carry out the transactions being entered into< and
(c) the identity and address of the fiduciary. (5) Any fiduciary who issues any certificate
containing any statement which he knows or ought to know
is false shall be guilty of an offence and shall on conviction be liable to the punishment of imprisonment for a term not exceeding two years or to a fine (multa).”.
41. Subarticle (3) of article 1322 of the Code shall be amended as follows>-
(a) in paragraph (l) thereof, for the words “article 2010, and” there shall be substituted the words “article 2010<”<
(b) in paragraph (m) thereof, the words “immovable assets.” there shall be substituted the words “immovable assets< and”< and
(c) immediately after paragraph (m) there shall be added the new paragraph (n) as follows >-
“(n) the settlement in trust of property forming part of the community of acquests and the variation or revocation of the terms of any trust in which any such property has been settled.”
42. Immediately after article 1740 of the Code, there shall be added a new Article 1740A as follows>-
C 647

Amendment of article 1322 of the Code.

Addition of new article 1740A of the Code.

“Rules on donations not applicable to trust settle- ments.

1740A. The rules relating to donations shall not apply to the settlement or distribution of property under trusts except to the extent expressly stated by the provisions of this Code.”.
42A. Immediately after article 1871 of the Code, there shall
be added a new Article 1871A as follows>-
C 648

Addition of new article

1871A of the

Code.

1871A (1) Any person holding property for another holds property subject to fiduciary obligations to the person engaging him for such purpose and shall be regulated by the provisions of this title and by the provisions of this Code relating to fiduciary obligations.
(2) Where such person acquires property in his own name but on behalf of a mandator, the mandator shall at all times be entitled to demand the immediate and unconditional transfer thereof from the mandatory. The mandatory shall on such demand or, in any case, on the expiration of the time during which the mandate was to continue, immediately render account of his mandate in terms of article 1875 of this Code and transfer the property to the mandator by such means as may be appropriate, saving any special terms of the mandate relating to fees and expenses and rights of any third party in good faith.
(3) Notwithstanding article 1886 of this Code, a mandate in favour of a person acting in terms of this article shall not lapse>-
(i) on the death of the mandator and shall continue to bind the mandatory to preserve the property and all rights related thereto until such time as the property held by him is validly transferred to the heirs or legatees of the mandator< and
(ii) on the bankruptcy of the mandator or the mandatory and shall continue to bind the mandatory to preserve the property and all rights related thereto until such time as the property held by him is validly transferred as directed by the competent court for the benefit of the mandator or of the creditors of the mandator, as the case may be.
(4) A term of the mandate purporting to bind a mandatory as referred to above to transfer the property held by him to a third party after the death of the mandator shall not be valid unless such bequest be made by means of a will in accordance with the formalities required by law.
(5) In the event of the death of the mandatory, the heirs at law or the executor, if any, of the will of the mandatory shall be bound by the same obligations to preserve the property held for the mandator and to immediately transfer
it to him or as he may instruct, saving such rights to the payment of outstanding dues and expenses according to law.
(6) Notwithstanding the provisions of subarticle (1) of article 1871 of this Code, in cases where a mandatory, as referred to above, brings, by any means, to the attention of any third party the fact that he is acting in such capacity, the mandatory shall not be personally liable for the obligations entered into other than with and to the extent of the property held by him.”.
43. Immediately after article 2095 of the Code, there shall be added the new title and new articles from 2095A to 2095E as follows >-
“Title XXIIIA
Of Trusts and Obligations

Sub-Title I

Of matrimonial regimes

C 649

Addition of title and new articles 2095A to 2095E to the Code.

Trusts and married persons.

2095A. (1) Property being the subject of matrimonial contracts may be settled in trust only by means of a written instrument. Trusts between spouses are not created by operation of law.
(2) Property forming part of the community of acquests or governed by the system of community of residue under separate administration may only be settled in trust with the consent of both spouses. Paraphernal property of either spouse may be settled in trust by each spouse acting singly.
(3) A trust settled by both spouses jointly may only be varied or, if revocable, may only be revoked by both spouses acting jointly and after the death of one of the spouses such trust shall be irrevocable notwithstanding any of its terms, except with the authorisation of the Court in its voluntary jurisdiction.
(4) A beneficial interest held by a spouse under a trust shall not form part of the community of acquests irrespective of when it was settled in his favour or when he became a beneficiary, except in the case of a beneficial interest under a trust into which community property has been jointly settled by the spouses and only in relation to such property.
(5) Any distribution of income made under a trust in favour of a spouse shall, unless otherwise expressly
C 650

Spouse as beneficiary under trust settled by other spouse.

provided in the trust instrument, form part of the community of acquests or of the community of residue under separate administration of such spouse, as may be applicable, in terms of article 1320 and article 1338(2) of this Code respectively.
(6) When the matrimonial home is the subject of trusts for the benefit of the spouses or any one of them, nothing in the trust instrument or in the law shall imply that a spouse enjoys lesser rights to the home and its enjoyment than under article 3A of the Code, and the terms of the trust may not be revoked or varied, nor may the trustee dispose of the said property, without the consent in writing of both spouses or, in the absence of consent, without the authorisation of the Court.
(7) Any debt, indemnity or other liability due by either spouse as a trustee shall not be charged to the assets of the community of acquests in terms of article 1327 except as provided in article 1329 and, for the purposes of article 1341, any such debt shall be deemed to be a paraphernal debt.
2095B. (1) A person may settle property under trusts to his spouse acting as trustee for the benefit of beneficiaries including any such spouse as beneficiary.
(2) When a spouse is a beneficiary, a trustee may not enter into a contract of sale with the settlor spouse except in the cases specified in sub-paragraph (b) of article
1366 of the Code.
(3) A person cannot be a beneficiary under a trust settled by his or her spouse for more than the property that is allowed to be bequeathed or donated to such spouse in terms of this Code. Notwithstanding the terms of the trust and the rules at law otherwise applicable in relation to any excess, the excess shall be held by the trustee for the use and enjoyment of such spouse for his lifetime and thereafter shall be held on trust for the settlor or his heirs.
(4) If a beneficiary spouse is entitled at law to any property in ownership, the property held in trust up to the reserved portion, having regard to any other dispositions in such person’s favour, shall in virtue of this provision be held on separate trust for the benefit of such spouse alone irrespective of the terms of the trust. Any further property settled in trust for the benefit of the spouse shall, irrespective of the terms of the trust, be held under trust only for the use

Trust property which is not matrimonial property.

Non- applicability of provisions on annuities.

and enjoyment of the beneficiary for his lifetime and thereafter for the benefit of the settlor or his heirs. The above shall be without prejudice to the right of any legitimary to demand the reduction of the trust when the settlement impinges on right of legitim as provided by this Code.
2095C The provisions of law relating to spouses or matrimonial property shall not apply in any manner to the actions of a spouse when acting as trustee.

Sub-title II Of Annuities

2095D. Title XI of Book Second “Of the Constitution of Annuities” and the provisions of sub-titles I and II thereof shall not apply in relation to annuities constituted in a deed of trust or testamentary trusts and the obligations of trustees and the rights of the beneficiaries shall be regulated exclusively by the terms of the trust and the special laws relating to trusts.

Sub-title III Of Security Trusts

C 651

Security Trusts.

2095E. (1) Security may be created in favour of a
trustee, called a security trustee, for the benefit of any creditor or creditors, present or future, or in favour of a class or classes of creditors.
For the purposes of article 2042 and other provisions under special laws which may be applicable to security, the trustee shall be treated as a creditor and shall be entitled to be registered as holder of the security, indicating his position as trustee.
(2) The security trustee shall enjoy all such rights and be subject to such obligations as may be stated in the instrument in writing regulating>-
(a) the appointment of the security trustee, and
(b) the security granted to the security trustee for the benefit of the creditor or creditors.
(3) Security, for the purposes of this article, means any arrangement whereby the rights of a creditor are legally protected including any undertaking, guarantee,
C 652
mandate, pledge, assignment, transfer, grant, privilege or hypothec or the placing of property in possession or control of the trustee with rights of retention and sale as may be agreed.
(4) When a hypothec is created in favour of a security trustee which is a bank or other entity which is authorised in terms of the Banking Act or in terms of equivalent legislation overseas, such hypothec may, notwithstanding any other provision of law, be granted to secure future debts by the same debtor to the security trustee or the beneficiaries of the security trusts, present or future, as may be defined in the trust instrument. Such a hypothec shall be valid on condition that the deed constituting the hypothec expressly states that it secures future debts of the same debtor and limits the effects of the hypothec to a stated maximum sum. Such information shall form part of the relative note of registration for the purposes of article 2042 of this Code.
(5) When security is granted to a security trustee, such trustee shall have the power and legal interest to file any legal proceedings for the enforcement thereof even where under the terms of the deed of trust and the security>-
(a) the trustee is not the creditor of the principal debt or obligation< or
(b) all creditors enjoy the right to sue, jointly and severally, for the enforcement of the debt>
Provided that payment by the debtor either to the security trustee or to the beneficiaries, if also creditors, shall discharge the obligations of the debtor to the extent of the payment made.
(6) Subject to the preceding article, nothing in the Code of Organization and Civil Procedure shall hinder the action of a security trustee for the benefit of the beneficiaries under a trust on the basis of any simultaneous judicial or other action by any beneficiary under the trust.
(7) A security trustee shall not be subject to any of the obligations of the creditors for whose benefit he may hold security except to the extent to which he has expressly agreed in writing.
(8) A security trustee may resign, retire or be substituted in accordance with the terms of the trust and in
such case the original security trustee shall assign any security held by him to the substitute security trustee in the form required by law for the particular security held.
(9) Beneficiaries of a security trust who may be vested with the debt, may assign the debt to third parties and the provisions of article 1475 shall apply to the security for such debt even when held by a security trustee and in such case the assignees of such debt shall enjoy the rights of beneficiaries under the security trust upon notice to or acknowledgement by the trustee without the need of a separate assignment of the beneficiary rights under the trust deed.
(10) The appointment of a security trustee to hold security, his removal or his substitution by another trustee and any related transactions shall not operate as a novation nor shall they affect the security validly constituted in any manner.
(11) A security trustee may also act as an agent or mandatory for the beneficiaries of the security trust and may carry out functions under such contract in accordance with its terms.
(12) In the exercise of any right relating to the enforcement of any security, the security trustee shall be bound by the legal provisions relating to the particular type of security and in any case where the security arrangements are not subject to rules as to its enforcement, the security trustee shall act in a fair and reasonable manner in relation to the debtor.
Part III
AMENDMENTS TO THE NOTARIAL PROFESSION AND NOTARIAL ARCHIVES ACT, CAP. 55
44. (1) This Part amends and shall be read and construed as one with the Notarial Profession and Notarial Archives Act, hereinafter in this Part referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for notarial affairs may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
C 653

Amendments to the Notarial Profession and Notarial Archives Act, Cap.

55.

C 654

Amendment to article 28 of the principal Act.

Amendment of article 50 of the principal Act.

45. Article 28 of the principal Act shall be amended as follows>-
(a) immediately after sub-paragraph (iii) of paragraph (c) of subarticle (1) of the said article there shall be inserted a new sub-paragraph as follows >-
“(iv) where a party appearing declares to be acting as a trustee in respect of the subject-matter of the Act, the indication that the party appears as trustee in respect of that subject-matter<” and
(b) immediately after subarticle (2) of the said article there shall be added the following new subarticle>-
“(3) The above requirements, apart from those stated in sub-paragraphs (a), (b), (c), (h), (i), (j) and (k) of subarticle (1) of this article, shall not apply to a notarial deed whereby a trust is created in terms of article 43A of the Trusts and Trustees Act except in the case where it involves any act of settlement under trust or unilateral declaration of a trust of immovable property or real rights over such property or any vesting or divesting of a trustee in respect of such property or rights.”.
46. Article 50 of the principal Act shall be amended as follows>- (a) immediately after paragraph (k) of subarticle (1) of the
said article there shall be inserted a new paragraph as follows > –
“(l) any act of settlement under trust or unilateral declaration of a trust of immovable property or real rights over such property or any vesting or divesting of a trustee in respect of such property or rights and any act of settlement under trust of any other property made in accordance with article 43A of the Trusts and Trustees Act when the trustee is a private trustee as defined in the said Act.”< and
(b) immediately after subarticle (8) there shall be inserted the following new subarticle (9) as follows >-
“(9) In the case of a deed of settlement under trust of property which is not immovable property, the note shall only contain the date and nature of the act and the designation of the settlor in accordance with paragraph (c) of subarticle (1) of article 28< provided that the notary shall have no obligation and shall not register such note if the settlor has exempted
him from so doing in the trust deed and the trustee is a person who is authorised or not required to be authorised to act as a trustee in terms of article 43 of the Trusts and Trustees Act.”.
47. Immediately after article 68 of the principal Act there shall be a new article 68A as follows>-
C 655

Addition of new article 68A to the principal Act.

“Accessibility of deeds of trust

68A. (1) All deeds of trusts done by notarial deed in terms of article 43A of the Trusts and Trustees Act, except any act of settlement under trust or unilateral declaration of a trust of immovable property or real rights over such property, and any vesting or divesting of a trustee in respect of such property or rights, shall not be accessible to any person other than the settlor, the trustee or such other person as may be permitted access by the terms of the trusts, the applicable law or under authority of any court.
(2) The same rules shall apply to all other documents relative to a trust held by the depository notary in terms of the said Act.
(3) In the case of a testamentary trust, the provisions of this Act which apply to wills shall apply mutatis mutandis< however, the provisions of this article shall not apply to all documents subsequently filed with the depository notary in accordance with article 43A of the Trusts and Trustees Act.
(4) For the better carrying out of its functions under the Trust and Trustees Act, the Authority, as defined in the said Act, shall have the right and power to demand information from any depository notary relating to any trust documents in his possession and in such a case the depositary shall provide such information and documents as may be requested notwithstanding any duty of professional secrecy.”.
48. Immediately after article 84 of the principal Act, there shall be inserted a new Part IIIA and a new article 84A as follows >-
“Part IIIA – Of Notarial Trust Deeds

Addition of new Part IIIA and new article 84A to the principal Act.

Formalities relating to Notarial Trust Deeds

84A. (1) The formalities for notarial acts for the settlement of property under trusts, including unilateral declarations of trusts and the vesting and divesting of a trustee in respect of trust property applicable when a settlor wishes to create a trust by means of a notarial trust deed or when it is
C 656

Amendments to the Income Tax Act, Cap. 123.

Amendment of article 5 of the principal Act.

mandatory to do so in terms of article 43A of the Trusts and Trustees Act, shall be laid down from time to time by the Authority referred to in the Trusts and Trustees Act>
Provided that where the deed involves the transfer, vesting or divesting of any immovable property or real rights over such property, a notarial act shall be drawn up in accordance with Part III of this Act.
(2) The custody of notarial trust deeds and other trust documents relative to the same trust and their registration by the notary, access thereto and the issue of copies and extracts therefrom may also be regulated by such rules.
(3) In this article “notarial trust deed” shall include such notarial deed whereby a trustee declares an inventory of assets placed under trust in terms of article 43A of the Trusts and Trustees Act.”.
PART IV
AMENDMENTS TO THE INCOME TAX ACT, CAP 123
49. (1) This Part amends the Income Tax Act and it shall be read and construed as one with the Income Tax Act hereinafter in this Part referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
50. Article 5 of the principal Act shall be amended as follows > – (a) immediately following sub-paragraph (ii) of paragraph
(a) of subarticle (1) thereof, there shall be inserted the following
new sub-paragraph>-
“(iii) gains or profits arising from a transfer of the beneficial interest in a trust in accordance with the provisions of subarticle (18) of this article. For the purposes of this sub-paragraph, “transfer of the beneficial interest in a trust” shall include a transfer of a full or partial beneficial interest in a trust and any alienation of any such full or partial interest as a result of a disclaimer of such interest or as a result of a person not remaining a beneficiary of such trust<”<
(b) in paragraph (b) of subarticle (1) thereof for the words “donation, sale by instalments” there shall be substituted the words “donation, settlement of property on trust, distribution and reversion of property settled on trust, sale by instalments”<
(c) paragraph (g) of subarticle (2) thereof shall be deleted and shall be substituted by the following new paragraph>–
“(g) gains and profits relating to a transfer by donation or to a settlement in trust where the settlor of such trust is also the trustee of the same trust means the difference in the market value of the property at the time of the donation or the settlement and the cost of acquisition of the property at the time of acquisition by the donor or the settlor as the case may be.”<
(d) immediately after subarticle (17) thereof there shall be inserted the following new subarticles (18) to (26) as follows>
C 657

“Settlement of property

(18) On the settlement of property on trust, where the trust is established or evidenced by means of a written instrument it shall be deemed, for the purposes of this article that>–
(a) no transfer had taken place where the sole settlor is also the sole beneficiary of such trust<
(b) such property had been donated directly by the settlor of such trust to the beneficiaries that are persons other than the settlor himself>
Provided that –
(i) the relevant trust instrument specifically provides that the beneficiaries have an irrevocable vested right to receive all the property settled in trust as specified in the said written instrument< and
(ii) the relevant trust instrument specifically provides that the beneficiaries are, in relation to each settlor, persons referred to in subparagraph (i) of paragraph (e) of subarticle (2) of this article, whether they are in existence or not at the time of such settlement, or are persons referred to in subparagraph (ii) of the said paragraph in each case, such persons being either alone or with the settlor himself< and
C 658

Transfers of beneficial interest.

(iii) the beneficiaries include persons who are in existence at the time of the settlement of such property on trust<
(c) no loss or gain had arisen> Provided that –
(i) the relevant trust instrument specifically provides that the beneficiaries of such trust comprise only persons referred to in sub-paragraph (i) of paragraph (e) of subarticle (2) of this article, whether they are in existence or not in the time of such settlement, in relation to each settlor and may also include the said settlor himself< and
(ii) the beneficiaries of such trust include at the time of such settlement a person who by reason of an interdiction, incapacitation, or of a physical or mental impairment, or by reason of an irregular or dissolute lifestyle is substantially limited in his ability to administer or manage the property settled in trust, or includes at the time of such settlement a person who by reason of a physical or mental impairment is or may become unable to fully provide for his own maintenance, and where the trustee of such trust provides the Commissioner with the necessary evidence proving such interdiction, incapacitation, impairment or inability in the form of medical certificates, court orders or any other relevant documents which the Commissioner may deem necessary< and
(iii) the beneficiaries of such trust include persons who are in existence at the time of the settlement of such property.
(19) (a) For the purposes of the provisions of sub- paragraph (iii) of paragraph (a) of subarticle (1) of this article, gains or profits shall be deemed to arise on the date of the execution of a written instrument (hereinafter in this subarticle referred to as “transfer instrument”) whereby there is a transfer of the beneficial interest in a trust which includes taxable trust property. For the purposes of this subarticle “taxable trust property” means property referred to in sub-paragraphs (i) and (ii) of paragraph (a) of subarticle (1) of this article>

Cap. 16.

provided that this phrase includes only such property, the transfer of which, had it been carried out directly by the relevant beneficiary, would have given rise to gains or profits chargeable to tax in accordance with the provisions of this Act.
(b) The gain or profit arising from the transfer of the beneficial interest in a trust which has taxable trust property shall be equal to the consideration for the said beneficial interest as declared in the relevant transfer instrument. No deductions shall be allowable against the consideration payable to the transferor.
(c) The gain or profit that is determined in accordance with paragraph (b) of this subarticle shall be taxable at the rate specified in subarticle (6) of article 56 of this Act. No relief, reduction, credit or set-off of any kind shall be made in respect of such tax.
(d) In addition to the requirements laid down in Sub-Title VII of Title VI of Part II of Book Second of the Civil Code, any person transferring the beneficial interest in a trust which includes taxable trust property shall, within forty-five days of the date on which the transfer instrument was executed, provide the trustee of such trust with an authenticated copy of the said transfer instrument and shall require the trustee to collect an amount of tax equal to the tax determined in accordance with the provisions of paragraph (c) for onward payment to the Commissioner.
(e) The tax so collected by the trustee from the transferor in accordance with the provisions of paragraph (d) shall be a debt due from the trustee to the Commissioner payable by not later than the fourteenth day following the end of the month in which the trustee had collected the tax. Together with this payment, the trustee shall provide the Commissioner with>-
(i) an account of the gains or profits together with a list of all the assets making up the taxable trust property on the date the transfer instrument was executed on such form as may be prescribed<
(ii) an authenticated copy of the relevant transfer instrument< and
C 659
C 660

Transfers of property in the administ- ration of trusts.

(iii) a copy of the last financial statements of the trust.
(f) The trustee of the relevant trust shall, by not later than fifteen days from the date when he receives acknowledgement from the Commissioner of receipt of the tax and documents referred to in paragraph (e), furnish the parties to the transfer instrument with a certificate evidencing that the tax has been paid and that his obligations under paragraph (e) have been fulfilled.
(g) Notwithstanding the provisions of Sub-Title VII of Title VI of Part II of Book Second of the Civil Code, any transfer of a beneficial interest in a trust which includes taxable trust property shall not take place and shall not have any effects for the purposes of any law unless the said transfer is made by means of a transfer instrument and unless the transferor and the trustee have fulfilled their obligations in accordance with the provisions of paragraphs (d) and (e) of this subarticle.
(h) Subject to the provisions of article 10A of the Income Tax Management Act, the person transferring the beneficial interest in a trust which includes taxable trust property shall not be obliged to disclose the existence of such gains or profits in any return made pursuant to the provisions of the Income Tax Acts and no further tax shall be payable on such gains or profits.
(i) The provisions of this article shall not apply - (i) where the Commissioner is satisfied that
an irrevocable disclaimer of a beneficial interest
was not effected with the sole or main purpose of avoiding, reducing or postponing liability to tax and where he has, at his discretion, ordered in writing that the provisions of this article are not applicable to such a disclaimer<
(ii) to any transfer of beneficial interest in a trust where the trustee holds property solely for the purpose of a designated commercial transaction as defined in subarticle (24) of this article.
(20) (a) Where, in the administration of a trust, the trustee transfers property of such trust, gains shall be ascertained in accordance with the provisions of this article

Distribution of property settled on trust.

and the cost of acquisition shall be determined in accordance with the provisions of paragraphs (b) and (c) of this subarticle.
(b) In the case where such property had been settled in trust in any of the circumstances described in subarticles (18) and (24) of this article where the settlor is also a beneficiary of the trust, the cost of acquisition shall be equal to the cost of acquisition of such property at the time it was originally acquired by the settlor of such trust. Where the property had been settled in the circumstances described in paragraph (a) of subarticle (18) or paragraph (a) of subarticle (24) of this article, it shall be deemed for the purposes of this article that the settlor has directly transferred such property.
(c) Subject to the provisions of paragraph (b) of this subarticle, the cost of acquisition shall be the cost of acquisition at the time when such property was first acquired as trust property of that trust whether by way of settlement or otherwise.
(21) (a) For the purposes of this article, property is distributed to beneficiaries of a trust when the trustee transfers property of a trust to any beneficiary of such trust provided that such transfer does not constitute a reversion of property settled on trust as defined in paragraph (a) of subarticle (22) of this article.
(b) Where property which had been settled on trust is distributed to the beneficiaries it shall be deemed that for the purpose of this article>-
(i) no transfer took place in the case where such property had been settled in the circumstances described in paragraph (b) of subarticle (18) of this article provided that the property was distributed to beneficiaries which were not settlors of the trust<
(ii) property distributed to persons referred to in sub-paragraph (i) of paragraph (e) of subarticle (2) of this article in relation to the settlor, was donated directly by the settlor to such beneficiaries where such property had been settled in the circumstances described in paragraph (c) of subarticle (18) of this article<
C 661
C 662

Reversion of property to settlor.

(iii) notwithstanding the relevant deeming provisions of subarticle (18) of this article, such property was donated directly by the original settlor of that property to such beneficiaries where such property had been settled in the circumstances described in paragraphs (b) and (c) of subarticle (18) of this article and was subsequently distributed to a beneficiary that was also a settlor of such trust>
Provided that the said beneficiary is a person referred to in sub-paragraph (i) of paragraph (e) of subarticle (2) of this article in relation to the said original settlor who had owned such property prior to its settlement in trust.
(c) The provisions of subarticle (20) of this article shall apply mutatis mutandis in the circumstances of a distribution of property as they apply to the transfer of property in the administration of a property of a trust.
(22) (a) For the purpose of this article, property settled on trust reverts where there is a transfer to a person who is the settlor of a trust (even where such person is a beneficiary of that same trust) of property which had, immediately before its settlement into such trust, been owned by that same settlor.
(b) Where property which had been settled in trust in the circumstances described in subarticle (18) of this article reverts back to the settlor, notwithstanding the relevant deeming provisions of subarticle (18) of this article, it shall be deemed for the purposes of this article that such property had never been settled into such trust.
(c) Where property had been settled into trust in circumstances other than those described in paragraph (b) of this subarticle, and where such property reverts back to the settlor for the reasons referred to in article
16 of the Trusts and Trustees Act, it shall be deemed for
the purpose of this article that no loss or gain had arisen in the event of such reversion.
(d) The provisions of subarticle (20) of this article shall apply mutatis mutandis in the circumstances of a reversion of property settled on trust as they apply to the transfer of property in the administration of a property of a trust.

Subsequent transfers by settlors or beneficiaries.

Transfers involving changes in trustees and particular commercial reasons.

(23) In the case of a subsequent transfer of property by a settlor or beneficiary, as the case may b>-
(a) where such property had reverted back to such settlor< or
(b) where such property was distributed to the beneficiaries, and where>-
(i) such distribution was deemed, in accordance with the provisions of this article, to be a direct donation from the settlor of the trust to the said beneficiaries of such trust< and
(ii) such property is transferred by such beneficiaries within the period of time referred to in paragraph (f) of subarticle (2) of this article from the date of such deemed donation<
capital gains shall be ascertained in accordance with the provisions of this article by taking into account the cost of acquisition of such property at the time it was originally acquired by the settlor of the trust before the relevant settlement.
(24) (a) No transfer of the property shall be deemed to have taken place>-
(i) on the settlement of property consisting of shares in one company when the settlor who owned the said shares prior to the settlement thereof on trust is also the sole beneficiary of the trust<
(ii) on the settlement of property consisting of shares in one company when the settlement is made by more than one settlor, and the said settlors are the only beneficiaries of the trust, and the beneficiaries are entitled to benefit in accordance with the terms of the trust in the same proportion as they would have done as settlors<
(iii) on the reversion to the settlors of the shares referred to in sub-paragraphs (i) and (ii) of this paragraph in the same proportion which the settlors would have been entitled to when the property was owned by them as settlors immediately prior to the settlement<
C 663
C 664
(iv) upon the transfer of shares in one company purchased by a trustee with money settled in trust by a settlor for the purpose of acquiring, purchasing or subscribing to such shares, when the said transfer is made to the sole beneficiary of the trust who is also the original settlor<
and in each case, the trustee is a person authorised or not required to be so authorised to act as a trustee in terms of articles 43 and 43A of the Trusts and Trustees Act.
(b) No transfer of the property of a trust shall be deemed to have taken place where the trustee of such trust transfers all the property of such trust, which transfer involves only a change in the trustee of such trust and there is no change in the beneficiaries or in the beneficial interest.
(c) No loss or gain shall be deemed to have arisen where property is settled into a trust and where the trustee holds such property for the purpose of designated commercial transactions or where such property so settled reverts back to the settlor. Where such property is transferred by the trustee of such trust to its beneficiaries (or to any person through a judicial sale or otherwise), the cost of acquisition shall be the cost at which the settlor of such trust had acquired the said property. In such a case, the provisions of subarticle (10) of this article can be availed of by the settlor in the same manner as if the transfer of the property by the trustee had been made directly by the settlor himself. Where such property is not so transferred but reverts back to the settlor, or where the settlor waives his right to a reversion of the property, and there is a subsequent transfer of such property, the cost of acquisition shall be the cost at which the settlor had acquired the said property prior to its settlement into the said trust. Subject to the approval of the Commissioner, the provisions of this sub- paragraph shall also be applicable where a property is settled into a trust for the purpose of a commercial transaction not being a designated commercial transaction. For the purposes of this sub-paragraph, “designated commercial transactions” means the custody of investment instruments, the establishment or holding of real or personal security interests (including hypothecs, privileges, pledges and guarantees), and

Transfers of shares involving fiduciary relationships.

any other commercial transaction which may be prescribed, while “commercial transaction” shall have the meaning assigned to it in article 2 of the Trusts and Trustees Act.
(25) (a) Where a person that is authorised or not required to be so authorised to act as a trustee in terms of articles 43 and 43A of the Trusts and Trustees Act holds in its own name shares on behalf of the beneficial owner of such shares, and where such person transfers or otherwise disposes of the beneficial ownership of such shares to a third party, such a transaction shall be deemed to constitute a transfer of shares for the purposes of this article.
(b) Where a change in the registered holder of shares in a company does not involve a change in the beneficial ownership thereof, such change shall not be deemed to constitute a transfer of shares for the purposes of this article provided that the registered holder of such shares remains a person authorised or not required to be so authorised to act as a trustee in terms of articles 43 and 43A of the Trusts and Trustees Act.
(c) For the purposes of this subarticle “beneficial owner” means a person who is the real owner of, or who is otherwise beneficially entitled to, the shares which are subscribed or held on his behalf and in his interest by a person authorised or not required to be so authorised to act as a trustee in terms of articles 43 and 43A of the Trusts and Trustees Act and “beneficial ownership” shall be construed accordingly.
(d) When the shares referred to in this subarticle are transferred either by the trustee to a person other than the settlor or by the settlor to a third party after the shares have reverted to the settlor, the acquisition cost shall be deemed to be the cost of acquisition of the shares by the settlor when the shares were originally purchased or subscribed by the settlor prior to the shares being settled into the trust.
C 665

Power to make rules.

(26) The Minister may make regulations
determining the method of calculation of capital gains in
relation to transfers involving trusts and to prescribe any matter that may be prescribed in relation to such transfers.”.
C 666

Addition of new articles 27B to 27D to the principal Act.

51. Immediately after article 27A of the principal Act there shall be added the following new articles 27B to 27D>

“Taxation of trusts.

Trustees.

Trusts treated as

companies.

27B. (1) Where at least one of the trustees of a trust is a person resident in Malta, tax on any income attributable to a trust accruing or deriving in the year immediately preceding the year of assessment commencing on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint and for each subsequent year shall be payable in accordance with this article.
(2) For the purposes of this article, “income attributable to a trust” means the aggregate of any relevant income referred to in article 4 of this Act which has accrued to or is derived by a trustee or trustees of a trust from property which was settled in such trust and from property which was acquired in the administration of such trust including any income from the employment of such property.
27C. The trustee of a trust shall be answerable for doing all matters and things required to be done under the Income Tax Acts for the purposes of the determination, assessment and payment of tax in connection with the income attributable to a trust. Where two or more persons act in the capacity of trustees of the same trust, they shall be jointly and severally so answerable.
27D. (1) (a) The trustee of a trust that has been granted authorisation under subarticle (3) of Article 43 of the Trusts and Trustees Act where such trustee is a person resident in Malta (hereinafter a resident trustee) may elect, in accordance with the provisions of this subarticle, to have the income attributable to a trust treated in the manner provided for in paragraph (c) of this subarticle. Such election, which shall be irrevocable, is to be effected on the date of the establishment of such trust, or the date of appointment of the said resident trustee, whichever is the later, and is to be made on such form and under such conditions as may be prescribed. The said trustee shall submit such form to the Commissioner not later than 30 days from the date of the establishment of such trust or the appointment of a resident trustee whichever is the later.

Trusts of a temporary nature.

(b) An election as provided for in this subarticle may only be made where the trust is established by a written instrument which specifically provides that the income attributable to a trust shall comprise only of income in the form of royalties, dividends, capital gains, interest, rents or any other income from investments. For the purposes of paragraph (c) of this subarticle, such income shall not constitute income from a trade, business, profession or vocation.
(c) Where an election has been made in accordance with the provisions of this subarticle, the trustee of such trust shall compute the chargeable income in relation to the income attributable to a trust for the relevant year of assessment as if such income was derived by a company ordinarily resident and domiciled in Malta. Tax thereon shall be charged at the rate specified in subarticle (6) of article 56 of this Act and payable in the same manner applicable to such companies. Distributable profits shall be allocated in the same manner applicable to such companies and distributions of such allocated profits to beneficiaries of such trust shall be treated as if they were dividends distributed to shareholders of such a company. For the purposes of this subarticle, distributable profits of a trust shall mean the total profits which would be available for distribution to the beneficiaries resulting from the income attributable to a trust. The trustee shall keep all records and submit all returns and documents to the Commissioner as is required in the case of such companies. Where the Income Tax Acts require documents which are to comply with the Companies Act, the trustee shall submit similar documents, certified by a certified public auditor, and which are either provided for under the Trusts and Trustees Act or, in the absence of such provision, which comply as far as is possible, with the Companies Act.
(2) The trustee of a trust where such trustee is a person in possession of a valid licence issued in terms of the Banking Act or the Financial Institutions Act may apply to the Commissioner for a determination that property has been settled into such trust as a result or consequence of another transaction or set of transactions, and that the duration of such trust is of a temporary nature lasting only until such time as is necessary so that the said transaction or transactions may be effectively concluded. Such an application may be made on
C 667
C 668

Other trusts.

such form and under such conditions as may be prescribed. Where the Commissioner makes, at his discretion, such a determination>-
(i) no deduction or exemption contemplated by this Act shall be allowable or granted in relation to the income attributable to a trust< and
(ii) the said income shall be taxable at the rate specified in subarticle (6) of article 56 of this Act< and
(iii) the tax payable as provided for in this subarticle shall not be reduced whether by way of relief of double taxation or otherwise, and no set-off or credit shall be made or allowed in respect of such tax. The resulting tax shall be payable by such time as may be prescribed< and
(iv) the trustee of such trust shall declare such income and property settled in trust on such form as may be prescribed and no further disclosure of such income shall be required by the beneficiaries of such trust< and
(v) no further tax shall be payable on such income. (3) (a) Where neither an election in accordance
with subarticle (1) nor a determination in accordance with
subarticle (2) has been made the provisions of paragraphs
(b), (c), (d) and (e) of this subarticle shall apply. (b) In the case where –
(i) all the income attributable to a trust consists of income either arising outside Malta or income referred to in paragraph (c) of subarticle (1) of article 12 of this Act< and
(ii) all the beneficiaries of the trust are persons who are either not ordinarily resident in Malta or not domiciled in Malta, or are persons whose income is totally exempt from tax under the provisions of article 12 of this Act<
it shall be deemed that such income is not income attributable to a trust but is income derived directly by such beneficiaries, and that where the income arising outside Malta is received in Malta

Income attributable to a trust allocated to

beneficiaries.

by the trustee of the trust, it shall be deemed to be received in Malta by such beneficiaries. The trustee shall notify the beneficiary of such income and shall inform him of his duties under the Income Tax Acts.
(c) In the case where the income attributable to a trust comprises solely dividends distributed out of the profits allocated to the foreign income account or out of the profits of an international trading company, which were derived by such company while it was an international trading company, and all the beneficiaries of such trust are persons not resident in Malta, and the trustee of such trust provides the Commissioner with a certificate as referred to in subarticle (2) of article
5 of the Income Tax Management Act, it shall be deemed that such dividends do not constitute
income attributable to a trust.
(d) Capital gains derived in accordance with the provisions of article 5 of this Act from the transfer of property settled in trust in the administration of such trust or in the distribution or reversion of such property shall form part of the income attributable to a trust.
(e) The chargeable income in relation to the income attributable to a trust shall be computed as if the trust was a person that is ordinarily resident and domiciled in Malta but shall exclude amounts of income attributable to a trust allocated to beneficiaries as determined in accordance with the provisions of subarticle (4) of this article.
(4) For the purpose of paragraph (e) of subarticle (3)
of this article>-
(a) amounts of income attributable to a trust allocated to beneficiaries shall consist of -
(i) amounts over which beneficiaries had a vested right in the year immediately preceding the year of assessment< and
(ii) amounts over which an entitlement had been bestowed to beneficiaries other than in
C 669
C 670
the manner referred to in subparagraph (i) of this paragraph, and where such entitlement had been so bestowed by the end of the year immediately preceding the year of assessment< and
(iii) amounts representing income attributable to a trust for the year of assessment which were distributed to beneficiaries by the end of the year immediately preceding the year of assessment, and which amounts do not form part of the amounts referred to in subparagraphs (i) and (ii) of this paragraph.
(b) In order that the amounts referred to in paragraph (a) of this subarticle may be excluded in terms of paragraph (e) of subarticle (3) of this article, the trustee must ensure that>-
(i) the return referred to in article 24A of the Income Tax Management Act has been submitted in accordance with the provisions of that same article< and
(ii) he has furnished the beneficiaries in question with a certificate indicating, for the relative year of assessment and where applicable, the relevant amounts referred to in paragraph (a) of this article on such form and giving such additional details as may be prescribed< and
(iii) where the amounts referred to in subparagraphs (i) and (ii) of paragraph (a) of this subarticle were not distributed to the beneficiaries by the 31st March following the end of the year immediately preceding the relevant year of assessment, a payment of tax has been made on behalf of the beneficiaries equivalent to the tax which would result were the said amounts charged to tax at the rate specified in subarticle (6) of article
56 of this Act. Where such distribution is not made by the said date, this tax becomes a debt due from the relevant trustee to the Commissioner payable by not later than the 30th June following the end of the said year. The tax so paid shall be available as a credit against the beneficiary’s tax liability, or for a refund as the case may be, for the relevant year of assessment.

Rate of

Taxation.

Foreign tax deemed to be paid by trust.

Tax on income attributable to a trust is final.

Taxation of

Beneficiaries.

(5) Except as provided in subarticle (4) of article
56 of this Act, tax shall be charged upon the chargeable income in relation to the income attributable to a trust at the rate specified in subarticle (6) of article 56 of this Act.
(6) (a) Where foreign tax has been paid on the income attributable to a trust, such tax shall be deemed to have been paid by a trustee of such trust, whether it was paid by a trustee or a beneficiary of such trust.
(b) A claim for relief of double taxation with respect to the tax referred to in paragraph (a) of this paragraph, may only be made through the provisions of articles 79 to 88 of this Act. Any reference in these articles to a person, shall, for the purposes of this subarticle, be deemed to be a reference to a trustee of a trust while any reference to income or income of a person, shall be deemed to be a reference to the income attributable to a trust.
(7) Unless otherwise provided for in this article, no person shall be charged to further tax under this Act in respect of income attributable to a trust which has been charged to tax in accordance with the provisions of subarticles (1), (2) and (3) this article.
(8) (a) Amounts allocated to beneficiaries referred to in paragraph (a) of subarticle (4) of this article shall be aggregated with other income of the said beneficiaries for the purposes of article 4 of this Act and tax shall be charged accordingly for the year of assessment commencing on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint and for each subsequent year of assessment.
(b) Amounts allocated to beneficiaries referred to in paragraph (a) of subarticle (4) of this article shall be treated as income derived by the beneficiary at the time it vests, or the beneficiary becomes entitled to it, or it is distributed, as the case may be.
(c) Income distributed to beneficiaries shall retain its character as to type and country of source. A claim for relief of double taxation with respect to such income may be made in accordance with the provisions referred to in article 74 of this Act notwithstanding that
C 671
C 672

Interpretation.

Anti- avoidance.

foreign tax may have been paid by the trustee or the beneficiary himself.
(9) (a) For the purposes of this article the terms “beneficiary”, “settlor”, “trust” and “trustee” shall have the meaning assigned to them by article 2 of the Trusts and Trustees Act.
(b) Words and expressions used in this article and in other parts of the Income Tax Acts which relate to the income attributable to a trust, shall, in so far as their meanings are not defined by the Income Tax Acts, have the meaning assigned to them in the Trusts and Trustees Act and any rules and regulations made thereunder.
(10) (a) Where in the opinion of the Commissioner, transactions involving a trust are carried out with the sole or main purpose of reducing the amount of tax payable by a person, the Commissioner shall disregard such trust and the income of such person shall be determined as if it had been derived without the involvement of such trust.
(b) Article 57 of the Income Tax Management Act shall apply mutatis mutandis in the circumstances relating to trustees. References in that article to>
(i) “warrant holder” shall be construed as references to any person acting as trustee as provided for under the Trusts and Trustees Act<
(ii) “Board” shall be construed as references to the Malta Financial Services Authority<
(iii) “article 14(1)(a)(i) of the Accountancy Profession Act” shall be construed as references to article 51 of the Trusts and Trustees Act<
(iv) “documents” shall be construed as references to any document required to be produced by a trustee in relation to a trust under Maltese law<
(v) “1st January, 1998” shall be construed as references to the date of the coming into force of the Trusts and Trustees Act.”
52. In subarticle (2) of article 30 of the principal Act, for the words “allied institution, trust, foundation” there shall be substituted the following words “allied institution, foundation”.
53. In subarticle (10) of article 56 of the principal Act>
(a) in paragraph (b) thereof, for the words “15c on every lira.” there shall be substituted the words “15c on every lira<”<
(b) immediately after paragraph (b) thereof, thereof shall be included the following new paragraph>“
(c) Where income has been deemed to be derived directly under the provisions of paragraph (b) of subarticle (3) of article
27D of this Act by an individual who has been granted a residence permit under article 7 of the Immigration Act, such income shall be charged to tax at the rates laid down in paragraphs (a) or (b) of subarticle (1) of this article starting at the rate of 15 cents on every lira as if such income constitutes separate chargeable income.”.
54. Article 61 of the principal Act shall be amended as follows>- (a) in the Maltese text only, paragraphs (i) and (ii) shall be
renumbered as (a) and (b), while sub-paragraphs (a) and (b) shall
be renumbered as (i) and (ii)< and
(b) in subparagraph (ii) of paragraph (a) thereof, for the words “and domiciled in Malta<” there shall be substituted the words “and domiciled in Malta< or”< and
(c) immediately after sub-paragraph (ii) of paragraph (a)
thereof there shall be included the following new sub-paragraph>-
“(iii) a trustee of a trust where the beneficiaries of such trust are persons referred to in paragraphs (i) and (ii) of this subarticle<”<
55. Article 70 of the principal Act shall be amended as follows>- (a) In subarticle (1) thereof, for the word “trustee”
wherever it occurs, there shall be substituted the word
“administrator”< and
C 673

Amendment of article 30 of the principal Act.

Amendment of article 56 of the principal Act.

Amendment of article 61 of the principal Act.

Amendment of article 70 of the principal Act.

C 674

Deletion of article

72 of the principal

Act.

Amendments to the External Transactions Act Cap. 233.

Amendment of article 2 of the principal Act.

(b) In subarticle (2) thereof the word “trust,” shall be deleted< and for the words “a trustee” there shall be substituted the words “an administrator”.
56. Article 72 of the principal Act shall be deleted.
PART V AMENDMENTS TO THE EXTERNAL TRANSACTIONS ACT, CAP. 233
57. (1) This Part amends and shall be read and construed as one with the External Transactions Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint.
58. Subarticle (1) of article 2 of the principal Act shall be amended as follows>-
(a) for the definition of “non-resident” there shall be substituted the following new definition>-
“ “non resident” means>
(a) any person, body corporate or other entity which is not a resident<
(b) any resident trustee in terms of a trust where any of the beneficiaries are non-resident and in the case of a discretionary trust, where the power of appointment or any discretion may be exercised in favour of any non-resident”<
(b) for the definition of “resident” there shall be substituted the following new definition>-
“ “resident” means>
(a) any natural person regardless of nationality whose place of business is ordinarily in Malta or in a Member State or who has resided in or has the intention to reside in Malta or in a Member State for a continous period of one year<
(b) any body corporate incorporated in or under the laws of Malta or of a Member State, or any entity which operates from or is otherwise registered in Malta or in a Member State<
(c) any trustee in terms of a trust whose place of residence is ordinarily outside Malta or any Member State but where all the beneficiaries of the trust are determined and are residents and in case of a discretionary trust where the power of appointment or any discretion may be exercised only in favour of residents.”
PART VI
AMENDMENTS TO THE MERCHANT SHIPPING ACT, CAP. .234
59. (1) This Part amends and shall be read and construed as one with the Merchant Shipping Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for merchant shipping may, by notice in the Government Gazette, appoint.
60. In subarticle (4) of article 38 of the principal Act after the words “any other enactment.” there shall be inserted the words “Any such security trust shall be governed by the provisions of article 2095E of the Civil Code when the applicable law is the law of Malta.”
PART VII
AMENDMENTS TO THE IMMOVABLE PROPERTY (ACQUISITION BY NON-RESIDENTS) ACT, CAP. 246
61. (1) This Part amends and shall be read and construed as one with the Immovable Property (Acquisition by Non-Residents) Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint.
62. Article 2 of the principal Act shall be amended as follows>- (a) in paragraph (c) of the definition of “non-resident person”
there shall be deleted the word “trust,” and in sub-paragraph (iii)
thereof, for the words “ or is registered in the name of a company licensed to act as a nominee company” there shall be inserted the words “or is registered in the name of a trustee for the benefit of a non-resident person”<
(b) immediately after paragraph (c) there shall be added a new paragraph (d) as follows>-
“(d) any trustee in terms of a trust who is>
C 675

Amendment to the Merchant Shipping Act, Cap. 234.

Amendment of subarticle (4) of article 38 of the principal Act.

Amendments to the Immovable Property (Acquisition by

Non-Residents) Act, Cap. 246.

Amendment of article 2 of the principal Act.

C 676

Amendments to the Land Registration Act, Cap. 296

Amendment of article 12 of the principal Act.

(i) a non-resident person unless all the beneficiaries of the trust are determined and are residents of Malta and in case of a discretionary trust where the power of appointment or any discretion may be exercised in favour of residents of Malta<
(ii) a resident of Malta where any of the beneficiaries are non-resident persons and in case of a discretionary trust, where the power of appointment or any discretion may be exercised in favour of any non- resident person<”.
PART VIII
AMENDMENTS TO THE LAND REGISTRATION ACT, CAP. 296
63. (1) This Part amends and shall be read and construed as one with the Land Registration Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for land registration may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
64. Sub-paragraph (a) of subarticle (1) of Article 12 of the principal Act shall be deleted and substituted by the following>-
“(a) every contract conveying the ownership of immovable property, or any real right over such property including transactions relating to immovable property under trusts, or whereby any act having the effect of conveying the ownership of immovable property or any real right over such property, is dissolved, rescinded or revoked, and every contract creating or varying such right or whereby any such right is converted into any other of such rights or is waived, and every contract whereby immovable property is partitioned, and every act having a declaratory effect as to the ownership of, or any real right over, immovable property (including a deed made for a purpose of the Duty on Documents and Transfers Act, 1993 and an inventory drawn by a trustee accepting a testamentary trust and a unilateral declaration of trust with regard to additional trust property, but excluding any other deed of inventory), and every contract of antichresis< and”.
65. In Article 24 of the principal Act, immediately after the words “only for a limited period,” there shall be inserted the words “or is owned under trusts.”
66. In paragraph (a) of Article 25 of the principal Act immediately after the word “the owner,” there shall be inserted the words “a trustee,”.
PART IX
AMENDMENTS TO THE MALTA FINANCIAL SERVICES AUTHORITY ACT, CAP. 330
67. (1) This Part amends and shall be read and construed as one with the Malta Financial Services Authority Act, hereinafter in this Part referred to as “the principal Act”.
(2) The provisions of this Part shall come into force on such date as the Minister responsible for finance, may by notice in the Gazette establish and different dates may be so established for different provisions or different purposes of this Part.
68. Article 18 of the principal Act shall be amended as follows> (a) the present provision shall be renumbered as subarticle
(1) thereof< and
(b) immediately after subarticle (1) thereof as renumbered there shall be added the following new subarticle (2)>-
“(2) The Authority may, subject to such conditions it may deem fit to impose and to such procedures as may be applicable according to law, disclose information to overseas central banks and other authorities responsible for monetary policy and, where appropriate to other overseas public authorities responsible for overseeing payment systems, where such information relates and is connected to their respective functions in terms of law.”.
69. Immediately after article 20A of the principal Act, there shall be added the following two new articles 20B and 20C>-
C 677

Amendment of article 24 of the principal Act.

Amendment of article 25 of the principal Act.

Amendments to the Malta Financial Services Authority Act, Cap. 330.

Amendments of article 18 to the principal Act.

Addition of new articles 20B and

20C to the principal

Act.

“Financial

Conglomerates.

20B. (1) The Minister may, acting on the advice of the
Authority, make regulations for the transposition of Directive
2002#87#EC of the European Parliament and of the Council of 16 December 2002 and to provide for the supplementary supervision of credit institutions, financial institutions, insurance undertakings and investment firms in a financial conglomerate, and to otherwise regulate the supervision of
C 678

Language of regulations

financial conglomerates and financial groups with cross- sectoral financial activities.
(2) Regulations made by the Minister in virtue of subarticle (1) shall, in particular and without prejudice to the authority vested in the Minister by the said subarticle>
(a) provide for the appointment of a coordinator responsible for coordination and examination of supplementary supervision, for the assessment of the financial situation of a group, including solvency requirements, risk concentration and intra-group transactions, and the means for obtaining from the entities within a financial group and from other competent authorities, the information necessary for the performance of this supplementary supervision and may provide for consultation and the sharing and exchange of information with overseas competent authorities, as may be necessary<
(b) provide for the establishment and imposition of administrative penalties or other measures for the contravention of any of the regulations, and to provide for appeals therefrom to the Financial Services Tribunal.
20C. Regulations which are required to be issued by the Minister upon the advice of the Authority or after consultation therewith under any Act in respect of which the Authority has been appointed as the competent authority, may be made in the English language only.”.
PART X
AMENDMENTS TO DUTY ON DOCUMENTS AND TRANSFERS ACT, CAP. 364

Amendments to Duty on Documents and Transfers Act, Cap. 364.

Addition of new article 32B to the principal Act.

70. (1) This Part amends and shall be read and construed as one with Duty on Documents and Transfers Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
71. Immediately after article 32A of the principal Act, a new article to be numbered 32B shall be inserted as follows>-

“Special rules applicable to Trusts

32B. (1) Notwithstanding any other provisions of this Act, no duty shall be chargeable on any transfer of immovable property or any real right over an immovable property>
(a) by a settlor to the trustees of a trust of which the settlor is the sole beneficiary and where the settlor has an irrevocable vested right to receive the trust property<
(b) by a settlor to the trustees of a trust created for the purpose of a designated commercial transaction<
(c) by a settlor to the trustees of a trust created for the purpose of a commercial transaction not being a designated commercial transaction but which has been approved by the Commissioner for the purposes of this paragraph<
(d) between trustees consequent to a change in the trustees (whether by addition, substitution or otherwise) holding the immovable property upon trust provided that no beneficial interest in the trust is also transferred upon such change in trustees<
(e) by trustees to the settlor where the trust property reverts back to the settlor< and
(f) by trustees to a beneficiary of the trust where duty has been previously charged on the initial transfer by the settlor to the trustees in accordance with subarticle (1) of article 32< provided that duty shall be chargeable in relation to any increase in value between the date of the initial transfer to the trustees and the subsequent distribution to the beneficiaries>
Provided that in all cases the trust must be established or evidenced by means of a written instrument.
For the purposes of this subarticle, “designated commercial transactions” means the custody of investment instruments, the establishment or holding of real or personal security interests (including hypothecs, privileges, pledges and guarantees), and any other commercial transaction which may be prescribed, while “commercial transaction” shall have the meaning assigned to it in article 2 of the Trusts and Trustees Act.
(2) Where a beneficiary under a trust for immovable property assigns or otherwise transfers inter vivos to a third party his beneficial interest in such trust, such a
C 679
C 680

Amendment of article 33 of the principal Act.

Amendment of article 34 of the principal Act.

Amendment of article 35 of the principal Act.

transfer shall be deemed to constitute a transfer for the purposes of this Act, and the transfer value shall be deemed to be the amount limited to that part of the value of the immovable property which is proportionate to the value of the beneficial interest transferred by such beneficiary.
(3) The provisions of sub article (2) of this article shall apply mutatis mutandis in those cases when there is any change in beneficiary, including a disclaimer or renunciation whether in full or in part of a beneficiary’s entitlement under a trust<
Provided that where the Commissioner is satisfied that an irrevocable disclaimer of a beneficial interest was not effected with the sole or main purpose of avoiding, reducing or postponing liability to duty, he may at his discretion order in writing that the provisions of this subarticle shall not apply to such a disclaimer and that no duty shall be chargeable.”.
72. In article 33 of the principal Act subarticle (6) immediately after the words “testamentary executors” there shall be inserted the words “and trustees”.
73. In article 34 of the principal Act immediately after the words
“as may be prescribed.” there shall be inserted a new paragraph as follows>-
“For the purpose of determining the applicability of the benefits of this Article whenever the immovable property or real rights thereon are held on trust, reference shall be made to the beneficiaries of the trust as indicated in the declaration, and the trustee shall be ignored for such purpose.”.
74. Article 35 of the principal Act shall be amended as follows>- (a) subarticles (3) to (6) shall be renumbered as subarticles
(4) to (7) respectively<
(b) immediately after subarticle (2) there shall be added a new subarticle (3) as follows>-
“(3) For the purpose of determining the applicability of the benefits referred to in subarticles (1)(a) and (2) of this Article whenever the dwelling house is transferred causa mortis to a trustee, reference shall be made to the beneficiaries of the trust as indicated in the declaration, and the trustee shall be ignored for such purpose. No reference to the beneficiaries of a trust shall be made for the purpose of subarticle (1)(b) of this Article.”< and
(c) in subarticle (6) as renumbered, immediately after the words “which is not merely potestative” there shall be inserted the words “or of a transfer causa mortis upon trust”.
75. Immediately after article 42 of the principal Act, a new article to be numbered 42A shall be inserted as follows>-
C 681

Addition of new article 42A to the principal Act.

“Special rules applicable to Trusts

42A. The provisions of Article 32B shall apply mutatis mutandis to any transfers of marketable securities, and references to “immovable property” in Article 32B shall be construed as references to “marketable securities” for the purposes of this Article.”.
PART XI
AMENDMENTS TO THE INVESTMENT SERVICES ACT, CAP. 370
76. (1) This Part amends and shall be read and construed as one with the Investment Services Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
77. Article 12 of the principal Act shall be amended as follows> (a) paragraphs (j) and (k) of subarticle (1) thereof shall be
respectively re-numbered as (l) and (m)<
(b) immediately after paragraph (i) of subarticle (1) thereof, there shall be added the following new paragraph (j)>-
“(j) transpose the requirements of Directive 2002#87#EC
of the European Parliament and of the Council of 16 December
2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate, as may be applicable to a licence holder<”.
78. Paragraph 4 of the First Schedule to the principal Act shall be amended as follows>-
(a) in sub-paragraph (a) the words “this Schedule< or”
shall be substituted by the words “this Schedule>”<
(b) immediately after sub-paragraph (a) there shall be added the following proviso>-

Amendments to the Investment Services Act, Cap. 370.

Amendment to article 12 of the principal Act.

Amendment of the First Schedule to the principal Act.

C 682

Amendments to the

Banking Act, Cap.

371.

Amendment to article 2 of the principal Act.

Amendment to article 13 of the principal Act.

Addition of new articles 29B and

29C.

“Provided that for the purposes of this sub-paragraph any person who is authorised or otherwise exempt from authorisation in the terms of Article 43 or 43A of the Trusts and Trustees Act shall not by virtue of holding such assets be required to have a licence in terms of this sub-paragraph if such person does not provide an investment service and delegates all activities which are investment services in terms of this Act to a person who is licenced to provide such services< or<
(c) in sub-paragraph (b) of the said paragraph the words “investment service< or” shall be substituted by the words “investment service>”< and
(d) immediately after sub-paragraph (b) thereof there shall be added the following proviso>-
“Provided that for the purposes of this paragraph any person who is authorised or otherwise exempt from authorisation in the terms of Article 43 or 43A of the Trusts and Trustees Act shall not by virtue of holding such assets be required to have a licence in terms of this Act.”
PART XII
AMENDMENTS TO THE BANKING ACT, CAP. 371
79. (1) This Part amends and shall be read and construed as one with the Banking Act, hereinafter in this Part referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
80. In subarticle (1) of article 2 of the principal Act, in the definition of “competent authority” for the words “article 3(2)” there shall be substituted the words “article 3(1)”.
81. In subarticle (3) of article 13 of the principal Act, for the words “ listed a stock exchange licensed under the Financial Markets Act” there shall be substituted the words “listed on a recognised investment exchange in terms of the Financial Markets Act”.
82. Immediately after article 29A of the principal Act, there shall be added the following new articles 29B and 29C>-
“29B. The Minister may, after consultation with the competent authority, make regulations for the transposition of Directive 2002#87#EC of the European Parliament and of the Council of the European Union of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate, as may be applicable to credit institutions.
29C. Regulations made under this Act and any amendment thereto or revocation thereof may be made in the English language only.”.
PART XIII AMENDMENTS TO THE INCOME TAX MANAGEMENT ACT, CAP. 372
83. (1) This Part amends the Income Tax Management Act and it shall be read and construed as one with the Income Tax Management Act hereinafter in this Part referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
84. Article 5 of the principal Act shall be amended as follows>- (a) in subarticle (3) thereof, for the words “is licensed
under article 51A of the Malta Financial Services Centre Act” there
shall be substituted the words “had been licensed under article
51A of the Malta Financial Services Authority Act and until such time that he is so licensed or is authorised or otherwise permitted to act as a trustee under article 43 or 43A of the Trusts and Trustees Act”< and
(b) in subarticle (4) thereof, for the words “A licensed nominee shareholder who” there shall be substituted the words “A person referred to in subarticle (3) of this article who”.
85. In subarticle (1) of article 24 of the principal Act, for the words “Where any person in any capacity whatsoever” there shall be substituted the words “Where any person in any capacity whatsoever, but not in the capacity of a trustee of a trust”.
86. Immediately after article 24 of the principal Act there shall be added the following new articles 24A and 24B>-
C 683

“Financial

Conglomerates

Language of

Regulations

Amendments to the Income Tax Management Act, Cap. 372

Amendment of article 5 of the principal Act.

Amendment of article 24 of the principal Act.

Addition of new articles 24A and

24B to the principal

Act.

C 684

“Returns to be furnished by trustees.

Returns to be furnished by settlors.

“24A. (1) The Commissioner may give notice to a trustee of a trust requiring him to furnish, within the time limited by such notice, not being less than 30 days from the date of service of such notice, a return containing –
(a) a true and correct statement, certified by a warrant holder referred to in article 57 of this Act, of the income attributable to such trust as referred to in article
27B of the Income Tax Act< and
(b) (i) the names and addresses of those beneficiaries to whom income has been allocated as provided in subarticle (4) of article 27D of the Income Tax Act, together with the relative amounts so allocated< and
(ii) the amount, date of allocation, type and country of source of the income so allocated for each beneficiary referred to in subparagraph (i) of this paragraph.
(2) (a) A return under the provisions of this article shall be deemed to be a return required to be furnished under the provisions of article 10 of this Act.
(b) A trustee who issues a false certificate to the Commissioner shall be guilty of making a false statement within the meaning of paragraph (b) of subarticle (1) of article 52 of this Act.
24B. Where –
(a) the settlor of a trust is a person resident in
Malta< and
(b) none of the trustees of such trust is a person resident in Malta< and
(c) property is settled into such trust after such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint<
the said settlor shall inform the Commissioner of the property so settled together with a copy, where applicable, of the relevant trust instrument or of any other document evidencing the existence of such trust. This
information shall be submitted to the Commissioner by not later than 30 days from the date of the relevant settlement. Any settlor who fails to comply with the provisions of this article shall be guilty of an offence and liable on conviction to a fine (multa) of not less than
50 liri and not exceeding 500 liri and to a further fine (multa) of not less than 2 liri but not exceeding 10 liri for every day during which the offence continues after the lapse of the said 30 days.”.
87. Immediately after article 42 of the principal Act there shall be inserted the following new article 42A>-
C 685

Addition of new article 42A to the principal Act.

“Time limit within which payment is

to be made by

trustees.

42A. Notwithstanding anything contained in article 42 of this Act, tax payable on the income attributable to a trust as defined in article 27B of the Income Tax Act for any year of assessment, shall be paid not later than the tax settlement date as defined in the Income Tax Acts.”.
PART XIV
AMENDMENTS TO THE RECOGNITION OF TRUSTS ACT, CAP. 374
88. As from the date established by notice in the Gazette by the
Minister responsible for finance the principal Act shall be repealed.
PART XV
AMENDMENTS TO THE FINANCIAL INSTITUTIONS ACT, CAP. 376
89. (1) This Part amends and shall be read and construed as one with the Financial Institutions Act, hereinafter in this Part referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
90. Immediately after subarticle (2) of article 12 of the principal
Act, there shall be added the following new articles 12A and 12B>-

Amendment to the Recognition of Trusts Act, Cap.

374.

Amendments to the Financial Institutions Act, Cap 376.

Addition of new articles, 12A and

12B

“Financial

Conglomerates.

12A. The Minister may, after consultation with the
competent authority, make regulations for the transposition
of Directive 2002#87#EC of the European Parliament and of the Council of the European Union of 16 December 2002
C 686

Language of

Regulations.

and to provide for the supplementary supervision of financial institutions in an financial conglomerate.
12B. Regulations made under this Act and any amendment or revocation of such may be made in the English language only.”.
PART XVI
AMENDMENTS TO THE COMPANIES ACT, CAP. 386

Amendments to the Companies Act, Cap. 386.

Amendment of article 16 of the principal Act.

Amendment of article 70 of the principal Act.

91. (1) This Part amends and shall be read and construed as one with the Companies Act, hereinafter in this Part referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint, and different dates may be so appointed for different provisions and different purposes thereof.
92. Immediately after subarticle (2) of article 16 of the principal
Act, there shall be inserted the following new subarticle (3)>
“(3) The registration of a partnership by the Registrar under this article shall be without prejudice to any other licence or other authorisation as may be required in respect of the activities to be carried on by the partnership under any other law.”.
93. Article 70 of the principal Act shall be amended as follows>- (a) for subarticle (5) thereof, there shall be substituted the
following>-
“(5) A company shall not be registered by a name which includes the word “fiduciary”, “nominee” or “trustee”, or any abbreviation, contraction or derivative thereof, unless such company is authorised to act as a trustee in terms of the applicable laws of Malta, or unless otherwise permitted to do so by the relevant competent authority.”< and
(b) for paragraph (b) of subarticle (6) thereof, there shall be substituted the following>-
“ (b) under a name or title which contains the words “fiduciary”, “nominee” or “trustee”, or any abbreviation, contraction or derivative thereof, which is not the name of a
company which is authorised to use such name as provided in subarticle (5) of this article< or”.
94. Immediately after subarticle (2) of article 77 of the principal
Act, there shall be inserted the following new subarticle (3)>-
“(3) The registration of a company by the Registrar under this article shall be without prejudice to any other licence or other authorisation as may be required in respect of the activities to be carried on by the company under any other law.”.
95. In subarticle (4) of article 88 of the principal Act, for the words “the offer in the Gazette” there shall be substituted the words “the offer in the Gazette or on a website maintained by the Registrar”.
96. Article 127 of the principal Act shall be amended as follows>- (a) subarticles (2), (4), (5) and (10) thereof shall be deleted< (b) subarticle (3), (6), (7), (8) and (9) thereof shall be re-
numbered as subarticles (2), (3), (4), (5) and (6) respectively<
(c) in subarticle (2) as renumbered immediately after the words “any nominee” there shall be added the words “or any trust>
Provided that the company shall not be obliged to obtain or to record any information on the number of beneficiaries and it shall be the sole duty of the trustee to inform the company of the number of beneficiaries if it appears to the trustee that, paying regard to the number of beneficiaries, it may result in the aggregate number of persons interested exceeding fifty. The Registrar may at any time order any trustee to declare in writing to the company the number of beneficiaries and in such a case reference shall only be made to beneficiaries who enjoy a fixed interest in the shares under the trust.”
(d) Subarticle (3) as renumbered shall be substituted by the following new subarticle (3)>-
“(3) Where a trustee holds shares in a company for the benefit of beneficiaries>
(a) the memorandum of association and articles of association, if any, shall be deemed to be validly entered into for the purposes of articles 68 and 75 of this Act if
C 687

Amendment of article 77 of the principal Act.

Amendment of article 88 of the principal Act.

Amendment of article 127 of the principal Act.

C 688
they are signed only by the trustee when all the shares in the company are subscribed by the trustee<
(b) the memorandum of association, the register of members, share certificates, returns of allotments and any annual return of a company may specify the number of shares held by the trustee on its own account, if any, and the amount of shares held under trusts or each trust if more than one, and the provisions of paragraphs (a), (b) and (c) of subarticle (1) of article 123 of this Act shall be construed accordingly<
(c) a resolution in writing pursuant to article 210 of this Act shall be deemed to be valid and effective if it is signed only by the trustee when all the shares in the company are subscribed by the trustee.”<
(e) subarticle (4) thereof as renumbered shall be amended as follows> (a) paragraph (a) thereof shall be substituted by the
following new paragraph (a)>-
“(a) Where a beneficial owner of shares in a company which are held by a trustee, transfers or otherwise disposes of the beneficial ownership of such shares inter vivos to a third party, such a transaction shall be deemed to constitute a transfer of shares for the purposes of the Duty on Documents and Transfer Act, and for the purposes of article
5(1) of the Income Tac Act.”< and
(b) in paragraph (c) thereof, for the words “licensed nominee” there shall be substituted the words “trustee”<
(f) in subarticle (5) thereof as renumbered>-
(i) the definition of “beneficial owner” shall be substituted by the following new definition>-
“beneficial owner” means the person beneficially entitled to the shares under a trust or a fiduciary agreement<
(ii) the definition of “licensed nominee” shall be deleted< and
(iii) following the definition of “beneficial owner”
there shall be inserted the following new definition>-
“trustee” shall mean a person who may act as a trustee in accordance with the Trusts and Trustees Act and shall include any fiduciary holding shares on behalf of another person”.
97. In subarticle (1) of article 324 of the principal Act, for the words “notice thereof in the Gazette” there shall be substituted the words “notice thereof in the Gazette or on a website maintained bythe Registrar”.
98. Article 325 of the principal Act shall be amended as follows>- (a) in subarticle (2) thereof, for the words “notice in the
Gazette” there shall be substituted the words “notice in the Gazette
or on a website maintained by the Registrar”<
(b) in subarticle (3) thereof, for the words “ publish in the Gazette” there shall be substituted the words “publish in the Gazette or on a website maintained by the Registrar of Companies”< and
(c) in subarticle (4) thereof, for the words “publish a notice in the Gazette” there shall be substituted the words “publish a notice in the Gazette or on a website maintained by the Registrar”.
99. Article 356 of the principal Act shall be amended as follows> (a) in paragraph (a) thereof, for the words “the Registrar in
the Gazette” there shall be substituted the words “the Registrar in
the Gazette or on a website maintained by the Registrar”< and
(b) in paragraph (c) thereof, for the words “published by the Registrar in the Gazette” there shall be substituted the words “published by the Registrar in the Gazette or on a website maintained by the Registrar”.
100. Article 401 of the principal Act shall be amended as follows>- (a) in paragraph (e) of subarticle (1) thereof, for the words
“in the Gazette” wherever they occur, there shall be substituted
the words “in the Gazette or on a website maintained by the
Registrar”< and
(b) in paragraph (g) of subarticle (1) thereof, for the words “statement published in the Gazette” there shall be substituted the words “statement published in the Gazette or on a website maintained by the Registrar”.
C 689

Amendment of article 324 of the principal Act.

Amendment of article 325 of the principal Act.

Amendment of article 356 of the principal Act.

Amendment of article 401 of the principal Act.

C 690

Amendment of article 402 of the principal Act.

Amendment of article 425 of the principal Act.

Amendment to article 431 of the principal Act.

Amendment of the Tenth Schedule to the principal Act.

101. In subarticle (6) of article 402 of the principal Act, for the words “a licensed nominee as defined in article 127, who holds in his name shares in the company on behalf of and for the interest of another person beneficially entitled thereto.” there shall be substituted the words “a trustee, as defined in article 127 of this Act, who holds shares in the company.”
102. Immediately after subarticle (5) of article 425 of the principal
Act, there shall be inserted the following new subarticle (6) thereof>
“(6) Regulations made under any of the provisions of this Act may be made in the English language only.”.
103. In paragraph (b) of subarticle (1) of article 431 of the principal Act, for the words “from when the provisions of this Act” there shall be substituted the words “from when the provisions of this Act or of any other law”.
104. The Tenth Schedule to the principal Act shall be amended as follows>-
(a) sub-paragraph (a) of paragraph (1) thereof, shall be deleted<
(b) sub-paragraph (b) of paragraph (1) thereof, shall be renumbered as paragraph (1)<
(c) in sub-paragraph (1)(a) of paragraph (3) thereof, for the words “and at least one of whom shall be a licence holder licensed as a manager of a collective investment scheme within the meaning of the Investment Services Act” there shall be substituted the words “and each of whom shall satisfy the competent authority within the meaning of the Investment Services Act that he is a fit and proper person to carry out such activities or functions and shall further satisfy the requirements of subarticle (7) of article 6 of the Investment Services Act and any other requirements as may be established by guidelines issued by the competent authority under and within the meaning of the Investment Services Act”< and
(d) in sub-paragraph (8) of paragraph (22) thereof, for the words “published in the Gazette” there shall be substituted the words “published in the Gazette or on a website maintained by the Registrar”.
PART XVII
AMENDMENTS TO THE ARBITRATION ACT, CAP. 387
105. (1) This Part amends and shall be read and construed as one with the Arbitration Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the Minister for justice may by notice in the Government Gazette appoint.
106. Immediately after article 15 of the principal Act there shall be inserted the following new article 15A as follows>
C 691

Amendments to the Arbitration Act, Cap. 387.

Addition of new article 15A to the principal Act.

“Arbitration clause in wills and trusts.

15A. (1) It shall be lawful for a testator to insert an arbitration clause in a will. In such event such clause shall be binding on all persons claiming under such will in relation to all disputes relating to the interpretation of such will, including any claim that such will is not valid.
(2) It shall be lawful for a settlor of a trust to insert an arbitration clause in a deed of trust and such clause shall be binding on all trustees, protectors and any beneficiaries under the trust in relation to matters arising under or in relation to the trust.
(3) In the cases referred to in the preceding subarticles, the right of a party to seek directions of the Court of voluntary jurisdiction in terms of the Trusts and Trustees Act shall not be limited by any such clause and notwithstanding the provisions of this Act, the said Court shall not be bound to stay proceedings in terms of subarticle (3) of article 15 or otherwise, but shall enjoy a discretion to do so until such time as it determines that the matter is of a contentious nature, in which case it shall stay the proceedings and shall refer the parties to arbitration.”.
PART XVIII
AMENDMENTS TO THE INSURANCE BUSINESS ACT, CAP. 403
107. (1) This Part amends the Insurance Business Act, hereinafter in this Part referred to as “the principal Act” and shall be read and construed as one with the principal Act.
(2) The provisions of this Part shall come into force on such date as the Minister responsible for finance may, by notice in the Gazette, establish and different dates may be so established for different provisions or different purposes of this Part.

Amendments tothe InsuranceBusiness Act,Cap. 403.

C 692

Amendment of article 10 of the principal Act.

Amendment of article 12 of the principal Act.

Amendment of article 14 of the principal Act.

Amendment of article 28 of the principal Act.

Amendment of article 38 of the principal Act.

108. For paragraph (b) of subarticle (1) of article 10 of the principal Act, there shall be substituted the following>
“(b) where the authorisation sought or held is one not restricted to reinsurance, the company submits proof that it maintains the minimum guarantee fund in accordance with article 16 of the Act.”.
109. Article 12 of the principal Act, shall be amended as follows> (a) the present article 12 shall be renumbered as subarticle
(1) thereof< and
(b) immediately after the new renumbered sub-article (1) there shall be inserted the following new subarticle>
“(2) Without prejudice to the provisions of subarticle (1) of this article, the general representative shall not be personally liable for the debts and obligations of the company referred to in article 11.”.
110. For paragraph (b) of subarticle (5) of article 14 of the principal Act, there shall be substituted the following>
“(b) the Malta margin of solvency is the margin of solvency of an authorised company computed by reference to the assets and liabilities of the business carried on by that company in Malta.”.
111. Subarticle (1) of article 28 of the principal Act, shall be amended as follows>-
(a) the present paragraph (h) shall be re-numbered as paragraph (i) thereof< and
(b) immediately after paragraph (g) thereof, there shall be inserted the following new paragraph>-
“(h) require the company to submit a financial recovery plan if it considers that the interest of insureds, policyholders, creditors or other interested persons are likely to be prejudiced owing to a deterioration in the financial position of the company<”.
112. Article 38 of the principal Act shall be amended as follows>-
(a) immediately after subarticle (1) thereof, there shall be inserted the following new subarticle>
“(2) If the person acquiring a qualifying shareholding is an insurance undertaking, a credit institution or an investment firm authorised in a Member State or an EEA State, or the parent undertaking of such an entity, or a natural or legal person controlling such an entity, and if, as a result of that acquisition, the undertaking in which the acquirer proposes to hold a holding would become a subsidiary or subject to the control of the person acquiring such shareholding, the assessment of the acquisition must be subject to the prior consultation referred to in Article 12a of Council Directive
73#239#EEC of 24 July 1973 on the coordination of laws,
Regulations and administrative provisions relating to the taking up and pursuit of the business of direct insurance other than life assurance and Article 12a of Council Directive
79#267#EEC of 5 March 1979 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance, as amended from time to time.”<
(b) in subarticle (3) thereof, for the words “listed on any Stock Exchange” there shall be substituted the words “listed on any recognised investment exchange”< and
(c) immediately after subarticle (11) thereof, there shall be inserted the following new subarticle>-
“(12) In this article, the expressions “Member State”
and “EEA State” have the following meanings>
(a) “Member State” means a Member State of the European Communities< and
(b) “EEA State” means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on 2 May, 1992 as amended by the Protocol signed at Brussels on the
17 May, 1993 and as amended from time to time.”.
113. For paragraph (a) of subarticle (1) of article 41 of the principal Act, there shall be substituted the following>
“(a) in the case of a company whose head office is in Malta, dissolve and consequentially wind up under and in accordance with regulations made under of this article< and”.
C 693

Amendment of article 41 to the principal Act.

C 694

Amendment of article 58 of the principal Act.

Amendment of article 62 of the principal Act.

Amendment of article 64 of the principal Act.

114. Article 58 of the principal Act, shall be amended as follows>- (a) paragraph (c) of subarticle (1) thereof, shall be
substituted by the following>-
“(c) to suspend or revoke an authorisation under article
26, or under any regulation made under this Act<”< and
(b) subarticle (3) thereof, shall be substituted by the following>- “(3) An appeal made under this article shall not suspend
the operation of any decision from which the appeal is made>
Provided that, a decision to revoke an authorisation shall not become operative until the expiration of the period within which an appeal may be made under this article and, if an appeal is made within such period, the decision shall become operative on the date of the decision of the Tribunal dismissing the appeal or the date on which the appeal is abandoned.”.
115. Article 62 of the principal Act shall be amended as follows>- (a) in subarticle (1) thereof for the words
“Notwithstanding the provisions of the Companies Act,
regulations”, there shall be substituted the words
“Regulations”< and
(b) immediately after subarticle (3) thereof, there shall be added a new subarticle (4) as follows>-
“(4) The provisions of this article and of any regulations made thereunder shall prevail over anything to the contrary contained in the Companies Act, or regulations made thereunder, with respect to continuance of companies.”
116. Article 64 of the principal Act, shall be amended as follows> (a) Paragraph (c) of subarticle (1) thereof, shall be
substituted by the following>-
“(c) provide for and regulate the payment by any person, body or cell created by a cell company, as the case may be, of any fees, duties 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<”< and
(b) subarticle (3) thereof, shall be renumbered as subarticle
(4)< and
(c) immediately after sub-article (2) there shall be added the following new subarticle>-
“(3) The Minister may, after consultation with the competent authority, make regulations for the transposition of Directive 2002#87#EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investments firms in a financial conglomorate, as may be applicable to insurance undertakings.
117. Immediately after paragraph 4.3 of the First Schedule to the principal Act, there shall be inserted the following new paragraph>-
“4.4 Without prejudice to the other provisions of this paragraph, the general representative shall not be personally liable for the debts and obligations of Lloyd’s or any of its members.”.
118. The Fourth Schedule to the principal Act, shall be amended as follows>-
(a) Part I thereof, shall be amended as follows>-
(i) in 3.8 thereof, for the words “signed by a senior manager of the company”, there shall be substituted the words “signed by a senior manager of an insurer or an insurance broker, as the case may be,”< and
(ii) in 3.9 thereof, for the words “shall not act for any company”, there shall be substituted the words “shall not act for an insurer or an insurance broker, as the case may be,”< and
(b) in item (ii) of sub-paragraph (b) of paragraph 5.5 of Part III thereof, for the words “arranging a contract of insurance with an authorised company” there shall be substituted the words “arranging a contract of insurance with a company”.
C 695

Amendment of the First Schedule to the principal Act.

Amendment of the Fourth Schedule to the principal Act.

C 696

Amendments to the Value Added Tax Act, Cap. 406.

Amendment of the Third Schedule of the principal Act.

Amendments to the Legal Procedures (Ratification of Conventions) Act, Cap. 443.

Amendment of article 40 of the principal Act.

PART XIX
AMENDMENTS TO THE VALUE ADDED TAX ACT, CAP. 406
119. (1) This Part amends and shall be read and construed as one with the Value Added Tax Act, hereinafter referred to as “the principal Act”<
(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Government Gazette, appoint.
120. Sub-paragraph (c) of paragraph 10 of the Third Schedule to the principal Act shall be amended by the insertion of the word “trustees,” after the word “financial advisors,”
PART XX
AMENDMENTS TO THE LEGAL PROCEDURES (RATIFICATION OF CONVENTIONS) ACT, CAP. 443
121. (1) This Part amends and shall be read and construed as one with the Legal Procedures (Ratification of Conventions) Act, hereinafter referred to as “the principal Act”.
(2) This Part shall come into force on such date as the
Minister for justice may, by notice in the Government Gazette, appoint.
122. Article 40 of the principal Act shall be substituted by the following>
“40. For the purposes of this Part of the Act, a trust shall be deemed to be domiciled in Malta if any of the factors stated in subarticle (1) of article 8 of the Trusts and Trustees Act exist, subject to the provisions of subarticle (2) thereof.”.
SCHEDULE
C 697
(Article 34)
“SCHEDULE (Articles 2 and 5A)
CONVENTION ON THE LAW APPLICABLE TO TRUSTS AND ON THEIR RECOGNITION
CHAPTER 1- SCOPE Article l
This Convention specifies the law applicable to trusts and governs their recognition.
Article 2
For the purposes of this Convention, the term “trust” refers to the legal relationship created - inter vivos or on death - by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.
A trust has the following characteristics>

(a) the assets constitute a separate fund and are not a part of the trustee’s own estate<

(b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee<

(c) the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law. The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.

Article 3
The Convention applies only to trusts created voluntarily and evidenced in writing.
Article 4
The Convention does not apply to preliminary issues relating to the validity of wills or of other acts by virtue of which assets are transferred to the trustee.
C 698
Article 5
The Convention does not apply to the extent that the law specified by Chapter II
does not provide for trusts or the category of trusts involved.
CHAPTER II - APPLICABLE LAW Article 6
A trust shall be governed by the law chosen by the settlor. The choice must be express or be implied in the terms of the instrument creating or the writing evidencing the trust, interpreted, if necessary, in the light of the circumstances of the case. Where the law chosen under the previous paragraph does not provide for trusts or the category of trust involved, the choice shall not be effective and the law specified in Article 7 shall apply.
Article 7
Where no applicable law has been chosen, a trust shall be governed by the law with which it is most closely connected. In ascertaining the law with which a trust is most closely connected reference shall be made in particular to>-
(a) the place of administration of the trust designated by the settlor< (b) the situs of the assets of the trust<
(c) the place of residence or business of the trustee<
(d) the objects of the trust and the places where they are to be fulfilled.
Article 8
The law specified by Article 6 or 7 shall govern the validity of the trust, its construction, its effects, and the administration of the trust.
In particular that law shall govern -
(a) the appointment, resignation and removal of trustees, the capacity to act as a trustee, and the devolution of the office of trustee<
(b) the rights and duties of trustees among themselves<
(c) the right of trustees to delegate in whole or in part the discharge of their duties or the exercise of their powers<
C 699
(d) the power of trustees to administer or to dispose of trust assets, to create security interests in the trust assets, or to acquire new assets<
(e) the powers of investment of trustees<
(f) restrictions upon the duration of the trust, and upon the power to accumulate the income of the trust<
(g) the relationships between the trustees and the beneficiaries including the personal liability of the trustees to the beneficiaries<
(h) the variation or termination of the trust< (i) the distribution of the trust assets<
(j) the duty of trustees to account for their administration.
Article 9
In applying this Chapter a severable aspect of the trust, particularly matters of administration, may be governed by a different law.
Article 10
The law applicable to the validity of the trust shall determine whether that law or the law governing a severable aspect of the trust may be replaced by another law.
CHAPTER III – RECOGNITION Article 11
A trust created in accordance with the law specified by the preceding Chapter shall be recognised as a trust. Such recognition shall imply, as a minimum, that the trust property constitutes a separate fund, that the trustee may sue and be sued in his capacity as trustee, and that he may appear or act in this capacity before a notary or any person acting in an official capacity. In so far as the law applicable to the trust requires or provides, such recognition shall imply, in particular –
(a) that personal creditors of the trustee shall have no recourse against the trust assets<
(b) that the trust assets shall not form part of the trustee’s estate upon his insolvency or bankruptcy<
C 700
(c) that the trust assets shall not form part of the matrimonial property of the
trustee or his spouse nor part of the trustee’s estate upon his death<
(d) that the trust assets may be recovered when the trustee, in breach of trust, has mingled trust assets with his own property or has alienated trust assets. However, the rights and obligations of any third party holder of the assets shall remain subject to the law determined by the choice of law rules of the forum.
Article 12
Where the trustee desires to register assets, movable or immovable, or documents of title to them, he shall be entitled, in so far as this is not prohibited by or inconsistent with the law of the State where registration is sought, to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed.
Article 14
The Convention shall not prevent the application of rules of law more favourableto the recognition of trusts.
CHAPTER IV - GENERAL CLAUSES Article 15
The Convention does not prevent the application of provisions of the law designated by the conflicts rules of the forum, in so far as those provisions cannot be derogated from by voluntary act, relating in particular to the following matters>
(a) the protection of minors and incapable parties< (b) the personal and proprietary effects of marriage<
(c) succession rights, testate and intestate, especially the indefeasible shares of
spouses and relatives<
(d) the transfer of title to property and security interests in property< (e) the protection of creditors in matters of insolvency<
(f) the protection, in other respects, of third parties acting in good faith.
If recognition of a trust is prevented by application of the preceding paragraph, the court shall try to give effect to the objects of the trust by other means.
C 701
Article 16
The Convention does not prevent the application of those provisions of the law of the forum which must be applied even to international situations, irrespective of rules of conflict of laws.
Article 17
In the Convention the word “law” means the rules of law in force in a State other than its rules of conflict of laws.
Article 18
The provisions of the Convention may be disregarded when their application would be manifestly incompatible with public policy (ordre public).
Article 22
The Convention applies to trusts regardless of the date on which they were created.

–––––––––––– Objects and Reasons

The main object of this Bill is to amend the Trusts Act so as to provide for a consolidated law about trusts and trustees.
The Bill also provides for consequential amendments to various other laws.
C 702

Ippubblikat mid-Dipartiment ta’ l-Informazzjoni (doi.gov.mt) — Valletta — Published by the Department of Information (doi.gov.mt) — Valletta

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

Prezz Lm4.92ç – Price Lm4.92c