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The Various Financial Laws (Amendment) Act, 2009 (Bill No. 29)

A BILL

entitled

AN ACT to amend various financial services Laws, and to implement Directive

2007/44/EC.

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:-

Short title. 1. The short title of this Act is the Various Financial Laws

(Amendment) Act, 2009.

PART I

Amendment of the Investment Services Act. Cap. 370.

Amendment of article 2 of the principal Act.

2. This Part amends the Investment Services Act, and it shall be read and construed as one with the said Act, hereinafter in this Part referred to as “the principal Act”.

3. In article 2 of the principal Act:

(a) immediately after the definition “EEA state”, there shall be inserted the following new definition:
“ “European Investment Firm” means an investment firm as defined in article 4(1) of the Directive and as authorized by its European regulatory authority within the meaning of article 5 of the Directive or authorized by a European regulatory authority in an EEA State;”;
(b) for the definition “qualifying shareholding”, there shall be substituted the following:
“ “qualifying shareholding” means a direct or indirect holding in a company which represents ten per centum or more of the share capital or of the voting rights referred to in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council of the 15 December 2004 on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading and amending Directive 2001/34/EC taking into account the conditions regarding the aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the company in which that holding subsists, and “qualifying shareholder” shall be construed accordingly:

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Provided that in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not take into account voting rights or shares which investment services licence holders, European Investment Firms or credit institutions may hold as a result of providing the service of underwriting or placing of financial instruments on a firm commitment basis in terms of point 6 of Section A to Annex 1 to the Directive, provided that those rights are, on the one hand, not exercised or otherwise used to intervene in the management of the issuer and, on the other, disposed of within one year of acquisition;”; and
(c) immediately after the definition “unit”, there shall be inserted the following new definition:

Amendment of article 9A of the principal Act.

Cap. 252. “ “working days” shall not include Saturdays and the days referred to in the National Holidays and Other Public Holidays Act.”.

4. Article 9A of the principal Act shall be amended as follows:

(a) in sub-article (2) thereof, for the words “for recognition and” there shall be substituted the words “and conditions for granting recognition, providing for the refusal of recognition and for the variation, cancellation and supervision of recognition and”;
(b) paragraph (viii) of sub-article (2) thereof shall be renumbered as paragraph (ix) and immediately after paragraph (vii) there shall be added the following new paragraph:
“(viii) to provide for the imposition of administrative penalties up to a maximum of 45,000 euro or for other administrative sanctions in case of any breach of the provisions of this article or of the applicable Investment Services Rules or of any of the conditions attached to a recognition certificate, where any.”; and
(c) immediately after sub-article (2) thereof, there shall be added the following new sub-article:
“(3) Where the competent authority refuses, varies, cancels or suspends a recognition issued in terms of this article or imposes an administrative penalty in terms of the applicable Investment Services Rules, an appeal shall lie to the Financial Services Tribunal and the provisions of article 19(3) of this Act shall apply to such appeal.”.

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Amendment of article 10 of the principal Act.

5. For article 10 of the principal Act, there shall be substituted the following:

“Participation in an investment

services licence holder.

10. (1) Notwithstanding anything contained in any other law, any person or persons acting in concert (hereinafter referred to in this Act as the “proposed acquirer”) who have taken a decision either to:
(a) acquire, directly or indirectly, a qualifying shareholding in an investment services licence holder;
(b) increase, directly or indirectly, an existing shareholding which is not a qualifying shareholding so as to cause it to become a qualifying shareholding in an investment services licence holder; or
(c) further increase, directly or indirectly, such qualifying shareholding in an investment services licence holder as a result of which the proportion of the voting rights or of the capital held would reach or exceed twenty per centum, thirty per centum or fifty per centum or so that the investment services licence holder would become its subsidiary,
(hereinafter referred to in this Act as the “proposed acquisition”), shall notify the competent authority in writing of any such decision, indicating the size of the intended shareholding and providing any relevant information as and in the manner that the competent authority may by Investment Services Rules require, including the form in which such notification shall be made and the criteria adopted by the competent authority in determining whether such person is a fit and proper person.
(2) Notwithstanding anything contained in any other law, any person who has taken a decision either to:
(a) dispose, directly or indirectly, of a qualifying shareholding in an investment services licence holder;
(b) reduce, directly or indirectly, a qualifying shareholding so as to cause it to cease to be a qualifying shareholding; or
(c) reduce, directly or indirectly, a qualifying

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shareholding so that the proportion of the voting rights or of the capital held would fall below twenty per centum, thirty per centum or fifty per centum or so that the investment services licence holder would cease to be its subsidiary,
shall notify the competent authority in writing of any such decision indicating the size of the intended shareholding and providing any relevant information as and in the manner that the competent authority may, by Investment Services Rules require.
(3) Sub-articles (1) and (2) shall apply irrespective of whether or not any of the relevant shares are shares listed on a regulated market within the meaning of the Financial Markets Act or on an equivalent market which is not situated in a Member State or an EEA State.
(4) It shall be the duty of an investment services licence holder to notify the competent authority forthwith upon becoming aware that any person has taken any action set out in sub-article (1) or (2).
(5) If any person or any investment services licence holder takes or decides to take any action set out in sub-article (1) or (2) without notifying the competent authority or obtaining its approval in terms of article 10A, then, without prejudice to any other penalty which may be imposed under this Act, the competent authority shall have the power to make an order:
(a) restraining such person or investment services licence holder from taking, or continuing with, such action;
effect;
(b) declaring such action to be void and of no
(c) requiring such person or investment services licence holder to take such steps as may be necessary to restore the position existing immediately before the action was taken;
(d) restraining such person or investment services licence holder from exercising any rights which such action would, if lawful, have conferred

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upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired; or
(e) restraining such person or investment services licence holder from taking any similar action or any other action within the categories set out in sub- articles (1) and (2).
(6) Without prejudice to any other provision of this Act, where the influence exercised by any person acquiring or proposing to acquire a qualifying shareholding is, or is likely to, operate against the sound and prudent management of an investment services licence holder, the competent authority may issue a notice of objection and exercise any of the powers assigned to it under this Act to put an end to such situation, including the power to issue directives as it may deem reasonable and appropriate in the circumstances.
(7) A copy of any notice served on the person concerned in terms of sub-article (6) shall be served on the company to whose shares it relates.
(8) The competent authority, may, by means of Investment Services Rules issued under this Act, indicate the circumstances when persons are to be regarded as “acting in concert.”.

Addition of

new article 10A to the principal Act.

6. Immediately after article 10 of the principal Act, there shall be inserted the following new article:

“Assessment

procedure.

10A. (1) The competent authority shall, promptly and
in any event within two working days following receipt of the notification required under sub-article (1) of article 10, as well as following the possible subsequent receipt of the information referred to in sub-article (4), acknowledge receipt thereof in writing to the proposed acquirer.
(2) The competent authority shall have a maximum of sixty working days as from the date of the written acknowledgement of receipt of the notification required under sub-article (1) of article 10 and all documents required by the competent authority to be attached to such notification (hereinafter referred to in the Act as the “assessment period”) to carry out an assessment on the basis of such information as may be determined by Investment Services Rules issued for

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this purpose.
(3) The competent authority shall inform the proposed acquirer of the date of the expiry of the assessment period at the time of acknowledging receipt.
(4) The competent authority may, during the assessment period, if necessary and no later than the fiftieth working day of such period, request any further information that is necessary to complete the assessment. Such a request shall be made in writing and shall specify the additional information needed.
(5) During the period between the date of request for additional information by the competent authority and the receipt of a response thereto by the proposed acquirer, the assessment period shall be interrupted. The interruption period shall not exceed twenty working days. Any further requests by the competent authority for completion or clarification of the information shall be at its discretion but shall not result in an interruption of such period.
(6) The competent authority may extend the interruption referred to in sub-article (5) up to thirty working days if the proposed acquirer is:
(a) situated or regulated in countries that are not
Member States or EEA States; or
(b) a person not subject to supervision under: (i) the Directive;
(ii) Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS);
(iii) Council Directive 92/49/EEC of 18
June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non- life insurance Directive);
(iv) Directive 2002/83/EC of the European

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Parliament and of the Council of 5 November 2002 concerning life assurance;
(v) Directive 2005/68/EC of the Eurpean Parliament and Council of 16 November, 2005 on reinsurance amending Council Directives
73/239/EEC, 92/49/EEC as well as Directives
98/78/EC and 2002/83/EC; or
(vi) Directive 2006/48/EC of the European Parliament and of the Council of 14 June, 2006 relating to the taking up and pursuit of the business of credit institutions (recast).
(7) The competent authority shall, upon completion of the assessment referred to in sub-article (2) and not later than the date of the expiry of the assessment period, issue a notice:
(a) granting unconditional approval to the proposed acquisition;
(b) granting approval to the proposed acquisition subject to such conditions as the competent authority may deem appropriate; or
(c) refusing the proposed acquisition.
(8) In making the assessment referred to in sub-article (2), the competent authority shall neither impose any prior conditions in respect of the level of shareholding that must be acquired nor examine the proposed acquisition in terms of the economic needs of the market.
(9) The competent authority may refuse the proposed acquisition only if there are reasonable grounds for doing so on the basis of the criteria set out in the Investment Services Rules referred to in sub-article (1) of article 10 or if the information provided by the proposed acquirer is incomplete.
(10) If the competent authority decides to refuse the proposed acquisition, it shall, within two working days, and not exceeding the assessment period, inform the proposed acquirer in writing specifying the reasons for such decision. The competent authority may, whether at the request of such proposed acquirer or not, issue a public statement indicating such reasons.

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(11) If the competent authority does not refuse the proposed acquisition in writing within the assessment period, such proposed acquisition shall be deemed to be approved.
(12) Without prejudice to the provisions of article 22, where a qualifying shareholding in an investment services licence holder is acquired notwithstanding the refusal of the competent authority, the exercise of the corresponding voting rights shall be suspended and any of the votes cast in contravention of this sub-article shall be null and void.
(13) The competent authority may fix a maximum period for concluding the proposed acquisition and extend it where appropriate.
(14) Notwithstanding the provisions of sub-articles (1) to (6), where two or more proposals to acquire or increase qualifying shareholdings in the same investment services licence holder have been notified to the competent authority, the latter shall treat the proposed acquirers in a non- discriminatory manner.”.

Addition of

new article 10B

in the principal

Act.

7. Immediately after article 10A of the principal Act, there shall be inserted the following new article:

“Cooperation

with European regulatory authorities and overseas regulatory authorities in case of acquisitions.

10B. (1) The competent authority shall work in full
consultation with European regulatory authority or overseas regulatory authorities when carrying out the assessment referred to in sub-article (2) of article 10A if the proposed acquirer is one of the following:
(a) a credit institution, an assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed;
(b) the parent undertaking of a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed; or
(c) a person controlling a credit institution,

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assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than in which the acquisition is proposed.
(2) The competent authority shall, without undue delay, provide any information which is essential or relevant for the assessment referred to in sub-article (2) of article 10A to the European regulatory authority or overseas regulatory authority requesting such information. Upon request, the competent authority shall communicate to the European regulatory authority or overseas regulatory authority all relevant information and shall communicate on its own initiative all essential information. A decision by the competent authority in terms of article 10A shall indicate any views or reservations expressed by the European regulatory authority or overseas regulatory authority responsible for the proposed acquirer.”.

Addition of

new article 10C in the principal Act.

8. Immediately after article 10B of the principal Act, there shall be added the following new article:

“Mergers,

reconstructions, divisions and changes in

share capital or

voting rights.

10C. (1) Notwithstanding anything contained in any
other law, and without prejudice to sub-articles (1) and (2) of article 10, the consent of the competent authority given in writing shall be required before an investment services licence holder may lawfully:
(a) sell or dispose of its business or any significant part thereof;
(b) merge with any other company, whether licensed under this Act or not;
(c) undergo any reconstruction or division; or
(d) increase or reduce its nominal or issued share capital or effect any material change in voting rights.
(2) It shall be the duty of all directors and qualifying shareholders of an investment services licence holder to notify the competent authority forthwith in writing, upon becoming aware that such investment services licence holder intends to take any of the actions set out in sub-article (1).
(3) Within three months of receipt of such notification

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or receipt of such information as the competent authority may lawfully require, whichever is the later, the competent authority shall issue a notice:
(a) granting unconditional consent to the taking of the action;
(b) granting consent to the taking of the action subject to such conditions as the competent authority may deem appropriate; or
(c) refusing consent to the taking of the action,
and if it refuses to grant consent, it shall inform the person or the investment services licence holder concerned in writing for the reason for its refusal.
(4) If any person or any investment services licence holder takes or decides to take any action set out in sub-article (1) without obtaining the consent of the competent authority, then, without prejudice to any other penalty which may be imposed under this Act, the competent authority shall have the power to make an order:
(a) restraining such person or investment services licence holder from taking, or continuing with, such action;
(b) declaring such action to be void and of no effect;
(c) requiring such person or investment service licence holder to take such steps as may be necessary to restore the position existing immediately before the action was taken;
(d) restraining such person or investment services licence holder from exercising any rights which such action would, if lawful, have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or investment services licence holder from taking any similar action or any other action within the categories set out in sub-article (1).”.

Amendment of article 19 of the

9. For paragraph (e) of sub-article (1) of article 19 of the principal

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principal Act. Act there shall be substituted by the following:

“(e) any notice issued or any order made in terms of articles 10, 10A and 10C;”.

PART II

Amendment of the Banking Act.

Cap. 371.

10. This Part amends the Banking Act, and it shall be read and construed as one with the said Act, hereinafter in this Part referred to as “the principal Act”.

Amendment of article 2 of the principal Act.

11. Sub-article (1) of article 2 of the principal Act shall be amended as follows:

(a) for the definition “close links”, there shall be substituted the following new definition:
“ “close links” means a situation in which two or more persons are linked in any of the following ways:
(a) by participation, in the form of direct ownership or by way of control, of twenty per centum or more of the voting rights or capital of a body corporate; or
(b) by control, through the relationship between a parent undertaking and a subsidiary undertaking as defined in article 2 (2) of the Companies Act, or a similar relationship between any natural or legal person and an undertaking; or
(c) permanently to one and the same third person by a control relationship;”;
(b) the definition “control” shall be deleted;
(c) the definition “equity share” shall be deleted;
(d) for the definition “initial capital”, there shall be substituted the following new definition:
“ “initial capital” means paid up capital and reserves as defined in a Banking Rule on own funds;”;
(e) for the definition “Malta’s international commitments”, there shall be substituted the following new definition:
“ “Malta’s international commitments" means

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commitments, responsibilities and obligations arising out of European Community law, or 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 or reciprocity agreement, however called, whether bilateral or multilateral, to which Malta or the competent authority is a party;”;
(f) for the definition “qualifying shareholding”, there shall be substituted the following new definition:
“ “qualifying shareholding” means a direct or indirect holding in a company which represents ten per centum or more of the share capital or of the voting rights, taking into account the voting rights as set out in Articles 9 and 10 of Directive
2004/109/EC of the European Parliament and of the Council of
15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading and amending Directive
2001/34/EC, as well as the conditions regarding aggregation thereof laid down in Article 12 (4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the company in which that holding subsists, and “qualifying shareholder” shall be construed accordingly:
Provided that, in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not take into account voting rights or shares which investment firms or credit institutions may hold as a result of providing the underwriting of financial instruments and, or placing of financial instruments on a firm commitment basis in terms of point 6 of Section A to Annex 1 to Directive
2004/39/EC, provided that those rights are, on the one hand,
not exercised or otherwise used to intervene in the management of the issuer and, on the other, disposed of within one year of acquisition.”;
(g) the definition “significant shareholding” shall be deleted;
(h) immediately after the definition “third country”, there shall be inserted the following new definition:

Cap. 252. “ “working days” shall not include Saturdays and the days referred to in the National Holidays and Other Public Holidays Act.”.

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Amendment of article 5 of the principal Act.

12. In the English text of the proviso to sub-article (2) of article 5 of the principal Act, for the words “entitled to exercise their rights under European Community Law”, there shall be substituted the words “entitled to exercise its rights under European Community Law”.

Amendment of article 7 of the principal Act.

13. In sub-article (1) (b) of article 7 of the principal Act, for the words “credit institution in Malta;”, there shall be substituted the words “credit institution in Malta and such persons are of sufficiently good repute and have sufficient experience to perform such duties;”.

Amendment of article 9 of the principal Act.

14. In sub-article (2)(d) of article 9 of the principal Act, for the words “sufficient own funds;”, there shall be substituted the words “sufficient own funds in terms of article 16A of this Act;”.

Amendment of article 10 of the principal Act.

Amendment of article 11 of the principal Act.

15. In paragraph (h) of article 10 of the principal Act, for the words “to issue any notice or make any order under article 13;”, there shall be substituted the words “to issue any notice or make any order under articles

13, 13A and 13C;”.

16. Immediately after sub-article (2) of article 11 of the principal

Act, there shall be inserted the following new sub-article:

Amendment of

L.N. 88 of

2004.

“(3) A credit institution licensed in Malta shall be entitled to exercise its rights under the European Passport Rights for Credit Institutions Regulations, 2004.”.

17. For article 13 of the principal Act there shall be substituted the

article 13 of the

principal Act.

following:

“Participation in a credit institution.

13. (1) Notwithstanding anything contained in any other law, any person or persons acting in concert (hereinafter referred to in this Act as the “proposed acquirer”), who have taken a decision either to:

(a) acquire, directly or indirectly, a qualifying shareholding in a credit institution;
(b) increase, directly or indirectly, an existing shareholding which is not a qualifying shareholding so as to cause it to become a qualifying shareholding in a credit institution; or
(c) further increase, directly or indirectly, such qualifying shareholding in a credit institution as a result of which the proportion of the voting rights or of the capital held would reach or exceed twenty per centum, thirty per centum or fifty per centum or so that the credit

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institution would become its subsidiary,
(hereinafter referred to in this Act as the “proposed acquisition”), shall notify the competent authority in writing of any such decision, indicating the size of the intended shareholding and providing any relevant information as and in the manner that the competent authority may by a Banking Rule require, including the form in which such notification shall be made and the criteria adopted by the competent authority in determining whether such person is a suitable person.
(2) Notwithstanding anything contained in any other law, any person who:
(a) acquires, directly or indirectly, at least five per centum but less than ten per centum of the share capital or of the voting rights in a credit institution; or
(b) increases, directly or indirectly, an existing shareholding so that the proportion of the voting rights or of the capital held would amount to at least five per centum but less than ten per centum,
shall inform the competent authority in writing, indicating the size of the shareholding and providing any relevant information as and in the manner that the competent authority may by a Banking Rule require. Such Banking Rule may provide, inter alia, general guidance as to when the shareholding would be deemed to result in significant influence.
(3) Notwithstanding anything contained in any other law, any person who has taken a decision either to:
(a) dispose, directly or indirectly, of a qualifying shareholding in a credit institution;
(b) reduce, directly or indirectly, a qualifying shareholding so as to cause it to cease to be a qualifying shareholding; or
(c) reduce, directly or indirectly, a qualifying shareholding so that the proportion of the voting rights or of the capital held would fall below twenty per centum, thirty per centum or fifty per centum or so that the credit institution would cease to be its subsidiary,

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shall notify the competent authority in writing of any such decision indicating the size of the intended shareholding and providing any relevant information as and in the manner that the competent authority may by a Banking Rule require.
(4) Sub-articles (1), (2) and (3) shall apply irrespective of whether or not any of the relevant shares are shares listed on any regulated market within the meaning of the Financial Markets Act or on an equivalent market in a third country.
(5) It shall be the duty of a credit institution and of the directors thereof, to notify the competent authority forthwith upon becoming aware that any person decides to take any of the actions set out in sub-articles (1), (2) or (3).
(6) If any person takes or decides to take any action set out in sub-article (1) or (3) without notifying the competent authority or obtaining its approval in terms of article 13A , then, without prejudice to any other penalty which may be imposed under this Act, the competent authority shall have the power to make an order:
(a) restraining such person or credit institution from taking, or continuing with, such action;
effect;
(b) declaring such action to be void and of no
(c) requiring such person or credit institution to take such steps as may be necessary to restore the position existing immediately before the action was taken;
(d) restraining such person or credit institution from exercising any rights which such action would, if lawful, have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or credit institution from taking any similar action or any other action within the categories set out in sub-articles (1) and (3).
(7) Without prejudice to any other provision of this
Act, where the influence exercised by any person acquiring or

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proposing to acquire a qualifying shareholding is, or is likely to, operate against the sound and prudent management of a credit institution, the competent authority may exercise any of its powers under this Act to put an end to such situation, including the power to issue directives as it may deem reasonable in the circumstances.
(8) The competent authority, may, by means of a Banking Rule issued under this Act indicate the circumstances when persons are to be regarded as “acting in concert.”.

Addition of new articles

13A, 13B and

13C to the

18. Immediately after article 13 of the principal Act, there shall be inserted the following new articles:

principal Act. “Assessment procedure.

13A. (1) The competent authority shall, promptly and
in any event within two working days following receipt of the notification required under sub-article (1) of article 13, as well as following the possible subsequent receipt of the information referred to in sub-article (4), acknowledge receipt thereof in writing to the proposed acquirer.
(2) The competent authority shall have a maximum of sixty working days as from the date of the written acknowledgement of receipt of the notification required under sub-article (1) of article 13 and all documents required by the competent authority to be attached to such notification (hereinafter referred to in this Act as the “assessment period”) to carry out the assessment on the basis of such information as may be determined by a Banking Rule issued for this purpose.
(3) The competent authority shall inform the proposed acquirer of the date of the expiry of the assessment period at the time of acknowledging receipt.
(4) The competent authority may, during the assessment period, if necessary and no later than on the fiftieth working day of such period, request any further information that is necessary to complete the assessment. Such a request shall be made in writing and shall specify the additional information needed.
(5) During the period between the date of request for additional information by the competent authority and the receipt of a response thereto by the proposed acquirer, the assessment period shall be interrupted. The interruption period shall not exceed twenty working days. Any further requests by

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the competent authority for completion or clarification of the information shall be at its discretion but shall not result in an interruption of such period.
(6) The competent authority may extend the interruption period referred to in sub-article (5) up to thirty working days if the proposed acquirer is:
(a) situated or regulated in a third country; or
(b) a person not subject to supervision under: (i) the Directive;
(ii) Council Directive 85/611/EEC of 20
December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS);
(iii) Council Directive 92/49/EEC of 18
June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non- life insurance Directive);
(iv) Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance;
(v) Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive
2000/12/EC of the European Parliament and of the
Council and repealing Council Directive
93/22/EEC; or
(vi) Directive 2005/68/EC of the European
Parliament and of the Council of 16 November
2005 on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC.
(7) The competent authority shall, upon completion of

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the assessment referred to in sub-article (2) and not later than the date of the expiry of the assessment period, issue a notice:
(a) granting unconditional approval to the proposed acquisition;
(b) granting approval to the proposed acquisition subject to such conditions as the competent authority may deem appropriate; or
(c) refusing the proposed acquisition.
(8) In making the assessment referred to in sub-article (2), the competent authority shall neither impose any prior conditions in respect of the level of shareholding that must be acquired nor examine the proposed acquisition in terms of the economic needs of the market.
(9) The competent authority may refuse the proposed acquisition only if there are reasonable grounds for doing so on the basis of the criteria set out in the Banking Rule referred to in sub-article (1) of article 13 or if the information provided by the proposed acquirer is incomplete.
(10) If the competent authority decides to refuse the proposed acquisition, it shall, within two working days, and not exceeding the assessment period, inform the proposed acquirer in writing specifying the reasons for such decision. The competent authority may, whether at the request of such proposed acquirer or not, issue a public statement indicating such reasons.
(11) If the competent authority does not refuse the proposed acquisition in writing within the assessment period, such proposed acquisition shall be deemed to be approved.
(12) Without prejudice to any other penalty which may be imposed under the Act, where a qualifying shareholding in a credit institution is acquired notwithstanding the refusal of the competent authority, the exercise of the corresponding voting rights shall be suspended and any of the votes cast in contravention of this sub-article shall be null and void.
(13) The competent authority may fix a maximum period for concluding the proposed acquisition and extend it where appropriate.

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(14) Notwithstanding the provisions of sub-articles (1) to (6) of this article, where two or more proposals to acquire or increase qualifying shareholdings in the same credit institution have been notified to the competent authority, the latter shall treat the proposed acquirers in a non-discriminatory manner.

Co-operation with overseas regulatory authorities in the case of acquisitions.

13B. (1) The competent authority shall work in full consultation with overseas regulatory authorities when carrying out the assessment referred to in sub-article (2) of article 13A if the proposed acquirer is one of the following:
(a) a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed;
(b) the parent undertaking of a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed; or
(c) person controlling a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed.
(2) The competent authority shall, without undue delay, provide any information which is essential or relevant for the assessment referred to in sub-article (2) of article 13A to the overseas regulatory authority requesting such information. Upon request, the competent authority shall communicate to the overseas regulatory authority all relevant information and shall communicate on its own initiative all essential information. A decision by the competent authority in terms of article 13A of this Act shall indicate any views or reservations expressed by the overseas regulatory authority responsible for the proposed acquirer.

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Mergers, reconstructions, divisions and changes in share capital or voting rights.

13C. (1) Notwithstanding anything contained in any other law and without prejudice to sub-articles (1) and (3) of article 13, the consent of the competent authority given in writing shall be required before any credit institution may lawfully:
(a) sell or dispose of its business or any significant part thereof;
(b) merge with any other company, whether a credit institution or otherwise;
(c) undergo any re-construction or division; or
(d) increase or reduce its nominal or issued share capital or effect any material change in the voting rights.
(2) It shall be the duty of all directors and qualifying shareholders of a credit institution to notify the competent authority forthwith in writing upon becoming aware that such credit institution intends to take any of the actions set out in sub-article (1).
(3) Within three months of receipt of such notification or receipt of such information as the competent authority may lawfully require, whichever is the later, the competent authority shall issue a notice:
(a) granting unconditional consent to the taking of the action;
(b) granting consent to the taking of the action subject to such conditions as the competent authority may deem appropriate; or
(c) refusing consent to the taking of the action, and if it refuses to grant consent it shall inform the person or the
credit institution concerned in writing of the reason for its
refusal.
(4) If any person or any credit institution takes or decides to take any action set out in sub-article (1) without obtaining the consent of the competent authority, then, without prejudice to any other penalty which may be imposed under this

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Act, the competent authority shall have the power to make an order:
(a) restraining such person or credit institution from taking or continuing with such action;
effect;
(b) declaring such action to be void and of no
(c) requiring such person or credit institution to take such steps as may be necessary to restore the position existing immediately before the action was taken;
(d) restraining such person or credit institution from exercising any rights which such action would, if lawful, have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or credit institution from taking any similar action or any other action within the categories set out in sub-article (1).”.

Amendment of article 14 of the principal Act.

19. Immediately after sub-article (4) of article 14 of the principal

Act, there shall be inserted the following new sub-article:
“(5) For the purposes of this article control includes the power to determine in any manner the financial and operating policies of a body corporate, the power to appoint or remove the majority of the members of the board of directors or equivalent governing body or the power to cast the majority of votes at meetings of the board of directors or equivalent governing body.”.

Amendment of article 15 of the principal Act.

20. Sub-article (1) of article 15 of the principal Act shall be amended as follows:

(a) in paragraph (d) thereof, for the words “indirectly any significant or qualifying shareholding”, there shall be substituted the words “indirectly any qualifying shareholding”; and
(b) in paragraph (iv) of the proviso to paragraph (d) thereof, for the words “considered as a significant shareholding for the purposes”, there shall be substituted the words “considered as a qualifying shareholding for the purposes”.

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Amendment of article 16A of the principal Act.

21. Article 16A of the principal Act shall be amended as follows:

(a) in sub-article (2) thereof, for the words “do not meet the requirements laid down in Article 109 of the Directive”, there shall be substituted the words “do not meet the requirements laid down in a Banking Rule”;
(b) sub-articles (3) and (4) thereof shall be re-numbered as sub- articles (4) and (5) thereof; and
(c) immediately after sub-article (2) thereof, there shall be inserted the following new sub-article:
“(3) In certain specific circumstances and with the written approval of the competent authority, where there is a merger of two or more credit institutions, the own funds of the credit institutions resulting from the merger may not fall below the total own funds of the merged credit institutions at the time of the merger as long as the level specified in article 7 (1) (a) of the Act have not been attained.”.

Amendment of article 17 of the principal Act.

22. For sub-article (2) of article 17 of the principal Act there shall be substituted the following:

“(2) Where the level of the capital requirement of a credit institution is not restored within the determined period, the competent authority may in addition to the power to impose an administrative penalty, exercise any of the powers granted to it under the provisions of article 9 (2) of the Act.”.

Substitution of article 17A of the principal Act.

23. For article 17A of the principal Act there shall be substituted the following:

“17A. (1) Every credit institution, to the exclusion of an electronic money institution, shall maintain adequate provisions for bad and doubtful debts.
(2) The competent authority may issue a Banking Rule as it shall consider appropriate for the regulation of provisioning for bad and doubtful debts.”.

Amendment of article 19 of the principal Act.

24. In paragraph (b) of sub-article (1) of article 19 of the principal Act, for the words “the competent authority for statistical purposes;”, there shall be substituted the words “the competent authority for prudential and statistical purposes;”.

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Amendment of article 20 of the principal Act.

25. In sub-article (9) of article 20 of the principal Act, for the words “who has a significant shareholding or qualifying shareholding in a credit institution”, there shall be substituted the words “ who has a qualifying shareholding in a credit institution”.

Amendment of article 22 of the principal Act.

26. Article 22 of the principal Act shall be amended as follows:

(a) in sub-article (3) thereof, for the words “who has a significant shareholding or qualifying shareholding in a credit institution”, there shall be substituted the words “ who has a qualifying shareholding in a credit institution”;
(b) in sub-article (5) thereof, for the words “who has a significant shareholding in, qualifying shareholding in, or is a controller of that body”, there shall be substituted the words “ who has a qualifying shareholding in, or is a controller of that body”.

Amendment of article 25 of the principal Act.

27. Article 25 of the principal Act shall be amended as follows:

(a) in sub-article (1) thereof, for the words “On the basis of international agreements, or upon reciprocity agreements, the competent authority may share its supervisory duties with other foreign competent authorities”, there shall be substituted the words “On the basis of Malta’s international commitments, the competent authority may share its supervisory duties with overseas regulatory authorities”;
(b) in sub-article (2) thereof, for the words “on the basis of international agreements, or upon reciprocity agreements, disclose information to other foreign competent authorities.”, there shall be substituted the words “on the basis of Malta’s international commitments, disclose information to overseas regulatory authorities.”; and
(c) in sub-article (6) thereof, for the words “disclose to the Central Bank, other bodies”, there shall be substituted the words “disclose to the Central Bank, other overseas Central Banks, other bodies”.

Amendment of article 25A of the principal Act.

28. Article 25A of the principal Act shall be amended as follows:

(a) in sub-article (2) thereof, for the words “financial soundness of a credit institution in another Member State”, there shall be substituted the words “financial soundness of a credit institution or financial institution in another Member State”;

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(b) in sub-article (4) thereof, for the words “The competent authority shall consult”, there shall be substituted the words “The competent authority shall, prior to its decision, consult”; and
(c) in sub-article (6) thereof, immediately after the words “in accordance with the Directive.”, there shall be added the words “The Commission shall be kept informed of the existence and the content of any such agreements.”.

PART III

Amendment of the Insurance Business Act. Cap. 403.

Amendment of article 2 of the principal Act.

29. This Part amends the Insurance Business Act, and it shall be read and construed as one with the said Act, hereinafter in this Part referred to as “the principal Act”.

30. Article 2 of the principal Act shall be amended as follows: (a) in sub-article (1) thereof:

deleted;
(i) the definition “investment services licence” shall be
(ii) for the definition “qualifying shareholding”, there shall be substituted the following:
“ “qualifying shareholding” means a direct or indirect holding in a company which represents ten per centum or more of the share capital or of the voting rights, taking into account the voting rights as set out in Articles 9 and 10 of Directive
2004/109/EC of the European Parliament and of the Council of
15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading and amending Directive
2001/34/EC, as well as the conditions regarding aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the company in which that holding subsists, and “qualifying shareholder” shall be construed accordingly:
Provided that, in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not take into account voting rights or shares which investment firms or credit institutions may hold as a result of providing the underwriting of financial instruments and, or

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placing of financial instruments on a firm commitment basis in terms of point 6 of Section A to Annex 1 to Directive
2004/39/EC, provided that those rights are, on the one hand,
not exercised or otherwise used to intervene in the management of the issuer and, on the other, disposed of within one year of acquisition;”; and
(iii) immediately after the definition “vehicle”, there shall be inserted the following new definition:

Cap. 252 “ “working days” shall not include Saturdays and the days referred to in the National Holidays and Other Public Holidays Act.”; and

(b) in sub-article (2) thereof:
(i) in paragraph (h) thereof, for the words “Directives 98/78/EC and 2002/83/EC; and ”, there shall be substituted the words “Directives 98/78/EC and 2002/83/EC;”
(ii) paragraph (i) thereof shall be renumbered as paragraph (j);
(iii) immediately after paragraph (h) thereof, there shall be added the following new paragraph (i):
“(i) Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/EEC and Directives 2002/83/EC,
2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector; and”.

Substitution of article 38 of the principal Act.

31. For article 38 of the principal Act there shall be substituted the following:

“Participation in an authorised company.

38. (1) Notwithstanding anything contained in any other law, any person or persons acting in concert (hereinafter referred to in this Act as the “proposed acquirer”), who have taken a decision either to:
(a) acquire, directly or indirectly, a qualifying shareholding in an authorised company;
(b) increase, directly or indirectly, an existing

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shareholding which is not a qualifying shareholding so as to cause it to become a qualifying shareholding in an authorised company; or
(c) further increase, directly or indirectly, such qualifying shareholding in an authorised company as a result of which the proportion of the voting rights or of the capital held would reach or exceed twenty per centum, thirty per centum or fifty per centum or so that the authorised company would become its subsidiary,
(hereinafter referred to as the “proposed acquisition”), shall notify the competent authority in writing of any such decision, indicating the size of the intended shareholding and providing any relevant information as and in the manner that the competent authority may by an insurance rule require, including the form in which such notification shall be made and the criteria adopted by the competent authority in determining whether such person is a fit and proper person.
(2) Notwithstanding anything contained in any other law, any person who has taken a decision either to:
(a) dispose, directly or indirectly, of a qualifying shareholding in an authorised company;
(b) reduce, directly or indirectly, a qualifying shareholding so as to cause it to cease to be a qualifying shareholding; or
(c) reduce, directly or indirectly, a qualifying shareholding so that the proportion of the voting rights or of the capital held would fall below twenty per centum, thirty per centum or fifty per centum or so that the authorised company would cease to be its subsidiary,
shall notify the competent authority in writing of any such decision indicating the size of the intended shareholding and providing any relevant information as and in the manner that the competent authority may by an insurance rule require.

Cap. 345.

(3) Sub-articles (1) and (2) shall apply irrespective of whether or not any of the relevant shares are shares listed on any regulated market within the meaning of the Financial Markets Act or on an equivalent market in a non-Member State or non-EEA State.

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(4) It shall be the duty of an authorised company and of the directors thereof, to notify the competent authority forthwith upon becoming aware that any person decides to take any of the actions set out in sub-article (1) or (2).
(5) If any person or any authorised company takes or decides to take any action set out in sub-article (1) or (2) without notifying the competent authority or obtaining its approval in terms of article 38A, then, without prejudice to any other penalty which may be imposed under this Act, the competent authority shall have the power to make an order:
(a) restraining such person or authorised company from taking, or continuing with, such action;
effect;
(b) declaring such action to be void and of no
(c) requiring such person or authorised company to take such steps as may be necessary to restore the position existing immediately before the action was taken;
(d) restraining such person or authorised company from exercising any rights which such action would, if lawful, have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or authorised company from taking any similar action or any other action within the categories set out in sub-articles (1) and (2).
(6) Without prejudice to any other provision of this Act, where the influence exercised by any person acquiring or proposing to acquire a qualifying shareholding is, or is likely to, operate against the sound and prudent management of an authorised company, the competent authority may exercise any of its powers under this Act to put an end to such situation, including the power to issue directives as it may deem reasonable in the circumstances.
(7) In the case of a company whose head office is in a country outside Malta authorised under this Act to carry on in

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or from Malta the business of insurance, the provisions of this article shall apply to the extent only of requiring such company to give to the competent authority, not later than thirty days from such change or occurrence, as the case may be, the information therein referred to.
(8) The competent authority, may, by means of an insurance rule issued under this Act, indicate the circumstances when persons are to be regarded as “acting in concert”.”.

Addition of

new article 38A to the principal Act.

32. Immediately after article 38 of the principal Act, there shall be inserted the following new article:

“Assessment

procedure.

38A. (1) The competent authority shall, promptly and
in any event within two working days following receipt of the notification required under sub-article (1) of article 38, as well as following the possible subsequent receipt of the information referred to in sub-article (4), acknowledge receipt thereof in writing to the proposed acquirer.
(2) The competent authority shall have a maximum of sixty working days as from the date of the written acknowledgement of receipt of the notification required under sub-article (1) of article 38 and all documents required by the competent authority to be attached to such notification (hereinafter referred to in this Act as the “assessment period”) to carry out an assessment on the basis of such information as may be determined by an insurance rule issued for this purpose.
(3) The competent authority shall inform the proposed acquirer of the date of the expiry of the assessment period at the time of acknowledging receipt.
(4) The competent authority may, during the assessment period, if necessary and no later than on the fiftieth working day of such period, request any further information that is necessary to complete the assessment. Such a request shall be made in writing and shall specify the additional information needed.
(5) During the period between the date of request for additional information by the competent authority and the receipt of a response thereto by the proposed acquirer, the assessment period shall be interrupted. The interruption period shall not exceed twenty working days. Any further requests by the competent authority for completion or clarification of the

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information shall be at its discretion but shall not result in an interruption of such period.
(6) The competent authority may extend the interruption period referred to in sub-article (5) up to thirty working days if the proposed acquirer is:
(a) situated or regulated in a non-Member State or non-EEA state; or
(b) a person not subject to supervision under:
(i) Council Directive 85/611/EEC of 20
December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS);
(ii) Council Directive 92/49/EEC of 18 June
1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non- life insurance Directive);
(iii) Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance;
(iv) Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive
2000/12/EC of the European Parliament and of the
Council and repealing Council Directive
93/22/EEC;
(v) Directive 2005/68/EC of the European Parliament and Council of the 16 November 2005 on reinsurance and amending Council Directives
73/239/EEC, 92/49/EEC as well as Directives
98/78/EC and 2002/83/EC; or
(vi) Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business

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of credit institutions (recast).
(7) The competent authority shall, upon completion of the assessment referred to in sub-article (2) and not later than the date of the expiry of the assessment period, issue a notice:
(a) granting unconditional approval to the proposed acquisition;
(b) granting approval to the proposed acquisition subject to such conditions as the competent authority may deem appropriate; or
(c) refusing the proposed acquisition.
(8) In making the assessment referred to in sub-article (2), the competent authority shall neither impose any prior conditions in respect of the level of shareholding that must be acquired nor examine the proposed acquisition in terms of the economic needs of the market.
(9) The competent authority may refuse the proposed acquisition only if there are reasonable grounds for doing so on the basis of the criteria set out in the insurance rule referred to in sub-article (1) of article 38 or if the information provided by the proposed acquirer is incomplete.
(10) If the competent authority decides to refuse the proposed acquisition, it shall, within two working days, and not exceeding the assessment period, inform the proposed acquirer in writing specifying the reasons for such decision. The competent authority may, whether at the request of such proposed acquirer or not, issue a public statement indicating such reasons.
(11) If the competent authority does not refuse the proposed acquisition in writing within the assessment period, such proposed acquisition shall be deemed to be approved.
(12) Without prejudice to any other penalty which may be imposed under the Act, where a qualifying shareholding in an authorised company is acquired notwithstanding the refusal of the competent authority, the exercise of the corresponding voting rights shall be suspended and any of the votes cast in contravention of this article shall be null and void.

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(13) The competent authority may fix a maximum period for concluding the proposed acquisition and extend it where appropriate.
(14) Notwithstanding the provisions of sub-articles (1) to (6) of this article, where two or more proposals to acquire or increase qualifying shareholdings in the same authorised company have been notified to the competent authority, the latter shall treat the proposed acquirers in a non-discriminatory manner.”.

Addition of

new article 38B to the principal Act.

33. Immediately after article 38A of the principal Act, there shall be added the following new article:

“Co-operation with

overseas

regulatory authorities in the case of acquisitions.

38B. (1) The competent authority shall work in full
consultation with overseas regulatory authorities when carrying out the assessment referred to in sub-article (2) of article 38A if the proposed acquirer is one of the following:
(a) a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed;
(b) the parent undertaking of a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed; or
(c) a person controlling a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed.
(2) The competent authority shall, without undue delay, provide any information which is essential or relevant for the assessment referred to in sub-article (2) of article 38A to the overseas regulatory authority requesting such information. Upon request, the competent authority shall communicate to the overseas regulatory authority all relevant information and shall

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communicate on its own initiative all essential information. A decision by the competent authority in terms of article 38A shall indicate any views or reservations expressed by the overseas regulatory authority responsible for the proposed acquirer.”.

Addition of

new article 38C to the principal Act.

34. Immediately after article 38B of the principal Act, there shall be inserted the following new article:

“Mergers, reconstruction

s, divisions

and changes in share capital or voting rights.

38C. (1) Notwithstanding anything contained in any
other law and without prejudice to sub-articles (1) and (2) of article 38, the consent of the competent authority given in writing shall be required before an authorised company may lawfully:
(a) merge with any other company, whether authorised under this Act or not;
(b) undergo any reconstruction or division; or
(c) increase or reduce its nominal or issued share capital or effect any material change in voting rights.
(2) It shall be the duty of all directors and qualifying shareholders of an authorised company to notify the competent authority forthwith in writing upon becoming aware that such company intends to take any of the actions set out in sub-article (1).
(3) Within three months of receipt of such notification or receipt of such information as the competent authority may lawfully require, whichever is the later, the competent authority shall issue a notice:
(a) granting unconditional consent to the taking of the action;
(b) granting consent to the taking of the action subject to such conditions as the competent authority may deem appropriate; or
(c) refusing consent to the taking of the action, and if it refuses to grant consent it shall inform the person or the
authorised company concerned in writing of the reason for its

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refusal.
(4) If any person or any authorised company takes or decides to take any action set out in sub-article (1) without obtaining the consent of the competent authority, then, without prejudice to any other penalty which may be imposed under this Act, the competent authority shall have the power to make an order:
(a) restraining such person or authorised company from taking or continuing with such action;
effect;
(b) declaring such action to be void and of no
(c) requiring such person or authorised company to take such steps as may be necessary to restore the position existing immediately before the action was taken;
(d) restraining such person or authorised company from exercising any rights which such action would, if lawful, have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or authorised company from taking any similar action or any other action within the categories set out in sub-article (1).”.

Amendment of article 43 of the principal Act.

35. In paragraph (b) of sub-article (2) of article 43 of the principal Act, for the words “inform the competent authority”, there shall be substituted the words “at least once a year, inform the competent authority”.

Amendment of article 58 of

the principal

Act.

36. In paragraph (e) of subarticle (1) of article 58 of the principal Act, for the words “under article 38”, there shall be substituted the words “under articles 38, 38A and 38C”.

PART IV

Amendment of theInsurance Intermediaries Act.

Cap. 487. Deletion of article 42 of the principal Act.

37. This Part amends the Insurance Intermediaries Act, and it shall be read and construed as one with the said Act, hereinafter in this Part referred to as “the principal Act”.

38. Article 42 of the principal Act shall be deleted.

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Amendment of article 44 of the principal Act.

39. In sub-article (2) of article 44 of the principal Act, for the words “article 54 of this Act insofar as it refers to article 38 of the Insurance Business Act”, there shall be substituted the words “article 44A of this Act”.

Addition of

new article 44A in the principal Act.

40. (1) Immediately after article 44 of the principal Act, there shall be inserted the following new article:

“Participation in an

enrolled

company.

Cap. 345.

44A. (1) Notwithstanding anything contained in any
other law, the prior written consent of the competent authority shall be required before any person may lawfully:
(a) acquire, directly or indirectly, a qualifying shareholding in a company enrolled under article 13 of this Act (hereinafter referred to in this Act as the “enrolled company”);
(b) increase, directly or indirectly, an existing holding which is not a qualifying shareholding so as to cause it to become a qualifying shareholding in an enrolled company;
(c) further increase, directly or indirectly, a qualifying shareholding so as to cause it to equal or exceed, twenty per centum or thirty per centum or fifty per centum or to cause the enrolled company to become that person’s subsidiary;
(d) reduce, directly or indirectly, a qualifying shareholding so as to cause it to fall below fifty per centum or thirty per centum or twenty per centum or to cause the enrolled company to cease to be that person’s subsidiary;
(e) reduce, directly or indirectly, a qualifying shareholding so as to cause it to cease to be a qualifying shareholding; or
(f) divest itself, directly or indirectly, of a qualifying shareholding.
(2) Sub-article (1) shall apply irrespective of whether or not any of the relevant shares are shares listed on any regulated market within the meaning of the Financial Markets Act or on an equivalent market in a non-Member State or non- EEA State.

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(3) It shall be the duty of an enrolled company and of the directors thereof to notify the competent authority forthwith upon becoming aware that any person intends to take any of the actions set out in sub-article (1).
(4) Notwithstanding anything contained in any other law, the written consent of the competent authority shall be required before any enrolled company may lawfully -
(a) merge with any other company, whether enrolled under this Act or not;
(b) undergo any reconstruction or division; or
(c) increase or reduce its nominal or issued share capital or effect any material change in voting rights.
(5) It shall be the duty of all directors and qualifying shareholders of an enrolled company to notify the competent authority forthwith upon becoming aware that the company intends to take any of the actions set out in sub-article (4).
(6) For the purpose of this article, the competent authority may issue an insurance intermediaries rule determining the form in which notification in terms of sub- article (1) and sub-article (4) shall take place and the information required to be furnished with such notification; and, the competent authority shall, upon a notification by a person intending to take any action set out in sub-articles (1)(a) to (c), determine whether such person is a fit and proper person before giving its consent.
(7) Within three months of receipt of such notification or receipt of such information as the competent authority may lawfully require, whichever be the later, the competent authority shall issue a notice -
(a) granting unconditional consent to the taking of the action;
(b) granting consent to the taking of the action subject to such conditions as the competent authority may deem appropriate; or

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(c) refusing consent to the taking of the action,
and if it refuses to grant consent, it shall inform the person or the enrolled company concerned in writing of the reason for such refusal.
(8) If any person or any enrolled company takes or intends to take any action set out in sub-article (1) or (4) without the prior written consent of the competent authority, the competent authority shall, without prejudice to any other penalty which may be imposed under this Act, have the power to make an order:
(a) restraining the person or company from taking, or continuing with, such action;
effect;
(b) declaring such action to be void and of no
(c) requiring the person or company to take such steps as may be necessary to restore the position existing immediately before such action was taken;
(d) restraining the person or company from exercising any rights which such action would, if lawful, have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining the person or company from taking any similar action or any other action within the categories set out in sub-articles (1) and (4).
(9) In the case of a foreign company enrolled under this Act to carry out insurance intermediaries activities in or from Malta, the provisions of this article shall apply only to the extent of requiring such company to give to the competent authority, not later than thirty days from such change or occurrence, as the case may be, the information therein referred to.
(10) Without prejudice to any other provision of this Act, where the influence exercised by any person holding a qualifying shareholding is, or is likely to, operate against the sound and prudent management of an enrolled company, the competent authority may exercise any of its powers under this

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Act, including the power to issue directives as it may deem reasonable in the circumstances.”.

Amendment of article 50 of the principal Act.

41. Sub-article (2) of article 50 of the principal Act shall be amended as follows:

(a) paragraph (h) thereof, shall be renumbered as paragraph (i); (b) immediately after paragraph (g) thereof, there shall be
added the following new paragraph:
“(h) to issue any notice or make any order under article 44A;”.

Amendment of article 52 of the principal Act.

42. In paragraph (b) of sub-article (1) of article 52 of the principal Act, for the words “article 29, 30, 31A or 38 of the Insurance Business Act”, there shall be substituted the words “article 29, 30 or 31A of the Insurance Business Act”.

Amendment of article 54 of the principal Act.

43. For paragraph (a) of sub-article (1) of article 54 of the principal

Act, there shall be substituted the following:
“(a) the provisions of articles 29 to 31A of the Insurance Business Act (hereinafter in this article referred to as the “the Act”) shall apply to an enrolled person, as if reference in such provisions-
(i) to “authorisation” were a reference to “enrolment in the
Agents List, Managers List or Brokers List”;
(ii) to “authorised company” were a reference to an
“enrolled person”;
(iii) to “business of insurance” were a reference to
“insurance intermediaries activities”;” .

PART V

Amendment of the Income Tax Act.

Cap. 123.

Amendment of article 12 of the principal Act.

44. This Part amends the Income Tax Act, and it shall be read and construed as one with the said Act, hereinafter in this Part referred to as “the principal Act”.

45. For paragraph (d) of sub-article (1) of article 12 of the principal Act, there shall be substituted the following:

“(d) the income of any retirement fund or retirement scheme licensed, registered or otherwise authorized under the Special Funds (Regulation) Act or any Act replacing the said Act, other than income

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from immovable property situated in Malta;”.

Objects and Reasons

The main object of this Bill is to implement the provisions of Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector.