Regulation of Trustees in Malta

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November 28 11:23 2018 by The Editor Print This Article

The tri-partite relationship between the trustee, settlor and beneficiary is based on a fiduciary relationship.  Maltese law allows for the regulation of trustees in Malta, where trust and fiduciary business is conducted by natural or legal persons alike, provided that the necessary authorisations laid down by law are obtained.

The role of the trustee may be carried out in one of two ways: either in a professional capacity or a personal capacity.[1] In both circumstances, the law requires that the trustee abides by the criteria laid down in the law for the authorisation of the trustees.

Barring a few exceptions laid down in the law itself, any person whether resident in Malta or operating in Malta and receives any property upon trust or accepts to act as trustee of a trust requires authorisation by the Malta Financial Services Authority (MFSA). This is particularly the case where the trustee receives or is entitled to receive remuneration, acts as trustee on a habitual or regular basis or offers trustee services. This prevails notwithstanding the fact that the proper law of the trust would be other than Maltese law or whether the property settled under trust is located in a place other than Malta.[2]

For the regulation of trustees in Malta, authorisation is acquired by the submission of an application in writing to MFSA. Authorisation to act as trustee is granted on the condition that the MFSA is satisfied that the conditions laid down under the law have been fulfilled. Moreover, authorisation to act as trustee may be granted as general or may be restricted to certain activities.[3]

Qualifications to act as Corporate Trustees in Malta

In the case where the trustee is a legal person, the following conditions must be satisfied for a company to act as trustee:

  • its objects must include the capacity to act as trustee;
  • the company’s other objects must not include any activities which are incompatible with the function of acting as trustee;
  • its directors must be a minimum of three (3) approved persons;[4]
  • the maintenance of records must be kept in adequate systems;
  • only approved persons are to have a direct or indirect interest in the company;
  • the company’s name must not be inconsistent with the activity of the trustee;
  • in the event where the company is not registered in Malta, such registration must be in an approved jurisdiction.[5]

Qualifications to act as Individual Trustees in Malta

In the case where the trustee is a natural person, the following conditions must be satisfied for that individual to act as trustee:

  • he must be resident or operating in Malta;
  • he must be an approved person;
  • the person’s records must be maintained with adequate systems for the purpose of record keeping.[6]

Upon the grant of the authorisation, the trustee has an obligation to notify MFSA with regard to any changes or other circumstances which would have a bearing on the individual’s status as an authorised person. A company which acts as trustee would have a similar obligation in that notification would occur in the event of any change to its constitutive documents, directors or members. Additionally such changes will not be effective against third parties prior to notification to MFSA.[7]

Exemption from Regulation of Trustees in Malta

The following exemptions exist  in that no authorisation to act as trustee would be required:

  • those persons carrying out the following activities for which they are already in possession of licences under the following laws:
    • Banking Act;
    • Investment Services Act;
    • Insurance Business Act of the Insurance Intermediaries Act;
    • Any licence in relation to the above Acts granted by an approved jurisdiction;
    • Financial Markets Act;
    • Article 84Z of the Merchant Shipping Act;
    • Special Funds (Regulation) Act;
  • a person who acts as trustee where the trust is created for the purpose of holding securities granted in relation to any financial transaction for the benefit of lenders or other creditors in such transaction;
  • a person who acts as trustee of any movable property which is held as security for the benefit of persons and whose entitlement is conditional or determinable in terms of the trust or the contract in relation to which the holding was created;
  • a person who acts as liquidator or curator in bankruptcy or a court appointed administrator acting in the course of the liquidation, bankruptcy or administration;
  • to a person in possession of a warrant to carry out the profession of an advocate, notary public, legal procurator or certified public accountant, provided that acting as trustee is limited to what is necessary and incidental in the course of carrying out his profession; nonetheless the professional will be required to carry out meticulous record keeping;
  • to persons when acting as trustees of a unit trust which is a collective investment scheme recognised under the Investment Service Act or which is except from licensing and the establishment of which is notified to MFSA;
  • to an individual acting as a non-remunerated trustee for a charitable trust and does not provide himself as offering such services;
  • any person who acts as a co-trustee when another trustee or the majority of trustees are authorised in terms of the Trusts and Trustees Act;
  • to legal entities registered in an approved jurisdiction, the directors of which must be approved persons and which are wholly owned and controlled by authorised trustees in terms of Article 43 and which are established solely for the purpose of holding trust property and ancillary acts;
  • 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 trustee to the public and is not remunerated;
  • 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 euro (€1).

Regulation of Private Trustees in Malta 

Private trustees, on the other hand, do not require authorisation in the following scenarios:

  • if the trustee is related to the settlor;
  • if the trustee has known the settlor for a minimum of ten (10) years;

And

  • he is not remunerated
  • he does not offer services as trustee;
  • he does not habitually act as trustee.

Acting as a private trustee requires certain conditions to be respected as laid down by the Trusts and Trustees Act as well as the Notarial Profession and Notarial Archives Act depending on the various scenarios in which the trust is to be in place.

 


[1] Article 42, Trusts and Trustees Act, Chapter 331 of the Laws of Malta

[2] Article 43 (1), Trusts and Trustees Act, Chapter 331 of the Laws of Malta

[3] Article 43 (3), Trusts and Trustees Act, Chapter 331 of the Laws of Malta

[4] Article 2, Trusts and Trustees Act, Chapter 331 of the Laws of Malta defines an approved persons as:

“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 the trustee.”

[5] Article 2, Trusts and Trustees Act, Chapter 331 of the Laws of Malta defines an approved jurisdiction as:

“a jurisdiction which has been approved by the Authority for the purposes of this Act.”

[6] Article 43 (4), Trusts and Trustees Act, Chapter 331 of the Laws of Malta

[7] Article 43 (5), Trusts and Trustees Act, Chapter 331 of the Laws of Malta