Regulation of Trustees in Malta

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July 11 15:43 2019 by The Editor Print This Article

The tri-partite relationship between the trustee, settlor and beneficiary is based on a fiduciary relationship. The Trust and Trustees Act Malta (Chapter 331 of the Laws of Malta) specifically provides for the regulation of trustees in Malta, the role of which can be maintained by natural or legal persons alike, provided that the necessary authorisations laid down by law is obtained.

 

A General Overview

According to Article 42 of the Trust and Trustees Act Malta, the role of the trustee may be carried out in one of two ways: either in a professional capacity or a personal capacity. In both circumstances, the law requires that the trustee abide by the criteria laid down in the law for the authorisation of the trustees.

Barring a few exceptions expressly upheld within the Act, 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 the authorisation of the Malta Financial Services Authority (MFSA). According to the Trust and Trustees Act Malta, 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. The rule will prevail, 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.

As previously mentioned, in order for a natural or legal person to take on the role of a trustee, prior authorisation is required by the MFSA. Furthermore, Article 43 of the Trust and Trustees Act Malta clearly states that the proposed trustee must submit an application in writing to the MFSA. The Authority will subsequently determine if all of the conditions stipulated within the Act and any other rules have been satisfied. Upon proceeding to authorise the trustee, the MFSA will need to decide whether to grant the trustee general authorisation or restricted authorisation, which would only apply to certain activities. 

 

Qualifications to act as Corporate Trustees in Malta

The Trust and Trustees Act Malta expressly upholds that in the case where the trustee is a legal person, the following conditions must be satisfied for that 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; 
  • it must have a minimum capital of €15,000, which it will maintain throughout its duration;
  • It must, at all times, be covered by insurance which is proportionate to the nature and size of the business operations;
  • 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. 

 

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:

  • Must operate in or from Malta;
  • Is an approved person;
  • The person’s records must be maintained with adequate systems for the purpose of record keeping; 
  • Has a minimum capital of €15,000, which must be maintained for as long as such person is authorised;
  • Must be covered by insurance at all times, which must be proportionate to the nature and size of the trustee’s business operations. 

The Trust and Trustees Act Malta further upholds that 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. 

 

Exemption from Regulation of Trustees in Malta

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

  • Persons carrying out the following activities for which the trustee services provided are incidental or ancillary to the main activities, which they are already in possession of licences under the following laws:
  • 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;
  • 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;
  • A person acting as trustee 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;
  • 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 Malta;
  • 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 aggregate nominal value does not exceed five euro (€5).

 

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 by consanguinity or affinity;
  • If the trustee has known the settlor for a minimum of ten (10) years;

And

  • Is not remunerated;
  • Does not offer services as trustee to the public;
  • Does not habitually act as trustee to more than 5 settlors at any time.

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

 

Our Trust Services

The Trusts team within the firm are well-versed with the process of setting up a trust in Malta as well as all the requirements which are to be satisfied under the Trust and Trustees Act Malta. The professional trustees industry in Malta is seeing consistent growth, where Claris Trustees and Fiduciaries are in fact one of the leading players which offer such services to local and international persons, whether legal or nature, for commercial and private trusts.