Category: General

Companies Act – Register of Beneficial Owners

On the 1st January 2018, new regulations came into force setting up the register of beneficial owners within the Registry of Companies.  Companies must declare the identity of the ultimate beneficial owners (UBOs).  This applies for UBOs having a share or controlling interest of more than 25%. If there are none, then the company has to indicate who the senior administrators are.

The regulations exclude companies where:
  1. They are listed on a regulated market and disclosure of beneficial owners is already required under the appropriate regulations; or
  2. All shareholders are natural persons disclosed to the companies registrar.

The First Schedule of the regulations sets out a form which is to be delivered together with the M&As whenever a new company is being set up. Declarations must be submitted for each beneficial owner. The declarations must include name, date of birth and nationality, identification details and country of issue of the passport or identity document.  Failure to comply means that the Registrar will not register the company.

The regulations require the Registrar to keep a register for information on the beneficial owners.  The information is not available to the general public except under payment of a fee to download the documents.

Update – December 2023:

A recent European court judgement has confirmed that having this information accessible by the general public is not strictly necessary or proportionate in terms of human law rights and thus, the ability to access beneficial owners’ information has now been limited to licensed entities and subject persons.  Read the article here.

Companies must retain accurate, adequate and up to date information on all beneficial owners in compliance with the regulations.  They must hold this information in a beneficial owners register which they keep at the company’s registered office.

Shareholders and UBOs are bound to provide the information without delay, even upon any change in the beneficial ownership or interest held.  New shareholders shall not be registered unless they comply with this requirment.

Any changes in beneficial ownership must be notified to the registry within fourteen days.  Companies must use the prescribed Form including all the information necessary.  The same applies in the case of a transfer or transmission of shares, where this has entailed a change in beneficial ownership interest held.  Notices of changes must be signed by at least one director or the company secretary.

Power of Authorities

The registry is authorised to exchange the information with tax and other competent authorities as well as to subject persons carrying out CDD in terms of the applicable regulations.  Subject persons requesting such information may demonstrate their legitimate interest in obtaining such information, including on the basis of previous activities and proven track record.  (Note – this might cause problems for new start-ups).

In exceptional cases where the beneficial owner risks exposure to harm owing to  disclosure, such information should not be disclosed.  Subject persons cannot rely exclusively on the register for CDD purposes.  Furthermore, authorities across the EU will have the power to exchange information with each other.

Submission and Liability to fines for default

The rules subject access to information to online registration and a fee of EUR 5.00 for every access to the information on the beneficial owners of each company. Post 2022, this information is only accessible to subject (licensed) persons.

Default will expose every beneficial owner, shareholder, officer and the company jointly and severally to fines.  Officers can only escape this where they have used all due diligence in order to comply with the rules and was not at fault for the failure.

This information is to be provided at every anniversary of each company after the initial submission.  Notably, the rules also apply to commercial partnerships.

False or misleading statements can lead to hefty fines and / or imprisonment.  The rules make provision for electronic submission. This enables subject persons to submit documents on time.

The Second Schedule lists down the applicable administrative penalties for failure to submit on time.

FIAU Press Release on Penalties

Following the coming into force of the Various Financial Services Laws (Amendment) Act, 2017 (Act XXVIII of 2017) on the  1st December 2017, publication of administrative penalties imposed by the Financial Intelligence Analysis Unit (“FIAU”) for one or more contraventions of the Prevention of Money Laundering Act (“PMLA”) and/or of the Prevention of Money Laundering and Funding of Terrorism Regulations no longer falls under Article 13A of the PMLA but by the new Article 13C.

Article 13C now provides for the publication of administrative penalties where these exceed €10,000 and have become final and due.  Publication is to take place in accordance with policies and procedures set by the FIAU’s Board of Governors.

The then-existing Policies and Procedures were revised on the 22nd  December 2017, to take into account the changes brought about by the new Act as well as the requirements of Directive (EU) 2015/849 relative to the publication of administrative sanctions.

The revised version of the said policies and procedures is available on the FIAU’s website and can be accessed through the following link – http://www.fiumalta.org/penalties .

The FIAU advises subject persons to become familiar with these policies and procedures.  Queries on the matter are to be sent to legal@fiumalta.org.  

If we can be of any assistance, please reach out to us.

Ballast Water Management Convention brought into Force

Transport Malta, the competent authority in Malta to regulate shipping and ports, has issued a Merchant Shipping Notice concerning the implementation of the Ballast Water Management Convention.  Known as the Ballast Convention, the treaty was transposed through regulations issued in 2017.

The Merchant Shipping notice addresses owners, operators, masters, of ships, owners’ representatives and recognised organisations. It brings to attention the coming into force of the Convention.

The Convention came into force on the 8th September 2017.  The implementing regulations in Malta came into force on the same date.

Ballast water is carried in ballast tanks and is used to stablise or lower the ship on unloaded voyages.  The rules have been changed to make sure that ballast water is carried in these special, segregated tanks only. Further, water taken in for ballast has to be changed several times during a voyage. This will make sure marine organisms are not carried too far from their natural habitat.

As from this date, all Maltese ships engaged under international voyages to which the Convention applies, must be compliant.   The convention and regulations set standards standards for the management of ballast water and sediments. The requirements include drawing up and maintenance of a Ballast Water Management Plan (BWM Plan).

The convention grants a transition period of up to three months from the date of entry into force.  This time will allow owners to make the necessary arrangements for compliance.  Ships must also maintain Ballast Water Record Book is also to be maintained.

The Regulations may be downloaded from here.

Marine Insight’s Online Resources for Maritime Piracy

Information is available to help to keep informed on piracy on the high seas, as well as how best to deal with this problem

Marine Insight has published links to 28 sources of information, useful to professionals in different aspects of the shipping industry.

 

“With the increase in piracy at the sea, several maritime organisations and defence agencies have started providing online updates on events related to maritime piracy which is taking place around the world,” reads the introduction.  This excellent initiative is worth exploring.

Public Consultation – Antitrust Damages Directive

The Office for Competition has launched a public consultation on implementing the Antitrust Damages Directive in Malta.

The draft legislation relates to Malta’s obligation to transpose Directive 2014/104/EU (the “Antitrust Damages Directive”). This Directive sets rules for actions for damages under national law when competition law is infringed. It applies to both individual and collective actions in EU Member States.

Current Legislation

Maltese law already allows businesses to recover damages for competition law violations under Article 27A of the Competition Act. This is supported by procedural rules in the Code of Organisation and Civil Procedure. Recently, a court has awarded damages in a case involving abuse of competition law.

The Directive and the draft legislation aim to better align private and public enforcement of competition law.  The changes will allow private enforcement of decisions by national competition authorities across all EU Member States.

Key changes

Key changes that the Directive and draft legislation introduce, include:

  • Easier access to evidence: Parties can now obtain court orders to access evidence held by other entities. Courts will ensure that disclosure is proportionate, protecting confidential information.

  • Proof of infringement: A final decision by a national competition authority will serve as full proof of the infringement in that country’s courts. In other Member States, it will be prima facie evidence.

  • Clear limitation periods: Victims of antitrust infringements will have at least 5 years to file claims for damages, starting from when they could have discovered the harm. This period pauses if a competition authority starts an investigation. Once an infringement decision is final, claimants have at least 1 year to file.

  • Passing-on of harm: If an infringer raises prices, indirect customers may be entitled to compensation. The Directive assumes indirect customers suffered harm unless the infringer can prove otherwise.

  • Full compensation: Victims may claim full compensation, covering actual losses, lost profits, and interest from the time the harm occurred.

  • Rebuttable presumption of harm in cartels: Cartels are presumed to cause harm, based on the finding that 90% of cartels lead to price increases. In rare cases where this is not true, infringers can prove no harm occurred.

  • Joint and several liability: All participants in an infringement are liable for the full harm caused, with the possibility of recovering a share from others. However, leniency programme participants who cooperate with authorities will be liable only to their direct and indirect customers. SMEs facing bankruptcy can apply for a narrow exception from joint and several liability

EU Single Market Forum to be modernised over 2016

Note: This post reflects insights from the 2016 EU Single Market Forum. It has been retained for archival purposes. Any queries on updates can be sent through our Contact Form.

The Government has issued a press release on the new EU Single Market Forum, one of the Commission’s agenda items for 2016.

One of the aims of the European Commission for 2016 is to modernize the current Single Market Strategy. The Ministry for the Economy, Investment and Small Business, in collaboration with GRTU and the Malta Employer’s Association, held a seminar entitled “Single Market Forum – Tackling internal barriers to movement of goods and labour,” seeking to better gauge the  Maltese position and to listen to suggestions relating to policy changes.  The Forum aims to carry out these objectives.

The full press release can be found here.

Deficiencies in Ships – Merchant Shipping Notice

This article discusses Merchant Shipping Notice 124 issued in 2015. Procedures and regulations may have changed since then. Please refer to the latest notices from Transport Malta for current information.

Transport Malta has recently issued a Merchant Shipping Notice to ships visiting US Ports.  It noted that many detentions arise from the deficiencies in terms of environmental protection and fire safety.

Therefore, Transport Malta requires ships to notify the relevant directorate of their intentions before entering US Ports. The Master and the ISM Manager are responsible to make this notification in the appropriate time.

MS Notices are issued regularly by Transport Malta as directions to ships and shipowners in the operation of their vessels, assisting better compliance with the laws and international conventions. They are published on the Transport Malta Website.

Thoughts on sanctions in the legal system

While reading the news on various media sites today, I have come across a number of irate comments by the general public, over fines which are either excessively high or excessively low. So yesterday, the news hit the media with a man who was fined 20 Euros for masturbating in public, decidedly a lewd act under Maltese criminal law, with minimum and maximum fines between 6.99 and 58 Euro. The fact that the amounts appear laughable is not the fault of the courts, but the fact that the fines have not been amended to reflect the current cost of living. I imagine that when they were originally drafted, they were quite high, to indicate the outrage that they would cause.

On the contrary, two people swimming in the nude in one of our bays were fined 100 Eur each – a far greater amount for a far less serious offence. Indeed, to my mind, the fact that a person swims in the nude (and often cannot be seen by anyone when under water anyway) cannot be offensive because this is how God made us – it would not bother me if they left me alone. I would, however, be very offended and uncomfortable (even at my age, no longer being a teenager) if a man (or even a woman, really) were to be masturbating in the open anywhere around me. I find it oppressive and harrassing, and yet fined at levels less than what probably was considered by the carefree nude bathers a natural pleasure without bothering anybody.

However, the trouble with this whole matter is the fact that no authority has sat with the Code of Police Laws, the Criminal Code and other legislation to evaluate the punitive measures, especially the pecuniary ones (though not only). In many cases, the value of the punishment (money and / or time) no longer reflects society’s morals. Possibly, in some cases, the fines or penalties should be increased – either in terms of monetary value or because their seriousness is now no longer overlooked. The same should happen (or rather, the reverse) for acts which are no longer considered to strike at the core of society’s values.

The core of this whole set of arguments is the legal maxim which we learnt at law school, indeed in our first year: that justice must not only be done, but must be manifestly done. While in many cases, comments seen on the public media are plain idiotic, the message behind them seems to be that there is far too much leniency (e.g. giving two suspended sentences, when the law only contemplates a first one, which should be followed by consecutive serving of these sentences if followed by another period). On the other hand, growing prison populations are a worldwide problem so that the courts are faced with the dilemma of how to sentence, in the knowledge that they ought to reserve such punishments for the harsher, or harshest of crimes. Indeed, prison grounds are known to have hardened or created criminals and it is in this perspective that the lesser sentences are meted out.

All in all, a balance still needs to be created, between appropriate financial penalties which would not cause derisory laughter, and between creating a rational balance between the action and the sanction. It is not an easy balance to achieve; it must start at the level of the legislator and be continued in court, with the prosecution (and defence) properly carrying out their roles in between in the interests of the delivery of justice to the people.

 

[The opinions of the author expressed in this article are her own personal views and are in no way endorsed by any authority or entity. They are served as an expression of academic and social thought only, and are not sought to garner any political argument. Political comments, particularly partisan politics, and irrelevant or inane comments will be reported as spam and deleted.]

European court grants compensation to Zabbar property owners who had rights violated

The Times of Malta reported today that the European Court of Human Rights ordered Government to property owners in Zabbar for the violation of their rights, since they were not allowed to seek an increase in rent for their property to reflect current market values.

The court ordered the government to pay Carmel Zammit and Doris Attard Cassar €40,000 in respect of pecuniary damage and €10,000, plus any chargeable tax, in respect of costs and expenses. It said that Government did not strike a balance between community interests and the rights of the plaintiffs to enjoy their property.

Read more here, or you can look up the case on the Justice Website.

The ECJ confirms Commission’s power to impose high fines in cartel cases

Peter Citron, of Hogan Lovells, Belgium, has alerted today that on the 9th July the ECJ has endorsed the power of the European Commission to impose large fines on multinational companies operating at various levels of the manufacturing and supply chain. It confirms that, for the purposes of cartel fine calculation, the Commission may take into account non-EEA sales of cartelized inputs if these inputs have been built into finished products and subsequently sold to a third party in the EEA by a vertically integrated company.

This case is a prime example of the extra-territorial jurisdiction exercised by the EU when the effects are felt within EU territory (Effects Doctrine).  You can read the full summary here.