According to a recent legislative provision, the Malta Business Registry (MBR) has become the competent body to collect registrations not only of new enterprises and companies, but also of Foundations and Associations. Let us see below, on the basis of the documentation required when setting up these legal entities, the main requirements and organisational criteria that must be met.
The reference legislation regulating Maltese foundations is the Second Schedule to the Civil Code of Malta (Chapter 16 of the Laws of Malta). The Maltese private foundation is constituted by public deed, before a Maltese notary, by which the memorandum and articles of association will be drawn up, or alternatively by will. It differs from the Association, in substance, in that it may be established not only for public or social purposes, such as acts of support or charity, but also for a legitimate private interest which is not of a commercial nature such as the management of immovable property (e.g. houses), registered movable property (e.g. boats or aircraft), intangible assets or securities (e.g. shares, trademarks and patents) and the profits derived from the ownership of such property. The Foundation is also used for the protection of its assets from possible “aggression” by creditors, or for the safe inheritance of assets.
At the time of registration, each Foundation must identify an Administrator, who is responsible for the economic and management of the entity, and who must obtain authorisation from the MFSA (Malta Financial Services Authority) to carry out this role. In the case of a Non-Resident Administrator, he/she must submit a declaration that he/she does not carry out any activity of an economic nature or related to the provision of services in Malta.
An annual registration fee and a statement of net assets supported by an audited profit and loss account is payable to the Registry each year on the anniversary date of the Foundation’s birth.
There are of course specific procedures and documents to be drawn up by way of declarations in the event of changes in the Trustees, the seat of the Foundation, or the members of the management committee, as well as for deregistration.
Another figure of reference for the Foundation is the beneficiary, a person identified by the deed of establishment of the Foundation who may enjoy the assets conferred on the institution and the fruits deriving from the management of these assets. Individuals, charities, legal entities in general, but also possible future heirs can be appointed beneficiaries. From this point of view, the Maltese foundation can, for example, also be used as an instrument for a possible future generational transfer of assets.
The Second Schedule to the Maltese Civil Code also dedicates a specific chapter to Associations, which, as in Italy, are entities created by agreements between three or more persons who intend to organise themselves in order to achieve a series of defined objectives or aims by pooling their efforts and resources.
As far as the Association is concerned, it is necessary to appoint a legal representative who is ordinarily resident in Malta and who will be responsible for all legal and bureaucratic obligations. This figure must be present at all times, even if the directors are all foreigners. The Registry will therefore take this representative as the reference person to manage the relationships and the practices concerning the Association.
Also in the Association there is the figure of the beneficial owner, which in this case is none other than the member of the entity, be it a director or someone with control and supervisory functions.
Declarations to the Register must be made regardless of whether or not the Associations are in the register of legal persons or in any other register, and civil unions, cooperative societies, sports and voluntary organisations are also included in these obligations. Excluded from the applicability of the Regulations in the Second Schedule to the Civil Code are any association of persons which is regulated by the Companies Act, any entity which is established as a condominium association in accordance with the the Condominium Act; trade unions or trade associations, or any other type of ministerial appointed association.
Each association is responsible for maintaining information that is accurate, adequate and up-to-date at all times with respect to its beneficial owners. This information can be accessed by national tax authorities, anti-money laundering supervisory bodies, the FIAU and other bodies granted supervisory role or national authority status.
For both Foundations and Associations, all the above requirements translate into documentation to be drawn up and declarations to be submitted, both at the time of incorporation and during ongoing management, as well as annual fees to be paid. And, of course, in the event of non-compliance or violations there are penalties, sometimes quite heavy. For this reason, it is always advisable to seek the support of a consultant who is present in the area and who can act as a safe guide to the correct application of procedures. To this end, the Malta Business Agency team is at your disposal.