The Beneficial Owner in Malta refers to any natural persons who ultimately own or control a company, trust, association or foundation (“Legal Persons”). The purpose of identifying the beneficial owners of Legal Persons is to enhance the transparency of structures, thereby assisting with the prevention of criminal activities, i.e. money laundering and the financing of terrorism. Details on the beneficial owners should remain accurate and up to date to ensure it is readily available to competent authorities or other relevant parties.
Commercial Partnerships
The Companies Act (Register of Beneficial Owners) Regulations came into effect in 2018 in accordance with the 4th EU Directive, for commercial partnerships registered in Malta under the Companies Act. The most recent legislative update to the Companies Act (Register of Beneficial Owners) Regulations legal notice 247 came into effect from 16th June 2020.
These amendments are in line with the Financial Action Task Force (FATF) 2019 best practices and updated the filing requirements of commercial partnerships with the Registrar. In Malta the information for commercial partnerships is publicly available on the Malta Business Registry (MBR) online system. For commercial partnerships the level of ownership and control required is that of any natural persons having a direct or indirect ownership of 25% plus one (1) or more of the shares, or holding more than 25% of the voting rights, or control via other means, and if having exhausted all possible means of ownership and control any natural persons holding the position of senior managing officials.
The MBR issued a guidance document relating to the Register of Beneficial Owners for commercial partnerships.
Trusts
The Trusts and Trustees Act (Register of Beneficial Owners) Regulations were published in 2017. Following the introduction of Legal Notice 27 of 2020 to comply with the 5th EU directive, all Trusts administered by trustees licensed in Malta are required to file information on beneficial owners via the Malta Financial Services Authority (MFSA) Trusts Ultimate Beneficial Ownership Register (TUBOR) online platform.
The beneficial ownership information filed through TUBOR is not publicly available and is only available to entitled parties as set out in the aforementioned Regulations. A beneficial owner of a trust includes; the settlor, the trustee, the protector, the beneficiaries or details of the class of beneficiaries where the individuals benefiting have yet to be determined, and any other person exercising ultimate and effective control over the trust by any means i.e. a person who has a negative power to veto decisions or a positive power to direct the trustee in accordance with provisions contained in the trust instrument or other instrument in writing.
For more information on Trusts in Malta, click here.
Foundations and Associations
The beneficial ownership requirements for foundations and associations are governed by the Civil Code (Second Schedule) (Register of Beneficial Owners –Foundations) Regulations, 2020 and the Civil Code (Second Schedule) (Register of Beneficial Owners –Associations) Regulations, 2020. Information pertaining to the register of beneficial owners is to be filed with MBR and details on the beneficial owners is only available to certain persons as provided for in the Civil Code.
Under the Civil Code a beneficial owner in relation to foundations and associations refers to the members and relevant persons; including the administrators, protector or members of supervisory council and any other person exercising ultimate and effective control over the foundation or association by means of direct or indirect ownership or a persons whose consent is required or direction provided for, as determined by the statutes or other written instrument of the association/foundation.
Complying with the Beneficial Ownership Regulation
All Legal Persons must maintain accurate and up to date information on the beneficial owners, including identification details of the persons, nature and extent of the beneficial ownership interest and the effective date of such interest together with the appropriate documentation to verify the aforementioned details. Under the Companies Act, commercial partnerships existing and incorporating are required to:
- Provide the Registrar with a declaration containing information on the beneficial owners of the company
- Provide an annual declaration confirming the details held with the Registrar, and
- Provide a declaration for any changes to the beneficial owners of the company as provided for in a timely manner.
Similar filing requirements are in place for other Legal Persons. Exemptions apply to companies listed on a regulated market and companies whereby the direct shareholders are all natural persons. The Registrar and the MFSA have the power to carry out inspections to ensure compliance with the Regulations i.e. information on the beneficial owners is current and accurate and additional documentation is readily available to verify the identification of beneficial owners. Failure to comply with the Regulations may result in hefty fines issued by the Registrar in relation to commercial partnerships, foundations and associations, for default together with daily penalties until the Legal Persons are compliant.
Where a trustee fails to comply with the Regulations an administrative penalty of up to €150,000 may be imposed by the MFSA. In the case of commercial partnerships there is the risk of being struck off the register should beneficial ownership information be omitted. The Registrar also has the power to withhold an incorporation or officer appointment for non-compliance with the Regulations.
