L.S. 370.09 Regolamenti għal Skema ta' Kumpens lill-Investituri

(1)Scheme. There shall be established an Investor Compensation

(2)The Scheme shall be a body corporate having a distinct legal personality and shall be capable, subject to the provisions of the Act and of these regulations, of entering into contracts of borrowing or otherwise incurring indebtedness for the purposes of its functions, of acquiring, holding and disposing of any kind of property for the purposes of its functions, of suing or being sued and of doing all such things and entering into all such transactions as are incidental or conducive to the exercise or performance of its functions.

(3)The Scheme shall be managed and administered by and be under the general control of the Management Committee appointed in terms of regulation 5.

(4)The legal and judicial representation of the Scheme shall vest in the chairperson of the Management Committee: Provided that, and without prejudice to the foregoing, the Management Committee may vest any one or more of its members or of the officers or agents of the Scheme with legal or judicial representation.

(5)For the purpose of enabling the Scheme and the competent authority to carry out their respective functions, the Scheme and the competent authority may share and exchange information, and shall otherwise consult and collaborate with one another. Functions of the Scheme. 4.

(1)Without prejudice to any other power or function conferred on it by these regulations or by any other law, it shall be the function of the Scheme (

1. a)to maintain a fund or funds out of which payments shall be made to investors and to meet such other payments or expenses as may be paid out of the fund or funds in accordance with these regulations; (
2. b)to establish and maintain, after consultations with the competent authority, arrangements for the making of payments to investors in accordance with these regulations; (
3. c)to process claims for compensation by investors as expeditiously as possible and to ensure that compensation is paid out without undue delay; and (
4. d)to advise the competent authority on matters relating to compensation of investors.

(2)The objective of the Scheme is to provide a means of protection for private investors within the framework of these regulations. All the members of the Management Committee shall work in the best interest of the Scheme and shall pursue and INVESTOR COMPENSATION SCHEME [ S.L.370.09 3 promote its objective. 5.

(1)The Management Committee shall be appointed by the competent authority and shall consist of a chairperson and seven

(7)other members as follows: (a) two

(2)officers performing duties with the competent authority; Composition of the Management Committee. Amended by: L.N. 36 of 2006; L.N. 186 of 2025. (b) one

(1)officer nominated by, and performing duties with, the Central Bank of Malta; (c) one

(1)person nominated by the Minister; (d) one

(1)person nominated by an association or associations or other bodies representing persons holding a licence under the Act who participates in, and contributes to the Scheme in accordance with these regulations, and which association or associations or other bodies are recognised for such purpose by the competent authority. The person nominated shall not be an officer or employee of, or in any other way hold any position with, a holder of a licence under the Act falling within the scope of these regulations; (e) one

(1)person nominated by an association or associations or other bodies representing credit institutions who participates in, and contributes to the Depositor Compensation Scheme established under the Depositor Compensation Scheme Regulations, and which association or associations or other bodies are recognised for such purpose by the competent authority. The person nominated shall not be an officer or employee of, or in any other way hold any position with, a credit institution falling within the scope of the Depositor Compensation Scheme in accordance with the Depositor Compensation Scheme Regulations; (f) one

(1)officer nominated by, and performing duties with the Malta Competition and Consumer Affairs Authority established under article 3 of the Malta Competition and Consumer Affairs Authority Act and such person shall represent the point of view of consumers: Provided that the chairperson of the Management Committee shall also be an officer performing duties with the competent authority: Provided further that an officer nominated and appointed under paragraphs (a), (

1. b)and (
2. f)shall remain a member of the Committee throughout the term of appointment only to the extent that such officer continues to be an officer of the competent authority, the Central Bank of Malta or the Malta Competition and Consumer Affairs Authority, as the case may be: S.L. 371.09. Cap. 510. 4 [ S.L.370.09 INVESTOR COMPENSATION SCHEME Provided further that whenever, for any reason whatsoever, the associations or other bodies representing licence holders or credit institutions referred to in paragraphs (
3. d)and (
4. e)fail to nominate the person they are required to nominate within the period of time established by the competent authority, such person shall be appointed by the competent authority at its discretion.

(2)The members of the Management Committee shall be appointed from among persons who, in the view of the competent authority, have proven knowledge, expertise and experience in financial services or management, or otherwise possess any other relevant professional or commercial knowledge and expertise.

(3)A person shall not be eligible for appointment as a member of the Management Committee in accordance with sub-regulation

(1)if such person has a financial or other interest as is likely to adversely affect the discharge by such person of his functions under these regulations. In addition, the members of the Management Committee appointed under paragraphs (d) and (e) of sub-regulation

(1)shall serve in their personal capacity and shall not represent or receive directives or instructions from an association, entity or other body nominating them, however the Management Committee may expressly and in writing, authorise any such member to share specific information with the said association, entity or other body.

(4)Every member of the Management Committee shall hold office for such period and upon such terms and conditions as may be determined by the competent authority and indicated in the letter of appointment. Such term of office shall be of not less than three years and not more than five years. Every member of the Management Committee, including the chairperson, shall be eligible for re-appointment.

(5)A member of the Management Committee may be relieved of office by the competent authority on the grounds of inability to perform the functions of his office, whether due to infirmity of mind or of body, or of misbehaviour; and for the purposes of this subregulation repeated and unjustified non-attendance of meetings of the Management Committee may be deemed to amount to misbehaviour.

(6)A member of the Management Committee may resign from office by means of a letter addressed to the competent authority.

(7)The competent authority may fill any vacancy occurring in the Management Committee for any reason whatsoever, having regard to the provisions of subregulation

(1).

(8)Notice of the names of the members of the Management Committee (and any resignation, dismissal and new appointment) shall be published in the Gazette.

(9)The competent authority shall establish any remuneration to be paid to the members of the Management Committee.

(10)The competent authority shall appoint one of its officers to serve as secretary to the Management Committee with such administrative functions and responsibilities as may be assigned to him by the Management Committee. INVESTOR COMPENSATION SCHEME [ S.L.370.09 5

(11)For the purpose of the second proviso to sub-regulation

(1), sub-regulation

(2), the first sentence of sub-regulation

(3), and subregulations

(4),

(5),

(6),

(8)and

(9), "member" shall include the chairperson.

(12)Where the chairperson is absent or is unable to exercise the functions and powers of his office, and the competent authority has not appointed any other person to act as chairperson during the said period, the other members of the Management Committee shall designate one

(1)of the said other members to carry out the functions of the chairperson during such period. 6.

(1)The Management Committee shall have the power to enter into such reasonable administrative and other expenses as may be necessary to enable it to fulfil its functions under these regulations. Powers and duties of the Management Committee. Amended by: L.N. 186 of 2025.

(2)The Management Committee may place contributions made by licence holders in terms of regulation 11 and any other funds managed and administered by it on deposit or may invest such contributions, having regard to the need for prudence.

(3)For the purposes of being able to exercise its functions and objectives in accordance with regulation 4, the Management Committee may, on behalf of the Scheme, after consulting with the competent authority, take out insurance policies, borrow or otherwise incur indebtedness and obtain funding guarantees, as it may consider appropriate to establish additional sources of funding for the Scheme. For the purposes of this sub-regulation, the term "guarantees" shall include guarantees obtained from credit institutions construed in accordance with item 4 of the First Schedule to the Banking Act. Cap. 371.

(4)The Management Committee shall cause proper books of account to be kept so that the financial position of the Scheme can be ascertained with reasonable accuracy at any time.

(5)In exercising its powers and duties, the Management Committee shall be bound to safeguard and take into account the general in terest s o f in vesto rs entitl ed to claim under these regulations. 7. Without prejudice to regulation 6

(1), the Management Committee shall enter into such investment management and administrative support agreements as may be approved by the competent authority. Investment management and administrative support agreements. 8.

(1)The Management Committee shall prepare annual forecast statements of the expected costs and revenues of the Scheme, and shall make available such forecast statements to all participants upon request. Publication of financial statements. Amended by: L.N. 228 of 2009; L.N. 280 of 2023.

(2)The Management Committee shall submit to the competent authority an annual report on the discharge of its functions and on the operation of the Scheme within seven

(7)months from the financial year end of the Scheme. Such annual report shall include, inter alia (

1. a)a statement showing the payments in and payments out 6 [ S.L.370.09 INVESTOR COMPENSATION SCHEME of the Scheme during its immediate previous financial year; and (
2. b)annual audited financial statements prepared in accordance with Intemational Accounting Standards.

(3)The annual report shall be made available on the website of the competent authority.

(4)The books of accounts shall be kept at such place as the Management Committee thinks fit. Meetings of the Committee. Amended by: L.N. 36 of 2006; L.N. 186 of 2025. 9.

(1)The meetings of the Management Committee shall be held as often as may be required but not less than once every three calendar months.

(2)Meetings of the Management Committee shall be convened by the chairperson either on his own initiative or at the written request of any two members of the Management Committee.

(3)The Management Committee shall only hold the meeting if at least five

(5)members are present, which members shall include the chairperson or, in his absence, the person designated to carry out the function of chairperson in accordance with regulation 5

(12).

(4)For the purpose of decisions of the Management Committee, each member shall have one vote. Voting shall be by simple majority of the members present. In the event of an equality of votes, the chairperson shall have a second or casting vote.

(5)Subject to the foregoing provisions of this regulation, the Management Committee shall have power to regulate its own proceedings and may also establish such procedures or make such rules as it may deem appropriate for the better fulfilment of its purposes.

(6)The Management Committee may invite any person who in its opinion possesses specialised knowledge or expertise on a particular subject, to attend any meeting and take part in the discussions.

(7)Save where otherwise provided in subregulation

(3), the Management Committee may act notwithstanding any vacancy in its membership, and any proceeding thereof or decision taken thereat shall be valid notwithstanding that the appointment of any person is not made. Source and application of funds. 10.

(1)In terms of regulation 4, the Scheme shall establish and maintain a fund or a number of funds out of which payments to investors shall be made in accordance with these regulations.

(2)The sources of funding shall include: (

1. a)contributions levied from participants of the Scheme by the Management Committee; (
2. b)money paid as administrative fees by all participants, as may be prescribed; (
3. c)money received as income from the investment of the assets of the fund; INVESTOR COMPENSATION SCHEME [ S.L.370.09 (
4. d)money borrowed by the Management Committee for the purposes of the Scheme; (
5. e)money received by the Management Committee on any insurance policy it takes out; and (f)

(3)any other money required to be paid in to the fund or funds, received or recovered by the Management Committee for the purposes of the Scheme. There shall be paid out of the fund or funds: (

1. a)money determined by the Management Committee as compensation for investors; (
2. b)money required for the repayment of (or interest on or charges in connection with) any money borrowed or for the payment of premia on any insurance policies taken out, for the purposes of the Scheme; (
3. c)the costs incurred in administering and managing the Scheme; and (
4. d)any other money paid out by the Management Committee for the purposes of the Scheme.

(4)The Management Committee shall hold, manage and apply the fund or funds in accordance with these regulations. 11.

(1)Every licence holder in possession of a Category 2 or Category 3 licence in terms of the Investment Services Act (Licence and Other Fees) Regulations shall participate in and contribute to the Scheme: Provided that licence holders licensed to provide investment services solely and exclusively to persons who do not fall within the definition of "investor" in terms of regulation 2 shall not be required to participate in and contribute to the Scheme: Provided further that a branch of a licence holder operating in Malta which is licensed in a non-EEA state shall participate in and contribute to the Scheme, unless the Scheme has in force an agreement with the authority responsible for the management and administration of the scheme in that other state stipulating, inter alia, that the level or scope of cover provided for investors in that state is equal or exceeds the level or scope of cover in Malta: Provided further that a branch of a licence holder operating in Malta which is licensed in an EEA state may at its own option, participate in and contribute to the Scheme, only where the level or scope of the Scheme in Malta exceeds the level or scope of cover provided in the EEA state in which it is licensed.

(2)The Scheme may enter into a bilateral agreement with any authority responsible for the management and administration of a scheme set up in any other country stipulating, inter alia, the level or scope of cover as well as the rules and procedures to be followed for the payment of compensation to investors, and in any such case, the guiding principles set out in Annex II of the Directive 97/9/EC of the European Parliament and of the Council of 3rd March 1997 on investor-compensation schemes shall, where appropriate, apply. Participants. Amended by: L.N. 36 of 2006; L.N. 62 of 2011. S.L. 370.03 7 8 [ S.L.370.09 INVESTOR COMPENSATION SCHEME

(3)Participation in the Scheme does not exclude the possibility that particular licence holders may have to participate also in another compensation or similar schemes set up under a different law and governed by another competent authority or other body.

(4)When a licence holder becomes a participant in the Scheme after the coming into force of these regulations, the Management C ommittee shall determine all the rel ati ve obl ig ati ons and conditions of the new participant in terms of these regulations. Contributions to the Scheme. Amended by: L.N. 36 of 2006. 12.

(1)Participants shall pay such contributions to the Scheme as prescribed in the Second Schedule, and such contributions shall not be refundable.

(2)Participants may be requested to pay to the Scheme such reasonable administrative fees as may from time to time be prescribed by the Management Committee. Determination. 13.

(1)Where (

1. a)it appears to the competent authority that a participant is unable, for the time being, for reasons which are directly related to its financial circumstances to meet its obligations arising from claims by its investors and to have no early or foreseeable prospect of being able to do so, or has otherwise suspended payment; or (
2. b)in respect of a participant which has its head office in Malta an order has been made by the Courts in Malta for its winding-up or liquidation under the laws of Malta; whichever is the earlier, the competent authority shall, as soon as practicable, make a determination to that effect.

(2)The competent authority may, by way of guidelines, establish those circumstances or criteria which it may consider in arriving at a decision as to whether it will make a determination in terms of subregulation

(1).

(3)As soon as practicable after a determination is made, the competent authority shall inform the Management Committee in writing of such determination. The Management Committee may take additional measures it deems necessary or appropriate within its powers under these regulations.

(4)The competent authority shall, as soon as possible, inform any other compensation scheme relating to financial services activities, as may be established under any other law and regulated by other competent authority or other body, which it believes may be effected by such determination.

(5)In making a determination in accordance with subregulation

(1), the competent authority shall have regard to any report of an officer or officers authorised by it on the state of affairs of the licence holder, and any other information in its possession. Application for compensation. 14.

(1)On being informed by the competent authority that a determination has been made under regulation 13

(1), the Management Committee shall publish a notice in at least two local INVESTOR COMPENSATION SCHEME [ S.L.370.09 newspapers, informing investors of the licence holder concerned of such determination and of the manner in which claims supported by documentary evidence are to be submitted.

(2)The right of an investor for compensation shall not be forfeited if the investor is able to prove that he was unable to assert his right to compensation within any prescribed time-limits as may be provided by the Management Committee.

(3)The Management Committee may, following an application for compensation being made to it by an investor, accept or refuse to provide compensation in accordance with these regulations.

(4)The Management Committee shall proceed to pay compensation for verified claims within three months of the date of the determination given in terms of regulation 13

(1): Provided that the Management Committee may, in exceptional circumstances, apply to the competent authority for an extension of this period by a further period of up to three months, and up to two further periods of up to three months each thereafter. 15.

(1)The Management Committee shall make its own administrative arrangements for verifying claims. These arrangements shall include: Verification of claims. (

1. a)providing an application form for claimants both in English and in Maltese; (
2. b)providing for the exercise of the Management Committee’s right of subrogation under regulation 22; and (
3. c)requiring claimants to give: (
4. i)(
5. ii)(iii) (
6. iv)their identity and address; the capacity in which they claim; evidence of the investments; and any other information as may be required by the Management Committee.

(2)The Management Committee may refuse to make a payment for compensation until the claimant informs the Management Committee as to the capacity in which he is the beneficial owner of the investment and provides satisfactory documentary evidence and information to allow the Management Committee to determine the amount of compensation payable.

(3)The Management Committee may decide to delay payment to a claimant until determination of any criminal charge brought against the claim ant, in vestor, or any perso n ent itl ed to or interested in respect of an investment under the provisions of the Prevention of Money Laundering Act or a corresponding law of a country outside Malta.

(4)Where in the opinion of the Management Committee circumstances so warrant, the Management Committee may effect part payments to claimants eligible for compensation under these regulations. Cap.

1. 9 10 [ S.L.370.09 INVESTOR COMPENSATION SCHEME When funds appear to be inadequate.
2. Whenever it appears to the Management Committee that the funds for the time being held by the Scheme are inadequate for the Management Committee to exercise its functions, the Management Committee may require a contribution to be made to the Scheme by licence holders out of, but not exceeding, funds reserved for this purpose by the licence holder in accordance with the Second Schedule. Such further contributions shall be provided to the Scheme within thirty calendar days of their being requested. Limit of compensation. Amended by: L.N. 36 of 2006; L.N. 425 of
3. 17.

(1)The total amount of compensation that may be paid out to an investor shall be the lesser of ninety per cent (90%) in respect of all claims which have been made by such investor, or up to 20,000 euro.

(2)In calculating the amount of compensation to be paid out in terms of subregulation

(1), all computations shall be made in the currency of the investment and all payments of compensation shall be made in the same currency as the investment. Claimants. Amended by: L.N. 36 of 2006. 18.

(1)Only persons falling within the definition of "investor" in regulation 2 may make a claim against the Scheme in terms of these regulations. An investor may only submit one claim in respect of all his investments, taken in aggregate, with the licence holder concerned.

(2)The categories listed in the First Schedule are excluded from claiming under the Scheme.

(3)An investor may not claim against more than one scheme in respect of a single claim. Where a claim has been made under two or more compensation schemes, the Management Committee shall conclusively determine under which scheme the claimant is eligible for compensation.

(4)Claims shall be made in such form, and shall be accompanied by such documentation or information, as the Management Committee may determine and make public from time to time. Claims. Amended by: L.N. 230 of 2017. 19.

(1)After a determination is made, in terms of regulation 13, the Scheme shall provide for the payment of compensation in respect of claims arising out of a licence holder’s inability to: (

1. a)repay money owed to or belonging to investors and held on their behalf in connection with licensed business; or (
2. b)return to investors any instruments belonging to them and held, administered or managed on their behalf in connection with licensed business or, where this is not possible, their monetary equivalent or value.

(2)Notwithstanding the provisions of regulation 17, the Scheme shall also, in accordance with the provisions of article 26

(3)(e) of the Arbiter for Financial Services Act, settle any judgment or arbitration award for up to twenty thousand euro (EUR 20,000), in respect of any civil liability which is obtained by an investor against a participant with regard to licensed business in respect of which there is a determination, and such payment shall INVESTOR COMPENSATION SCHEME [ S.L.370.09 11 be made within ten

(10)working days from the day when the judgement or arbitration award becomes res judicata: Provided that following the settlement of any such amount by the Scheme, the maximum compensation sum payable to each investor in terms of regulation 17

(1)shall be reduced by the amount settled by the Scheme in accordance with this subregulation.

(3)The amount of an investoris claim shall be calculated by the Management Committee after taking into account any or all of the following factors: (

1. a)legal and contractual conditions; (
2. b)counterclaims; (
3. c)market value; and (
4. d)surrender value. 20. Where the Management Committee is of the opinion that an investor is not eligible for compensation in whole or in part in terms of these regulations, the Management Committee shall give notice in writing to such investor of that opinion and the reasons therefor. Eligibility for compensation. 21.

(1)In considering compensation to any investor for any payment under these regulations, the Management Committee shall take into account any payments made under a policy of professional indemnity insurance, if any, held by the licence holder or any payments made under any other law or arrangement in respect of the same losses. Compensation paid to be deducted from compensation payable.

(2)The Management Committee shall deduct such amount of compensation paid from the amount of compensation that may be payable to the investor in respect of any or all of the circumstances arising from this regulation. 22.

(1)Where the Scheme has made a payment to a claimant, the Scheme shall be subrogated to the rights and remedies of that claimant against the licence holder. Subrogation.

(2)Prior to payment, investors shall confirm in writing to the Management Committee that: (

1. a)they have not received any payment from any other scheme or from the licence holder concerned in respect of the same loss; (
2. b)they will provide any assistance the Management Committee may require to enable the Management Committee to exercise its rights and remedies against the licence holder; and (
3. c)their rights in respect of any money or instruments comprising the claim shall be subrogated in favour of the Management Committee. 23.

(1)Where two or more persons are jointly entitled to an investment account, each of these persons shall be treated as having a separate account of an amount produced by dividing the amount Establishment of the level of compensation. 12 [ S.L.370.09 INVESTOR COMPENSATION SCHEME of the investment to which such persons are jointly entitled by the number of persons so entitled, unless there exists specific evidence or special contractual provisions determining the particular entitlements of such persons in which case such evidence shall be taken into account in determining their entitlements.

(2)Where a person is acting as trustee or nominee for one or more persons under a deed of trust or other similar agreement, the amount comprising the claim shall be deemed to belong to the beneficial owners equally, unless there exists specific evidence or special contractual provisions determining the beneficial interests of such persons in which case such evidence shall be taken into account in determining their entitlements, and provided in any event that ownership is proved to the entire satisfaction of the Management Committee. Consumer information. 24. The Management Committee shall ensure that the general public is adequately informed about the operation of the Scheme arrangements. Advertisements. 25.

(1)Licence holders shall make available to actual and intending investors adequate and clear information concerning the applicability of the Scheme together with such other particulars as may from time to time be specified by the competent authority in a manner and form specified by the competent authority: Provided that a licence holder shall not advertise or cause to be advertised the fact that money or instruments placed with a licence holder are protected by or through the Scheme except with the prior written consent of the competent authority.

(2)The competent authority may, from time to time, specify the information that licence holders are to provide to investors regarding the Scheme and its operations, as well as the manner and form in which such information should be provided. Power of the Management Committee to obtain information. Amended by: L.N. 425 of 2007. 26.

(1)The Management Committee may request participants, either directly or through the competent authority, to provide such information which the Management Committee may consider relevant for the proper administration of the Scheme, within a period of time as may be established by the Management Committee. The request may be addressed to the participant or to any of its directors or officials who are in possession of such information.

(2)Without prejudice to any provision of these regulations, a participant or any director or official thereof, who fails to comply with the Management Committeeis request for information within the period of time established by the Management Committee in terms of subregulation

(1), or who knowingly or recklessly furnishes information, or makes a statement which is inaccurate, false or misleading in any material respect, shall be liable to an administrative penalty not exceeding two thousand and three hundred and twenty-nine euro and thirty-seven cents (2,329.37) as may be imposed by the competent authority by means of a notice in writing and without recourse to a court hearing.

(3)Where an administrative penalty has been imposed by the INVESTOR COMPENSATION SCHEME [ S.L.370.09 13 competent authority in terms of subregulation

(2), an appeal shall lie to the Financial Services Tribunal in accordance with articles 6 and 19 of the Act. 27.

(1)Members of the Management Committee and persons appointed under regulation 6

(1)shall be subject to the provisions of the Professional Secrecy Act and shall keep confidential any information obtained by them in the course of performing their duties under these regulations, and shall not reveal any information to any person, credit institution, association or entity except as may be allowed by these regulations or any other law or by Court order. Respect for confidentiality. Cap. 377.

(2)The duty of confidentiality shall not be contravened in the case of: (

1. a)exchange of information between the Management Committee and competent authorities in other countries, or the competent authorities for the management and administration of corresponding schemes in other countries, provided that the relevant information is necessary for the discharge of their duties under these regulations; and (
2. b)any use or disclosure as may be required to enable the Management Committee and its officers or agents to perform their duties and carry out their functions under these regulations. 28.

(1)Where a licence holder fails to comply with its obligations under these regulations, the Management Committee shall notify and consult with the competent authority and shall agree on the appropriate measures to be taken by the competent authority, including the imposition of penalties, to ensure that the licence holder complies with such obligations. Failure to comply with obligations.

(2)If these measures fail to secure compliance on the part of the licence holder, the Management Committee shall report the matter to the competent authority for any further measure to be taken at law, including the possible restriction or withdrawal of the licence holderis licence.

(3)After the restriction or withdrawal of a licence, cover shall continue to be provided in respect of licensed business up to the date of restriction or withdrawal of the licence. 29. The Scheme shall establish and maintain adequate internal procedures to investigate complaints against it by licence holders and by investors. Procedures to investigate complaints. 30.

(1)The competent authorit ma issue guidelines to licence holders for the purposes of these regulations. Power to issue guidelines.

(2)Such guidelines may contain such incidental, supplementary and consequential provisions as appear to the competent authority to be expedient for the purpose of these regulations. 14 [ S.L.370.09 INVESTOR COMPENSATION SCHEME Exemption from liability for damages.

1. The Management Committee and officers and agents of the Scheme shall not be liable in damages for anything done or omitted in the discharge of functions under these regulations unless it is shown that the act or omission was in bad faith. Financial year end of the Scheme.
2. The financial year end of the Scheme shall be an accounting period of twelve months ending on the thirty-first day of December of each year. Audit.
3. The accounts of the Scheme shall be audited in accordance with International Standards on Auditing by auditors appointed by the Management Committee from among persons who are qualified to be appointed as auditors of a company under the law for the time being in force in Malta. Cooperation with other authorities.
4. The competent authority and the Management Committee shall consult the relevant competent authorities and the persons responsible for compensation schemes in other countries outside Malta and seek to reach agreement with those authorities and persons about: (a) the procedures to be followed if a participant defaults; (b) the amounts of compensation payable, after deductions if any, under each scheme; and (c) any other aspect which is deemed appropriate for the proper management and administration of the schemes. Transitory provision. S.L. 371.09 L.N. 6 of
5. Compensation Fund. Cap.
6. Transitory provision, termination of office. Added by: L.N. 186 of
7. 35.

(1)The Management Committee established under regulation 3 of the Depositor Compensation Scheme Regulations and the Management Committee referred to in these regulations are one and the same. The Management Committee established under regulation 3 of these regulations shall continue in the personality of the Management Committee established immediately before the coming into force of these regulations and accordingly shall succeed to all its rights and obligations.

(2)All appointments, decisions, contributions, claims, payments or other acts made or taken under the Investor Compensation Scheme Regulations, 2003, before the coming into force of these regulations, shall continue in force and shall be deemed to have been made or taken under these regulations, and any reference in any law to the Management Committee shall be deemed to be a reference to the Management Committee established under regulation 3. 36. The Compensation Fund established by bye-laws in terms of the Schedule to the Financial Markets Act shall become absorbed as an integral part of the Scheme in accordance with the provisions of the Third Schedule. 37. Notwithstanding the provisions of regulation 5

(4), the term of office of the members of the Management Committee sitting on the said Committee on 2nd September 2025, shall be deemed to be terminated on the said date. INVESTOR COMPENSATION SCHEME [ S.L.370.09 15 16 [ S.L.370.09 Substituted by: L.N. 36 of 2006. INVESTOR COMPENSATION SCHEME FIRST SCHEDULE Exclusions (Regulation 2, 18) The following are excluded from claiming under the Scheme: 1. Persons carrying on investment services within the meaning of the Investment Services Act, or equivalent or similar foreign legislation; 2. Credit institutions carrying on the business of banking within the meaning of the Banking Act, or equivalent or similar foreign legislation; 3. Financial institutions within the meaning of the Financial Institutions Act, or equivalent or similar foreign legislation; 4. Insurance undertakings carrying on the business of insurance within the meaning of the Insurance Business Act and the Insurance Brokers and other Intermediaries Act, or under equivalent or similar foreign legislation; 5. Collective investment schemes; 6. Pension and retirement funds; 7. Companies which are of such a size that they are not permitted to draw up abridged balance sheets pursuant to the Companies Act, or under equivalent or similar foreign legislation; 8. Governments and administrative authorities, national and international institutions; 9. Local and municipal councils or authorities; 10. Debt securities issued by the same institution and liabilities arising out of own acceptances and promissory notes; 11. Persons holding accounts which do not disclose the investor’s identity; 12. Companies and commercial partnerships in the same group as the licence holder; 13. Directors and managers of the relevant licence holder and members of the licence holder with personal liability, persons holding five percent or more of the capital of such licence holder, the auditors of the licence holder and persons of the same description with respect to a company forming part of the same group of companies as the licence holder; 14. Close relatives, that is, ascendants, descendants or the spouse of the persons referred to in paragraph 13; 15. Investors who have any responsibility for or have taken advantage of certain facts relating to a licence holder which gave rise to the licence holder’s financial difficulties or contributed to the deterioration of its financial situation; 16. Investors in respect of transactions in connection with which a criminal conviction has been obtained for money laundering in terms of the Prevention of Money Laundering Act, or under equivalent or similar foreign legislation; 17. Nominees, trustees or other third parties acting on behalf or in the interest of the persons referred to in this Schedule to the extent of the funds held in such capacity; 18. Other categories of professional and institutional investors as may be INVESTOR COMPENSATION SCHEME [ S.L.370.09 17 determined from time to time by the Management Committee. SECOND SCHEDULE Contributions in terms of regulation 12 1. Amended by: L.N. 36 of 2006. Substituted by: L.N. 425 of 2007. Amended by: L.N. 62 of 2011. Contributions (

1. a)Licence holders shall, every year, be obliged to contribute to the Scheme a Fixed Contribution and a Variable Contribution. (
2. b)The Fixed Contribution shall be paid to the Scheme annually, in every calendar year. 2. Fixed Contribution (
3. a)Every licence holder which participates in the Scheme shall pay a Fixed Contribution as follows: (
4. i)€2,911.72 in the case of Category 2 Investment Services Licence Holders; and (
5. ii)€17,470.30 in the case of Category 3 Investment Services Licence Holders. (
6. b)The fixed contribution that shall be payable by a licence holder during its first calendar year of participation, shall be calculated in accordance with the following formula: contribution x days 365 Where: "contribution" means the fixed contribution as provided for in paragraph (a); "days" means the number of days that elapse from the day when the said licence holder obtains a Category 2 or a Category 3 licence, as the case may be, up to the end of that calendar year. (
7. c)The additional fixed contribution that shall be payable during the calendar year in which a licence holder upgrades from a Category 2 to a Category 3 licence, shall be calculated in accordance with the following formula: difference x days 365 Where: "difference" means the difference between the fixed contribution for Category 3 and the fixed contribution for Category 2 investment services licence holders as provided for in paragraph (a); "days" means the number of days that elapse from the day when the said licence holder upgrades to a Category 3 licence, up to the 18 [ S.L.370.09 INVESTOR COMPENSATION SCHEME end of that calendar year. (
8. d)Payment of the Fixed Contribution to the Scheme shall be made by the 30 April of each year or within thirty calendar days from the date when the licence holder shall become liable to participate in and contribute to the Scheme, as the case may be. (
9. e)A licence holder which has ceased to be a participant of the Scheme or which has downgraded its licence at any time during a calendar year shall not be entitled to a refund of any contributions paid to the Scheme. 3. Variable Contribution (
10. a)The Variable Contribution is calculated by applying a percentage rate to the total revenue of the licence holder on an annual basis. The percentage rate for the Variable Contribution is set at 0.1 per centum. (
11. b)The Variable Contribution shall be accounted for in the financial year when the Fixed Contribution is paid. (
12. i)Investor Compensation Scheme Reserve The Variable Contribution shall be held by the licence holder in a reserve so that the funds will be made available within 30 calendar days from the time when the Scheme makes a call on such funds in terms of regulation 16. Funds in this reserve, which shall be called the "Investor Compensation Scheme Reserve" in all accounts and documents, shall be invested by the licence holder with a third party approved in writing by the Management Committee. Such third party shall hold the funds on pledge in favour of the Scheme and shall specifically acknowledge the rights of the Scheme as pledgee, and shall notify the Scheme in writing accordingly. At the end of every financial year, each licence holder shall ensure that the current market value of the investments in which the Variable Contribution is invested is at least equal to the higher amount between 0.1% of the total revenue and the minimum amount established in sub-paragraph (
13. iv)of this title. If this requirement is notsatisfied, the licence holder shall take immediate steps to top up as necessary these investments within one month of the financial year end. (
14. ii)Investment with Third Parties Funds comprising the Investor Compensation Scheme Reserve may only be invested with a third party as follows: (
15. a)at least 25 per cent of the total amount shall be maintained in an interest bearing bank account denominated in euro (maximum maturity 30-day call) or invested in Malta Treasury Bills denominated in euro; and (
16. b)not more than 75 per cent of the total amount shall be invested as follows: (
17. i)at least 50 per cent (in this case 37.5 per cent of the total Reserve) shall beinvested in Malta Government Stocks or in local SICAVs that invest principally in Malta Government Stock; and (
18. ii)the balance may be invested in debt instruments issued by local or international entities with an investment grade of not lower than "A" by a reputable credit rating INVESTOR COMPENSATION SCHEME [ S.L.370.09 19 agency, which are quoted on an investment exchange and which are in a dematerialised form. A licence holder whose capital is denominated in a currency which is not euro may, subject to approval by the Management Committee, maintain the Variable Contribution in the currency of that capital. Deposits made by a licence holder shall not be placed with itself or with a bank or other institution which is an associated or parent company of the licence holder. For the purposes of this Schedule, an associated company shall mean any subsidiary of the parent company of the licence holder or any company over which the parent company exercises direct or indirect control or in which the parent company holds directly or indirectly more than 25 per cent of the shareholding. A licence holder may not switch from an investment which is pledged in favour of the Scheme into another type of investment, without the written consent of the Management Committee. The above parameters may be changed by Guidelines issued by the competent authority, upon consultation with the Management Committee. (iii) Payment on account against a potential claim on the Investor Compensation Scheme (
19. a)The licence holder may deposit the entire amount of the Variable Contribution directly with the Scheme, in which case such deposit shall be on account of the licence holder’s liabilities under regulation 16, and the provisions of this Schedule, except for paragraph 3(b)(
20. i)and (ii), shall also be applicable to such deposit. (
21. b)No interest shall be payable by the Scheme to the licence holder. (
22. iv)Minimum held as reserve (
23. a)When a Variable Contribution is higher than the Investor Compensation Scheme Reserve, the licence holder shall be required to make a Variable Contribution for the difference to ensure that the higher amount is always on reserve. (
24. b)If the Investor Compensation Scheme Reserve exceeds the Variable Contribution, no transfer to the Investor Compensation Scheme Reserve shall be made. (
25. c)The minimum amount held on reserve or deposited with the Scheme shall never be less than €698.81. (
26. v)Reporting of the Variable Contribution by participants Participants shall be required to insert a suitable note in their annual financial statements as to the amount of Variable Contribution held on reserve or deposited with the Scheme. For amounts held on reserve, it would be appropriate to include the nominal and market value of the instruments in which the reserve has invested, together with a maturity schedule according to the type of instrument. The amount on reserve will be deducted in full as an illiquid adjustment for the purposes of calculating the licence holder’s financial resources in its financial return submitted in terms of its 20 [ S.L.370.09 INVESTOR COMPENSATION SCHEME licence conditions. 4. Maximum limit of payment Licence holders will be required to contribute to their Investor Compensation Scheme Reserve each year until such time that aggregate fixed contributions paid to the Scheme and accumulated reserves held by licence holders by way of the Variable Contribution amount to €2,329,373.40. THIRD SCHEDULE (Regulation 36) The Compensation Fund and the Select Committee established by Bye-laws in terms of the Schedule to the Financial Markets Act shall cease to be in effect as from the date of the coming into force of these regulations and the Compensation Fund shall as from such date become absorbed as an integral part of the Scheme subject to the following provisions of this paragraph:

(1)The Bye-laws as in force immediately before the coming into force of these regulations, shall mutatis mutandis continue to regulate any claim made by an investor in terms of Bye-law 7.03 with reference to events occurring prior to 3rd January, 2003 and any reference to the Council shall be deemed to be a reference to the Management Committee established under these regulations.

(2)(

1. a)The portion of the Compensation Fund comprising the payments made by the Malta Stock Exchange in terms of Bye-law 7.12(
2. b)shall be transferred back to the Malta Stock Exchange: Provided that the Malta Stock Exchange shall keep such portion of the Compensation Fund separate and distinct from any other funds or assets; (
3. b)The Malta Stock Exchange shall provide an indemnity in favour of the Scheme, up to the amount of funds kept separate and distinct in accordance with the proviso to the immediately preceding sub-regulation and in proportion to the percentage of the funds constituting the Compensation Fund that have been transferred back to it, and it shall remain responsible in accordance with the provisions of the first proviso to paragraph (
4. b)of subregulation

(3), up till 3rd January, 2008, for any claims that may arise with reference to events occurring prior to 3rd January, 2003.

(3)(

1. a)The portion of the Compensation Fund that had been paid by the members of the Malta Stock Exchange in terms of Bye-law 7.12(
2. a)and any other remaining funds pertaining to the Compensation Fund shall be transferred to the Scheme and shall become an integral part thereof: Provided that a moratorium shall be allowed in favour of members of the Malta Stock Exchange who had paid such portion to the Compensation Fund as in force immediately before the coming into force of these regulations, so that their respective contributions to the Compensation Fund shall be set off against contributions now due by them to the Scheme; (
3. b)The Scheme shall be responsible for claims made against the Compensation Fund by investors in terms of Bye-law 7.03 and arising out of or with reference to events occurring prior to 3rd January, 2003: INVESTOR COMPENSATION SCHEME [ S.L.370.09 21 Provided that claims accepted for settlement by the Management Committee shall be settled out of funds transferred from the Compensation Fund to the Scheme and the Malta Stock Exchange pro rata: Provided further that the liability of the Scheme shall not exceed the amount of funds transferred in accordance with the provisions of paragraph (
4. a)of subregulation 3, and the responsibility of the Scheme shall expire on 3rd January, 2008.

(4)Any reference in any law to the Compensation Fund established by Byelaws in terms of the Schedule to the Financial Markets Act, shall henceforth be deemed to be a reference to the Scheme.