in terms of sub-article (1), the competent authority may also make an application to the court for the dissolution and winding up by the court of a licence holder where it appears to the competent authority that a licence holder should be dissolved and wound up by the court for the reason set out in article 214(2)(b)(iii) of the Companies Act, and where the court accedes to the application the relevant provisions of the Companies Act in relation to the dissolution and winding up by the court and any other applicable provisions of any other law shall apply.
\n
(3)The competent authority may, where it feels it is in the best interest of the public so to do, make or issue public statements or notices giving warnings or information about any measure taken in terms of this article.
\n
(4)The competent authority may require the licence holder concerned to pay all the expenses of, and incidental to, the publication or issue of public statements or notices pursuant to this article, or such part thereof as it may deem appropriate; and any sum so due shall be recoverable by the competent authority in the same manner as an administrative penalty imposed under this Act.
\n
(5)Any measure adopted in terms of sub-article (1) shall remain in force notwithstanding that a licence holder ceases to hold a licence for whatever reason, unless the competent authority otherwise directs.
\n
Art. 16
\n
16.(1) Any officer, employee or agent of the competent authority, on producing, if required, evidence of his authority, may enter premises occupied by a person on whom a notice has been served under article 13 or whose affairs are being investigated under article 14, for the purpose of obtaining and, or verifying there the information or documents required by that notice, or otherwise for the purpose of the investigation, and of exercising any of the powers conferred by the said articles.
\n
(2)Where any officer, employee or agent of the competent authority has reasonable cause to believe that if such notice as is referred to in sub-article (1) were served it would not be complied with or that any documents to which it could relate would be removed, tampered with or destroyed, such person may, on producing, if required, evidence of his authority, enter any premises referred to in sub-article (1) for the purpose of obtaining there any info rmati on or docum ents specified in the au thori ty, being information or documents that could have been required under such notice as is referred to in sub-article (1). (2A) Without prejudice to sub-articles (1) and (2), any officer, employee or agent of the competent authority, on producing, if required, evidence of his authority, may enter premises occupied by a person on whom a notice has been served under article 13 and by any other person included in the supervision of compliance with the group capital test, where the competent authority is the group supervisor, in Right of entry.
\n
Amended by:
\n
LXXII.2021.17.
\n
INVESTMENT SERVICES order to conduct an inspection:
\n
Provided that the exercise of the right of entry under this sub-article in relation to any person included in the supervision of compliance with the group capital test where the competent authority is the group supervisor, shall be subject to the prior notification of other competent authorities concerned.
\n
(3)For the purposes of any action taken under the provisions of this article, the competent authority may request the assistance of the Commissioner of Police, who may for such purpose exercise such powers as are vested in him for the prevention of offences and the enforcement of law and order.
\n
Administrative penalties and other measures.
\n
Added by:
\n
XX. 2007.68.
\n
Amended by:
\n
L.N. 425 of 2007;
\n
X. 2011.28;
\n
XX. 2013.43;
\n
XXXI. 2017.53;
\n
V.2020.14.
\n
Art. 16A
\n
16A. (1) Without prejudice to any other powers assigned to the competent authority in terms of this Act, where a licence holder or the manager, secretary, director or any other person responsible for a licence holder contravenes or fails to comply with any of the conditions imposed in a licence, and, or where the competent authority is satisfied that a person’s conduct amounts to a breach of any of the provisions of this Act, regulations, Investment Services Rules or Conduct of Business Rules issued thereunder, including failure to cooperate in an investigation, the competent authority may by notice in writing and without recourse to a court hearing impose on the licence holder, manager, secretary, director, and, or any other person as the case may be, an administrative penalty w h i c h may not exceed one hundred and fifty thousand euro (€150,000) for each infringement or failure to comply, as the case may be.The provisions of article 16 (4) of the Malta Financial Services Authority Act shall apply mutatis mutandis.
\n
(2)Administrative penalties or other measures that may be imposed by the competent authority on licence holders or others, as may be specified, may be imposed in the form of a fixed penalty, a daily penalty, or both.
\n
(3)The imposition by the competent authority of an administrative penalty in terms of this article shall be without prejudice to any other consequence of the act or omission of the offender under civil or criminal law:
\n
Provided that in all cases where the competent authority imposes an administrative penalty in respect of anything done or omitted to be done by any person and such act or omission also constitutes a criminal offence, no proceedings may be taken or continued against the said person in respect of such criminal offence.
\n
(4)The competent authority may, by means of a public statement, disclose the name of t he person sanct io ned, the p a r t i c u l a r b r e a c h o f t h e p r o v i s i o n o f t h i s A c t , regulations, Investment Services Rules or Conduct of Business Rules issued thereunder, and the penalty or administrative measure imposed. The competent authority shall withhold such public disclosure where it deems that such disclosure would seriously jeopardise the financial INVESTMENT SERVICES markets, be detrimental to the interests of investors or cause disproportionate damage to the parties involved.
\n
(5)Where the competent authority has made a public statement in terms of sub-article (4), it shall simultaneously report that fact to ESMA.
\n
(6)The competent authority shall annually provide ESMA with aggregated information about all the administrative measures and sanctions imposed in accordance with this article and shall upon request provide the necessary information on the application of administrative measures and imposition of penalties in the case of breaches of the provisions adopted in the implementation of the AIFM Directive.
\n
16AA. (1) Without prejudice to any other power of the competent authority under this Act or any other law, where the competent authority is the consolidating supervisor and has established that the conditions set out in article 10D(4) are not met or have ceased to be met, the competent authority shall take the appropriate supervisory measures to ensure or restore, as the case may be, continuity and integrity of consolidated supervision and ensure compliance with the requirements laid down in this Act and any regulations made and Investment Services Rules issued thereunder transposing the CRD, in any binding legal instruments issued under the CRD, and in the CRR, on a consolidated basis. In the case of a mixed financial holding company, the supervisory measures applied by the competent authority as the consolidating supervisor shall, in particular, take into account the effects on the financial conglomerate.
\n
The supervisory measures referred to in this sub-article shall include: (a) withdrawing the approval granted to a financial holding company or mixed financial holding company in terms of article 10D; (b) suspending the exercise of voting rights attached to the shares of the subsidiary institutions held by the financial holding company or mixed financial holding company; (c) issuing administrative measures or administrative penalties, in terms of this Act and any regulations made or Investment Services Rules issued thereunder, against the financial holding company, the mixed financial holding company or the directors and managers, subject to the provisions of national law transposing Articles 65 to 72 of the CRD; (d) issuing instructions or directions to the financial holding company or mixed financial holding company to transfer to its shareholders the participations in its subsidiary institutions; (e) issuing a directive to the financial holding company or mixed financial holding company in terms of article 15;
\n
Supervisory measures related to financial holding companies and mixed financial holding companies.
\n
Added by:
\n
LXXII.2021.18.
\n
INVESTMENT SERVICES (f) designating on a temporary basis another financial holding company, mixed financial holding company or institution within the group as responsible for ensuring compliance with the requirements laid down in this Act and, or any regulations made and, or Investment Services Rules issued thereunder transposing the CRD, in the CRD and, or in the CRR on a consolidated basis; (g) restricting or prohibiting distributions or interest payments to shareholders; (h) requiring financial holding companies or mixed financial holding companies to divest themselves from, or reduce, holdings in institutions or other financial sector entities; (i) requiring financial holding companies or mixed financial holding companies to submit a plan on return, without delay, to compliance; (j) restraining any person within financial holding companies or mixed financial holding companies and, or financial holding companies or mixed financial holding companies from taking, or continuing to take, any action as a result of which the conditions set out in article 10D(4) are not met or have ceased to be met; (k) requiring any person within financial holding companies or mixed financial holding companies and, or financial holding companies or mixed financial holding companies to take such steps as may be necessary to restore the position existing immediately before any action, as a result of which the conditions set out in article 10D(4) are not met or have ceased to be met, was taken; (l) restraining any person within financial holding companies or mixed financial holding companies and, or financial holding companies or mixed financial holding companies from exercising any rights which a lawful action, as a result of which the conditions set out in article 10D(4) are not met or have ceased to be met, would have conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired; (m) any measure under article 15A:
\n
Provided that in exercising any of its powers under article 15A, the provisions of the said article shall apply mutatis mutandis, and provided further that any reference to \"the licence holder\" shall be deemed to be reference to \"the financial holding company\" and, or \"the mixed financial holding company\", as applicable.
\n
(2)Where the competent authority intends to withdraw an approval in accordance with sub-article (1)(a), it shall serve written notice of its intention on the financial holding company or mixed financial holding company; such notice shall specify the grounds upon INVESTMENT SERVICES which the competent authority intends to take such action and shall specify a period, being a period not less than forty-eight hours and not more than thirty calendar days, in which the financial holding company or mixed financial holding company shall be entitled to make representations to the competent authority as to why such action should not be taken. Unless the competent authority decides that the matter is urgent, it shall not withdraw an approval before the expiry of such period.
\n
(3)For the purpose of taking decisions on the supervisory measures referred to in sub-article (1), where the financial holding company or the mixed financial holding company is established in a Member State or in an EEA State other than Malta and the competent authority is the consolidating supervisor, the competent authority shall work together with the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established, as the case may be, in full consultation.
\n
(4)Where the competent authority is not the consolidating supervisor but the financial holding company or the mixed financial holding company is established in Malta, the competent authority shall, for the purposes of taking decisions on the supervisory measures referred to in Article 21a(6) of the CRD, work together with the European regulatory authority acting as the consolidating supervisor, in full consultation.
\n
(5)Where the competent authority is the consolidating supervisor and where the financial holding company or the mixed financial holding company is not established in Malta, the competent authority shall prepare an assessment on the matters referred to in subarticle (1), and shall forward that assessment to the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established.
\n
(6)The competent authority, whether acting as the consolidating supervisor or whether it is in receipt of an assessment referred to in Article 21a(8) of the CRD from the European regulatory authority acting as the consolidating supervisor, shall do everything within its powers to reach a joint decision on the measures referred to in subarticle (1) of this article and, or in Article 21a(6) of the CRD, with the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established or with the European regulatory authority acting as the consolidating supervisor, as the case may be, within two months of receipt of that assessment:
\n
Provided that the joint decision shall be duly documented and reasoned and where the competent authority is the consolidating INVESTMENT SERVICES supervisor, it shall communicate the joint decision to the financial holding company or the mixed financial holding company.
\n
(7)In the event of a disagreement between the competent authority and the European regulatory authority acting as the consolidating supervisor or with the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established, as the case may be, the competent authority shall refrain from taking the joint decision referred to in sub-article (6) and shall refer the matter to the EBA in accordance with Article 19 of Regulation (EU) No. 1093/2010. In such cases, the competent authority shall adopt a joint decision with the European regulatory authority acting as the consolidating supervisor or with the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established, as the case may be, in conformity with the decision of the EBA:
\n
Provided that the matter shall not be referred to the EBA after the end of the two month period referred to in sub-article (6) or after a joint decision has been reached.
\n
(8)In the case of mixed financial holding companies, where the coordinator appointed in terms of Article 10 of Directive 2002/87/EC is neither the competent authority, nor the European regulatory authority acting as the consolidating supervisor, nor the European regulatory authority in the Member State or EEA State where the mixed financial holding company is established, the agreement of the said coordinator shall be required for the purposes of the decisions or joint decisions referred to in sub-article (1) of this article and, or in Article 21a(6) of the CRD, as applicable. Where the agreement of the coordinator is required, the competent authority shall refer any disagreements to the relevant European Supervisory Authority, namely, to the EBA or to the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA), established by Regulation (EU) No. 1094/2010, which shall take its decision within one month of receipt of the referral. Any decision taken in accordance with this sub-article shall be without prejudice to the obligations under Directive 2002/87/EC or the Solvency II Directive.
\n
(9)For the purposes of this article: (a) the term \"group\" means a group as defined in point
\n
(138)of Article 4(1) of the CRR; (b) the term \"institution\" means an institution as defined in point (3) of Article 4(1) of the CRR; (c) the term \"participation\" means the same as the meaning assigned to in point (35) of Article 4(1) of the CRR; and INVESTMENT SERVICES (d) the term \"subsidiary\" means a subsidiary as defined in point (16) of Article 4(1) of the CRR.
\n
Art. 16B
\n
16B. Any decision taken under this Act by the competent authority in terms of any provisions which transpose the AIFM Directive, the BRRD, the CRD, the MiFID, the UCITS Directive, and the IFD, including any regulations, regulations, Investment Services Rules or Conduct of Business Rules issued thereunder, made thereunder for the said transposition, shall state the grounds on which such a decision has been based.
\n
Obligation to state grounds for decisions.
\n
Added by:
\n
XX. 2007.68.
\n
Amended by:
\n
X. 2011.29;
\n
XX. 2013.44;
\n
XXII. 2014.8;
\n
XXI. 2015.15;
\n
XXXI. 2017.54;
\n
LXXII.2021.19.
\n
CO-OPERATION WITH REGULATORY AUTHORITIES AND OTHER BODIES Substituted by:
\n
XX. 2007.69;
\n
LXXII.2021.20.
\n
Art. 17
\n
17.(1) The competent authority shall act as the contact point in terms of and for the purposes of Article 79(1) of the MIFID, and it shall also exercise its powers and duties as provided for in the UCITS Directive.
\n
Powers exercisable.
\n
Amended by:
\n
XVII. 2002.149;
\n
XX. 2007.70;
\n
X. 2011.30;
\n
XX. 2013.45;
\n
XXII. 2014.9;
\n
XXI. 2015.16;
\n
XIX. 2016.21;
\n
XXXI. 2017.55; (1A) The competent authority shall cooperate with other local regulatory authorities or bodies which are also responsible for the supervision of credit institutions and financial institutions and shall exchange with such local regulatory authorities or bodies, without delay, any information which is essential or relevant to the exercise of their functions.
\n
(2)The competent authority shall cooperate with other European regulatory authorities whenever necessary for the purpose of carrying out its duties and exercising its powers under the AIFM Directive, the BRRD, the CRD, the CRR, the MIFID, the MiFIR, the UCITS Directive, the IFD and the IFR. It shall render the necessary assistance to other European regulatory authorities, in particular by exchanging information and cooperating in any investigatory or supervisory function. In terms of the AIFM Directive, the BRRD, the CRD, the MiFID, the UCITS Directive and the IFD, the competent authority may use its powers for the purposes of cooperation even in cases where the conduct under investigation does not constitute an infringement of any provisions of this Act, regulations, Investment Services Rules or Conduct of Business Rules issued thereunder:
\n
Provided that the competent authority shall communicate information to other European regulatory authorities where this is relevant for monitoring and responding to the potential implications of the activities of an individual AIFM or AIFMs collectively, for the stability of systemically relevant investment services licence holders and the orderly functioning of markets on which AIFMs are active.
\n
ESMA and the ESRB shall be informed accordingly. (2A) Without prejudice to the generality of sub-article (2), the competent authority shall, for the purposes of its duties pursuant to the IFR and the IFD as transposed in national law, exchange information about investment firms with European regulatory authorities without LXXII.2021.21.
\n
INVESTMENT SERVICES delay, including the following: (a) information about the management and ownership structure of the investment firm; (b) information about compliance with requirements by the investment firm; own funds (c) information about compliance with the concentration risk requirements and liquidity requirements of the investment firm; (d) information about the administrative and accounting procedures and internal control mechanisms of the investment firm (e) any other relevant factors that may influence the risk posed by the investment firm:
\n
Provided that for the purposes of this sub-article the term \"investment firm\" means an investment firm licensed under this Act.
\n
(3)Upon receipt of a request from European regulatory authorities designated as contact points within the individual Member States or EEA States under Article 79(1) of the MIFID, the competent authority shall immediately take the necessary measures in order to gather the information required for the carrying out of its duties pursuant to the MIFID and the MiFIR. If the competent authority is not able to supply the required information immediately, it shall notify the requesting European regulatory authority of the reasons.
\n
(4)At the time of communicating information to the European regulatory authorities, whether designated as contact points or not, the competent authority may stipulate that the information must not be disclosed without its express agreement, in which case such information may be exchanged solely for the purposes for which the competent authority had given its agreement.
\n
(5)Where a European regulatory authority exchanging information with the competent authority stipulates at the time of communication of the information that such information must not be disclosed without its express agreement, such information may be used by the competent authority solely for the purposes for which the European regulatory authority would have given its agreement.
\n
(6)Information received by the competent authority from contact points in the other Member States or EEA States may be transmitted to other bodies or natural or legal persons, provided that: (a) the express agreement of the contact points which disclosed the information is obtained; and (b) the information is used solely for the purposes for which the contact points gave their agreement:
\n
Provided that in duly justified circumstances the competent authority can transmit information to other bodies or natural or INVESTMENT SERVICES legal persons without satisfying the conditions in paragraphs (a) and (b), in which case the competent authority shall immediately inform the contact point that sent the information.
\n
(7)Where the competent authority receives confidential information from contact points in the other Member States or EEA States or from overseas regulatory authorities or auditors under articles 17D and 18, or when other bodies or natural or legal persons receive confidential information from the competent authority, they may only use such confidential information in the course of their duties, in particular: (a) to check that the conditions governing the taking-up of the business of licence holders, including undertakings contributing towards the business activity of UCITS are met and to facilitate the monitoring, on a nonconsolidated or consolidated basis, of the conduct of that business, especially with regard to the financial resources requirements; (b) to monitor the proper functioning of trading venues within the meaning of the MIFID and the MiFIR; (c) to impose penalties or adopt other administrative measures and to consider representations received in their regard; (d) in appeals under article 19; (e) to investigate complaints received from consumers in terms of article 20 of the Malta Financial Services Authority Act; or (f) in taking any decision in the implementation of the UCITS Directive and the MIFID and the MiFIR; or (g) to monitor the prudential rules set out in the IFD and the IFR.
\n
(8)Sub-article (7) of this article and article 26 shall not preclude the competent authority from exchanging information, in terms of the UCITS Directive, with European regulatory authorities, where that information is to be divulged to: (a) authorities with public responsibility for the supervision of credit institutions, investment undertakings, insurance undertakings or other financial organisations, or authorities responsible for the supervision of financial markets; (b) bodies involved in the liquidation or bankruptcy of UCITS or undertakings contributing towards their business activity, or bodies involved in similar procedures; or (c) persons charged with carrying out statutory audits of the accounts of insurance undertakings, credit institutions, investment services licence holders or other financial institutions.
\n
(9)Sub-article (7) of this article and article 26 shall not preclude INVESTMENT SERVICES the competent authority from exchanging information with European regulatory authorities, or other overseas regulatory authorities or other bodies and entities in pursuance of the requirements and terms of the BRRD, CRD, the CRR, the IFD and the IFR, as may be prescribed.
\n
(10)Without prejudice to the powers of the competent authority under this Act or any other law, where the competent authority has good reason to suspect that acts contrary to the provisions of the AIFM Directive, the CRD, the CRR, the MiFID, the MiFIR, the UCITS Directive, the IFD and the IFR are being or have been carried out on the territory of another Member State or EEA State by entities not subject to its supervision, it shall notify this in as specific a manner as possible to the contact point in the other Member State or EEA State and to ESMA:
\n
Provided that where the said suspected acts have been or are suspected to have been committed by an AIFM in breach of the AIFM Directive, the competent authority shall also inform the home Member State and the host Member State of the AIFM, as the case may be, in as specific a manner as possible.
\n
(11)Where the information in the possession of the competent authority had originated from a European regulatory authority or an overseas regulatory authority, it may not be disclosed to a European regulatory authority or to any other third party without the express agreement of the European regulatory authority or the overseas regulatory authority which had transmitted it and, where appropriate, solely for the purposes for which that authority had given its agreement.
\n
(12)Where a European regulatory authority suspects that acts carried out by entities not subject to its supervision and which are contrary to the provisions of the AIFM Directive, the CRD, the CRR, the MiFID, the MiFIR, the UCITS Directive, the IFD or the IFR are being or have been carried out in Malta and notifies the competent a uthority to t his effect, the competent author it y sh al l t ake appropriate action. The competent authority shall inform the notifying European regulatory authority and ESMA of the outcome of any such action and, to the extent possible, of significant interim developments:
\n
Provided that any such action taken by the competent authority shall be without prejudice to the powers and functions of the European regulatory authority that has forwarded the information.
\n
(13)Without prejudice to the foregoing provisions of this article, the competent authority may exercise the following powers at the request of or for the purpose of assisting a European regulatory authority: (a) the power to impose, revoke or vary conditions on the grant of a licence pursuant to the provisions of article 6(2); (b) the power to cancel or suspend a licence under article 7(1); (c) the powers of inquiry under article 13;
\n
INVESTMENT SERVICES (d) the power to appoint inspectors under article 14; (e) the powers of intervention under article 15; (f) the powers of entry under article 16; (g) the power to communicate to the European regulatory authority information which is in the possession of the competent authority, whether or not as a result of the exercise of any of the above powers.
\n
(14)The competent authority shall have the powers conferred upon it by Article 101(8) of the UCITS Directive.
\n
(15)The competent authority may also cooperate with European regulatory authorities with respect to facilitating the recovery of administrative penalties.
\n
Art. 17A
\n
17A. (1) The competent authority may request the cooperation of a European regulatory authority in carrying out its supervisory functions or for an on-site verification or in an investigation in the territory of the latter within the framework of their powers:
\n
Provided that in the case of a person holding a licence or other equivalent authorisation from a European Regulatory Authority and who is a remote member within the meaning of the MIFID of a regulated market authorised in terms of the Financial Markets Act, the competent authority may communicate with such person directly, in which case the competent authority shall inform the contact point of the home Member State of such person accordingly.
\n
(2)If, upon the request for cooperation by the competent authority in terms of Article 54(2) of the AIFM Directive, Articles 52 and 118 of the CRD and Article 101(5) of the UCITS Directive, a verification or an investigation is carried out in a Member State by a European regulatory authority, the competent authority may request that its own officers, employees or agents accompany the officials carrying out the verification or investigation, and such officers, employees or agents shall, however, be subject to the overall control of such Member State on whose territory the said verification or investigation is being conducted.
\n
(3)A European regulatory authority may request the c o o p e r a t i o n o f t h e c o m p et e n t a u t h o r i t y i n c a r r y i n g o u t i t s supervisory functions or for an on-site verification or in an investigation, in which case the competent authority shall, within the framework of its powers: (a) carry out the verifications or the investigation itself, and in respect of requests pursuant to Article 118 of the CRD with the participation of the requesting authority; or (b) allow the requesting authority to carry out the verification or investigation, and, it may also, in terms of Article 54(2) of the AIFM Directive and Article 101(5) of the UCITS Directive, request that its own officers, employees or agents accompany the European regulatory authority in carrying out the verification or investigation;
\n
Co-operation in supervisory functions, verifications, onsite checks, inspections and investigations.
\n
Added by:
\n
XX. 2007.71.
\n
Amended by:
\n
X. 2011.31;
\n
XX. 2013.46;
\n
XXII. 2014.10;
\n
XXXI. 2017.56;
\n
LXXII.2021.22;
\n
XXIX.2025.16.
\n
INVESTMENT SERVICES or (c) allow inspectors or experts within the meaning of article 14 and auditors within the meaning of article 18 to carry out the verification or investigation.
\n
(4)Without prejudice to any other provision of this Act, the competent authority may request the cooperation of a European regulatory authority to verify information about investment firms, investment holding companies, mixed financial holding companies, financial institutions, ancillary services undertakings, mixed-activity holding companies or subsidiaries, including subsidiaries which are insurance companies, that are located in the territory of the European regulatory authority concerned, and such request shall be verified in accordance with sub-article (6).
\n
(5)Without prejudice to any other provision of this Act, a European regulatory authority may request the cooperation of the competent authority to verify information about investment firms, investment holding companies, mixed financial holding companies, financial institutions, ancillary services undertakings, mixed-activity holding companies or subsidiaries, including subsidiaries which are insurance companies, that are located in Malta, and such request shall be verified in accordance with sub-article (6).
\n
(6)Where a European regulatory authority makes a request in terms of sub-articles (4) and (5), the competent authority shall, within the framework of its powers: (a) carry out the verification itself; (b) allow the European regulatory authority who made that request to carry out such verification; (c) request an auditor or expert to carry out the verification impartially and to report the results promptly:
\n
Provided that for the purposes of paragraphs (a) and (c), the European regulatory authority that made the request shall be allowed to participate in the verification.
\n
(7)Where a European investment firm carries out its activities through a branch in Malta, the European regulatory authority of the home Member State may, after having informed the competent authority, carry out, itself or through intermediaries that it appoints for that purpose, inspections of such a branch and on-site checks of the information referred to in article 17(2A).
\n
(8)Without prejudice to sub-article (7), where Malta is the host Member State, the competent authority shall, for supervisory purposes and where the competent authority considers it to be relevant for reasons of stability of the financial system in Malta, have the power to INVESTMENT SERVICES carry out, on a case-by-case basis, on-site checks and inspections of the activities carried out by branches of European investment firms on its territory and require information from a branch about its activities:
\n
Provided that, before carrying out such checks and inspections, the competent authority shall, without delay, consult the European regulatory authority of the home Member State:
\n
Provided further that, as soon as possible following the completion of those on-site checks and inspections, the competent authority shall communicate to the European regulatory authority of the home Member State the information obtained and findings that are relevant for the risk assessment of the European investment firm concerned.
\n
Art. 17B
\n
17B. The competent authority may refuse to act on a request for cooperation in carrying out an investigation, onsite verification or supervisory function under article 17A of this Act or to exchange information with European regulatory authorities designated as contact points under Article 44 of the AIFM Directive, or with European regulatory authorities designated as contact points under Article 79(1) of the MIFID, or with European regulatory authorities designated under Article 101(1) of the UCITS Directive for the purpose of carrying out duties and exercising powers thereunder only where:
\n
Refusal to cooperate.
\n
Added by:
\n
XX. 2007.71.
\n
Amended by:
\n
X. 2011.32;
\n
XX. 2013.47;
\n
XIX. 2016.22;
\n
XXXI. 2017.57. (a) such an investigation, on-site verification, supervisory function or exchange of information might adversely affect the sovereignty, security or public policy of Malta; (b) compliance with the request is likely to affect adversely its own investigation, enforcement activities or, where applicable, any criminal investigation; (c) judicial proceedings have already been initiated in respect of the same actions and against the same persons before the courts of Malta; or (d) a final judgment has already been delivered in relation to such persons for the same actions in Malta:
\n
In the case of such a refusal, the competent authority shall notify the European regulatory authority and ESMA accordingly, providing as detailed information as possible for such refusal.
\n
Art. 17C
\n
17C. (1) Prior to granting a licence to an applicant which is (a) a subsidiary of a person holding an investment services licence or equivalent authorisation or of a market operator or of a credit institution authorised in another Member State or EEA State; or (b) a subsidiary of the parent undertaking of a person holding an investment services licence or an equivalent authorisation or of a credit institution authorised in another Member State or EEA State; or Inter-authority consultation prior to granting of a licence.
\n
Added by:
\n
XX. 2007.71.
\n
Amended by:
\n
XXXI. 2017.58.
\n
INVESTMENT SERVICES (c) controlled by the same natural or legal persons which control a holder of an investment services licence or the holder of an equivalent authorisation or a credit institution authorised in another Member State or EEA State, the competent authority shall consult with the relevant European regulatory authorities.
\n
(2)Prior to granting a licence to an applicant which is (a) a subsidiary of a credit institution or insurance undertaking authorised in another Member State or EEA State; or (b) a subsidiary of the parent undertaking of a credit institution or insurance undertaking authorised in another Member State or EEA State; or (c) controlled by the same person, whether natural or legal, who controls a credit institution or insurance undertaking authorised in another Member State or EEA State, the competent authority shall consult with the European regulatory authority responsible for the supervision of credit institutions or insurance undertakings.
\n
(3)Consultation between the competent authority and the European regulatory authorities shall in particular take place when assessing the suitability of the shareholders or members and the reputation and experience of persons who effectively direct the business involved in the management of another entity of the same group. The competent authority shall exchange all information that is of relevance to the other European regulatory authorities involved regarding the suitability of shareholders or members and the reputation and experience of persons who effectively direct the business, both for the granting of a licence as well as for the ongoing assessment of compliance with operating conditions.
\n
Referral to ESMA.
\n
Added by:
\n
XX. 2013.49.
\n
Art. 17D
\n
17D. The competent authority may refer to ESMA, situations where a request relating to one of the following has been rejected or has not been acted upon within a reasonable time: (a) to exchange information as provided for in article 17; (b) to carry out a supervisory activity, an on-site verification or an investigation, as provided for in article 17A; and (c) to seek authorisation for its officials to accompany those of the European regulatory authority as provided for in article 17A.
\n
Cooperation with ESMA.
\n
Added by:
\n
XX. 2013.49.
\n
Amended by:
\n
XXXI. 2017.59.
\n
Art. 17E
\n
17E. (1) The competent authority shall cooperate with ESMA for the purposes of the AIFM Directive, the MIFID, the MiFIR and the UCITS Directive in accordance with Regulation (EU) No 1095/ 2010.
\n
(2)In the case of a disagreement between the competent authority and a European regulatory authority on an assessment, INVESTMENT SERVICES action or omission pertaining to either authority, in areas where the AIFM Directive requires cooperation or coordination between authorities from more than one Member State, the competent authority may refer the matter to ESMA.
\n
(3)The competent authority shall, without delay, provide ESMA with all information necessary to carry out its duties under the AIFM Directive, the MIFID, the MiFIR and the UCITS Directive in accordance with Article 35 of Regulation (EU) No 1095/2010.
\n
CO-OPERATION WITH OVERSEAS REGULATORY AUTHORITIES AND OTHER BODIES
\n
Art. 17F
\n
17F. (1) Co-operation agreements with overseas regulatory authorities or other authorities, bodies and natural or legal persons in countries that are not Member States or EEA States may be entered into only if the inform ation disclosed is subject to guarantees of professional secrecy at least equivalent to those required under article 26. Such exchange of information must be intended for the performance of the functions of those overseas regulatory authorities or other authorities, bodies and natural or legal persons:
\n
Provided that the transfer of personal data to countries that are not Member States or EEA States shall be in accordance with the provisions of Chapter IV of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.
\n
(2)The competent authority may conclude cooperation agreements providing for the exchange of information with overseas regulatory authorities, other authorities or with bodies and natural or legal persons in countries that are not Member States or EEA States responsible for: (i) the supervision of credit institutions, other financial organisations, persons holding a licence, insurance undertakings, financial institutions and financial markets, including financial entities licensed to operate as central counterparties where central counterparties have been recognised under Article 25 of Regulation (EU) No. 648/2012; (ii) the liquidation and bankruptcy of persons holding a licence or an equivalent authorisation and other similar procedures; (iii) carrying out statutory audits of the accounts of persons holding a licence or an equivalent authorisation and other financial institutions, credit institutions and insurance undertakings, in the performance of their supervisory functions, or which administer compensation schemes, in the performance of their functions; (iv) overseeing the bodies involved in the liquidation and bankruptcy of persons holding a licence or Added by:
\n
XX. 2007.72.
\n
Co-operation with overseas regulatory authorities.
\n
Added by:
\n
XX. 2007.72.
\n
Re-numbered by:
\n
XX. 2013.48.
\n
Amended by:
\n
XXXI. 2017.60;
\n
V.2020.15;
\n
LXXII.2021.23.
\n
INVESTMENT SERVICES an equivalent authorisation and other similar procedures; (v) overseeing persons charged with carrying out statutory audits of the accounts of insurance undertakings, persons holding a licence or an equivalent authorisation, credit institutions and other financial institutions:
\n
Provided that, for the purposes of this paragraph, the term \"financial insitutions\" means both financial institutions as defined in point (26) of Article 4(1) of the CRR and as defined in point (14) of Article 4(1) of the IFR; (vi) overseeing persons active on emission allowance markets for the purpose of ensuring a consolidated overview of financial and spot markets; (vii) overseeing persons active on agricultural commodity derivatives markets for the purpose of ensuring a consolidated overview of financial and spot markets.
\n
(3)Where the information in the possession of the competent authority had originated from a European regulatory authority or an overseas regulatory authority, it may not be disclosed to an overseas regulatory authority or to any other third party without the express agreement of the European regulatory authority or the overseas regulatory authority which had transmitted it and, where appropriate, solely for the purposes for which that authority had given its agreement.
\n
(4)Without prejudice to the foregoing provisions of this article, at the request of, or for the purposes of assisting an overseas regulatory authority, the competent authority may exercise the powers listed in article 17(13), and for the purposes of this subarticle the words \"European regulatory authority\" shall be read as \"overseas regulatory authority\".
\n
Competent authority to inform the Commission and ESMA of general difficulties.
\n
Added by:
\n
XX. 2013.50.
\n
Art. 17G
\n
17G. The competent authority shall inform the Commission of the European Union and ESMA of any general difficulties which: (a) an investment services licence holder encounters in establishing itself or providing investment services and, or performing investment activities in any overseas country or territory; and (b) UCITS encounter in marketing their units in any overseas country or territory.
\n
DUTY OF AUDITORS Auditor’s duty to report.
\n
Amended by:
\n
XVII. 2002.150;
\n
XXII. 2014.11;
\n
LXXII.2021.24.
\n
Art. 18
\n
(1)An auditor of the holder of a licence shall have the duty to report immediately to the competent authority any fact or decision concerning that licence holder of which he becomes aware in his capacity as auditor of such licence holder which – INVESTMENT SERVICES (a) is likely to lead to a serious qualification or refusal of the auditor’s report on the accounts of such licence holder; (b) constitutes or is likely to constitute a material breach of this Act or any regulations or Rules issued thereunder, including the legal or regulatory requirements applicable to the licence holders in or under this Act; (c) may affect the continuous functioning of the licence holder; (d) may lead to the refusal to certify the licence holder’s accounts or to the expression of reservations; or (e) relates to any other matter which may be prescribed.
\n
(2)An auditor of the licence holder shall report to the competent authority any facts or decision as specified in sub-article
\n
(1)of any person having close links with such licence holder within the meaning in article 6, of which he becomes aware in his capacity as auditor of the licence holder or of the person having such close links.
\n
(3)No duty (including the duty of professional secrecy) to which an auditor of the holder of a licence may be subject, shall be regarded as contravened by reason of his communicating in good faith to the competent authority, whether or not in response to a request from it, any information or opinion on a matter of which the auditor has become aware in his capacity as auditor of that licence holder and which is relevant to any functions of the competent authority under the provisions of this Act or is required to be communicated by virtue of sub-article (1).
\n
(4)The matters prescribed for the purposes of sub-article (1)(d) may include matters related to persons other than the licence holder.
\n
(5)An auditor of a licence holder shall, in the absence of compelling reasons not to do so, simultaneously report the information specified in sub-articles (1) and (2), in accordance with the provisions of sub-articles (3) and (4), to the management body of the licence holder.
\n
(6)The competent authority may require the replacement of a person referred to in sub-article (1) if that person acts in breach of his obligations under paragraphs (a) to (d) of sub-article (1).
\n
APPEALS, REMEDIES, SANCTIONS AND CONFIDENTIALITY
\n
Art. 19
\n
19.(1) In this article the Financial Services Tribunal means the Tribunal established under article 21 of the Malta Financial Services Authority Act.
\n
(2)Subject to the provisions of this article, an appeal shall lie to the Tribunal with respect to: (a) any notice in terms of article 3(3);
\n
Appeals.
\n
Amended by:
\n
XVII. 2002.151;
\n
XII. 2006.63;
\n
XX. 2007.73;
\n
XVII. 2009.9;
\n
X. 2011.33;
\n
XX. 2013.51;
\n
LXXII.2021.25.
\n
INVESTMENT SERVICES (b) any failure to inform an applicant within the terms of article 6(6); (c) any administrative penalty imposed under article 16A; (d) any refusal, variation, cancellation or suspension of a licence under article 8(3); (e) any notice issued or any order made in terms of articles 10, 10A and 10C; (f) any decision concerning an advertisement under article 11; (g) any punishment or penalty imposed under article 12(5); (h) any directive given under article 15; or Unenforceability of certain agreements. (i) any measure taken in terms of article 15A(1), (2) and (4); (j) any measure taken in terms of paragraphs (a) to (l) of article 16AA(1).
\n
(3)The provisions of article 21 of the Malta Financial Services Authority Actshall apply mutatis mutandis to appeals that may be brought before the Tribunal under this article.
\n
(4)In pursuance of the UCITS Directive, the Tribunal referred to in this article shall also have the competence to hear appeals by European m anagemen t companies , ex er c ising a f re e do m of establishment or a freedom to provide services in Malta, from decisions of the competent authority to take measures for breaches incurred by European management companies and the phrases \"aggrieved person\" and \"appellant\" in article 21 of the Malta F i n a n c i a l S e r v i c e s A u t h o r i t y A c t s h al l i n c l u d e E u r o p e a n management companies.
\n
Art. 20
\n
An investment agreement which is entered into (a) by a person in the course of providing an investment service in contravention of the provisions of article 3 of this Act; or (b) by the holder of an investment services licence or by an exempted person in consequence of anything said or done by a person in the course of providing an investment service in contravention of the provisions of article 3, shall be unenforceable against the other party; and such other party shall be entitled to recover any money paid, or other property transferred by him under the agreement, or where such property cannot be so recovered, such party shall be entitled to have it replaced by its value at the time of the agreement, together with compensation for any loss sustained by him in consequence of such payment or transfer or the non-recovery of the property transferred and any profits that may have accrued as a result of that money or other property having been transferred by him:
\n
Provided that where on demand for a recovery under this article, the court is satisfied that - INVESTMENT SERVICES (i) in a case falling under paragraph (a), the person therein mentioned reasonably believed he was not contravening the provisions of the said article 3; or (ii) in a case falling under paragraph (b), the licence holder or exempted person neither knew nor ought to have known that the agreement was entered into as mentioned in that paragraph, it may allow an investment agreement to which this article applies to be enforced and the money or property paid or transferred thereunder to be retained.
\n
Art. 21
\n
21.(1) If, on an application by the competent authority made to the Civil Court, First Hall, the said court is satisfied (a) that there is reasonable likelihood that a person will contravene any of the provisions of articles 3, 4 or 11 or of any regulations, Investment Services Rules and Conduct of Business Rules issued under it, or will contravene or fail to comply with any condition, obligation, requirement, Investment Services Rules, directive, or order made or given under any of the provisions of this Act; or (b) that a person has contravened any such provision or has contravened or failed to comply with any such condition, obligation, requirement, Investment Services Rules, Conduct of Business Rules, directive, or order and that steps could be taken to remedy the contravention or failure, the court may give such orders as it may deem appropriate to restrain the contravention or, as the case may be, to require the person referred to in paragraph (a) or (b), or any other person who appears to the court to have been knowingly concerned in the contravention, to take such steps as the court may direct.
\n
(2)If, on an application made under sub-article (1), the court is satisfied that a person has entered into any transaction in contravention of any of the provisions of articles 3, 4 or 11, the court may order that person and any other person who appears to the court to have been knowingly concerned in the contravention to take such steps as the court may direct for restoring the parties to the position in which they were before the transaction was entered into.
\n
(3)If, on an application made under sub-article (1), the court is further satisfied that (a) profits have accrued to any person as a result of the contravention; or (b) an investor has suffered loss or been otherwise adversely affected as a result of that contravention, the court may order the person responsible for the contravention to pay into court such sum as appears to it to be just having regard to the extent of the profit, loss or adverse effect as aforesaid, and Powers of the court in the case of a likely contravention.
\n
Amended by:
\n
XXIV.1995.362;
\n
XX. 2007.74;
\n
XXXI. 2017.61..
\n
INVESTMENT SERVICES order such sum to be paid out as the court may direct to the persons who have entered into transactions as a result of which profits have accrued or losses or adverse effects have been suffered as aforesaid.
\n
(4)For the purposes of this article the court may order the production by any person of such accounts and the provision of such information, and verified in such manner, as the court may deem appropriate.
\n
(5)The provisions of this article shall be without prejudice to any right of any aggrieved person to bring proceedings directly in respect of any right such person may otherwise have independently of the competent authority.
\n
Offences.
\n
Amended by:
\n
XX. 2007.75.
\n
Art. 22
\n
22.(1) Any person who contravenes or fails to comply with any of the provisions of articles 3, 4, 9, 10, 11, 13, 15 or 26 or of article 13 as applied by article 14, or of articles 13, 14 or 15 as applied by articles 17 and 17D, or of any court order made under article 21 or of any regulations made under articles 12 or 31, or contravenes or fails to comply with any condition, obligation, requirement, directive or order made or given under any of the provisions of this Act, shall be guilty of an offence.
\n
(2)Any person who for the purposes of, or pursuant to, any of the provisions of this Act or of any regulations made thereunder, or any condition, obligation, requirement, directive or order made or given as aforesaid, furnishes information or makes a statement which he knows to be inaccurate, false or misleading in any material respect, or recklessly furnishes information or makes a statement which is inaccurate, false or misleading in any material respect, shall be guilty of an offence.
\n
(3)Any person who is knowingly a party to the carrying on of any investment service or of any activity by a collective investment scheme with a fraudulent intent or for a fraudulent purpose, shall be guilty of an offence.
\n
(4)Any person who by any statement, promise or forecast which he knows to be misleading, false or deceptive, or by any dishonest concealment of material facts, or by the reckless making (whether dishonest or otherwise) of any statement, promise or forecast which is misleading, false or deceptive, induces or attempts to induce another person to enter into or offer to enter into an investment agreement, shall be guilty of an offence.
\n
(5)Any person who with intent to avoid detection of the commission of an offence under this Act removes, destroys, conceals or fraudulently alters any book, document or other paper, shall be guilty of an offence.
\n
(6)Any person who intentionally obstructs a person exercising rights conferred by this Act shall be guilty of an offence.
\n
Penalties.
\n
Amended by:
\n
XX. 2007.76;
\n
L.N. 425 of 2007;
\n
X. 2011.34.
\n
Art. 23
\n
23.A person guilty of an offence under the provisions of article 22 shall be liable on conviction to a fine (multa) not exceeding four hundred and sixty-six thousand euro (€466,000) or to a term of imprisonment not exceeding four years, or to both such fine INVESTMENT SERVICES and imprisonment, unless such fine or term of imprisonment is otherwise imposed under article 12(5).
\n
Art. 24
\n
24.(1) No proceedings for an offence under this Act shall be commenced without the consent of the Attorney General.
\n
Criminal proceedings.
\n
(2)The provisions of this Act shall not affect any criminal proceedings that may be competent under any other law.
\n
Art. 25
\n
25.(1) If it appears to the competent authority that a person wh o h o l ds o r w h o h e l d a l i c e n c e , o r an y o t he r p e r s o n, ha s contravened any of the provisions of this Act or of any regulations made under this Act or has contravened or failed to comply with any condition, obligation, requirement, Investment Services Rules, Conduct of Business Rules, directive, or order made or given under any of the provisions of this Act, the competent authority may publish a statement to that effect.
\n
Public statement as to person's misconduct.
\n
Amended by:
\n
XII. 2006.64;
\n
XX. 2007.77;
\n
XXXI. 2017.62.
\n
(2)Nothing in this article shall restrict or otherwise prejudice the powers of the competent authority under article 15(4).
\n
Art. 26
\n
26.(1) Other than for the proper discharge of their duties or functions under this Act or any other Act, or as may be otherwise provided in any other law, information obtained by the competent authority or by its officers, employees or agents, as well as by inspecto rs, audi tors and experts engag ed by th e com petent authority for the purposes of, or pursuant to, any of the provisions of this Act, or of any regulations, Investment Services Rules or Conduct of Business Rules made thereunder, or in the discharge of their duties or any functions, shall be treated as confidential and protected by the duty of professional secrecy, and shall not be disclosed to any other person, except in the following cases: (a) where the disclosure is required for the detection, prevention or prosecution of criminal offences under the criminal provisions of this Act or any other Act; (b) where the information is disclosed by the competent authority with a view to the institution of, or otherwise for the purposes of any proceedings before any court or tribunal; (c) where the information is disclosed in civil or commercial proceedings in relation to the bankruptcy or dissolution and consequential winding up by the Court of a licence holder, provided such information does not concern third parties and is necessary for the carrying out of the proceedings, or is disclosed to an overseas body responsible for the liquidation and bankruptcy of a person holding a licence or an equivalent authorisation from a European regulatory authority or an overseas regulatory authority; (d) where a summary or collection of the information is prepared or supplied in such a way as not to enable the identity of any persons, including UCITS, their management companies and custodians to whom the information relates to be ascertained;
\n
Confidentiality.
\n
Amended by:
\n
XVII. 2002.152.
\n
Substituted by:
\n
IV. 2003.176;
\n
XII. 2006.65.
\n
Amended by:
\n
XX. 2007.78;
\n
X. 2011.35;
\n
XX. 2013.52;
\n
XXII. 2014.12;
\n
XXXI. 2017.63;
\n
V.2020.16;
\n
XLVI.2021.58;
\n
LXXII.2021.26.
\n
INVESTMENT SERVICES (e) where the information is disclosed to an auditor where such disclosure would assist him in the exercise of his functions under article 18; (f) where the information is provided to the Central Bank of Malta in the exercise of its functions in terms of law; (g) where the information is provided to such other local or European or overseas regulatory, judicial or enforcement authorities in the pursuance of serious concerns of a regulatory or criminal nature; and (h) where the competent authority publishes the outcome of stress tests in accordance with Article 100 of the CRD or Article 32 of Regulation (EU) No 1093/2010 and, or transmits the results to the EBA:
\n
Provided that this article shall not prevent the competent authority from exchanging or transmitting confidential information in accordance with the AIFM Directive, the BRRD, the CRD, the CRR, the MIFID, the MiFIR, the UCITS Directive, the IFD and the IFR, and with other Directives of the European Union applicable to licence holders, credit institutions, pension funds, insurance and reinsurance intermediaries, insurance undertakings, regulated markets or market operators, including the exchange or transmission of confidential information to ESMA or the ESRB:
\n
Provided further that this article shall not prevent the competent authority fro m usin g such inform ati on for other purposes where the body or person communicating information to the competent authority consents thereto. (1A) Notwithstanding the provisions of sub-article (1), information obtained by the competent authority or by its officers, employees or agents, as well as by inspectors, auditors and experts, who are or were engaged by the competent authority, in the course of their duties and, or pursuant to the IFR or the IFD as transposed in national law, shall be treated as confidential and protected by the duty of professional secrecy, and shall not be disclosed to any other person, except in the following cases: (a) where it is necessary for the proper discharge of their duties or functions under this Act or any other Act, or as may be otherwise provided in any other law; (b) where the information is disclosed in summary or aggregate form, provided that individual investment firms or persons cannot be identified, without prejudice to cases covered by criminal law; (c) in civil or commercial proceedings, where the investment firm to which the information relates has been declared bankrupt or is being compulsorily wound up, such information does not concern third parties and the disclosure of such information is necessary for carrying out those proceedings; (d) in proceedings initiated under article 19;
\n
INVESTMENT SERVICES (e) to monitor the prudential rules set out in the IFD as transposed in national law and in the IFR; (f) to impose penalties and other administrative measures; (g) in an appeal against a decision of the competent authority, including court proceedings; (h) to the Commission of the European Union when the information is necessary for the exercise of the powers of the Commission of the European Union, or (i) to the EBA, ESMA, the ESRB, central banks of the Member States or EEA States, the European System of Central Banks and the European Central Bank, in their capacity as monetary authorities, and, where appropriate, public authorities responsible for overseeing payment and settlement systems, where that information is necessary for the performance of their tasks. (1B) Natural and legal persons and other bodies, other than those mentioned in sub-article (1A), that receive information pursuant to the IFR or the IFD as transposed in national law shall only use that information for the purposes expressly provided by the competent authority or by law.
\n
(2)Without prejudice to the cases covered by criminal law, any confidential information received by bodies or natural or legal persons within the meaning of Article 81 of the MiFID, Article 15 of the IFD, and of Article 102 of the UCITS Directive shall only be used in the performance of their duties and for the exercise of their functions. In addition, such information is to be used specifically for the purpose for which such information was provided to them and, or in the context of administrative or judicial proceedings specifically related to the exercise of those functions:
\n
Provided that where a body or person communicating information to the competent authority consents thereto, such information may be used by the competent authority for other purposes.
\n
(3)The provisions of this article and of articles 17 and 17F of this Act shall not preclude the competent authority from transmitting to the Central Bank of Malta, the European System of Central Banks and the European Central Bank, in their capacity as monetary authorities, and, where appropriate, to recognised clearing houses or other similar body performing clearing or settlement services, to bodies which administer compensation schemes, and to other public authorities responsible for overseeing payment and settlement systems, confidential information intended for the performance of their functions. Likewise, the competent authority shall be entitled to the receipt of such information as it may require for the purpose of performing its functions under the MIFID and the MiFIR:
\n
Provided that where the exchange of information is carried out in terms of the UCITS Directive, the express consent of the European INVESTMENT SERVICES regulatory authority shall be obtained.
\n
(4)Where an officer or an employee of a licence holder has reason to believe that a transaction or a proposed transaction could involve money laundering or the funding of terrorism, he shall act in compliance with the reporting and other obligations set out in the regulations made under article 12 of the Prevention of Money Laundering Act and any procedures and guidance issued thereunder, and such disclosure shall not constitute a breach of confidentiality.
\n
MISCELLANEOUS Exclusion of liability.
\n
Amended by:
\n
XXV.1995.432;
\n
XX. 2007.79;
\n
XXXI. 2017.64.
\n
Notices, etc.
\n
Amended by:
\n
XX. 2007.80;
\n
XXXI. 2017.65.
\n
Art. 27
\n
Deleted by Act V.2020.17.
\n
Art. 28
\n
28.A notice or other document to be given or served under this Act, or any regulations, Investment Services Rules or Conduct of Business Rules made thereunder, shall be deemed to have been duly given or served on a person if (a) it has been delivered to him; or (b) it has been left at the address furnished by him to the competent authority, or to his last known address; or (c) if it has been sent to him by post or by telefax at any of the aforesaid addresses; or (d) in the case of a body of persons, whether corporate or unincorporate, or of a scheme or of a trust, if it has been given or served in any of the manners aforesaid to or on a secretary, clerk, manager, trustee or their equivalent, or to any member of the governing body or an appointed representative.
\n
Application of Exchange Control Act.
\n
Social security and import duty exemptions in respect of licence holders and expatriate staff.
\n
Art. 29
\n
(Deleted by: XX. 2007.81.).
\n
Art. 30
\n
30.(1) Expatriate officers and employees of any licence holder and the licence holder shall be exempt from the provisions of the Social Security Act, in respect of remuneration paid or attributed to such officers and employees by the licence holder for services rendered exclusively in a managerial capacity or in a function requiring special expertise which is not generally available in Malta.
\n
(2)In order to obtain the exemption provided for by sub-article
\n
(1), the licence holder shall apply to the Department for Social Security identifying the officers and employees concerned together with such proof as the department may require that the conditions of that sub-article are satisfied.
\n
(3)Personal belongings and effects of an expatriate officer or employee of a licence holder imported by him into Malta, not later than six months from his first taking up residence, shall be exempt from customs duty:
\n
INVESTMENT SERVICES Provided that duty shall become payable on anything imported free of duty and subsequently sold, assigned or otherwise transferred to a person resident in Malta.
\n
(4)Furniture, equipment and other material required by a licence holder and imported into Malta for its own use and purpose shall be exempt from customs duty:
\n
Provided that duty shall become payable on anything imported free of duty and subsequently sold, assigned or otherwise transferred to a person resident in Malta.
\n
(5)For the purposes of this article, \"expatriate\" means an individual who is not a national of Malta, who has been posted to Malta from abroad or recruited directly from abroad in order to be employed by a licence holder, whose mission in Malta is of a temporary nature and who has maintained the centre of his economic interests outside Malta.
\n
Art. 31
\n
31.(1) A body corporate, formed, incorporated or registered in a country outside Malta (hereinafter referred to as \"foreign body corporate\"), and carrying on the business of a collective investment scheme, which is similar in nature to a body corporate as known under the laws of Malta (hereinafter referred to as \"local body corporat e\"), and which would, if it were such a local body corporate qualify to be authorised or recognised as a collective investment scheme under this Act, may, subject to the specific approval and authorisation of the competent authority, be continued as a collective investment scheme under this Act and under the applicable laws of Malta.
\n
(2)The continuance of a foreign body corporate shall not take place unless such continuance (or similar process, including conversion) is permitted by the applicable laws of the foreign jurisdiction and is in accordance with such provisions thereof as may bring about such continuance (or similar process).
\n
(3)Continuance may only take place if it is allowed by the statute or equivalent instrument of the foreign body corporate to so continue, and if it is approved in accordance with the procedure, if any, established therein or in the applicable law of the foreign jurisdiction for this purpose.
\n
(4)The continuance of a foreign body corporate as a local body corporate shall be effected by an instrument of continuance containing, in addition to the declarations relating to the continuance, the equivalent of a memorandum and articles or equivalent constitutive document as may be required by this Act or other applicable laws of Malta for the registration of such body corporate in accordance with the type of local body corporate in which it is to be continued, and showing on the face of it that the continuance has been approved as provided in this article.
\n
(5)The delivery of the instrument of continuance to the Registrar of Companies shall, for all purposes of the laws of Malta, be equivalent to the delivery of a deed of partnership or of a memorandum and articles of a company, as the case may be, as if it were a local body corporate to be registered under this Act; and the Continuance of foreign body corporate.
\n
Substituted by:
\n
XVII. 2002.153.
\n
INVESTMENT SERVICES Registrar shall treat it accordingly.
\n
(6)Upon the delivery of the instrument of continuance and its registration under this Act the body corporate shall cease to be a body corporate under the jurisdiction of its previous registration and shall continue its corporate existence under the laws of Malta, and shall retain all its assets, rights and liabilities.
\n
(7)Where continuance as aforesaid entitles or requires the body corporate to redeem the interest of dissenting persons whose approval is required, such interest may be redeemed on such terms as may be agreed or as the courts in Malta may, on demand of either party, establish.
\n
(8)(a) A local body corporate carrying on business as a collective investment scheme authorised or otherwise falling within the meaning of this Act, may, subject to the specific approval and authorisation of the competent authority, be continued as a foreign body corporate, and the foregoing provisions of this article shall apply mutatis mutandis. (b) A local body corporate shall not cease to be a local body corporate subject to Maltese jurisdiction until the Registrar has received notice in writing of the continuance (or other process) made as aforesaid and unless and until, being satisfied that the requirements of this article have been complied with, the Registrar has registered such continuance and has, in consequence thereof and by virtue of this article, struck the name of the company off the register.
\n
(9)The Minister may, acting on the advice of the competent authority, make regulations for the better carrying out of the provisions of this article.
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Inclusion of holding companies in supervision of compliance with the group capital test.
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Added by:
\n
Art. 32
\n
Investment holding companies and mixed financial holding companies shall be included in the supervision of compliance with the group capital test.
\n
LXXII.2021.27.
\n
Assessment of third country supervision and other supervisory techniques.
\n
Added by:
\n
LXXII.2021.27.
\n
Art. 33
\n
(1)Where two or more European investment firms that are subsidiaries of the same parent undertaking, the head office of which is in a third country, are not subject to effective supervision at group level, the competent authority shall, together with any other European regulatory authority involved, assess whether the European investment firms are subject to supervision by the third-country supervisory authority which is equivalent to the supervision set out in the IFD as transposed in national law and in Part One of the IFR.
\n
(2)Where the assessment referred to in sub-article (1) concludes that no such equivalent supervision applies, the competent authority shall adopt appropriate supervisory techniques which achieve the objectives of supervision in accordance with Article 7 or 8 INVESTMENT SERVICES of the IFR. Those supervisory techniques shall be decided by the competent authority where it would have been the group supervisor had the parent undertaking been established in the European Union, after consulting the European regulatory authorities involved. Any measures taken pursuant to this paragraph by the competent authority shall be notified to the European regulatory authorities involved, to EBA and to the Commission of the European Union.
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(3)Without prejudice to sub-article (2), where the competent authority would have been the group supervisor had the parent undertaking been established in the European Union, it may require the establishment of an investment holding company or mixed financial holding company in the European Union and apply Article 7 or 8 of the IFR to that investment holding company or mixed financial holding company.
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Art. 34
\n
Where the parent undertaking of an investment firm licensed under this Act is a mixed-activity holding company, the competent authority may supervise transactions between such investment firm and the mixed-activity holding company and the subsidiaries of the latter, and require the said investment firm to have in place adequate risk management processes and internal control mechanisms, including sound reporting and accounting procedures to identify, measure, monitor and control those transactions.
\n
Supervision of mixed-activity holding company.
\n
Added by:
\n
FIRST SCHEDULE Amended by:
\n
L.N. 46 of 1999;
\n
XVII. 2002.154;
\n
XIII. 2004.80.
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Substituted by:
\n
XX. 2007.82.
\n
Amended by:
\n
L.N. 251 of 2013;
\n
L.N. 147 of 2014;
\n
XXXI. 2017.66. (Article 2) Investment Services and Activities 1.
\n
Reception and Transmission of Orders in relation to one or more instruments The reception from a person of an order to buy, sell or subscribe for instruments and the transmission of that order to a third party for execution.
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2.
\n
Execution of orders on behalf of clients Acting to conclude agreements to buy or sell one or more instruments on behalf of clients and includes the conclusion of agreements to sell instruments issued by an investment services licence holder or a credit institution at the moment of their issuance.
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3.
\n
Dealing on own account Trading against proprietary capital resulting in conclusion of transactions in one or more instruments.
\n
4.
\n
Management of Investments Managing or agreeing to manage assets belonging to another person if those assets consist of or include one or more instruments LXXII.2021.27.
\n
Substituted by:
\n
XXXI. 2017.66.
\n
INVESTMENT SERVICES or the arrangements for their management are such that the person managing or agreeing to manage those assets has a discretion to invest any of those assets in one or more instruments.
\n
Management of Investments may also constitute the selection or agreement to select, on a discretionary basis, instruments by reference to which benefits are wholly or partly payable under a contract of insurance falling within class III - linked long term of the Second Schedule to the Insurance Business Act.
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Collective portfolio management of assets, belonging to a collective investment scheme, where the arrangements for their management are such that the person managing or agreeing to manage those assets has discretion to invest in any movable and, or immovable property.
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5.
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Trustee, Custodian or Nominee Services (a) Acting as trustee, custodian or nominee holder of an instrument, or of the assets represented by or otherwise connected with an instrument, where the person acting as trustee, custodian or nominee holder is so doing as part of his providing any investment service in paragraphs 1, 2, 3, 4 or 6 of this Schedule;
\n
Provided that for the purposes of this sub-paragraph any person who is authorised or otherwise exempt from authorisation in the terms of article 43 or 43A of the Trusts and Trustees Act shall not by virtue of holding such assets be required to have a licence in terms of this sub-paragraph if such person does not provide an investment service and delegates all activities which are investment services in terms of this Act to a person who is licensed to provide such services; or (b) Holding an instrument or the assets represented by or otherwise connected with an instrument as nominee, where the person acting as nominee is so doing on behalf of another person who is providing any investment service in this Schedule or on behalf of a client of such person, and such nominee holding is carried out in relation to such investment service:
\n
Provided that for the purposes of this paragraph any person who is authorised or otherwise exempt from authorisation in the terms of article 43 or 43A of the Trusts and Trustees Act shall not by virtue of holding such assets be required to have a licence in terms of this Act. (c) Acting as trustee or custodian in relation to a collective investment scheme.
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6.
\n
Investment Advice Giving, offering or agreeing to give, to persons in their capacity as investors or potential investors or as agent for an investor or potential investor, a personal recommendation in respect of one or more transactions relating to one or more instruments.
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INVESTMENT SERVICES For the purposes of this paragraph, a \"personal recommendation\" shall mean a recommendation presented as suitable for the person to whom it is addressed, or which is based on a consideration of the circumstances of that person, and must constitute a recommendation to take one of the following steps: (a) to buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular instrument; (b) to exercise or not to exercise any right conferred by a particular instrument to buy, sell, subscribe for, exchange, or redeem an instrument; (c) to select one or more instruments by reference to which benefits are wholly or partly payable under a contract of insurance falling within the meaning of class III - ‘linked long term’, of the Second Schedule to the Insurance Business Act.
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A recommendation is not a personal recommendation if it is issued exclusively through distribution channels or to the public.
\n
7.
\n
Underwriting of instruments and, or placing of instruments on a firm commitment basis The underwriting or placing of instruments such that the person providing the service assumes the risk of bringing a new securities issue to the market by buying the issue from the issuer thereby guaranteeing the sale of a certain number of shares to investors 8.
\n
Placing of Instruments without a firm commitment basis The marketing of newly-issued securities or of securities which are already in issue but not listed, to specified persons and which does not involve an offer to the public or to existing holders of the issuer’s securities’ - without assuming the risk of guaranteeing the sale of a certain number of shares by buying the relative securities from the issuer.
\n
9.
\n
Operation of a Multilateral Trading Facility The operation of a multilateral system which brings together multiple third party buying and selling interests in instruments - in the system and in accordance with non-discretionary requirements in a way that results in a contract.
\n
10.The reception, transmission, and submission of a bid relating to emission allowances The reception, transmission, and submission of a bid by a person on any auction platform which auctions emission allowances within the meaning of Commission Regulation (EU) No 1031/2010 of 12 November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emissions allowances trading within the Community, as may be amended from time to time.
\n
Added by:
\n
XXXI. 2017.66.
\n
Amended by:
\n
L.N. 191 of 1998;
\n
XVII. 2002.155;
\n
L.N. 318 of 2006.
\n
Substituted by:
\n
XX. 2007.83.
\n
Amended by:
\n
XXXI. 2017.67.
\n
11.
\n
INVESTMENT SERVICES Operation of an Organised Trading Facility The operation of an OTF whereby multiple third-party buying and selling interests in bonds, structured finance products, emission allowances or derivatives are able to interact in the system in a way that results in a contract.
\n
SECOND SCHEDULE (Article 2) Instruments 1.
\n
Transferable Securities.
\n
Those classes of securities which are negotiable on the capital market and include: (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depository receipts in respect of shares; (b) bonds or other forms of securitised debt, including depository receipts in respect of such securities; (c) any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures.
\n
2.
\n
Money Market Instruments.
\n
Those classes of instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers and excluding instruments of payment.
\n
3.
\n
Units in collective investment schemes.
\n
Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivative instruments, financial indices or financial measures which may be settled physically or in cash.
\n
5.
\n
Options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;
\n
6.
\n
Options, futures, swaps, and any other derivative contracts relating to commodities, that can be physically settled provided that they are traded on a regulated market, within the meaning of the Financial Markets Act a Multilateral Trading Facility, or an Organised Trading Facility, except for wholesale energy products INVESTMENT SERVICES traded on an Organised Trading Facility that must be physically settled;
\n
7.
\n
Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled, are not for commercial purposes, are not included in article 6 of this S chedule, and, which h av e the characteristics of other derivative instruments.
\n
8.
\n
Derivative instruments for the transfer of credit risk.
\n
9.
\n
Rights under a contract for differences or under any other contract the purpose or intended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in the value or price for property of any description or in an index or other factor designated for that purpose in the contract.
\n
10.Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event, as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Schedule, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, OTF, or an MTF;
\n
Substituted by:
\n
XXXI. 2017.67.
\n
11.Certificates or other instruments which confer property rights in respect of any instrument falling within this Schedule.
\n
12.Foreign exchange acquired or held for investment purposes.
\n
13.Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2 0 0 3 / 8 7 / E C (Emissions Trading Scheme).
\n
Added by:
\n
XXXI. 2017.67.
\n
THIRD SCHEDULE Added by:
\n
XXXI. 2017.68. (Article 2) Ancillary Services 1.
\n
Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash, collateral management and excluding maintaining securities accounts at the top tier level;
\n
2.
\n
Granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction;
\n
3.
\n
Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings;
\n
4.
\n
Foreign exchange services where these are connected to the INVESTMENT SERVICES provision of investment services;
\n
5.
\n
Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments;
\n
6.
\n
Services related to underwriting;
\n
7.
\n
Investment services and activities as well as ancillary services of the type included under Section A or B of Annex 1 related to the underlying of the derivatives included under points
\n
(5), (6), (7) and (10) of Section C of MIFID where these are connected to the provision of investment or ancillary services.