Chapter 512 – Small Business Act

SMALL BUSINESS

CHAPTER 512

SMALL BUSINESS ACT To enhance the operational environment for medium and small enterprises in order to facilitate their setting up and growth. It seeks to identify those areas where the existing regulatory environment can be improved in order to provide solutions that will benefit enterprises and make it easier for them to operate. It further sets up the Enterprise Consultative Council and the College of Regulators, two advisory bodies, which aim to provide a forum for consultation and social dialogue, advise Government on challenges faced by the business enterprise, address grievances which emanate from the business enterprise and come up with remedial action.

1st October, 2011;

1st January, 2015 * 21st April, 2017 † ACT XI of 2011 , as amended by Acts XVIII of 2015 , XXV of 2015 , XXVII of 2016. XII of 2017 and XXII of 2021.

PART I

Definitions and Declaration of Principles

Art. 1

The short title of this Act is the Small Business Act.

Short title.

Art. 2

Amended by:

XXV. 2015.41;

XXVII. 2016.6.

XII. 2017.2;

XXII.2021.2.

In this Act, unless the context otherwise requires: "business support measures" means any initiatives such as grants, rebates, exemptions and other forms of facilitation meant to make it easier for businesses to start up and operate; "central entity" means an entity identified by article 5; "College" means the College of Regulators established by article 13; "consultation" means the seeking and giving of advice, information or opinion; "Council" means the Enterprise Consultative Council established by article 10(1); "customer satisfaction survey" is an exercise meant to analyse customer satisfaction and establish customer needs and expectations in order to identify any shortcomings or possible improvements in the service delivery; "explanatory notes" means a document prepared by the department or other entity submitting an instrument to Parliament or the House of Representatives that explains in plain terms what the instrument seeks to achieve and is meant to address, it is *See article 1(2) of the Act, as originally enacted, and Legal Notice 410 of 2011, which brought into force the provisions of the Act, except articles 3(2)(a) and (b), 4, 13, 15 and 16 thereof; and Legal Notice 1 of 2015 which brought into force article 3(2)(a) and (b) and article 4. † Articles 13, 15 and 16 were brought into force as from 21st April, 2017 by Legal Notice 114 of 2017.

SMALL BUSINESS published and attached with the Act or Legal Notice but does not have legal standing; "government agency" means a body listed in the Fourth Schedule to the Public Administration Act; "government department" means any entity in the public sector that is listed in the Second Schedule to the Public Administration Act; " g o v e r n m e n t e n t i t y " m e a n s a n o rg a n i z a t i o n , n o t b e i n g a government department, a government agency or a commercial partnership, in which government has a controlling interest, whether or not such an organization is established by law; "instrument" means both primary and subsidiary legislation, including a bill which has not yet become law, and the transposition of a European Union Directive into Maltese law; "the Malta Enterprise" means the entity set up in terms of the Malta Enterprise Act; "the Minister" means the Minister responsible for the economy; "the National Statistics Office" means the Office set up under the Malta Statistics Authority Act; "public sector entities offering services to business" means the Authority responsible for Planning, the Authority responsible for the Environment and Resources, Jobsplus, the Commissioner for Revenue, the Department responsible for Commerce, the Malta Enterprise, the Regulator responsible for Energy and Water Services, the Authority responsible for Medicines, the Authority for Competition and Consumer Affairs, the Authority for Communications, the Customs Department, the Authority responsible for Financial Services, the Authority responsible for Gaming, the Registry of Companies Agency, Business First, Authority responsible for Transport, and any other entity as may be identified by the Minster from time to time; "the Small Business Advisory Committee" means the body established by article 10(6); "SME" means small and medium enterprises as defined in Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises;

II; "SME Test" means the impact assessment as set out in Schedule "user guidelines" means a document prepared by the department or other entity that intends to enforce a new instrument in order to explain to the public in plain terms what will be required to abide by the provisions of the law, and what will be expected of it to ensure compliance.

SMALL BUSINESS

PART II

Functions of government departments and entities which relate to business

Art. 3

General functions attributed to a government department, government entity or government agency.

Provided that no instrument, to which this sub-article applies, may come into force before the lapse of the two months referred to in this paragraph; (c) draw up explanatory notes in terms of Schedule III and ensure that they are published concurrently with, and attached to, the instrument; (d) compile and publish User’s Guidelines to explain the requirements being imposed in any new instrument in accordance with paragraph (b), in sufficient time before the coming into force of such instrument to facilitate compliance; and (e) compile basic information on all pertinent rules and regulations within its remit as well as of business facilitation measures relevant to the setting up and running of an enterprise, and make this information easily available.

Art. 4

Amended by:

XVIII. 2015.2.

Substituted by:

XXII.2021.3.

SMALL BUSINESS outcome of a SME Test which shall be carried out by the government department, government entity or government agency concerned following the procedure set out under Schedule II.

Central entity.

Art. 5

Function related to the provision of information.

Art. 6

In its function to provide information in terms of article 3(2)(e), a government department, government entity or government agency shall: (a) organise all information within its remit related to the services provided by Government and information required by Government, which is necessary for the set up of an enterprise in Malta or for an enterprise to operate and maintain an existing business in Malta;

SMALL BUSINESS (b) provide the information collated under paragraph (a), to the Malta Enterprise or to such other entity in terms of article 8, in both official languages, and in a form to facilitate its communication by electronic means; (c) keep the information updated at all times and communicate such updates to the Malta Enterprise at once.

Art. 7

Functions attributed to public sector entities offering services to business.

Art. 8

Further to the fulfilment of the powers, functions and responsibilities attributed to Malta Enterprise under its legislation and any legislation concerning its area of competence, the Malta Enterprise, or such other entity so appointed by the Minister for such purpose, shall make available to the public all the information which it collects from the government department, government entity or government agency in terms of article 6(b), ensuring that this represents a complete reference of all Government imposed obligations and support measures applicable to businesses.

Moreover it shall make this information available through a website which it shall create for such a purpose, and shall keep the information on the website updated at all times. This information will not replace the actual legislation or regulation.

Centralised information centre.

Art. 9

Promotion of code of ethics.

PART III

Establishment of bodies Establishment and composition of the Enterprise Consultative Council.

Amended by:

XVIII. 2015.3;

XII. 2017.3;

XXII.2021.4.

Art. 10

Art. 11

Functions of the Council.

SMALL BUSINESS (d) promote synergies in the application of government policy within the Administration; and (e) undertake research work in-house, outsourcing, on relevant issues. or through

Establishment of Council Secretariat.

Amended by:

XVIII. 2015.4;

XII. 2017.4.

Art. 12

Establishment of College of Regulators.

Amended by:

XXV. 2015.41;

XII. 2017.5;

XXII.2021.5.

Art. 13

Art. 14

SMALL BUSINESS assign to the College from time to time.

Meetings and reporting.

Amended by:

XII. 2017.6;

XXII.2021.6.

Art. 15

or through The College shall: (a) meet at least once every four months or more frequently as may be deemed necessary by the College; (b) report to the Minister once a year on the work carried out; and (c) publish an annual report which shall include a general report of developments during the period to which it relates in respect of matters discussed during meetings.

College Secretariat.

Amended by:

XVIII. 2015.5;

XII. 2017.7;

XXII.2021.7.

Art. 16

PART IV

Miscellaneous Power to make regulations.

Substituted by:

XXII.2021.8.

Art. 17

The Minister has the power to make regulations generally: (a) to amend, cancel or substitute any of the Schedules to this Act; and (b) for giving effect to the provisions of this Act, and for the better carrying out of the provisions and objects of this Act..

Exemption.

Art. 18

SMALL BUSINESS

Art. 19

Nomination of SME Envoy.

Substituted by:

XVIII. 2015.6;

XXII.2021.9.

SMALL BUSINESS Schedule I (Article 4) Impact Assessment Framework Form Impact Assessment Framework Form for primary legislation SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS Impact Assessment Framework Form for subsidiary legislation SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS Schedule II (Article 4) SME Test guidelines

Preliminary assessment of businesses likely to be affected During this stage, it should be established whether SMEs are among the affected population, in particular the sector(s) more likely to be affected.

Relevant sources of information should be explored including SME representatives. A non-exhaustive list of elements to consider includes, when applicable, items such as:

Measurement of the impact on SMEs The distribution of the potential costs and of the benefits of the proposals with respect to the business size, differentiating between micro, small, medium and large enterprises should be analysed qualitatively and, if possible quantitatively. It is important to establish to which extent the proposal affects SMEs’ competitiveness or the business environment in which it will affect their operations by establishing the: • Financial costs - created by the obligation to pay fees or duties; • Substantive costs - created by the obligation to adapt the nature of the product/service and/or production/service delivery process to meet economic, social or environmental standards (e.g. the purchase of new equipment, training of staff, additional investments to be made); • Administrative costs - created by the obligation to provide information on the activities or products of the company including one-off and SMALL BUSINESS recurring administrative costs (e.g. resources to acquire or provide information); • Cost and impacts identified for small and micro enterprises should be compared with those for larger enterprises.

Additionally one may also consider other factors such as:

Assessment of alternative options and mitigating measures If the abovementioned cost/benefit analysis indicates that small and micro are facing a relatively higher burden, one might consider the use of specific measures in order to ensure a level playing field and the respect of the proportionality principle.

When the analysis made under the previous section shows that small and micro businesses are disproportionately affected or disadvantaged compared to larger companies, one should consider (one a case by case basis) using possible mitigating measures: • Complete or partial size-related exemptions for small or microbusinesses (example: businesses below certain thresholds do not have to comply with certain specific obligations when this does not invalidate the original purpose of the legislation) • Temporary reduction or exemptions (example: transition periods during which small and micro enterprises are exempted or longer intervals for certain obligations) • Tax reductions or direct financial aid to compensate costs incurred provided this is compatible with existing legislation (on competition or international trade) • Reduced fees (example: when these fees are particularly high and/or represent a fixed cost that would be felt disproportionately by small and micro enterprises) • Simplified reporting obligations for small and micro enterprises (example: in the area of statistics, explore possible synergies with already existing reporting obligations) • Specific information campaigns or user guides, training and dedicated help-desks/offices (example: specific help-desks providing tailored information for small businesses) • Systematically consider general simplification initiatives which can particularly benefit small and micro enterprises (example: possibility to SMALL BUSINESS use on-line facilities, simplified inspections) When assessing possible mitigation measures for SMEs, it is important that the costs this could produce are also fully considered and included in the final assessment.

Amended by:

XXII.2021.10.

Schedule III (Article 3) Explanatory Notes (i) Explanatory Notes must be published alongside every instrument that has been identified as having an impact on the business sector. (ii) The government department, government entity or government agency sponsoring the instrument is responsible for drafting the explanatory notes to accompany it. The draft must be agreed with by the Office of the State Advocate, which will check that it is consistent with the instrument.. (iii) The Explanatory Notes are not intended to be an exhaustive description of the instrument or to be a substitute for it. Their purpose is to make the instrument accessible to readers who are not legally qualified and who have no specialised knowledge of the subject matter. (iv) The Notes are not legislation. They do not form part of the instrument and are not amendable by Parliament or the House of Representatives nor endorsed by them. They are not designed to resolve ambiguities in the text of the instrument since if ambiguities are identified as the instrument progresses, they should be amended accordingly. The Notes should make clear that they do not purport to be authoritative rulings on the interpretation of the proposed legislation, as only the courts can give these. (v) The Notes should usually contain the following items: Introduction, Summary and background, Overview of the structure of the instrument, Commentary, and concluding sections. (vi) If the instrument implements a European Directive, the Explanatory Notes should include in the form of an annex a set of “Transposition Notes” illustrating how the Government intends to transpose all the main elements of the Directive(s) into Maltese law.

Schedule IV (Article 9) Ethical Values in SMEs Drawing up a code of ethics A code of ethics is the main tool for implementing an ethics policy. It translates core values into specific commitments and expected behaviour in relation to the organisation’s key stakeholder groups (i.e. customers, employees, suppliers and contractors, providers of finance and community). A code will also be a good place to address environmental responsibilities and to state how the company seeks to relate to its competitors. It is also helpful to ask employees about ethical issues that SMALL BUSINESS concern them and on which they would like guidance when drawing up a code.

Typical issues to be addressed in a code of ethics A code of ethics should pledge to:

1.

Accurately represent what the enterprise is capable of in all marketing, advertising and promotional materials.

2.

Accurately represent available skills, recognizing limitations and only offering professional services that it feels competent to provide.

3.

Inform prospective clients of any conditions that could limit the enterprise’s effectiveness.

4.

Place each client’s best interest first and foremost, making reasonably certain that the enterprise has the necessary skills and resources to provide the support needed before entering into a client relationship.

5.

Clearly communicate the terms and conditions of any client relationship, identifying the responsibilities of all parties, and documenting these provisions in a signed agreement.

6.

Honour all contracts, agreements and commitments.

7.

Only make commitments that are within the enterprise’s power and abilities to deliver.

8.

Accept responsibility for all work it does, admit mistakes and do whatever is possible to rectify any problems that arise.

9.

Maintain accurate and sufficient records of all client work.