On the 20th December 2017 the Civil Code (Second Schedule) (Register of Beneficial Owners- Foundations) Regulations (the “Regulations”) came into force and are applicable to all foundations established: (a) as a beneficiary foundation, for a private interest; or (b) as a purpose foundation for the achievement of a social purpose or for the carrying on of any lawful activity on a non-profit making basis, including voluntary organisations in the form of foundations.
With effect from 1st January 2018, every foundation (as described in the Regulations) must maintain up-to-date information in respect of its beneficial owners
Conversely, the Regulations do not apply to (a) a foundation which is established and controlled by the Government of Malta; or (b) a foundation which constitutes a pious foundation or an ecclesiastical entity in the form of a foundation or is a marriage legacy governed by the Marriage Legacies Law; or (c) any other type of foundation not referred to above which the Minister responsible for justice may by notice designate.
With effect from 1st January 2018, every foundation (as described in the Regulations) must maintain up-to-date information in respect of its beneficial owners, which shall at least include details pertaining to the name, date of birth, nationality, country of residence, official identification document number indicating the type of document and the country of issue and the role of the beneficial owner in relation to the foundation. Moreover information must be properly maintained in respect of the nature and extent of the benefit applicable to the beneficial owner and any changes thereto, including the effective date on which a natural person became, or ceased to be, a beneficial owner of the foundation or, in the case of a beneficiary, the effective date on which his beneficial interest in the foundation has increased or been reduced.
The term ‘Beneficial Owner’ includes the founder, the administrator, the protector or members of the supervisory council, if any, and the beneficiaries and where the latter are yet to be determined, the class of persons in whose main interest the foundation is set up or operates. When the beneficiary is a legal entity then this term shall also include the ultimate beneficial owner of such legal entity and any other natural person exercising ultimate and effective control over the foundation.
The term ‘Beneficial Owner’ includes the founder, the administrator, the protector or members of the supervisory council, if any, and the beneficiaries
In order for a new foundation to be registered, a declaration, in the prescribed form, if any, signed by two of the administrators of the foundation, unless the foundation has a sole administrator in which case by such administrator, containing the above-mentioned information on all the beneficial owners of the foundation must be submitted to the Registrar for Legal Persons. Where the administrator is a body corporate, such declaration shall be signed by at least two persons entrusted with the management and administration thereof.
Existing foundations have been granted a six month grace period and consequently must comply with their obligations and submit a declaration of beneficial ownership by the 30th June 2018.
Where there is a change in the beneficial ownership of a foundation or any other change occurs as a result of which the particulars in the Register of Beneficial Owners in relation to a beneficial owner are incorrect or, the foundation shall, within fourteen days from the date on which the change is recorded with the foundation, deliver to the Registrar for Legal Persons a notice, in the prescribed form, of the relevant changes and any other updated information.
All persons entitled to access information in terms of the Regulations shall be subject to the Data Protection Act and shall also be subject to the obligation not to disclose any information about beneficial owners except as required or permitted by applicable law
The register on the beneficial owners of every foundation provided to the Registrar for Legal Persons in accordance with these regulations shall be held by the Registrar for Legal Persons in a Register of Beneficial Owners kept for this purpose and such information shall be accessible, without prior notification to the foundation or the beneficial owners on whom information is sought, to (i) national competent authorities with designated responsibilities for combating money laundering and terrorist financing, or that have the function of investigating or prosecuting money laundering, associated criminal offences and terrorist financing; and (ii) subject persons in terms of the Prevention of Money Laundering and Funding of Terrorism Regulations for the purpose of carrying out customer due diligence in accordance with the said regulations with reference to such foundation, which access shall be granted in a timely manner on a written request.
All persons entitled to access information in terms of the Regulations shall be subject to the Data Protection Act and relevant regulations thereunder and shall also be subject to the obligation not to disclose any information about beneficial owners except as required or permitted by applicable law.
Failure to abide by the obligations in the Regulations may attract joint and several liability of every officer of the foundation for lump sum penalties for default coupled with daily penalties for so long as the default continues, unless such officer can demonstrate that he had exercised all due diligence to comply with the provisions of the Regulations and the default was not due to negligence on his part.