Malta Family Trust

Rules of Trustees for Family Trusts

Dr. Priscilla Mifsud Parker | 22 Jul 2016

Malta Trusts

The Trust and Trustees Act (Chapter 331 of the Laws of Malta) (TTA) provides for the appointment of Trustees to administer and oversee the functioning of trusts in Malta. As of May 2016, the Malta Financial Services Authority (MFSA) has issued guidelines and rules specifically applicable to Trustees of Malta family trusts also known as the Private Trust Company.

What is a Malta Family Trust?

A Malta family trust is a trust created to hold property settled by the settlor or settlors for the present and future needs of family members or family dependants who are definite and ascertainable. Nothing however precludes discretionary family trusts from being created for the benefit of a class of family members or dependants who are ascertainable, but not yet definite.

Family Members and Dependants

Dependants and family members (in terms of these new rules and of article 43B of the TTA) shall mean any individual who is related to the settlor creating the trust, by consanguinity, adoption or affinity in the direct line up to any degree, whether ascendant or descendant. If in the collateral line, this is up to the fifth degree inclusively.

It is also possible for the trust instrument to provide for a charitable purpose or an institution set up for such purpose, which will benefit as a residual beneficiary upon the termination of the family trust.

Who Do These Rules Apply To?

The Rules of Trustees for Family Trusts apply to Trustees of Malta trusts which are set up according to Article 43B of the TTA, and whose objects and activities are limited to acting as a Trustee in relation to a specific settlor or settlors, and providing administrative services in respect of a specific family trust or trusts. They also apply where the Trustee does not hold itself out as a Trustee to the public in terms of article 43 of the Act, and where the Trustee does not habitually act as Trustee in relation to more than five settlors of a family trust at this same time.

Are there any Requirements for Trustees of a Malta Family Trust?

The Trustee of a Malta family trust is subject to a registration process, as per article 5 of the Rules. All Trustees who fall within the remit of Article 43B and therefore require registration in terms of the Act are expected to have regard to these rules. A Trustee registered in terms of article 43B may not carry out any other activity regulated by the Trusts and Trustees Act, including acting as a mandator or administrator for Malta private foundations. The Trustee is also not permitted to carry out duties of a company service provider (as defined in the Company Service Providers Act), or any other duty that would require authorization in terms of the TTA Article 43. It will therefore only be possible for a Trustee registered in terms of article 43B to act as a Trustee in relation to a specific settlor or settlors of the family trust, and for a maximum of five settlors at a time, providing administrative services only in respect of a specific family trust(s).

When the Trustee is registered in terms of article 43B of the TTA, it shall commence its activities within 12 months of the granting of registration. Should the Trustee be unable to comply with this requirement, the Authority may cancel or suspend the registration.

How is a Trustee of a Malta Family Trust to be Registered?

The Trustee can be set up as a company (fulfilling the criteria in article 43B of the TTA), and therefore becomes subject to a registration process, and not the authorization generally required in terms of the Act.

For such a Trustee to be eligible for registration in terms of article 43B the Trustee company must satisfy the following criteria at application stage and on an ongoing basis:

  1. The Trustee company must be a limited liability company registered in Malta as per the Companies Act
  2. The applicant must submit a request in a form and manner prescribed by the MFSA, to then be included in the Register of Trustees for Family Offices .(this register shall be kept by the MFSA and shall be available to the public and updated on a regular basis).
  3. The Memorandum and Articles of Association of the applicant company shall limit the objects and activities  of the company to acting as a Trustee for specific settlor/s, and for no more than 5 settlors at a time, providing administrative services only for a specific Malta family trust(s)
  4. The applicant company must keep insurance cover at all times which must be proportionate to the nature and size of the activities carried out by the Trustee company.
  5. The applicant company’s Board of Directors must be made up of at least 3 directors, all of whom shall be collectively responsible for the proper administration of the Trustee company, including the fulfillment of the relevant Trustee’s duties 
  6. The directors must be individuals, determined by the MFSA to be fit and proper persons.
  7. The directors must submit a personal questionnaire in a form and manner determined by the MFSA to determine their fitness and properness. The MFSA will thereby determine the proposed director’s:
    1. Integrity: the proposed director must be of good repute and act honestly and in a trustworthy manner in relation to clients and other involved parties
    2. Competence & experience: the proposed director must be able to demonstrate an acceptable level of knowledge, professional expertise and experience in relation to the role assumed by them.
    3. Financial soundness & solvency: the proposed directors must be able to demonstrate the ability to effectively manage their personal financial resources
  8. At least one of the proposed directors of the company shall possess knowledge and experience in relation to the administration of trusts.
  9. One of the executive directors or another senior officer at the company shall take on the role of Money Laundering Reporting Officer (“MLRO”) in terms of the Prevention of Money Laundering and Funding of Terrorism Regulations (S.L. 373.01, Laws of Malta) and the FIAU’s Implementing Procedures, and such officer shall be responsible to fulfill the obligations applicable to the MLRO in terms of the said regulations and procedures

Documents Required for Registration of a Private Trust Company

The applicant Trustee company must also provide the following documents to the MFSA:

  1. Memorandum and Articles of Association of the company
  2. A copy of the trust deed per separate family trust that the Trustee intends to administer at application stage
  3. A declaration that the proposed trust structure(s) complies and shall continue to comply with the definition of a family trust as prescribed by the Act and these Rules.
  4. An application fee as may be prescribed by the MFSA
  5. Copies of standard management agreements (client agreements) that the applicant intends to use.

The MFSA may also request that the applicant company produce any additional information which it may deem appropriate. Once the MFSA is satisfied that the conditions and requirements mentioned above have been fulfilled, it will then proceed to register the Trustee in the above mentioned Register.

If a Trustee company which was formerly registered as a Trustee for Malta Family Trusts no longer satisfies the requirements to act as such, should the Trustee wish to provide trustee or fiduciary services in terms of Article 43 of the Act, then the Trustee must, within 30 calendar days apply to the MFSA for authorization to act as a Trustee.

Failure to seek authorization will result in the Trustee being prohibited from providing future services and the MFSA will cancel its registration as a Trustee for Malta Family trusts.

Duties of the Directors of A Trustee Company

The directors are responsible for ensuring the proper operation and management of a trustee company in line with the provisions of the Act and the Rules of Trustees for Family Trusts, as well as the general rules applicable to Directors as per the Companies Act.

The duties of the directors shall include the following:

  1. A declaration to be submitted to the MFSA (in the form prescribed by the MFSA) when submitting a request for the registration of the trustee company as a trustee for Malta Family Trust. This declaration shall contain:
    1. The name of the Malta trustee company applying for registration
    2. Names and addresses of the shareholders of the Malta trustee company
    3. Names and addresses of the directors of the Malta trustee company
    4. The number of Malta family trusts being administered by the trustee company, if any, at application stage.
    5. A statement indicating that the trustee company satisfies all the requirements which exempt it from authorization, but make it eligible for registration as a Trustee for Malta Family Trusts
    6. Details of the registered office and place of business of the Trustee Company
  1. Annual submission of a Certificate of Compliance on the anniversary of the date of Registration in the form found in Annex 1 of these Rules.
  2. The ensuring of the trustee company’s accurate accounts and record keeping for the administration of the Malta trust. The directors must also ensure that the company establishes adequate systems for maintaining proper records of the identity and residence of beneficiaries and of the dealings and assets in connection with the Malta family trust and compliance with applicable law. These accounts and records shall be available for inspection by the MFSA.
  3. Obtaining prior written consent of the MFSA before
    1. Registering any appointment or resignation of a director, or in the event that any of the directors have their engagement terminated or are otherwise hindered in the performance of their duties
    2. Affecting any change which would have a bearing on the trustee company’s eligibility for reregistration, including any change to its charter, statute, Memorandum and Articles of Association or any other document constituting the company, directors or members.
    3. Surrendering its registration
  1. Notifying the MFSA in writing and without delay of:
    1. Any new engagement by the registered trustee in relation to any additional family trusts(s) following registration and providing the MFSA with a copy of the relative trust deed and the relevant declaration that the proposed trust structure(s) complies, and shall continue to comply with the definition of a family trust as prescribed by the Act and these Rules
    2. Any change in the shareholding of the registered trustee

Surrender, Suspension or Cancellation of Registration

Surrender of Registration

In the event that a registered trustee intends to surrender its registration, it must inform the MFSA of this at an early stage. The MFSA may require the trustee to delay this surrender of registration as a trustee of Malta family trusts, or to wind-up such business in accordance with any conditions which may be imposed on the MFSA.

A registered trustee shall abide with the following procedure for surrendering its registration (subject to any additional requirements which may be imposed by the MFSA:

  1. Once the registered trustee company has informed the MFSA of its intention to surrender its registration, the registered trustee shall submit the following confirmations/documents to the MFSA:
    1. A formal request asking for approval to surrender its registration
    2. A certified true copy of the Directors’ Resolution confirming the company’s intention to surrender its registration certificate, subject to the MFSA’s approval, and once the necessary formalities are finalized
    3. Confirmation that the registered trustee has given due notice to its clients of its intention to surrender its licence
    4. A confirmation that no litigation is pending which arises out of any event that occurred while the registered trustee was registered
    5. A confirmation that the registered trustee will remove from all letterheads and any other stationery, any reference to being registered by the MFSA.
    6. A confirmation that the registered trustee has informed its auditor and insurer of its intention to surrender its registration.
  2. Upon being satisfied that all the requirements set out in the above para (a) have been met, the MFSA shall commence the process for approval of the surrender of registration and the final decision shall be conveyed to the registered trustee, which will then cease to be so registered thereafter.
  3. The registered trustee shall return its original registration certificate to the MFSA
  4. Following the MFSA’s approval of the surrender, unless arrangements are made for the winding up of the registered trustee, a certified true copy of the Constitutional Document of the registered trustee, amended to remove all references to acting as trustee of family trusts from its Objects Clause, and where appropriate, to change the name of the registered trustee. This is to be submitted to the MFSA.

Suspension of Registration by the MFSA

The MFSA may at any time suspend or cancel the registration of a trustee registered in terms of article 43B of the Act (as provided in these Rules) if:

  1. It considers that the holder of the registration no longer satisfies the requirements laid out in these Rules and fails to seek authorization where applicable to act as a trustee within the period specified in rule 5(6), i.e. 30 days.
  2. It considers that the holder of the registration does not fulfil the requirements of the Act or of these or any other Rules which are issued thereunder, or has failed to satisfy or comply with any obligation or condition to which it or the Registration is subject
  3. if the MFSA has been furnished by or on behalf of the registered trustee, with information or declarations which are false, inaccurate or misleading;
  4.  if the registered trustee does not commence activities pursuant to its registration within twelve months from the date of the granting of registration, as prescribed in sub-paragraph (4) of Rule 2.

Reporting Obligations & Co-operation with Regulatory Authorities

A registered trustee in terms of the Trusts and Trustees Act is expected to deal openly and in a spirit of co-operation with the MFSA and any other relevant regulatory authorities.

The registered trustee must also have in place arrangements for all records and accounts of its administration of Malta family trusts. These records must be easily accessible to enable the MFSA to monitor compliance with any requirements under the TTA and Rules, especially in the event of on-site compliance visits which may be carried out by the MFSA. The trustee shall arrange for sufficient backups of these records to be maintained.

A registered trustee shall also ensure that all submissions required in terms of these Rules and any other submissions which the MFSA may request are submitted in a timely manner. The trustee must also retain the records relating to the administration of a family trust for a period of not less than 10 years from the date of termination of the trust or trusteeship, whichever occurs earlier. 

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