Licensed Trust Companies in Malta

Setting up a Malta licensed trust company

The Malta ‘Trusts and Trustees Act’ establishes the requisites necessary to set up a trust in Malta. It also clarifies the duties and powers of the trustee within the trust and the limitations of such power. 

 

 

The ‘Trustee’ or ‘Corporate Trustee’

According to Article 2 of the Trust and Trustees Act (the "Act") Chapter 331 of the Laws of Malta, within trust companies in Malta, the trustee is the person/persons holding or in whom the property is vested on trust for the beneficiaries. Such trustees are usually appointed by, or as provided in, the trust instrument and in such number as may be so provided. 

A trustee may be a natural person, provided he/she is of full age and legal capacity and not under any legal impediment to so act. The trustee may also be a juridical person licensed by the competent authority, whose objects include acting as a trustee. 

According to the Act, a corporate trustee can be defined as a trustee which is any legal person, wherever incorporated.

Authorisation of Trustees

Persons may carry on the activities as trustees either in a professional or in a private capacity.

Any person, whether an individual resident or operating in Malta, or a corporate trustee registered or operating in Malta, who receives property upon trust or accepts to act as a trustee or co-trustee of a trust and who:

  • receives or is entitled to remuneration for so acting, or
  • does so on a regular and habitual basis, or
  • holds himself/herself out to be a trustee;

shall require authorisation by the MFSA in terms of the Act. This will apply irrespective of the proper law of the trust they hold and whether all or part of the trust property is in Malta. 

In turn, any person, whether individual or a company, may apply in writing to the Authority to be authorised as a professional trustee. The Authority may subsequently grant authorisation upon being satisfied that the conditions laid down at law have been met. Such authorisation may be general or may be restricted to particular specified activities.

An application for authorisation shall be made in the form and manner required by the MFSA and shall furthermore:

  • contain or be accompanied by such information and particulars, in addition to those required by law, as the Authority may prescribe;
  • be verified in the manner and to the extent required by the MFSA, or as may be prescribed;
  • contain the address in Malta for service on the applicant of any notice or other document required or authorised to be served on him/her by or under the Act;
  • be accompanied by the payment of the registration fee, as may be prescribed in respect of the authorisation applied for.

The Duties of Trustees

The duties of the trustee within trust companies in Malta can be particularly onerous. As a matter of fact, trustees are required, in the execution of their duties and the exercise of their powers and discretion, to act with prudence, diligence and observe the utmost good faith. Trustees should treat the interests of beneficiaries as paramount, subject to their legal obligations to other persons or bodies. 

Trustees are also bound:

  • to carry out and administer the trust according to its terms;
  • to safeguard the trust property from loss or damage;
  • to keep accurate accounts and records of the trusteeship and shall, upon request by any beneficiary, disclose such accounts and records to such beneficiary and provide copies thereof;
  • to provide full and accurate information as to the state and amount of the trust property.
  • to keep the trust property distinct and separate from their own property as well as from any other property held by them under any other trust or title, and separately identifiable therefrom;
  • to act jointly in the performance of their duties and powers in the case of co-trustees;
  • to act impartially in the interests of all the beneficiaries;
  • not to delegate powers unless permitted to do so by law, by the terms of the trust or by the court;
  • inform third parties with whom it is dealing that it is acting as trustee.

Trustees shall not carry out the following acts without the authority of the court:

  • directly or indirectly profit from the trusteeship (except for permitted professional fees); or
  • cause or permit any person to profit directly or indirectly from the trusteeship; or
  • on his own account enter into any transaction related to the trust property; or
  • delegate his powers, unless allowed via the trust deed. .

Trustees do not enjoy any benefits under any trust of which they are sole trustees, without the prior authority of the MFSA (where the trustee is authorised by the MFSA) or the Court (in any other case). Furthermore, unless authorised by the terms of the trust, or by the consent in writing of all beneficiaries or by any order of the court, a trustee is not entitled to remuneration for services rendered. A trustee may reimburse himself or pay out of the trust all expenses properly incurred by him in connection with the trust.

Trustees are bound to follow the Code of Conduct issued by the MFSA.

The Powers of trustees

A trustee shall, in relation to the trust property, have all the powers of a natural person having the absolute title to such property. The trustee shall exercise his powers in the interest of the beneficiaries and according to the terms of the trust.

Establishing Trust Companies in Malta

Companies that provide services related to trusts may be incorporated and managed in Malta in compliance with Maltese statutory requirements. These companies usually provide administrative services in relation to trusts. The MFSA may issue rules to establish which activities constitute administrative services in relation to trusts and the criteria for the conduct of these activities.

Where such companies carry out or intend to carry out trustee services along with routine administrative services, they would have to obtain prior authorisation to act as corporate professional trustees from the MFSA. Furthermore, an authorised trustee company will also be granted the power to act as a corporate service provider. 

Re-domiciliation of Trust Companies in Malta

The Continuation of Companies Regulations apply in that it is possible for trustee companies to relocate to Malta and effectively to continue their operations from Malta without having to wind up their operations in the original country. This may occur as long as such foreign companies are lawfully established in an approved jurisdiction.

Money Laundering

Trustees must act in accordance with the regulations made under the Prevention of Money Laundering Act, 1994 and follow the relative Guidelines issued by the MFSA and/or the Malta's Financial Intelligence Analysis Unit, FIAU. 

Taxation of Trust Companies in Malta

Companies that provide trust-related services and that are ordinarily resident and domiciled in Malta are subject to the normal company tax rate of 35% on their worldwide income. If it is the case that they are involved in international activity, it is possible for non-resident shareholders on a receipt of a dividend to claim a refund of the tax paid by the company on the profits out of which the dividend is paid.

Our Trust Services

Our Financial Service lawyers and regulatory experts within the firm are well-versed with the process of setting up licenced trust companies in Malta as well as all the requirements which are to be satisfied under the Acta. The professional trustees industry in Malta is seeing consistent growth, where Chetcuti Cauchi Advocates are in fact one of the leading players which offer such services to local and international persons, whether legal or nature, for commercial and private trusts. 

 



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