                  INVESTMENT   SERVICES [ CAP. 370.        1
CHAPTER 370
INVESTMENT SERVICES ACT
To regulate the carrying on of investment business and to make
provision for matters ancillary thereto or connected therewith.
19th September, 1994;
23rd September, 1994;
30th December, 1994;
8th July, 1995
ACT XIV of 1994 as amended by Acts: XXIV and XXV of 1995; Legal
Notices 191 of 1998 and 46 of 1999; and Acts XVII of 2002 and IV of 2003.
PRELIMINARY
Short title.
Interpretation.
Amended by:
XVII. 2002.136.
2. ( 1 ) In this Act, unless the context otherwise requires -
"collective investment scheme" means any scheme or
arrangement which has as its object or as one of its objects the
collective investment of capital acquired by means of an offer of
units for subscription, sale or exchange and which has the
following characteristics:
( a ) the scheme or arrangement operates according to the
principle of risk spreading; and either
( b ) the contributions of the participants and the profits or
income out of which payments are to be made to them
are pooled; or 
( c ) at the request of the holders, units are or are to be re-
purchased or redeemed out of the assets of the scheme
or arrangement, continuously or in blocks at short
intervals; or 
( d ) units are, or have been, or will be issued continuously
or in blocks at short intervals:
Provided that the competent authority may issue a licence
with respect to a scheme or arrangement whose units are to be
offered for subscription, sale or exchange to:
(i) licence holders; or
(ii) persons whose ordinary business involves the
acquisition and disposal of instruments of the
same kind as the instrument or instruments in
which the scheme or arrangement invests; or
(iii) persons whose ordinary business involves the
acquisition and disposal of property of the same
kind as the property, or a substantial part of the
property, in which the scheme or arrangement
invests; or 
(iv) persons who by regulation under this Act are
  2      CAP. 370. ]              INVESTMENT   SERVICES
exempt from the requirement of an investment
services licence provided that the scheme or
arrangement invests in instruments or property
in respect of which such persons are exempt;
Notwithstanding that such a scheme or arrangement does
not have the characteristic listed in paragraph ( a ), and in any such
case, such scheme or arrangement shall be deemed to be a
collective investment scheme;
"collective investment scheme licence" means a licence for the
issue or creation of units or the carrying on of an activity by a
collective investment scheme issued under article 6; 
"competent authority" means the body appointed by the Minister
in terms of article 2A;
"document" or "documentation" includes information recorded in
any form and, in relation to information recorded otherwise than in
legible form, references to its production include references to
producing a copy of the information in legible form; 
"exempted person" means a person who for any reason is
exempted from any or all of the provisions of article 3;
"instrument" means any instrument, contract or right falling
within the Second Schedule to this Act and whether or not issued in
Malta;
"investment advertisement" means any form or medium of
advertising or promotional activity, other than a prospectus, the
contents of which, either invites persons, or contains material
calculated to induce persons:
(i) to become or offer to become participants in a
collective investment scheme; or
(ii) to subscribe for or otherwise acquire or
underwrite an instrument; or
(iii) to purchase or otherwise procure an investment
service;
"investment agreement" means any agreement the making or
performance of which by either party constitutes an investment
service;   
"investment service" means any service falling within the First
Schedule when provided in relation to an instrument;   
"investment services licence" means a licence to provide an
investment service under article 6;   
"licence" means a collective investment scheme licence or an
investment services licence; 
"licence holder" means a person who holds a licence;
"Malta’s international commitments" means Malta’s
commitments, responsibilities and obligations arising out of
membership of, or affiliation to, or relationship with, any
international, global or regional organisations or grouping of
countries or out of any treaty, convention or other international
                  INVESTMENT   SERVICES [ CAP. 370.        3
agreement, however called, whether bilateral, multilateral, to which
Malta is a party;
"Minister" means the Minister responsible for finance;   
"overseas regulatory authority" means an authority which in a
country or territory outside Malta exercises any function
corresponding to:
( a ) a function of the competent authority under this Act;
Cap. 371.
( b ) a function of the Central Bank of Malta under the
Banking Act;
Cap. 345.
Markets Act; or
Cap. 403.
Cap. 404.
( d ) a function of the competent authority under the
Insurance Business Act and the Insurance Brokers and
Other Intermediaries Act; 
"participants" means the persons who participate in or receive, or
are to participate in or receive, profits or income arising from the
acquisition, holding, management or disposal of the property
comprised in a collective investment scheme or sums paid out of
such profits or income;   
"prescribed" means prescribed by rules or regulations made
under this Act;
Cap. 386.
"prospectus" has the meaning assigned to it in article 2 of the
Companies Act, and the word "shares" therein shall be read as
including a reference to the word "unit";
"qualifying shareholding" means a direct or indirect holding in a
body corporate which represents ten per cent or more of the share
capital issued by such body, or of the voting rights attaching to
such share capital or which makes it possible to exercise a
significant influence over the management of the body corporate;
Cap. 345.
"recognised investment exchange" has the meaning assigned to it
under the Financial Markets Act;
Cap. 386.
"subsidiary" has the same meaning as that given to the term by
article 2 of the Companies Act; 
"unit" means any representation of the rights and interests of
participants in a collective investment scheme.   
( 2 ) In this Act and in any regulations made thereunder, if there
is any conflict between the English and Maltese texts, the English
text shall prevail.
Competent 
authority.
Added by:
XVII. 2002.137.
2A. The Minister shall by Order in the Gazette appoint a body
to be the competent authority for the purposes of this Act to carry
out the functions of the competent authority under this Act and to
perform such other functions as the Minister may consider
appropriate in relation to the operation of this Act.
  4      CAP. 370. ]              INVESTMENT   SERVICES
LICENSING REQUIREMENTS
Requirement of 
licence for 
investment 
services.
Amended by:
XVII. 2002.138.
3. ( 1 ) No person shall provide, or hold himself out as
providing, an investment service in or from within Malta unless he
is in possession of a valid investment services licence.   
( 2 ) No body corporate, unincorporated body or association
formed in accordance with or existing under the laws of Malta,
shall provide or hold itself out as providing an investment service
in or from within a country, territory or other place outside Malta
unless it is in possession of a valid investment services licence.
(3) The competent authority may by notice in writing to any
person determine that -
( a ) a service falls within the First Schedule when provided
in relation to an instrument; or
( b ) an instrument, contract or right falls within the Second
Schedule and whether or not issued in Malta;
and subject to any appeal under article 19 with respect to such
person the determination by the Competent Authority unless over
ruled by the Tribunal shall be conclusive for all purposes of this
Act.
Requirement of 
licence for 
collective 
investment
scheme.
4. ( 1 ) Subject to the provisions of subarticle  ( 3 ) , no collective
investment scheme shall issue or create any units or carry on any
activity in or from within Malta unless there is in respect of it a
valid collective investment scheme licence.   
( 2 ) Subject to the provisions of subarticle  ( 3 ) , no collective
investment scheme formed in accordance with or existing under the
laws of Malta shall issue or create any units or carry on any activity
in or from within a country, territory or other place outside Malta
unless there is in respect of it a valid collective investment scheme
licence.
( 3 ) No collective investment scheme shall be precluded by the
provisions of subarticle  ( 1 )  from issuing or creating such units or
from taking such steps as may be necessary for the incorporation
or, as the case may be, the establishment of the scheme or from
taking such steps as may be necessary for securing the
authorisation of the scheme by the competent authority.
APPLICATION, GRANT, REVOCATION, ETC., OF LICENCES
Application for a 
licence.
5. An application for a licence shall be made in the form and
manner required by the competent authority and shall furthermore - 
( a ) contain or be accompanied by such information and
particulars, in addition to those required by this article,
as the competent authority may require or as may be
prescribed;
( b ) be verified in the manner and to the extent required by
the competent authority, or as may be prescribed;
( c ) contain the address in Malta for service on the
applicant of any notice or other document required or
                  INVESTMENT   SERVICES [ CAP. 370.        5
authorised to be served on him by or under this Act;
( d ) in the case of an investment services licence, be
accompanied by a programme of operations setting out
such matters as may be required to be set out by the
competent authority from time to time;
( e ) in the case of a collective investment scheme licence,
specify the nature of the collective investment scheme
concerned; and
( f ) be accompanied by such fee as may be prescribed in
respect of the licence applied for.
Power of 
competent 
authority to refuse 
or grant licence.
Amended by:
XVII. 2002.139;
IV. 2003.174.
6. ( 1 ) The competent authority may grant or refuse to grant a
licence applied for under this Act:
Provided that the competent authority shall not -
( a ) grant an investment services licence unless it is
satisfied that the applicant is a fit and proper person to
provide the investment services concerned and that the
applicant will comply with and observe any rules and
regulations made under this Act and applicable to him;
( b ) grant a collective investment scheme licence unless it
is satisfied that the scheme will comply in all respects
with any rules and regulations made under this Act and
applicable to it and that its directors, and officers, or in
the case of a trust, its trustees, are fit and proper
persons to carry out the functions required of them in
connection with the scheme.
(2) ( a ) In granting a licence the competent authority may
subject it to such conditions as it may deem
appropriate, and having granted a licence it may, from
time to time, vary or revoke any condition so imposed
or impose new conditions.
( b ) For the better carrying out of the provisions of this
Act, the competent authority may, from time to time,
issue and publish guidelines which shall be binding on
licence holders and others as may be specified therein.
Such guidelines may lay down additional requirements
and conditions in relation to activities of licence
holders, the conduct of their business, their relations
with customers, the public and other parties, their
responsibilities to the competent authority, reporting
requirements, financial resources, capital adequacy
and related requirements, and any other matters as the
competent authority may consider appropriate.
( 3 ) When considering whether to grant or refuse to grant a
licence the competent authority shall, in particular, have regard to -
( a ) the protection of investors and the general public;
( b ) the protection of the reputation of Malta taking into
account Malta’s international commitments;
( c ) the promotion of competition and choice; and
  6      CAP. 370. ]              INVESTMENT   SERVICES
( d ) in the case of a collective investment scheme licence,
the reputation and suitability of the applicant and all
other parties connected with the scheme.
  ( 4 ) Every licence shall specify the investment service which
the holder thereof has been authorised to provide or, as the case
may require, the class of collective investment scheme to which the
licence relates.
  ( 5 ) Without prejudice to the generality of subarticle  ( 2 ) , the
conditions to which the competent authority shall subject a licence
may be made applicable, or be prescribed to be applicable, to - 
( a ) all investment services licences or all collective
investment scheme licences, as the case may be; 
( b ) certain categories of licences;
( c ) all licences granted to certain categories of holders;
( d ) all licences in relation to particular services or
schemes, as the case may be.
( 6 ) Within six months from the date of the submission of a
properly completed application form together with the requisite
documentation, the competent authority shall inform an applicant
of its decision whether or not to grant a licence.
( 7 ) Any requirement in this Act that a person be a fit and
proper person to carry out certain activities or functions shall be
interpreted as a requirement not only that such person be a fit and
proper person to carry out such activities or functions, but also that
any qualifying shareholder or members, director of officer of such
person, and, in the case of a trust, each one of its trustees, be a fit
and proper person to carry out such activities or functions.
( 8 ) ( a ) Where close links exist between an applicant and any
other person the competent authority shall:
(i) only grant a licence if it considers that such
close links do not prevent it from exercising
effectively its supervisory functions; and 
(ii) refuse to grant such a licence if it considers that
the laws, regulations or administrative
provisions of any country outside Malta
governing one or more persons with whom the
applicant has close links, or their enforcement,
prevent the effective exercise of its supervisory
functions.
( b ) The competent authority may from time to time, by
means of guidelines under this Act define the
circumstances in which "close links" are to be regarded
as existing between any two or more persons.
(9) Where a licence holder or the manager, secretary, director
or other person responsible for a licence holder contravenes or fails
to comply with any of the conditions imposed in a licence issued
under this article, the competent authority may by notice in writing
and without recourse to a court hearing impose on the licence
                  INVESTMENT   SERVICES [ CAP. 370.        7
holder, manager, secretary, director, and or other persons, as the
case may be an administrative penalty which may not exceed forty
thousand liri.
(10) Within a period of thirty days beginning with the date of
service of a notice imposing an administrative penalty in
accordance with subarticle (9), a person upon whom the notice is
served may appeal to the Financial Services Tribunal against the
decision of the competent authority in accordance with article 19.
Cap. 12.
(11) Where a notice as referred to in subarticle (9) has not been
appealed or where such notice has been appealed within fifteen
days of the determination of such appeal, the administrative penalty
as contained in the notice or as reduced by the decision of the
Tribunal shall be due to the Authority and upon the service of a
copy of the notice or the decision as the case may be, by means of a
judicial act on the person indicated in the notice or decision, the
said notice or decision shall constitute an executive title for all
effects and purposes of Title VII of Part I of Book Second of the
Code of Organization and Civil Procedure.
Power of 
competent 
authority to  cancel 
or suspend 
licences.
Amended by:
XVII. 2002.140.
7. ( 1 ) The competent authority may at any time cancel or
suspend a licence in accordance with the provisions of this Act.
  ( 2 ) In the case of an investment services licence, the competent
authority may cancel or suspend a licence -
( a ) if it considers that the holder thereof is not a fit and
proper person to provide the investment service he is
authorised to provide; or
( b ) if it considers that the holder thereof does not fulfil the
requirements of, or has contravened, any of the
provisions of this Act or of any rules or regulations
made thereunder, or has failed to satisfy or comply
with any obligation or condition to which he or the
licence is subject by virtue of or under this Act; or
( c ) if the competent authority has been furnished by or on
behalf of the licence holder with information which is
false, inaccurate or misleading; or
( d ) if the licence holder has not commenced to provide the
service he has been authorised to provide within the
time provided for in the licence or has ceased to
provide such service; or
( e ) if it considers it desirable to cancel or suspend the
licence for the protection of investors and the general
public, and the reputation of Malta taking into account
Malta’s international commitments; or
( f ) at the request of the licence holder;
( g ) in any of the circumstances under which the competent
authority would have been precluded from issuing the
licence under this Act or where under this Act it would
have been entitled to refuse the grant of such licence;
and
( h ) if the licence holder thereof has obtained the licence
  8      CAP. 370. ]              INVESTMENT   SERVICES
by making false statements or by any other irregular
means.
  ( 3 ) In the case of a collective investment scheme licence, the
competent authority may cancel or suspend a licence -
( a ) if it considers that the directors, officers or trustees of
the scheme are not fit and proper persons to carry out
the functions required of them in connection with the
scheme; or
( b ) if it considers that the scheme to which the licence
refers does not fulfil the requirements of any provision
of this Act or of any rules or regulations made
thereunder, or there has been a contravention of any
such provision as aforesaid, or an obligation or
condition to which the scheme or the licence is subject
by virtue of or under this Act has not been satisfied or
complied with; or
( c ) if information has been furnished to the competent
authority by or on behalf of or in relation to the
scheme which is false, inaccurate or misleading; or
( d ) if the scheme has not commenced the activities which
it was authorised to carry on within the time provided
for in the licence or has ceased to carry on such
activities; or
( e ) if it considers it desirable to cancel or suspend the
licence for the protection of investors and the general
public and the reputation of Malta taking into account
Malta’s international commitments; or
( f ) at the request of the manager or trustee or custodian of
the scheme, or their equivalent.
Notification of 
proposed refusal, 
variation, 
cancellation or 
suspension of a 
licence.
Amended by:
XVII. 2002.141.
8. ( 1 ) Where the competent authority proposes -
( a ) to vary any condition to which the licence is subject or
to impose a condition thereon; or
( b ) to refuse an application for a licence or to cancel or
suspend a licence,
it shall give the applicant or, as the case may be, the licence holder
or the manager and trustee or custodian of a collective investment
scheme, or their equivalent, notice in writing of its intention to do
so, setting out the reasons for the decision it proposes to take.
  ( 2 ) Every notice given under subarticle  ( 1 )  shall state that the
recipient of the notice may, within such reasonable period after the
service thereof as may be stated in the notice  ( being a period of not
less than forty-eight hours and not longer than thirty days ) , make
representations in writing to the competent authority giving reasons
why the proposed decision should not be taken, and the competent
authority shall consider any representation so made before arriving
at a final decision.
( 3 ) The competent authority shall as soon as practicable notify
its final decision in writing to any of the persons to whom notice is
                  INVESTMENT   SERVICES [ CAP. 370.        9
to be given under subarticle (1).
OBLIGATIONS OF LICENCE HOLDERS AND OTHERS
Changes in 
information; 
payment of fees.
Amended by:
XVII. 2002.142.
9. ( 1 ) The holder of an investment services licence and the
manager of a collective investment scheme which has been licensed
under this Act, or any other person having responsibility for the day
to day administration or management of such a scheme, shall
provide the competent authority with particulars of any changes in
the information provided under this Act as soon as such holder,
manager or person becomes aware of such changes and shall notify
the competent authority, on a continuous basis, of any changes or
circumstances which give rise to the existence of close links within
the meaning in article 6.
( 2 ) Every holder of a licence shall pay to the competent
authority such periodic fee, and within such time, as may from time
to time be prescribed.
Persons providing 
administrative 
services.
Added by:
XVII. 2002.143.
9A. (1) Any person who in Malta or from Malta provides to
licence holders in Malta, or to equivalent authorised persons and
schemes overseas, administrative services which do not themselves
constitute licensable activity under this Act, shall be required to
apply for recognition by the competent authority under this article,
and no person shall provide such services unless he is so
recognised.
(2) The competent authority may from time to time, issue
guidelines laying down the requirements for recognition and
generally regulating the provision of such administrative services.
Such guidelines may in particular include provision for the
following matters:
(i) establishing which activities constitute
administrative services for the purposes of this
article;
(ii) the form and the content of applications to the
competent authority for recognition;
(iii) the application, annual and other fees payable in
respect of recognition;
(iv) the obligation to supply documentation and
other information to the competent authority;
(v) measures to allow the competent authority to
ensure compliance by recognised administrators
with this Act and guidelines issued thereunder;
(vi) arrangements for the exchange of information
with other regulatory bodies both in Malta and
overseas;
(vii) providing for the mutual recognition of persons
recognised as fit to provide such services outside
Malta;
(viii) generally any other matter ancillary or
connected with the above.
  10      CAP. 370. ]              INVESTMENT   SERVICES
Notification of new 
or increased 
control.
Amended by:
XVII. 2002.144.
  10. ( 1 ) No person shall acquire, directly or indirectly, a
qualifying shareholding in a licence holder or increase such
qualifying shareholding so that the proportion of the voting rights
or of the share capital held by him in the licence holder reaches or
exceeds 20 per cent, 33 per cent or 50 per cent, or so that the
licence holder becomes the subsidiary of such person, unless such
person has served on the competent authority a written notice
stating that he intends to acquire or increase such shareholding,
and-
( a ) the competent authority has, before the end of the
period of three months beginning with the service of
that notice, notified him in writing that there is no
objection to his acquiring or increasing such
shareholding; or
( b ) that period has elapsed without the competent
authority having served on him a notice of objection;
or
( c ) the competent authority has, before the end of the said
period of three months served a notice of objection
which has subsequently been withdrawn, cancelled or
quashed for any reason:
Provided that the acquisition or increase of the qualifying
shareholding takes place within one year following the event
mentioned in paragraph  ( a ) ,   ( b )  or   ( c )   as the case may be:
Provided also that in the case envisaged in the aforesaid
paragraph   ( c )   of this sub-article the aforesaid period of one year
shall commence to run from the date that the person concerned has
been notified of the withdrawal, cancellation or quashing of the
notice of objection, as the case may be.
  ( 2 ) A notice served on the competent authority under subarticle
( 1 )  shall contain such information as the competent authority may
direct and the competent authority may, after receiving such a
notice from any person, by notice in writing require him to provide
such additional information or documents as the competent
authority may reasonably require for deciding whether to serve a
notice of objection.
  ( 3 ) Where additional information or documents are required
from any person by a notice under subarticle  ( 2 ) , the time between
the giving of the notice and the receipt of the information or
documents shall be added to the period mentioned in subarticle
( 1 )( a ) .
( 4 ) Every notice of objection mentioned in subarticle  ( 1 )( b )
shall state the reasons for such objection and shall state that the
recipient of the notice may, within such reasonable period after the
service thereof as may be stated in the notice  ( being a period of not
less than forty-eight hours and not longer than thirty days ) , make
representations in writing to the competent authority giving reasons
why the notice of objection should be withdrawn; and the
competent authority shall consider any representations so made
before arriving at a final decision.
                  INVESTMENT   SERVICES [ CAP. 370.        11
  ( 5 ) The competent authority shall notify its final decision in
writing to the person who makes representations in writing under
subarticle (4), within thirty days of receipt of representations as
provided for in the said subarticle (4).
  ( 6 ) Any person who proposes to sell or dispose, directly or
indirectly, of a qualifying shareholding in a licence holder or to
reduce his qualifying shareholding so that the proportion of the
voting rights or of the share capital held by him in the licence
holder would fall below 20 per cent, 33 per cent or 50 per cent, or
so that the licence holder would cease to be his subsidiary, must
inform the competent authority in writing stating his intention to
sell, dispose of or reduce his shareholding and stating the size of
his shareholding following such sale, disposal or reduction.
( 7 ) Immediately on becoming aware of any proposed or actual
acquisition or disposal of part or all of a shareholding in its share
capital in any of the circumstances dealt with in this article a
licence holder shall inform the competent authority in writing. 
(8) Where the influence exercised by a person acquiring or
proposing to acquire a part of the share capital is likely to be
prejudicial to the sound and prudent management of a licence
holder, the competent authority may issue a notice of objection;
and exercise any of the powers assigned to it under this Act,
including the power to issue directives, as it may deem reasonable
and appropriate in the circumstances.
(9) A copy of any notice served on the person concerned in
terms of subarticle (8) shall be served on the company to whose
shares it relates.
(10) Without prejudice to the provision of article 22, where a
share holding in a licence holder is acquired despite the objection
of the competent authority, the exercise of the corresponding
voting rights shall be suspended and any votes cast in contravention
of this subarticle shall be null and void.
(11) If the acquirer of the qualifying holding referred to in this
article is:
( a ) a person holding a licence or an equivalent
authorisation from an overseas regulatory authority, or
( b ) the parent undertaking of a person referred to in
paragraph ( a ), or
( c ) any person controlling a person referred to in
paragraph ( a ),
and if, as a result of that acquisition, the licence holder in which the
acquirer proposes to acquire a holding would become the acquirer’s
subsidiary or come under his control, the assessment of the
acquisition by the competent authority must be the subject of prior
consultation with the overseas regulatory authority taking into
account Malta’s international commitments.
  12      CAP. 370. ]              INVESTMENT   SERVICES
Prospectus and 
investment 
advertisements.
Substituted by:
XVII. 2002.145.
 11. (1) ( a )  No collective investment scheme, whether licensed
or not, shall issue or cause to be issued a prospectus in or from
within Malta unless the prospectus has been approved by the
Competent Autho rity.
( b ) No person, other than licence holders, may issue or
cause to be issued an investment advertisement in or from within
Malta unless its contents have been approved by a licence holder.
(2) The competent authority may, from time to time, issue such
guidelines or directives to licence holders as it may consider
appropriate in order to set minimum standards and requirements
which are to be observed by licence holders when issuing or
approving investment advertisements or issuing a prospectus in
accordance with subarticle (1). Such guidelines or directives may
also include provision for such exemptions or conditions as may be
specified therein and may make different provision for different
cases or classes of cases, under such terms and conditions as may
be prescribed.
(3) The competent authority may impose such conditions,
limitations and restrictions on a licence holder with respect to the
issue or approval of investment advertisements, as it may consider
appropriate.
REGULATORY AND INVESTIGATORY POWERS
Minister’s power 
to make 
regulations.
Amended by: 
XXV.1995.432;
XVII. 2002.146;
IV. 2003.175.
 12. ( 1 ) The Minister, acting on the advice of the competent
authority, may make rules or regulations to give effect to the
provisions of this Act, and without prejudice to the generality of
the foregoing may, by such rules or regulations, in particular, do
any of the following:
( a ) amend the definition of "collective investment
scheme" contained in article 2, as well as the
definition of "investment service" contained in article
2 and the First and Second Schedules;
( b ) regulate investment services and collective investment
schemes, as well as services provided and activities
carried on in conjunction therewith or in relation
thereto, providing for any matter he may deem
expedient including the creation and exercise of rights
by or for the benefit of the public and the imposition of
duties and obligations on the holders of a licence or
persons responsible for the management or
administration thereof; provide for the safekeeping
and custody of the property of collective investment
schemes and for the requirement to appoint a
custodian, and prescribe and regulate in the most
extensive manner the functions, duties, responsibilities
and obligations of the custodian; establish the
qualifications and other eligibility criteria necessary to
act as custodian, including residence qualifications;
provide for the protection of the property of the
schemes in the event of the insolvency of the
                  INVESTMENT   SERVICES [ CAP. 370.        13
custodian, and for the purpose of this paragraph
"custodian" shall include a sub-custodian; require the
keeping of records with respect to the transactions and
financial position of collective investment schemes
and for the inspection of those records, and prescribe
reporting and disclosure requirements, including the
preparation of periodical reports with respect to the
schemes and the furnishing of those reports to the
shareholders, unit-holders or other participants in the
said schemes, and to others; and provide for the
regulation of the free circulation of units of collective
investment schemes and to regulate the management
companies of such schemes; and to make provisions on
capital adequacy requirements;
( c ) establish schemes or other arrangements for the
compensation of investors in cases where licence
holders or any categories thereof as may be specified,
are unable to satisfy their obligations towards
investors or claims in respect of any liability incurred
by them in connection with the carrying out of any
activity in regard to which they are licensed, and to
regulate the management and the financing of any such
schemes or arrangements and, the contributions and
levies to be paid thereto, to set the minimum and
maximum levels of compensation payable thereunder
and may under such schemes and arrangements
distinguish between different classes of investors and,
exclude certain classes from compensation, and to
make provision for the regulation of and for other
aspect related to such schemes or arrangements and
may moreover provide that such schemes or
arrangements as may be prescribed shall have a legal
personality distinct from that of the contributors
thereto and of the competent authority and provide for
the judicial and legal representation thereof; and such
schemes shall be exempt from the payment of income
tax as from the date of establishment of such schemes;
( d ) define the criteria for determining whether a holding is
an indirect holding for the purposes of determining
whether a qualifying shareholding exists;
( e ) regulate the promotion or sale by or on behalf of any
person, and by any means, of an investment service or
of a collective investment scheme or of any
instrument, including the criteria and procedures for
the granting or refusing of consent by the competent
authority pursuant to the provisions of article 11 of
this Act;
( f ) amend the provisions of article 18 on the
circumstances in which auditors are obliged to
communicate information to the competent authority,
to prescribe rules governing the disclosure by auditors
of information pursuant to article 18 and to establish
  14      CAP. 370. ]              INVESTMENT   SERVICES
supervisory and disciplinary procedures for auditors in
respect of their duties under the provisions of article
18;
( g ) regulate the drawing-up, approval, publication and
distribution in Malta of prospectuses relating to the
offer of transferable securities authorised or otherwise
approved, in a country or countries outside Malta and
to make provision for the recognition of such
prospectuses taking into account Malta’s international
commitments;
( h ) provide for and regulate the payment by any person,
body or scheme, as the case may be, of licence or other
fees and such other charges payable to the competent
authority in respect of any matter provided for, by or
under this Act or any rules or regulations made under
this article, as may be prescribed;
( i ) exempt any person, service, instrument, collective
investment scheme, or advertisement from any one or
more of the provisions of this Act subject to such
variations, additions, adaptations and modifications as
may be prescribed and subject to such conditions or
other requirements, including other forms of
authorisation and notification procedures, as may be
prescribed;
( j ) prescribe anything that is to be or which may be
prescribed;
( k ) provide for any matter incidental to or connected with
any of the above.
  ( 2) (A )  Rules or regulations made under this article may also
contain provision for enabling a person who has entered, or offered
to enter, into an investment agreement with the holder of a licence
to rescind the agreement or withdraw the offer within such period
and in such manner as may be prescribed, and in particular, but
without prejudice to the generality of the foregoing, may make
provision -
( a ) for requiring the service of notice with respect to the
rights exercisable under the rules or regulations;
( b ) for the restitution of property and the making or
recovery of payments where those rights are exercised;
( c ) for such other matters as are incidental to or connected
with any of the above.
Cap. 16.
(2) (B)  Rules or regulations made under this article may make
provision for the constitution of common funds for investment
purposes in the form of a collective investment scheme by contract
or other arrangement in writing and may exempt such funds from
the application of any article or provision of the Civil Code under
Title V of Part I of Book Second with such modifications and
variations as may be established.
  ( 3 ) Rules or regulations made under this article, may be made
                  INVESTMENT   SERVICES [ CAP. 370.        15
subject to such exemptions or conditions as may be specified
therein, may make different provision for different cases,
circumstances or purposes and may give to the competent authority
such powers of adaptation of the rules or regulations as may also be
so specified.
  ( 4 ) Rules or regulations made under this article may impose
punishments or other penalties in respect of any contravention or
failure of compliance not exceeding a fine  ( multa )  of forty
thousand liri or imprisonment for a term not exceeding one year, or
both such fine and imprisonment.
(5) The exercise of any of the powers assigned under this
article shall be subject to any obligations or rights arising from
Malta’s international commitments.
Power of 
competent 
authority to require 
information.
Amended by:
XVII. 2002.147.
13. ( 1 ) The competent authority may, by notice in writing,
require -
( i ) any person who is or was providing, or who
appears to be or to have been providing, an
investment service; or
( ii ) a collective investment scheme; or
( iii ) any person who is or was carrying on, or who
appears to be or have been carrying on activities
in connection with such a scheme; or
( iv ) any person who has issued, or appears to have
issued an advertisement falling within the
provisions of article 11 ( 1 ) ; or
( v ) any other person who appears to be in
possession of relevant information, 
to do all or any of the following:
( a ) to furnish to the competent authority, at such time and
place and in such form as it may specify, such
information and documentation as it may require with
respect to any such service, scheme or advertisement
as aforesaid, or with respect to any person with whom
the licence holder has close links within the meaning
of article 6;
( b ) to furnish to the competent authority any information
or documentation aforesaid verified in such manner as
it may specify;
( c ) to attend before the competent authority, or before a
person appointed by it, at such time and place as it
may specify, to answer questions and provide
information and documentation with respect to any
such service, scheme or advertisement as aforesaid.
  ( 2 ) The competent authority may take copies of any documents
furnished or provided under this article.
  ( 3 ) Where the person required to provide information or
documentation under this article does not have the relevant
information or documentation, he shall disclose to the competent
  16      CAP. 370. ]              INVESTMENT   SERVICES
authority where, to the best of his knowledge, that information or
documentation is, and the competent authority may require any
person, whether indicated as aforesaid or not, who appears to it to
be in possession of that information or documentation, to provide
it.
  ( 4 ) A statement made and documentation provided in
pursuance of any requirement under this article may be used in
evidence against the person making the statement or providing the
documentation as well as against any person to whom they relate.
Cap. 9.
( 5 ) The provisions of this article shall not apply to information
or documentation which is privileged in accordance with the
provisions of article 642 ( 1 )  of the Criminal Code.
( 6 ) The power to require the production of documentation
under the provisions of this article shall be without prejudice to any
lien or charge claimed by any person in relation to such
documentation.
( 7 ) Where the competent authority has appointed a person
under subarticle  ( 1 )( c ) , such person shall, for the purposes of
carrying out his functions under his appointment, have all the
powers conferred on the competent authority by this article and a
requirement made by him shall be deemed to be and have the same
force and effect as a requirement of the competent authority.
Cap. 204.
(8) Without prejudice to the other provisions of this article, a
licence holder may be required to submit to the Central Bank of
Malta such information as the Bank may reasonably require for the
discharge of its duties under the Central Bank of Malta Act.
Appointment of 
inspectors.
14. ( 1 ) The competent authority may, whenever it deems it
necessary or expedient, appoint an inspector or inspectors to
investigate and report on the affairs of any persons or scheme
referred to in article 13 ( 1 )( i )  to  ( iv ) .
( 2 ) An inspector appointed under subarticle  ( 1 )  - 
( a ) may also, if he thinks it necessary or expedient for the
purposes of that investigation, investigate the affairs
of any person or scheme mentioned in subarticle  ( 1 ) ;
( b ) shall have and may exercise all the powers conferred
on the competent authority by article 13, and any
requirement made by him shall be deemed to be and
have the same force and effect as a requirement of the
competent authority;
( c ) may, and if so directed by the competent authority
shall, make interim reports and on the conclusion of
his investigation shall make a final report to the said
authority.
( 3 ) The competent authority shall have power to order that all
expenses of, and incidental to, an investigation pursuant to this
article be paid by the persons or scheme concerned.
                  INVESTMENT   SERVICES [ CAP. 370.        17
Power to issue 
directives.
Amended by:
XVII. 2002.148.
15. ( 1 ) Without prejudice to any of the powers conferred on it
by articles 13 and 14, the competent authority may, whenever it
deems it necessary, and whether upon a report by an inspector
appointed under article 14 or not, give, by notice in writing, such
directives as it may deem appropriate in the circumstances; and any
person or scheme as is referred to in article 13 ( 1 )  to whom or to
which the notice is given shall obey, comply with and otherwise
give effect to any such directive within the time and in the manner
stated in the directive or further directive.
( 2 ) Without prejudice to the generality of the foregoing
provisions of this article, a directive under this article may - 
( a ) require anything to be done or be omitted to be done,
or impose any prohibition, restriction or limitation, or
any other requirement, and confer powers, with respect
to any transaction or other act, or to any assets, or to
any other thing whatsoever;
( b ) require a collective investment scheme and the
manager of such a scheme, or his equivalent, and any
other person who may issue, redeem, sell or purchase
units in the scheme, to cease the issue, redemption,
sale, or purchase of units or all or any combination of
those activities, as may be specified in the directive or
further directive;
( c ) require that any person having functions in relation to
the holder of a licence be removed or removed and
replaced by another person acceptable to the
competent authority;
( d ) require a collective investment scheme or its directors
and shareholders, or the manager or trustee or
custodian of a scheme, or their equivalent, to wind it
up by such date and in accordance with such procedure
and other provisions as may be specified in the
directive or further directive;
( e ) require a licence holder or any person who is or was
providing, or who appears to be or to have been
providing an investment service to cease operations
and to wind up its affairs, in accordance with such
procedures and directions as may be specified in the
directive, which may provide for the appointment of a
person to take possession and control of all documents,
records, assets and property belonging to or in the
possession or control of the licence holder or such
other person.
( 3 ) The power to give directives under this article shall include
the power to vary, alter, add to or withdraw any directive, as well as
the power to issue new or further directives.
( 4 ) Where the competent authority is satisfied that the
circumstances so warrant, it may at any time make public any
directive it has given under any of the provisions of this article. 
Right of entry.
  18      CAP. 370. ]              INVESTMENT   SERVICES
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 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.
( 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 subarticle  ( 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 subarticle  ( 1 )  for the purpose of obtaining
there any information or documents specified in the authority,
being information or documents that could have been required
under such notice as is referred to in subarticle  ( 1 ) .
( 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.
CO-OPERATION WITH OVERSEAS REGULATORY AUTHORITY
Powers 
exercisable.
Amended by:
XVII. 2002.149.
  17. ( 1 ) The competent authority may exercise the following
powers at the request of or for the purposes of assisting an overseas
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;
( 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 overseas 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.
( 2 ) The competent authority shall exercise powers by virtue of
this article:
( a ) where the assistance is requested by the overseas
regulatory authority for the purposes of the exercise of
one or more of its regulatory functions; or
( b ) where so required within the terms of Malta’s
international commitments; or
( c ) where so required within the terms of undertakings
                  INVESTMENT   SERVICES [ CAP. 370.        19
assumed in bilateral or multilateral agreements for the
exchange of information and other forms of
collaboration with overseas regulatory authorities
including a request arising under a memorandum of
understanding concluded with the competent authority.
DUTY OF AUDITORS
Auditor’s duty to 
report.
Amended by:
XVII. 2002.150.
18. ( 1 ) An auditor of the holder of a licence shall have the
duty to report immediately to the competent authority any fact or
decision of which he becomes aware in his capacity as auditor of
such licence holder which - 
( a ) is likely to lead to a serious qualification or refusal of
the auditor’s report on the accounts of such licence
holder; or
( b ) constitutes or is likely to constitute a material breach
of the legal or regulatory requirements applicable to
the licence holders in or under this Act; or
( c ) gravely impairs the licence holder’s ability to continue
as a going concern; or
( d ) relates to any other matter which may be prescribed.
(2) An auditor of the licence holder shall report to the
competent authority any facts or decision as specified in subarticle
(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.
( 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 subarticle  ( 1 ) .
( 4 ) The matters prescribed for the purposes of subarticle  ( 1 )( d )
may include matters related to persons other than the licence
holder.
APPEALS, REMEDIES, SANCTIONS AND CONFIDENTIALITY
Appeals.
Amended by:
XVII. 2002.151.
Cap. 330.
19. ( 1 ) In this article the Financial Services Tribunal means
the Tribunal established under article 21 of the Malta Financial
Services Authority Act.
( 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);
( b ) any failure to inform an applicant within the terms of
article 6(6);
  20      CAP. 370. ]              INVESTMENT   SERVICES
( c ) any administrative penalty imposed under article 6(9);
( d ) any refusal, variation, cancellation or suspension of a
licence under article 8 ( 3 ) ;
( e ) any decision under article 10 ( 5 ) ;
( f ) any decision concerning an advertisement under article
11;
( g ) any directive given under article 15; or
( h ) any decision to make a public statement, under the
provisions of article 25, as to a person’s misconduct.
( 3 ) An appeal under this article shall lie only on any of the
following grounds: 
( a ) that the competent authority has wrongly applied any
of the provisions of this Act; or
( b ) that the decision or directive of the competent
authority constitutes an abuse of discretion and is
manifestly unfair, but the discretion of the competent
authority may not, so long as it has been exercised
properly, be queried by the Tribunal.
( 4 ) An appeal made under this article shall not suspend the
operation of any decision or directive from which the appeal is
made:
Provided that a decision to cancel a licence shall not
become operative until the expiration of the period within which an
appeal lies under this article and, if an appeal is made within such
period, the decision shall become operative on the date of the
decision of the Tribunal dismissing the appeal or the date on which
the appeal is abandoned:
Provided further that a decision to issue a statement as to a
person’s misconduct shall not be published until expiration of the
period within which an appeal lies under this article and, if an
appeal is made within such period, the statement shall not be
published before the date of the decision of the Tribunal dismissing
the appeal or the date on which the appeal is abandoned.
Unenforceability 
of certain 
agreements.
20. 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
                  INVESTMENT   SERVICES [ CAP. 370.        21
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:
Provided that where on demand for a recovery under this
article, the court is satisfied that - 
( 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.
Powers of the court 
in the case of a 
likely 
contravention.
Amended by: 
XXIV.1995.362.
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 rules and regulations made under it, or will
contravene or fail to comply with any condition,
obligation, requirement, 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, 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.
( 2 ) If, on an application made under subarticle  ( 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.
( 3 ) If, on an application made under subarticle  ( 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, 
  22      CAP. 370. ]              INVESTMENT   SERVICES
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
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.
( 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.
( 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.
Offences. 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 article 17, or of any court order made under article 21 or
of any rules or 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.
( 2 )  Any person who for the purposes of, or pursuant to, any of
the provisions of this Act or of any rules or 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.
( 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.
( 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.
( 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.
( 6 ) Any person who intentionally obstructs a person exercising
rights conferred by this Act shall be guilty of an offence. 
  Penalties. 23. A person guilty of an offence under the provisions of
                  INVESTMENT   SERVICES [ CAP. 370.        23
article 22 shall be liable on conviction to a fine  ( multa )  not
exceeding two hundred thousand liri or to a term of imprisonment
not exceeding four years, or to both such fine and imprisonment,
unless such fine or term of imprisonment is otherwise imposed
under article 12 ( 4 ) .
Criminal 
proceedings.
24. ( 1 ) No proceedings for an offence under this Act shall be
commenced without the consent of the Attorney General.
( 2 ) The provisions of this Act shall not affect any criminal
proceedings that may be competent under any other law.
Public statement as 
to person's 
misconduct.
25. ( 1 ) If it appears to the competent authority that a person
who holds or who held a licence has contravened any of the
provisions of this Act or of any rules and regulations made under
this Act or has contravened or failed to comply with any condition,
obligation, requirement, directive or order made or given under any
of the provisions of this Act, the competent authority may publish a
statement to that effect.
( 2 ) Before publishing a statement under subarticle  ( 1 ) , the
competent authority shall give the person concerned written notice
of the proposed statement and of the reasons for which it is
proposed to act.
( 3 ) Where the reasons stated in the notice relate specifically to
matters which -
( a ) refer to a person identified in the notice other than the
person who is the subject of the notice; and
( b ) are in the opinion of the competent authority
prejudicial to that person in any office or employment, 
the competent authority shall, unless it considers it impracticable to
do so, serve a copy of the notice on that other person.
( 4 ) A notice served on a person pursuant to the provisions of
this article shall give particulars of the person’s right of appeal
under article 19 and of the provisions of subarticle  ( 5 ) .
( 5 ) Subject to the provisions of article 19 ( 4 ) , upon expiry of
one month from the date of service of the notice under subarticle
( 2 ) , or a copy of the notice under subarticle  ( 3 ) , whichever was the
later, the competent authority may publish the proposed statement
and, after publication, shall send a copy to that person and to any
person on whom a copy of the notice was served under sub-article
( 3 ) .
( 6 ) Nothing in this article shall restrict or otherwise prejudice
the powers of the competent authority under article 15 ( 4 ) .
Confidentiality.
Amended by:
XVII. 2002.152.
Substituted by:
IV. 2003.176.
26. ( 1 ) Information obtained by any person for the purposes
of, or pursuant to, any of the provisions of this Act, or of any rules
or regulatons made thereunder, or in the discharge of any functions
under any of the said provisions, or from overseas regulatory
authority, shall be treated as confidential and protected by the duty
of professional secrecy, and shall not be disclosed to any other
person except in:
  24      CAP. 370. ]              INVESTMENT   SERVICES
( a ) cases covered by criminal law provisions under this
Act or any other Act, including the detection,
prevention or prosecution of criminal offences;
( b ) a summary or collection of information formed in such
a way as not to enable the identity of any persons to
whom the information relates to be ascertained; and
( c ) 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 involved in
attempts to rescue such licence holder, and to such
overseas bodies responsible for the liquidation and
bankruptcy of a person holding a licence or an
equivalent authorisation from an overseas regulatory
authority or for other similar procedures.
(2) The provisions of subarticle (1) shall not preclude the
disclosure of information, provided the consent of the person from
whom the informaiton originates is obtained -
( a ) with a view to the institution of, or otherwise for the
purposes fo any proceedings by the competent
authority before any court under this Act;
( b ) to an auditor where such disclosure would assist him
in the exercise fo his functions under article 18;
Cap. 345.
( c ) to the Central Bank of Malta or to the Listing
Authority under the Financial Markets Act, where such
information is required by the Bank or the Listing
Authority in the exercise of their respective functions
in terms of law;
( d ) in response to a request from, or for the purpsoe of
assisting, an overseas regulatory authority pursuant to
article 17; and
( e ) to such other local or overseas regulatory, judicial or
enforcement authorities where such disclosure is
required or requested for the pursuance of serious
regulatory concerns.
MISCELLANEOUS
Exclusion of 
liability.
Amended by:
XXV.1995.432.
27. The competent authority and any member, officer or
employee of the competent authority, and any other person
appointed to perform a function under this Act, or under any rules
or regulations made thereunder, shall not be liable in damages for
anything done or omitted to be done in the discharge or purported
discharge of any functions under this Act, or any rules or
regulations aforesaid, unless the act or omission is shown to have
been done or omitted to be done in bad faith.
Notices, etc. 28. A notice or other document to be given or served under this
Act, or any rules or regulations made thereunder, shall be deemed
to have been duly given or served on a person if -
( a ) it has been delivered to him; or
                  INVESTMENT   SERVICES [ CAP. 370.        25
( 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.
Application of 
Exchange Control 
Act.
Cap. 233.
29. The Exchange Control Act shall not apply to transactions
carried out by licence holders  ( or by the companies or trusts of such
licence holders as are collective investment schemes )  with persons
not resident in Malta for the purposes of the said Act:
Provided that a licence holder who is not resident in Malta
for the purposes of the said Act shall be exempt from the provisions
of the said Act with respect to any steps which may be taken as
provided in article 4 ( 3 ) , or for the purposes of the establishment of
the licence holder in Malta.
Social security and 
import duty 
exemptions in 
respect of licence 
holders and 
expatriate staff. 
Cap. 318.
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.
( 2 ) In order to obtain the exemption provided for by subarticle
( 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.
( 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:
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.
( 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:
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.
( 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
  26      CAP. 370. ]              INVESTMENT   SERVICES
temporary nature and who has maintained the centre of his
economic interests outside Malta.
Continuance of 
foeign body 
corporate.
Substituted by:
XVII. 2002.153.
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
corporate"), 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.
(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).
(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.
(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.
(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
Registrar shall treat it accordingly.
(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.
(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.
(8) ( a ) A local body corporate carrying on business as a
collective investment scheme authorised or otherwise
                  INVESTMENT   SERVICES [ CAP. 370.        27
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 section,
struck the name of the company off the register.
(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.
SCHEDULES
Amended by:
L.N. 46 of 1999;
XVII. 2002.154.
FIRST SCHEDULE
Services
1. Dealing as Principal or Agent 
Buying, selling, subscribing for or underwriting
instruments as principal or as agent.
2. Arranging Deals
Arranging for another person to buy, sell, subscribe for or
underwrite instruments.
3. Management of Investments
Managing or agreeing to manage assets belonging to
another person if those assets consist of or include one or
more instruments 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.
4. 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, 5 or 6 of this Schedule;
or
( b ) Holding an instrument or the assets represented by or
otherwise connected with an instrument as nominee,
  28      CAP. 370. ]              INVESTMENT   SERVICES
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; or
( c ) Acting as trustee or custodian in relation to a
collective investment scheme.
5. Investment Advice
Giving, or offering or agreeing to give, to persons in their
capacity as investors or potential investors:
- advice on the merits of their purchasing, selling,
subscribing for or underwriting an instrument,
or exercising any right conferred by an
instrument to acquire, dispose of, underwrite or
convert an instrument; or
-  advice in relation to a scheme or arrangement
involving an instrument.
6. Stockbroking
Carrying on the business of purchasing, selling or otherwise
trading instruments quoted on a recognised investment
exchange for and on behalf of a third party or parties.
Amended by:
L.N. 191 of 1998;
XVII. 2002.155.
SECOND SCHEDULE
Instruments
1. ( 1 ) Securities, including shares and stock in the capital of a
company, debentures, debenture stock, loan stock, certificates of
deposit, bonds, notes and any other instruments creating or
acknowledging indebtedness.
(2) Certificates or other instruments which create or
acknowledge indebtedness and which upon issue confer the right to
claim the debt created or acknowledged thereby at some time in the
future, subject to the condition that the claim thereunder may be
reduced to below the value or price of the certificates or
instruments at the time of issue.
( 3 ) S ubarticle  ( 1 )  above shall not apply to -
( a ) any instrument acknowledging or creating
indebtedness for, or for money borrowed to defray, the
consideration payable under a contract for the supply
of goods or services;
( b ) a cheque or other bill of exchange, a banker’s draft or
a letter of credit; or
( c ) a banknote, a statement showing a balance in a current,
deposit or savings account or  ( by reason of any
financial obligation contained in it )  to a lease or other
disposition of property, or a contract of insurance,
                  INVESTMENT   SERVICES [ CAP. 370.        29
other than a contract of a kind specified in article 7 of
this Schedule.
2. Units in a collective investment scheme.
3. Warrants, options, certificates or other instruments,
including any record whether or not in the form of a document,
entitling the holder to subscribe for, acquire, sell or otherwise
dispose of, underwrite or convert any instrument or an interest in
any instrument falling within this Schedule or for any currency.
4. Certificates or other instruments which confer property
rights in respect of any instrument falling within this Schedule.
5. Futures and foreign exchange contracts entered into for
investment purposes or foreign exchange acquired or held for
investment purposes.
6. 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 of property of any description or in an index or other factor
designated for that purpose in the contract.
Cap. 403.
7. (1) Subject to the following provisions of this article,
rights under a contract the effecting and carrying out of which
constitutes business of insurance within the meaning of class III,
linked long term, under the description of classes of long term
business contained in the Second Schedule to the Insurance
Business Act.
(2) Where the provisions of a contract of insurance are such
that the effecting and carrying out of the contract -
( a ) constitutes both long term business within the meaning
of that Schedule and general business within the
meaning of the Third Schedule to that Act; or
( b ) by virtue of article 5(3) of that Act constitutes long
term business notwithstanding the inclusion of
subsidiary general business provisions,
references in subarticle (1) to rights and benefits under the contract
are references only to such rights and benefits as are attributable to
the provisions of the contract relating to long term business.
(3) Subarticle (1) does not apply to rights under a contract of
reinsurance.
(4) Rights falling within subarticle (1) shall not be regarded as
falling within article 6 of this Schedule.
