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Aviation

In response to the recommendations of a legal group commissioned by the Ministry for Infrastructure, Transport and Communications, the Maltese government is proposing to ratify and implement the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol thereto. Ratification of the convention will go some way towards making Malta a more attractive jurisdiction for aircraft registration.

Emulating the success of its Shipping Register, Malta is committed to establishing itself as a leading jurisdiction for aircraft registration. Plans were recently announced to reform the local regulatory framework and develop the registration of aircraft into a niche sector, with the potential of spearheading the creation of a cluster of aviation services.

Banking

The Financial Services Authority recently announced a review of certain criteria regarding the licensing of credit institutions and insurance companies. The rationale for these changes was the recent global financial crisis, which resulted in increasing demands on regulatory authorities to maintain financial stability, and the widening of the grounds for recourse under the bank depositor compensation scheme.

The recent financial crisis has accentuated the importance and relevance of sound and robust internal governance systems for credit institutions. The general framework of internal governance applicable to credit institutions licensed in Malta must therefore be considered, with companies ensuring that their internal governance systems are subject to the necessary scrutiny.

The Malta Financial Services Authority (MFSA) recently published a consultation document proposing amendments to the Financial Institutions Act and a new financial institutions rule, setting out the changes to the Maltese regulatory framework. The MFSA plans to regulate electronic money institutions under the lighter and more flexible regime of the Financial Institutions Act as compared to the Banking Act.

The Malta Financial Services Authority recently published the results of the 2010 independent assessment of its regulatory activities, including banking. The assessment also considered the authority's compliance with the Basel Core Principles for Effective Supervision. This update summarises the main findings.

The Central Bank of Malta and the Malta Financial Services Authority recently published the results of the stress-testing exercise performed on Bank of Valletta plc. This extensive exercise, coordinated by the Committee of European Banking Supervisors, aimed to gather information and assess the resilience of the EU banking system to possible adverse economic development.

The Malta Financial Services Authority has signed a memorandum of understanding with the China Banking Regulatory Commission. The memorandum will enhance cooperation in the sharing of information and the area of banking supervision. Two new banking rules were also recently enacted: one on the prudential assessment of acquisitions and increases in shareholdings, and one on outsourcing.

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Capital Markets

In 2009 some 48,520 companies and partnerships were registered with the Registry of Companies. The number of registered companies has been rising steadily over the past few years. The number of companies which can be legally defined as 'public' account for only a fraction of total registrations; therefore, the main reason for the lack of listed equity is not the exchange, but rather the reluctance of family companies to go public.

In January 2010 the Listing Authority published new amendments to the Listing Rules, which are applicable to all companies listed on the Malta Stock Exchange. The first set of amendments relates to the transposition of the EU Shareholder Rights Directive and aims to address cross-border voting issues. The second set of amendments relates to the corporate governance statement.

Company & Commercial

The will of the majority or the majority rule is an established general principle of company law that ensures that any decisions taken by the company conform to the will of the majority of the shareholders; the same shareholders who share a common (financial) incentive to see that the company thrives. Though a seemingly obvious and well-adjusted rule, it does have its flaws and is not immune to abuse.

Competition

When structuring M&A transactions, particular attention must be given to competition controls. On receipt of a notification, the director general (competition) must assess whether the concentration may lead to a substantial lessening of competition in Malta. A simplified notification procedure applies to concentrations that are deemed to raise no serious doubts as to their legality.

Corporate Finance/M&A

Malta is considered to be an important jurisdiction for the implementation and financing of buy-outs. Building on its civil law background combined with common law concepts, the legislature has invested significantly in ensuring that parties to a leveraged buy-out attain their respective objectives by making available a plethora of legal instruments specifically designed or adapted for such purposes.

M&A transactions in Malta are regulated largely by the Companies Act and the Civil Code. Maltese companies are in turn primarily regulated by the act and regulations enacted under its auspices, including matters such as cross-border mergers, the public offer of securities and the fundamental prospectus requirements for such public offers. A number of other regulations also apply to M&A transactions in the country.

In M&A deals, although legal and commercial considerations take a central role, structuring the transaction to maximise fiscal opportunities remains key. Malta offers a structural platform that allows for numerous benefits and a degree of flexibility. The use of a Maltese vehicle in cross-border transactions can thus result in significant advantages for both the purchaser and the seller.

Where the target company in an M&A transaction is a Maltese company, the financial assistance rules laid down in the Companies Act must be considered when structuring the financing and security package of such acquisition. Financial assistance rules also regularly come into play in relation to leveraged buy-outs. In principle, financial assistance is prohibited; however, exemptions apply in certain cases.

Corporate Tax

The minister of finance, economy and investment recently delivered the 2012 budget speech and announced a number of fiscal measures aimed at incentivising investment and business, among other things. A significant number of fiscal incentives will be introduced with the aim of further encouraging investment in Malta, as well as attracting the necessary talent required to encourage growth in key areas.

The minister of finance, economy and investment recently delivered the 2011 budget speech and announced a number of fiscal measures aimed at incentivising internationalisation, investment and business, among other things. The measures are being introduced against a backdrop of positive economic growth as a result of strong export performance and development in the domestic sector.

In the recently delivered 2010 Budget Speech the minister of finance announced a number of fiscal measures aimed at incentivizing investment and business. Among other things, the measures are intended to promote investment, research and development and environmental protection, and to tighten anti-abuse provisions to prevent certain aggressive tax-planning schemes.

Employment & Labour

In a case brought before the Industrial Tribunal an employee sought redress from her former employers. She claimed that she had been engaged on unfair terms which were intended to circumvent overtime regulations and obligations, and was dismissed from her employment unfairly for no good or sufficient reason.

The Maltese Industrial Tribunal recently decided two separate cases filed simultaneously by a woman against her former employer. The woman claimed that she had been sexually harassed in the workplace and as a consequence was forced to terminate her employment.

The Court of Appeal recently confirmed the decision of the Industrial Tribunal in one of the few cases dealing with a transfer of undertaking. The court confirmed that the outsourcing of cleaning services could be interpreted as a transfer of undertaking even though no assets, whether tangible or otherwise, were transferred.

Information Technology

Overview
Including: Application of Data Protection Act; Requirements and criteria; Data subject rights; Data protection commissioner; Information and Data Protection Appeals Tribunal.

Malta has become one of the most important hubs for internet gaming worldwide, thanks to the strong remote gaming regime which it has adopted over the years, together with its advantageous tax system and technology-neutral legislation. This update discusses the different gaming licence options and provides an overview of this fast-developing industry.

Amendments to the Processing of Personal Data (Electronic Communications Sector) Regulations have come into force. The use of information acquired via prospective customers registering their details on a company's website for direct marketing purposes is tantamount to the processing of personal data, even if the registration has not been completed. Thus, the regulations will apply to email notifications.

Offshore Services

In the past few years the legislature has been active in the sector of fiduciary obligations, particularly those resulting from the creation of trusts and foundations. Foundations have always been regulated by customary law, since no legislation on foundations existed until 2008, when the Second Schedule to the Civil Code was enacted. This schedule dedicates an entire subtitle to foundations.

'Estate planning' is defined as the process of anticipating and arranging for the disposal of an estate. It involves people that could be family members, other individuals or charitable organizations of your choice. It also involves your assets in whatever kind or form. By placing your assets into trust, specific provision can be made by which your objectives can, if possible, be guaranteed.

Most people have heard of trusts and foundations that are available to private individuals in Malta. However, not everyone is familiar with all that these two structures have to offer. It is likely that once the main characteristics of these two vehicles are understood, they will be used more confidently and the possibilities offered will be endless.

Parents often create trusts for the benefit of a child as beneficiary of the trust. In such cases an independent trustee has exclusive authority to decide on the manner in which the trust funds are managed and made use of for the beneficiary's benefit. This may provide peace of mind for parents who are reluctant to leave a lump sum to a reckless or spendthrift child, or who want to provide for their mentally or physically disabled child.

The social, political and economic changes seen worldwide have led to new questions and raised expectations regarding corporate social responsibility. Companies' corporate social responsibility may take various forms and may be carried out through various institutes. The Maltese foundation, when set up as a voluntary organization, provides an ideal vehicle for corporate social responsibility.

The essence of a trust is that upon its creation the person setting up the trust transfers ownership of the trust property to the trustees. The settlor creates and sets up the trust and decides the form which the trust property may take. However, once the trust is created, unless the settlor has reserved a personal interest, he or she loses all control of or interest in the trust property.

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Securitisation & Structured Finance

In order to finance the real estate developments of a Maltese corporate group, 7% secured notes were issued in a private placement. A Maltese public limited company issued a master loan note to a trust, which in turn placed notes representing a participation in the trust property with private investors. The company on-lent the raised funds to two Maltese subsidiaries, which acquired the property and plan to develop it.

Shipping & Transport

Following the recent increase in attacks on vessels travelling in the vicinity of Somalia, demand has grown for private maritime security companies that can provide professional armed guards on board a vessel to assist in anti-piracy measures. Malta has therefore recently taken steps to regulate the licensing of such companies to ensure that they meet appropriate standards and employ quality personnel of high integrity.

In a recent judgment the Maltese courts rejected a foreign liquidator's application to have a precautionary warrant of arrest lifted on the basis of the EU Insolvency Regulation. This judgment is to date the only judgment delivered by the Maltese courts in which the effects of the regulation on legal proceedings instituted in Malta to secure maritime claims in rem have been discussed.

A Maltese civil court recently further confirmed the rights of mortgagees granted by the law. Despite leaving a number of questions unanswered, this ruling should reassure international financiers of vessels registered under the Malta flag. Provided that the contracts into which they enter are in line with the provisions of the Merchant Shipping Act, financiers can rest assured that their rights will be fully upheld and safeguarded.

Legal history was made recently when a Maltese civil court granted an application requesting approval of a private sale. Court-approved private sales are intended to address the respective disadvantages of private sales and judicial sales by auction. Notwithstanding that this remedy has been on the statute book since 2006, this case represented its first test.

Following the violence in Libya over the past weeks, numerous shipping companies have been operating round trip charter evacuations between Libya and Malta, mainly on the request of governments in Europe, Latin America and the Far East. While tragic in its humanitarian implications, such a crisis presents those with the requisite resources and expertise with a commercial reality that warrants attention.

In 2010 the Maltese courts issued their highest-ever damages award in a case involving a failure to transfer shares in a company that was the owner of a new Aframax tanker. An Italian company filed an action against a Monegasque company for breach of a promise to sell shares in a Maltese registered company which had been formed for the purposes of entering into a shipbuilding contract.

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