The Malta Business Registry (MBR) is now entrusted with the registration of foundations and associations, and a new unit within the MBR has been set up to handle the registration process.
Apart from the registration process, this new unit will also vet and register the documents or notifications of these legal organisations, apart from screening and verifying beneficial owners, administrators and founders before registration takes place. For this purpose, certified true copies of identification documents for all involved parties are to be provided, as well as a character reference for all administrators where the registrar deems fit.
All involved parties are to be screened. In suspicious cases, the information will be passed on to the money-laundering reporting officer (MLRO) for further investigation and necessary reporting as deemed fit.
Unlike trusts, foundations acquire legal personality upon registration and yet can still fulfil the same purposes for which trusts are used. Foundations may not carry out trading or commercial activities except those listed in the Second Schedule to the Civil Code, Chapter 16 of the Laws of Malta (the ‘schedule’) and the Voluntary Organisations Act, Chapter 492 of the Laws of Malta (the ‘VOA’).
A foundation’s most important documents are its deed (which must be published by a notary), the statute annexed to the deed and the foundation’s disclosure of beneficial owners. The statute must contain specific provisions as required by law and must, inter alia, be in line with the schedule, particularly Article 29.
In case of a non-profit organisation, proof that it has started its enrolment process with the Office of the Commissioner for Voluntary Organisations (OCVO) must also be submitted.
The foundation’s deed and statute must be submitted to the registrar together with the relevant registration documents within three months from the foundation’s date of establishment. The registrar will proceed and register the foundation as soon as its deed, statute and all relevant registration documents follow the schedule’s provisions.
It is mandatory for a foundation registered under Maltese law to have a Maltese-registered office, and it is also a legal obligation for foundations to have administrators appointed
Following registration, information will be keyed on the MBR’s portal to make the information available online in accordance with the law. The MBR’s portal is https://registry.mbr.mt/ROC/.
Foundations can be of various types and the main ones existing under Maltese law are:
• Private foundations: established for the private interest or benefit of a named person or a class of persons (beneficiaries).
• Social purpose foundations: established exclusively for a lawful, charitable, philanthropic, social purpose as non-profit- making organisations.
• Pious foundations: established to fulfil a pious or religious purpose.
• Public foundations: established directly or indirectly by the government of Malta, with a majority of administrators appointed and controlled directly or indirectly by the government.
• Existing foundations: those foundations established before April 1, 2008 and thus not registered in terms of the Second Schedule to the Civil Code.
It is also mandatory for a foundation registered under Maltese law to have a Maltese-registered office and it is also a legal obligation for foundations to have administrators appointed. In this context, administrators are akin to company directors. Social purpose foundations for public benefit must have at least three administrators, who may be individuals or legal persons.
If all the foundation’s administrators are non-residents of Malta, a local representative ordinarily resident in Malta must be appointed. This means that, at all times, the administrators must retain a person ordinarily resident in Malta to act as the foundation’s local representative. The local representative shall have, by operation of the law and without the need for any action by the administrators:
• the legal representation of the organisation in Malta; and
• the legal representation of the organisation limited to the signing of forms and other notifications to the registrar and other competent authorities in Malta, as well as the enrolment of instruments and other documents executed by the administrators with a notary public in Malta when necessary to comply with the organisation’s legal obligations in Malta.
If the administrators appoint another person for the above-mentioned tasks, the local representative shall only act in consultation with such persons when such persons are not in Malta or if they fail to carry out any such function when required to do so within the time frames stated by law.
For a private foundation, the administrator must be licensed by the Malta Financial Services Authority (MFSA) to act as an administrator of private foundations.
A private foundation is a non-governmental and non-profit foundation. Its principal fund usually comes from a single source, such as an individual, family or organisation. Private foundations may be used as a vehicle for estate planning. Registered foundations may also establish segregated cells within the foundation to achieve particular purposes with specific assets, or they may hold assets as an investment portfolio and to conduct any acts ordinarily carried out in such context.
Private foundations can be used to set up a family foundation, which provides a great way to leave a ‘legacy’ to a family member or future children. By setting up a family foundation, a person has more control in managing assets and determining how they are spent, and can also:
• appoint an administrator to properly manage the foundation’s funds and distributions to its beneficiaries;
• segregate the foundation’s assets from personal assets; and
• provide more support to the beneficiaries.
One of the benefits of registering a foundation is that assets and liabilities become distinct from those of the founders, administrators and beneficiaries. To this end, administrators are subject to fiduciary obligations. A protector and supervisory council may also be appointed to supervise the administrators.
Furthermore, the administrators must be familiar with Maltese law to be able to comply with the obligations imposed by the schedule or any other regulation or applicable law, both at the incorporation stage and on an ongoing basis.
Dr Maria Schembri is senior professional officer within the Foundations and Associations Unit of the Malta Business Registry.