Operators in the trustee sector may be familiar with the restrictions contained in the Trusts and Trustees Act (Cap.331 of the Laws of Malta, “TTA”) that the MFSA have interpreted as obliging authorised trustees (and fiduciary mandataries and administrators of private foundations) to only offer CSP services to persons to whom trustee services are being offered and not, therefore, to persons that are not also the recipients of trustee services. This was the result of an interpretation of the relevant provisions dealing with the regulatory requirements for trustees, fiduciary mandataries and administrators requiring them to:
- Only carry on activities ancillary or incidental to the main services, and to not have objects which are not compatible with such an activity; and
- To actually conduct activities that are compatible and connected with the main services provided (paras (a) and (b) of articles 43(4)(i), 43(13)(i) and 43(15)(i) of the TTA).
The interpretation gave rise to a reality that presented severe difficulties for those trustee companies that either did not have a separate CSP company within the group or which, following the enactment of the Company Service Providers Act (Cap. 529 of the Laws of Malta), actually liquidated their separate CSP company in view of the exemption that the CSP Act contemplates for trustee companies already authorised by the MFSA.
Although the proposed amendments to the TTA that would seemingly relax the restrictions and finally formally allow trustee companies to provide CSP services across the board, even to persons who are not also recipients of trustee services, have not been enacted, the consultation document issued by the MFSA on the 30th December, 2016 (and closing, following an extension, on the 15th February, 2017) proposing the repeal of the Code of Conduct for Trustees and other Fiduciaries and its replacement with a ‘Rule Book’ for trustees and other fiduciaries, has shed some light on the direction that the MFSA is likely to have taken on this matter and, in fact, includes 2 whole sections (largely lifted from the CSP Rules) in section 5 of the proposed rules, dealing with the provision of company formation services by trustees and the provision of director services by trustee companies. In them, the MFSA refers to a proviso to the above-mentioned provisions (that currently does not feature in the TTA) and which one can only assume to constitute the solution to this practical problem. One will, of course, have to await the actual enactment of the amending act, but at least the inclusion in the proposed Rulebook for trustees and other fiduciaries of rules regulating the provision of corporate services by such authorised persons is very positive.
Author: Dr Anthony Cremona