While foundations have been recognized and regulated in Malta for almost 200 years through Maltese case law and doctrinal writings, Malta enacted specific legislation to clearly define their legal framework in 2008. Today, Maltese foundations are regulated by the Second Schedule of the Civil Code (Chapter 16 of the Laws of Malta), which dedicates an entire subtitle to foundations

The legislation allows for the set-up of two types of foundations: Private and Purpose Foundations, which have particular uses and benefits for certain clients.

Private Foundations: Set up for the benefit of a named person or class of persons called beneficiaries. The foundation’s patrimony is owned by the foundation itself (due to its separate legal personality) and is administered by designated persons (known as ‘administrators’) for the benefit of such beneficiaries.

Purpose Foundations: Set ups that have no ascertained or ascertainable beneficiaries, but are established exclusively:

  • For any charitable, philanthropic or other social purpose.
  • As a non-profit making organization.
  • For any other lawful purpose (not necessarily a social purpose and can be a private purpose).

Registration of a Foundation under Maltese Law

Registration of a foundation under Maltese law serves to vest the foundation with legal personality distinct and separate from that of its founders, administrators and beneficiaries (where applicable). By virtue of its separate legal personality, a foundation is capable of holding assets for its own benefit and of incurring obligations for which it is liable with all its assets, present and future. A foundation is not, however, liable for the obligations of any other person except to the extent that it expressly agrees to be so liable.

Features of a Maltese Foundation

Malta Foundation

Details

Means of Establishment

A Maltese foundation can only be constituted in writing, either by a public deed published by a Notary, or by a will. The foundation deed must be registered with the Office of the Registrar of Legal Persons

Assets

The assets of Maltese foundation may originate from any lawful business or activity and may consist of present or future assets of any nature.

The minimum endowment of money or property to set up a private foundation must be worth at least €1,165 (and €233 for a foundation established exclusively for a social purpose or as non-profit making, in the case of a purpose foundation).

Foundation deed

The foundation deed must contain the following information:

  • The name of the foundation, which must include in it the word ‘foundation’.
  • The registered address in Malta.
  • The purposes or objects of the foundations.
  • The constitutive assets with which the foundation is formed.
  • The composition of the board of administrators, and if not yet appointed, the method of their appointment.
  • The legal representation (a local representative is necessary, if the administrators of the foundation are non-Maltese resident).
  • The term for which it is established.
  • In the case of a private foundation, the deed of foundation must contain the names of the beneficiaries, or in the absence of such indication, a declaration that the foundation is constituted for the benefit of the beneficiaries. In the latter case, the beneficiaries must be indicated in a separate legal instrument, known as a beneficiary statement, which must be signed by the founder, addressed to the administrators and authenticated by the Notary Public who has published the foundation deed. In order to protect confidentiality, the beneficiary statement does not need to be filed; in its stead a note of reference referring only to the founder is filed with the Registrar of Legal Persons.

Legal Form

Once the foundation is established, the deed is published, and the foundation is registered with the Registrar for Legal Persons, a new legal person is created and the foundation itself becomes the owner of the foundation property

Termination

Except when foundations are used as collective investment vehicles, in securitization transactions or in the case of purpose foundations (which may be established for an unlimited term), foundations are valid for a maximum term of 100 years from their establishment.

Founder

The rights of the founder:

  • The founder may exercise supervision over administration of the foundation, obtain a copy or copies of accounts, inventory and descriptive notes of property
  • He/she may intervene in court proceedings concerning the appointment of administrators or the disposal of assets

Conditions for the founder:

  • The founder may also be an administrator
  • The founder may be a beneficiary during his lifetime but in this case, he/she cannot act as sole administrator of the foundation

Administrator

Duties of the administrator:

  • The administrators (whether natural or legal persons) are responsible for maintaining possession and control of the property of the foundation, safeguarding such property and ensuring compliance with the statute of the foundation and the law
  • They are bound by fiduciary obligations stipulated in the Civil Code. Any fiduciary who breaches such obligations shall be bound to return any property, together with all other benefits derived by him, whether directly or indirectly, to the person to whom the duty is owed.

Conditions for the administrator:

  • The administrator can be based outside Malta. However, a person resident in Malta must be appointed to act as the local representative of the foundation in this case;
  • The administrator may be the founder; however, in such situation, the founder cannot be the sole administrator.

Supervisory Protector

The deed can provide for a supervisory council or the office of protector. They usually exercise supervision over the acts of the administrators, and may be vested with powers of appointment or removal of administrators.

Tax on Maltese Foundation

Maltese Foundation are very attractive from a tax perspective. The Malta Foundation can elect to be treated in the same manner as a company that is ordinarily resident and domiciled in Malta. This results in the chargeable income accruing to and/or gains realized by a foundation to be subject to tax in Malta on a worldwide basis at the flat rate of 35%. 

Malta Foundation Distinctive Benefits

  • Have a separate legal personality
  • Defined in terms of the assets making up the foundation
  • Foundation is the legal owner of its own assets

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