SUBSIDIARY LEGISLATION INTEREST RATE (EXEMPTION) REGULATIONS

Transcription

1 INTEREST RATE (EXEMPTION) [S.L SUBSIDIARY LEGISLATION INTEREST RATE (EXEMPTION) REGULATIONS 24th March, 2009 LEGAL NOTICE 142 of 2009, as amended by Legal Notice 107 of The title of these regulations is the Interest Rate (Exemption) Regulations. 2. For the purposes of these regulations, unless the context otherwise requires: "company" includes any commercial partnership registered under the Companies Act and any equivalent partnership or similar entity established under foreign law; "financial transactions" means - (a) contracts for differences, derivative contracts including options, forwards, swaps, foreign currency exchange contracts and similar agreements; (b) (c) (d) (f) securities lending transactions, sale and buy back agreements, repurchase and reverse repurchase agreements and similar agreements; obligations linked to the performance of any asset, a basket of assets, a currency, an index, a right or an obligation, any price, value, formula or other market recognised value reference; prime brokerage agreements and other agreements entered into by collective investment schemes, in relation to the administration, management or custody of the assets of collective investments; loans, overdrafts and other financial agreements or facilities which are entered into for the purpose of, or in connection with, any of the transactions specified in paragraphs (a) to (d) of this definition; guarantee, suretyship, indemnity, insurance and other similar undertakings which are entered into for the purpose of, or in connection with, any of the transactions specified in paragraphs (a) to (d) of this definition; and (g) pledges, hypothecs, mortgages and other charges and any other collateral agreements, whether by way of title transfer or otherwise, which are entered into for the purpose of, or in connection with, any of the transactions specified in paragraphs (a) to (d) of this definition; "designated entity" means - (a) the Central Bank of Malta, the European Central Bank, the Bank for International Settlement, a multilateral Title. Interpretation. Cap. 386.

2 2 [S.L INTEREST RATE (EXEMPTION) development bank, the International Monetary Fund and the European Investment Bank; Cap (b) a bank or credit institution licensed under the Banking Act, or otherwise licensed or authorised by a foreign authority in a recognised jurisdiction or a credit institution within the meaning of Article 4 of Directive 2006/48/EC; (c) an investment services licence holder under the Investment Services Act, or otherwise licensed or authorised by a foreign authority in a recognised jurisdiction or an investment firm within the meaning of Article 4 of Council Directive 2004/39/EC including a management company within the meaning of Article 1a (2) of Directive 85/611/EEC as amended by Directive 2001/107/EC; (d) an undertaking for collective investments in transferable securities (UCITS) as defined in Article 1(2) of Council Directive 85/611/EEC of the 20th December, 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investments in transferable securities (UCITS) whether licensed in terms of the Investment Services Act or authorised in a Member State or EEA State; any other collective investment scheme which is licensed, recognised or otherwise exempt in terms of the Investment Services Act or otherwise licensed or authorised by a foreign authority in a recognised jurisdiction; (f) a financial institution licensed in terms of the Cap Financial Institutions Act or a financial institution within the meaning of Article 4 of Directive 2006/48/ EC; Cap (g) a company authorised under the Insurance Business Act or an insurance undertaking as defined in Article 1 (a) of Council Directive 92/49/EEC of the 18th June, 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and a life assurance undertaking as defined in Article 1 of Directive 2002/ 83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance or a reinsurance undertaking or captive reinsurance undertaking as defined in Article 2 of Directive 2005/ 68/EC of the European Parliament and of the Council of 16 November 2005 on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC; Cap (h) a listed company within the meaning of the Financial Markets Act or an issuer of a financial instrument listed on a regulated market within the meaning of

3 INTEREST RATE (EXEMPTION) [S.L (i) Directive 2004/39/EC; a central counterparty, settlement agent or clearing house; or (j) a person, other than a natural person, who acts in a trust or representative capacity on behalf of any entity as defined in paragraphs (a) to (i) of this definition or on behalf of any bondholders or holders of other forms of securitised debt; "Member State" means a Member State of the European Community; "EEA State" means any State which is a contracting party to the agreement on the European Economic Area signed at Oporto on the 2nd May, 1992 as adjusted by the Protocol signed at Brussels on 17th March, 1993 and as amended by any subsequent acts; "OECD country" means any country that is a member of the Organisation for Economic Co-operation and Development established in 1961; "recognised jurisdiction" means a Member State or an EEA State or any OECD country. 3. (1) The provisions of Title IV and Title XVII of Part II of Book Second of the Civil Code or of any other part of the Civil Code or of any other law in so far as they limit or restrict the charging of interest and the compounding of interest shall not apply to any: (a) debts and other obligations which may arise from financial transactions where one of the parties is a designated entity: Provided that no party to the financial transaction may be a natural person; (b) debts and other obligations secured by a mortgage registered or recognised under the Merchant Shipping Act or the Civil Aviation Act; (c) debts and other obligations where - (i) such obligations arise under a contract governed or otherwise regulated by the law of a country other than Malta; and (ii) the agreed rate of interest and, or compounding of interests are in accordance with international market conditions prevailing at the time that the debt or the obligation has been contracted; and (iii) the payor of interest is not a natural person; (d) security (including guarantees, suretyships, indemnities and other similar undertakings, pledges, privileges, hypothecs, mortgages and any other collateral arrangements, whether by way of title transfer or otherwise) which is governed by Maltese law and which is entered for the purpose of, or in connection with, any transaction specified in Non-applicability of Title IV and Title XVII of Part II of Book Second of the Civil Code or of any other law. Amended by: L.N. 107 of Cap. 16. Cap Cap. 232.

4 4 [S.L INTEREST RATE (EXEMPTION) Cap Cap (f) paragraph (c); debts and obligations arising from the offer of financial instruments within the meaning of the Financial Markets Act where the issuer of such instruments is a body corporate or similar entity and the total consideration of the financial instruments offered is at least two million Euro; debts and obligations arising from transactions entered into between companies or undertakings forming part of the same group of companies and, or undertakings; or where a debt or other obligation arises from a transaction entered into by a natural person and a company in which he has a controlling interest and the obligation to pay interest is an obligation undertaken by the company towards the natural person. The reference to "group" and "undertaking" shall have the same meaning as in article 2 of the Companies Act; (g) profit participating loans or profit participating notes and other similar obligations or instruments where the return on the obligation or instrument is variable and is linked to the performance of the business of the borrower or issuer or the performance of an asset or a basket of assets: Provided that the aggregate principal sum of the loans or notes and other similar obligations or instruments is at least two million euro, and that the issuer or the borrower, as the case may be, of the said loan, notes, obligations or instruments is not a natural person. (2) In this regulation "controlling interest" refers to the right at least to exercise majority of voting rights at general meetings or to appoint a majority of the directors. Amount of interest due may exceed capital. Interest rates of credit and financial institutions. Rescission of contract, arrangement, scheme or transaction which is artificial, etc. 4. It shall be lawful for the amount of interest due in respect of any debt or other obligation listed in regulation 3 to exceed the amount of capital due. 5. Notwithstanding anything else contained in any other law, credit and financial institutions within the meaning of regulation 2 may determine the rate of interest payable on deposits held by credit institutions, and the rate of interest that they may charge on loans, advances and any other credit facility as well as in the issue of debentures or debenture stock or other instruments creating or acknowledging indebtedness. 6. Where any contract, arrangement, scheme, transaction or any provision thereof which purports to benefit from any of the exemptions set out in these regulations is artificial, fictitious or simulated, it shall to that extent be without effect and the provisions of these regulations shall not apply thereto and any such contract, arrangement or scheme shall not be binding unless the contract, arrangement or scheme is capable of continuing in existence without such provision. Savings. 7. These regulations shall apply without prejudice to the

5 INTEREST RATE (EXEMPTION) [S.L instances where by law or commercial custom the prohibition against the charging of interest exceeding the amount of the capital did not apply. 8. For the purposes of regulation 3(c)(iii) of the Interest Rate (Financial Transactions) Order, 2005, revoked by this Order, any amount denominated and payable in Euro, at any time prior to the entering into force of these regulations, shall be deemed to satisfy the requirement that the amount be denominated and payable in a foreign currency. Interest Rate (Financial Transactions) Order, 2005.