Cap. 16 Art. 31BPrivate interest foundations and trading activities.

(1) Private interest foundations may carry out the trading activities referred to in:

(a) this sub-article and sub-articles (2) and (3); and

(b) sub-articles (4), (5) and (6) without limitation:

Provided that private foundations may also establish another legal organisation to carry out acts of trade or trading activities to achieve and promote their principal purposes and objectives. They may establish another legal organisation to carry out any acts of trade which are not related to their principal purposes and objectives only when this power is expressly granted in their statute. For the purpose of this article, a private interest foundation means a foundation, which neither qualifies as a public benefit foundation nor is it established for a public or social purpose and which is not a voluntary or non profit organisation but which can be established for a legitimate purpose and any reference to a foundation in terms of this article shall be construed as a reference to a private interest foundation.

(2)Notwithstanding the provisions of sub-article (1), a private interest foundation:

(a) may have additional objectives and powers contained in its statute to enable it to carry out any such activities referred to in this article to achieve its purposes or to protect its assets and, or to otherwise comply with legal requirements; and

(b) shall, in any case, be deemed to have all the powers to do anything which is necessary or ancillary to achieve the said purposes. (3)In addition to the activities referred to in sub-articles (1) and (2), a private interest foundation may:

(a) hold assets as an investment portfolio and to do all such acts ordinarily carried out in such context;

(b) carry out any specific actions with shares it may hold as may be designated in the statute of the foundation for the achievement of any designated purpose, transaction or for the protection of any designated interests;

(c) own, establish, grant and license a franchise, a trade mark or other intellectual property which gives rise to income;

(d) own income which may be made payable to voluntary organisations which own, administer or otherwise operate an innovative technology arrangement as defined in the Malta Digital Innovation Authority Act; and

(e) own commercial property or a ship or aircraft. (4)For the purposes of sub-article (3):

(a) a foundation shall act as the passive owner of such assets, the administration of which is delegated to a third party, including another legal organisation with its own board of directors or a third party under a fiduciary agreement or temporary title; and

(b) the carrying out of acts of trade of any kind by the delegate with assets belonging to the foundation shall not imply that the foundation is itself carrying out such activities.

For the purpose of this sub-article "passive" shall mean that the foundation is not involved in the day to day operations of the relevant activity but shall not imply limitations on the foundation or its administrators from exercising or protecting the rights of the foundation in relation to any of its purposes or assets.

(5)Subject to any authorisations, registrations or notifications as may be necessary under applicable laws, a foundation may operate:

(a) as a collective investment vehicle, and issue units to investors therein, for the holding of a common pool of assets, the management of which is delegated to a third party;

(b) as a pension or employee benefit arrangement;

(c) as a securitisation vehicle or for the purpose of supporting or implementing a securitisation transaction, including to hold any assets in connection therewith, borrow monies against the issue of bonds, establish security or collateral and do all relative and ancillary acts;

(d) as a retirement scheme or fund;

(e) for the holding, administration, development, or sale of undivided property originating from an inheritance deriving from one or more deceased person or persons common to the beneficiaries for the sole purpose of the division or liquidation of the common estate;

(f) to issue tokens and carry out any trading activity resulting from such foundations owning, administering or otherwise operating an innovative technology arrangement, as defined in the Malta Digital Innovation Authority Act; or

(g) for any other purpose as may be prescribed in a notice issued by the Minister under this Schedule.

(6)A foundation may be used in the context of the following transactions and any transactions connected or ancillary thereto:

(a) securities offerings, whether to the public or for private placement, portfolio management and custody of investment instruments;

(b) the grant of real or personal security interests, including hypothecs, mortgages, privileges, pledges and guarantees;

(c) collective loan agreements and other multi-creditor banking facilities;

(d) insurance policies and the payment of proceeds thereunder;

(e) timeshare and multi-property structure; and

(f) such other commercial transactions as may be prescribed in a notice issued by the Minister under this Schedule. (7)When a foundation is established with segregated cells, the foundation may itself render services against remuneration in favour of any of its cells which are established for the benefit of beneficiaries or for purposes or both.

(8)Whenever the activities of a foundation intended to be carried out under sub-articles (4), (5) and (6) are subject to laws regulating credit or financial institutions, insurance undertakings, investment services or funds, trusts and trustees, corporate or other licensable fiduciary institutions, such foundation shall only be permitted to register with the prior written consent of the Malta Financial Services Authority, where applicable in terms of law and when it is the competent authority under such law, or may be permitted by such authority to register but not to carry out activities, until it is authorised by means of a notice issued by such authority. (9)Where such activities are exempt from registration in terms of sub-article (8), the Registrar for Legal Persons may request confirmation of such exempt status from the Malta Financial Services Authority prior to registering the foundation in terms of the provisions of this Schedule. (10)Nothing in this article shall prohibit foundations regulated by European Union law from carrying out acts of trade or trading activities if they are permitted to do so under such law.