Cap. 16 Art. 32APublic benefit foundations and trading activities.

(1) Without prejudice to the ability of any public benefit foundation to carry out acts of trade in the ordinary course of carrying out its principal purposes and objectives, in terms of article 38(2) of the Voluntary Organisations Act, where applicable, a foundation shall not be established to carry out acts of trade or trading activities on a regular or continuing basis nor shall it do so in practice, except as permitted under this article and when the proceeds of such trading activities are attributable to a social or public purposes.

(2)Notwithstanding the provisions of sub-article (1) a foundation may own, acquire or be endowed with shares or other interests in another legal organisation and may generally:

(a) carry out any specific actions with shares it may hold as may be designated in the statute of the foundation for the achievement of its main purposes and objectives;

(b) subject to such authorisations as may be necessary under applicable laws, 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; and

(c) seek the achievement of designated social purposes which may include health and education: Provided that this shall not apply to management agreements, licences or otherwise to third parties for profit: Provided further that:

(i) when the foundation owns a shareholding in an organisation established to trade, the trading organisation shall not be restricted in its activities by the purposes of the foundation in any manner, unless otherwise stated in the statute of such trading organisation;

(ii) when the foundation qualifies as a voluntary organisation and owns shares or other interests in another legal organisation established pursuant to the provisions of article 38 of the

Voluntary Organisations Act, the provisions of sub-article (4) of the said article 38 shall apply but the relevant limitations shall not apply to persons who are not involved in the foundation and are not related parties thereto; and

(iii) the purposes of the holding, acquisition or endowment of shares or other interests shall not be to enable the foundation to speculate with such assets.

For the purposes of sub-paragraph (ii), "related parties" shall mean persons related by consanguinity or affinity in the direct line in any degree or in the collateral line up to the third degree inclusively, and shall also include any person involved in the same business under any legal structure or otherwise.

(3)With reference to a public benefit foundation:

(a) its statute may contain additional objectives and powers to enable it to carry out any such activities, to achieve its purposes, to protect its assets and otherwise to comply with legal requirements; and

(b) it shall, in any case, be deemed to have all the powers to do anything which is necessary or ancillary to achieve the said purposes. (4)It shall be lawful for -

(a) the administrators or a person designated in the statute;

(b) any public benefit beneficiary, in the case of public benefit foundations; or

(c) the State Advocate, in the case of a public benefit foundation and, or the Commissioner for Voluntary Organisations in the case of foundations which are voluntary organisations enrolled in accordance with the Voluntary Organisations Act, to seek directions from the Court as to whether the actual or proposed activity of the foundation constitutes regular or continuing trading activity beyond what is permitted under sub-article (1) and the Court may, in such cases, issue directives to the foundation on the manner in which it shall carry out activities consistently with this article, including a direction to amend its purposes and objectives, but any such order shall not affect or invalidate acts already lawfully carried out or interrupt lawful acts in progress.

(5)The Court shall also consider the following principles and circumstances:

(a) in case of a public benefit foundation, the avoidance of speculation which may affect the assets of the foundation and the achievement of its purposes;

(b) the creation of liabilities which may impinge on the achievement of the purposes of the foundation;

(c) the protection of third parties dealing with the foundation; and

(d) the competence of the administrators to carry out such activities and the extent of the delegation of such functions to third parties.

(6)When a public benefit 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 its beneficiaries or its purposes or both. (7)Nothing in this article shall prohibit public benefit 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: Provided such acts or activities are carried out solely to achieve and promote the principal purposes and objectives of the foundation.