Cap. 325 Art. 16Soft loans.

(1) Where the Corporation is satisfied that in the case of a qualifying company it would be consistent with the aims and objectives of the industrial policy of the Government, the

Corporation may grant loans to the said company for the acquisition of plant, machinery and other fixed assets, but excluding land and buildings, in accordance with the terms and conditions herein specified.

(2) The Corporation may grant loans as provided under subarticle (1) when -

(a) the plant, machinery or fixed assets are acquired as part of an investment programme of not more than three years duration as may be approved by the

*1st November, 2000 - see Legal Notice 135 of 2001. Corporation, and

(b) such investment programme is of not less than forty-eight thousand and nine hundred and sixteen euro and eighty-four cents (48,916.84).

(3) Loans under the provisions of this article shall in no case exceed thirty-three per cent of the projected capital investment approved by the Corporation, but no loan shall exceed -

(a) €2,329,373.40 in the case of companies satisfying the condition laid down in article 4(1)(b) of the Act, and

(b) €465,874.68 in all other cases.

(4) The rate of interest charged by the Corporation on loans granted under this article shall be either:

(a) the minimum discount rate in terms of directives issued from time to time by the Central Bank of Malta under the Central Bank of Malta Act, less:

(i) two and a half percentage points in respect of loans made under subarticle (3)(a), and

(ii) half a percentage point in respect of other loans: Provided that the provisions of paragraph (a)(i) shall be applied by the Corporation when the said minimum discount rate is at an equivalent or higher level than two and half percentage points, and the provisions of paragraph (a)(ii) shall only be applied by the Corporation when the said minimum discount rate is at an equivalent or higher level than half a percentage point; or

(b) such other rate as may be prescribed by the Minister by notice in the Gazette.

(5) The repayment of the principal as well as the payment of interest on any loan granted under this article shall be secured by a general hypothec over the property of the company receiving the loan in addition to any other security which the Corporation may require:

Provided that for the purposes of Title XXIII of Part II of Book Second of the Civil Code, the Corporation may allow a hypothecary debt in respect of a loan or other banking facility granted by a financial institution situated in Malta to rank immediately prior to the general hypothec or other security of the Corporation relative to such loan: Provided further that the Corporation may accept a prime bank guarantee or other similar security in respect of its loan instead of or in addition to a general hypothec as aforesaid.

(6) The repayment of any loan made under this article, and of the interest thereon, shall be made within a period and at instalments as may be agreed with the Corporation, but such period shall in no case exceed ten years from the date of the first loan payment received by the company: Provided that, unless otherwise stipulated by the Corporation, for the first two years following the first loan payment the company shall only pay interest on the loan.

(7) Any loan made under this article shall be applied by the company for only such purpose as may be authorised by the Corporation.

(8) Where the Corporation has granted a loan to a qualifying company under the provisions of this article it shall -

(a) from time to time make or cause to be made such examination of books, documents, premises and all other things and matters of that company whatsoever as may be necessary to ensure that the loan is being applied for the purpose for which it had been made; and

(b) request such financial statements from the company as it may require, to be submitted quarterly or at shorter intervals at the discretion of the Corporation.

(9) Where the Corporation has approved that a loan be granted by instalments, and any part of such loan has not yet been advanced, the Corporation, without prejudice to any other remedy, may withhold any portion of the loan still outstanding if -

(a) any sum of money, whether principal or interest due in respect of any loan under this article, remains unpaid; or

(b) any prior loan made under this article has not been applied for the purpose for which it was made or has not been expended in a careful, timely and economical manner; or

(c) the company has gone into liquidation or has become insolvent or has assigned property for the benefit of creditors; or

(d) there has been a breach or non-observance of any condition attached to the loan.

(10) The granting of loans made under this article shall not be subject to the provisions of the External Transactions Act.

(11) With effect from such date as may be determined by the * Minister by order in the Gazette the provisions of this article and those of article 24(1)(c) shall only be applicable with respect to loans granted before the said date.