Malta Business Registry Notice to Subject Persons

On 28 April 2020, the Malta Business Registry issued a reminder notice to Subject Persons in relation to the Register of Beneficial Owners. By virtue of Legal Notice 158 of 2019 the Companies Act (Register of Beneficial Owners) Regulations (“the Regulations”) were amended on 12th July 2019. The amendments to the Regulations transpose certain provisions of the Fifth EU Anti-Money Laundering Directive. The Malta Business Registry reminds Subject Persons that following the coming into force of the Regulations, subject persons in terms of the Prevention of Money Laundering and Funding of Terrorism Regulations providing services in or from Malta, have an added obligation under sub-Regulation 12(2) (Measures to ensure adequate, accurate and current information) of the Regulations. Sub-Regulation 12(2) of the Regulations obliges subject persons to report to the Registrar of Companies any discrepancies they find between the information available to them and the beneficial ownership information held in the register of beneficial owners kept by the Registrar of Companies.

The full text of the notice can be viewed here:  

https://registry.mbr.mt/static-resources/documents/docs/Important%20Notice%20to%20Subject%20Persons.pdf

The European Union’s Investment Policy

The Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – Towards a comprehensive European Investment Policy  (Brussels 7.7.2010 COM (2010)343 final) outlines the first steps of the European Union to establish an investment policy, following the Lisbon Treaty through which investment too became a common Union policy within the framework of the EU’s common commercial policy.  So foreign direct investment is today managed by the EU on behalf of the Member States, whereby the EU negotiates with third countries rules on both investment protection and market access for investment.

The objectives of the EU’s investment policy secures a level playing field so that EU investors abroad are not discriminated or mistreated, while providing the predictability and transparency to businesses.  Furthermore, the EU’s investment policy is also aimed to support sustainable development, respect for human rights, labour and environmental standards in third countries.  Finally the investment policy strives to attract international investment into the EU, while protecting the EU’s essential interests.

Furthermore, the EU adopted Regulation (EU) No. 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional agreements for bilateral investment agreements between individual EU members and third countries with a view to ensure consistency in the investment policy with third countries and that the existing bilateral investment treaties of the EU Member States with third countries are in compliance with EU law, the EU’s investment policy and external action. The EU also wants to ensure that the current bilateral investment treaties of the Member States do not pose obstacles to the EU’s negotiation of investment Chapters in EU-wide international trade agreements which the EU negotiates from time to time with third countries.

In November 2015, the EU agreed on a reformed investment dispute settlement approach through the proposal for an Investment Court System which should culminate in a permanent multilateral investment court project to rule on investment disputes. The Commission’s Trade for All Communication of 2015 also sets the objective of engaging with partners to build consensus for a permanent Multilateral Investment Court.  

The intention for this Multilateral Investment Court is to replace the court systems envisaged both in the EU trade agreements with third countries and to replace the dispute settlement provisions included bilateral investment treaties of the EU Member States.

On 20 March 2018, the Council adopted and published the negotiating directives for a multilateral investment court.

Extraordinary G20 Virtual Leaders’ Summit

Tackling  the pandemic and its economic implications as the world faces a global fallout has brought the G20 countries together in an extraordinary way.

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, addressed the Extraordinary G20 Leaders’ Summit held virtually on March 26, 2020, upon the call of the Saudi Presidency.

Within the framework of the aid packages that various governments are announcing to their respective economies, one may wish to note the stress of the IMF, particularly on the coordination of monetary and fiscal policies. Such policies are already coordinated between the EU Member States through the Treaties’ provisions and various Regulations and Directives which form part of the EU’s economic governance.

Georgieva explained that the IMF is projecting a contraction of global output in 2020, and recovery in 2021, stating that “How deep the contraction and how fast the recovery depends on the speed of containment of the pandemic and on how strong and coordinated our monetary and fiscal policy actions are.”

Georgieva emphasised the crucial importance of “targeted fiscal support to vulnerable households and to large and small businesses, so they can stay afloat and get quickly back to work.  Otherwise it will take years to overcome the effects of widespread bankruptcies and layoffs.  Such support will accelerate the eventual recovery and put us in a better condition to tackle challenges such as debt overhangs and disrupted trade flows.”

The development aspect, which characterise both the International Monetary Fund and the World Trade Organisation, has also been stressed, namely the $1 trillion strong, financial capacity to be placed by the IMF for the defence of emerging markets and developing countries to deal with and overcome the trade, economic and financial crisis created by the COVID-19 pandemic.   These countries are the main focus of attention of the IMF, with the latter working in close collaboration with the World Bank and other financial institutions.

Given the high burden of debt of many low-income countries, the IMF intends to double its emergency financing capacity and boost global liquidity through a sizeable Special Drawing Right allocation. It is also expanding the use of swap type facilities at the Fund Support action of official bilateral creditors to ease the debt burden of the poorest IMF members.   

This development element echoes the opening remarks of King Salman of Saudi Arabia, which currently presides over the presidency of the G20, who observed that “On the trade front, the G20 must send a strong signal to restore confidence in the global economy by resuming, as soon as possible, the normal flow of goods and services, especially vital medical supplies. In addition, it is our responsibility to extend a helping hand to developing countries and least developed countries to enable them to build their capacities and improve their infrastructure to overcome this crisis and its repercussions.”

Rent Laws: Is there proportionality in the application of Chapter 69 of the Laws of Malta and Act X of 2009?

The Constitutional Court in the case (Rikors numru 22/19 GM) Joseph Grima, Georgina Grima, u Doreen Grima v L-Avukat Ġenerali u Lawrence Aquilina u Iris Aquilina has decided on two appeals, one filed by defendants Aquilina and the other appeal filed by the Attorney General (today the State’s Advocate) following a decision of the First Hall of the Civil Court dated 10 October 2019 (“the Decision”).

The Decision had found an infringement of article 37 of the Constitution of Malta and articles 14 and Protocol 1 of the European Convention for the Protection of fundamental human rights.   The plaintiffs in this case had requested the Court to declare and decide that Chapter 69 of the Laws of Malta which granted the defendants the right to renew the lease violated the fundamental human rights of the plaintiffs as envisaged in article 37 of the Constitution of Malta and the First article of the First Protocol of the European Convention (First Schedule of Chapter 319 of the Laws of Malta) and article 14 of the said Convention. The plaintiffs requested the Court to give them the remedies together with the eviction of the defendants and damages, arguing that Chapter 69 did not create the right balance between the landlord and the tenant, given that the rent paid by the defendants did not reflect the market prices of the leased property.  The Decision decided in favour of the plaintiffs and ordered the Attorney General to pay the amount of Eur35,000 by way of compensation for damages.

The Constitutional Court noted that through the entry into force of Act X of 2009, the landlords’ position has improved, for instance through gradual yearly increases and the limited rights with respect to the inheritance of the lease.   Yet, the Constitutional Court observed that there is still a wide discrepancy between the rent as contemplated in the law when compared to the rent that the same property can fetch in the open market.  The Court cited the case Cassar v Malta (Applikazzjoni numru 50570/13) and said that the rent payable in this case is ‘manifestly unreasonable”.

The Constitutional Court held that Chapter 69 of the Laws of Malta does not strike the right balance between the interests of the landlord and those of the tenant. This was also reiterated by the Court of first instance. The increase in rent as envisaged in Chapter 69 is still low when compared to the value of the property as valuated by the court expert.   Therefore, Chapter 69 and Act X of 2009 do not follow the proportionality principle.   The court noted that despite a line of case law on this matter, the House of Representatives has not yet legislated to establish  balance between the rights of the landlord and the social interest intended to protect tenants who do not have the financial means to pay the rent as per market value.  But the fact in itself that the tenant has a financial difficulty to pay an increase in rent does not mean that the landlord has to suffer this burden himself indefinitely.

The Court observed that the rent laws reflect a legitimate social purpose.  In this case, the defendant lives alone and is pensioner of over sixty-five years of age.   Furthermore, the defendant has always lived in this property. Although there is the element of uncertainty  when the landlords can take back the property, yet they know that  as a fact that there is no possibility that any other person is protected by the law to benefit from the lease after the property is vacated by the defendant.  The Constitutional Court also added that through the amendments of Act X of 2009, the tenant is obliged to pay for the internal expenses of the property as they may arise (Article 1531E of the Civil Code).

To this effect, the Constitutional Court rejected the appeal of appellant Aquilina, acceded partially to the Attorney General’s appeal and modified the decision of 10 October 2019, in the sense that it rejected the plaintiff’s claim that the special law  is infringing the fundamental rights under Article 37 of the Constitution and article 14 of the Convention; reduced the compensation to be paid to the plaintiffs from Eur15,000 from the amount of Eur35,000 which was awarded by the first court, which amount is to be paid by the Attorney General, with 15% interest.