Legal & Compliance Malta
Malta has adopted Directive (EU) 2018/843 – Fifth Anti-Money Laundering Directive (“the Fifth AML Directive”) by transposing it into local legislation throughamendments tothe Prevention of Money Laundering Act (Chap. 373 of the Laws of Malta), the Prevention of Money Laundering and Funding of Terrorism Regulations (Subsidiary Legislation, S.L. 373.01) and the Criminal Code, Chapter 9 of the Laws of Malta.
The Fifth AML Directivefurther enhances the EU regulatory regime originally established in 1990 with the First AML Directive. The money laundering directives provide for the application of customer due diligence when entering into a business relationship (i.e. identify and verify the identity of clients, monitor transactions and report suspicious transactions). This legislation has been constantly revised in order to mitigate risks relating to money laundering and terrorist financing. The Fifth AML Directive continues to build on its successors in that it increases access rights to the beneficial ownerships registers introduced under the Fourth AML Directive (Directive 2015/849), it enhances the powers of EU Financial Intelligence Units and improves cooperation and information sharing between anti-money laundering supervisors and broadens the criteria for assessment of high-risk third countries.
The provisions of the AML Directives are aimed at entities or persons carrying on a relevant activity or involved in relevant financial business (“Subject Persons”). Said subject persons are considered the “gate-keepers” in the fight against money laundering and terrorist financing and are required to implement client onboarding procedures, risk assess their clients / financial transactions and report any suspicion of money laundering or terrorist financing.
EMD is your one-stop shop for Legal and Compliance related services. If your firm is a subject person you will need a robust legal and compliance function to help you keep abreast with the constantly evolving regulatory, AML/KYC requirements. A subject person is required to appoint a Money Laundering Reporting Officer (“MLRO”) and Compliance Officer and needs to have policies and procedures in place in respect of client onboarding and risk assessment. The subject person must register with FIAU and must submit an annual Risk Evaluation Questionnaire through the FIAU’s online portal.
EMD Advocates can provide a suite of services to assist with setting up and/or updating of the Legal and Compliance function within the firm including the drafting and review of the relevant policies, procedures and requirements. We can also assist on an ongoing basis to review and update any policies and procedures in line with any legal or regulatory updates. We can assist the Legal and Compliance function within your firm including the following:-
- • Drafting and review of Compliance, AML/KYC policies and procedures in line with the PMLFTR and Implementing Procedures;
- • Assistance with devising and implementing a Customer Risk Assessment process;
- • Assistance with devising and implementing a Business Risk Assessment and periodic reviews thereof;
- • Drafting and reviewing of contracts;
- • Conducting legal research and advising on the applicable requirements;
- • Assistancewithfilling the relevant reports required by FIAU, MFSA, IRD or any other competent authority.
- • Assisting in compiling client profiles and compliance audits when needed
- • Assisting the MLRO and Compliance Officer in all matters.
In addition, through our related entity, EMD Advisory Services Limited, we can also provide corporate compliance services filing of Annual Returns and BO Forms, tax and VAT compliance as well as assistance with book-keeping and financial statements.
Acquisition Malta Company
If you are looking to acquire a Malta company you will need a financial, legal and tax advisor. At EMD we can provide all those services under the same roof. An acquisition can take place through the purchase of all or the majority of the shares in the Maltese entity, alternatively an acquisition can take place by merger.
The method of acquisition chosen will also determine the legal consequences and effects of the acquisition. In the case of an acquisition of shares, the purchaser acquires beneficial ownership of the target company. Through the acquisition the beneficial ownership of the target entity changes, however, the target entity is otherwise unaffected. Therefore, existing contracts continue to apply in view of the fact that there is no change in legal entity. That said, the target company may have some contracts in place which render a change in beneficial ownership a “prohibited assignment” and would therefore trigger termination of the contract. Thus, a review of the relevant contractual arrangements in place prior to the acquisition is advisable so as to ensure that any business significant contracts will continue in force even after the acquisition.
Another method of acquisition is through a merger, whereby an entity acquires another. In this scenario, there is a legal change and transfer of entity since the target company is effectively absorbed and becomes part of the acquiring entity. Therefore, all contracts entered into by the target company are automatically transferred to the acquiring company and it is important to assess the effects of such a transfer from a legal and tax perspective. In certain cases, such as employment, the employee’s rights are protected under specific rules governing transfer of business. Furthermore, in the case of immovable property owned by the target company, a simple declaratory deed must be filed in the Public Registry to record the change of ownership.
An alternative to a merger by acquisition, is a merger through the formation of a new company. In this scenario, therefore, both entities cease to exist and are replaced by a new third entity. Therefore, title to the assets and contracts of both companies are automatically transferred to the new company.
Whichever method is chosen, it is always advisable to conduct a due diligence of the target company to assess its legal and financial standing while at the same time also addressing certain specific aspects such as the transferability of certain contracts as well as the legal and tax implications of the transfer.
EMD Advocates, the legal arm of the firm can provide legal advise on the structuring of the transaction (acquisition of shares, merger by acquisition or formation of a new company) and advising on the implications in relation to title to property, employee rights, transfer of licenses, competition law restrictions and transfer of contracts. EMD Advocates can also conduct a due diligence exercise on the target. This exercise can be performed in conjunction with the Advisory arm of the firm to cover not only the legal issues but also issues relating to tax, VAT and corporate compliance. The due diligence report would highlight any concerns or issues using a traffic light system for flagging matters.
EMD Advisory can provide advice and assistance from a financial and tax perspective in relation to the structuring of the acquisition transaction. EMD can further assist with the compilation of the Independent Expert’s report concerning the price of acquisition.
Finally, EMD Trust, our licensed trust, fiduciary and CSP provider can assist with the implementation of the acquisition including the drafting of the relevant paperwork and filings with the MBR/other authorities involved.