Legal Highlights

We operate in a transparent and efficient regulatory environment, that guarantees the parties to the securitisation transaction maximum certainty on their legal position.

Regulation

  • Single Malta regulator: the Malta Financial Services Authority (“MSFA“).
  • No licencing or authorisation requirements imposed on SCCs, save only public SCCs.
  • SCCs classify as Financial Vehicle Corporations (“FVCs”), not investment funds, in terms of of Regulation (EU) No. 1075/2013 ECB.
  • SCCs are also precluded from being considered / reclassified as a fund (including AIFs).

Notification to the Authorities

  • Notification to MFSA of the establishment of SCC;
  • SCCs required to submit quarterly reports to the Central Bank of Malta, in terms of Regulation (EU) No. 1075/2013 ECB.

Procedural Issues

Tax Neutrality

Procedural Issues

Bankruptcy remoteness of originator

Proceedings against an originator cannot impinge on:

  • A Securitisation Cell Company (SCC);
  • Assets;
  • Any other assets and obligation due in its favour by underlying debtors in connection with the securitisation assets.

Non-petition clause

SCC’s constitutive documents may permit a particular class of persons to demand or place the SCC only under:

  • dissolution and winding-up proceedings company recovery procedure;
  • company reconstruction; or
  • other proceedings affecting creditors’ rights.

Preferred claims

The claims of investors and other creditors of a securitisation vehicle over its assets and proceeds derived there from are privileged. These claims ranking prior to any claims by third parties against the securitisation vehicle and its assets.
Amongst themselves, the ranking of securitisation investors and other creditors may be determined contractually.
For further information visit the MFSA website

Limited litigious recourse

Only securitisation creditors are permitted to demand the issuance or enforcement of any precautionary act or warrant against the SCC; save only where fraud is proven to the satisfaction of the courts in Malta.

Tax Neutrality

For income tax purposes, each and every cell of a SCC is treated as a separate company.
Annual audited accounts of the core must be prepared. In addition, separate audited financial statements for each cell are to be kept in terms of the Maltese Income Tax Acts.
No Malta tax liability for originator who is not tax resident in Malta on consideration for securiti sation assets.
Income tax is charged on the worldwide income and gains of the SCC.
Taxable income of the SCC can be reduced or eliminated by the general rules on deductions of expenses.
Permitted deductions include:

  • Expenses wholly and exclusively incurred in the production of the income;
  • Payables from SCC to originator for the securitisation assets;
  • Payables in relation to the instruments issued by an SCC;
  • Expenses connected to day-to-day running of an SCC;
  • A further deduction of an amount equal to the total remaining income, if any (i.e. “Residual Profit Deduction”);
  • Exemption from income tax on gains derived from a transfer of securities in an SCC by non-Malta residents;
  • STAMP DUTY – Exemption from stamp duty on a transfer of securities issued by an SCC Malta resident;
  • VAT – Exemption from VAT on transactions in shares and securities in general;
  • OTHER TAXATION – SCCs enjoy the possibility to avail of an extensive double tax treaty network (70 treaties currently signed and ratified by Malta);
  • No withholding tax on payments by SCCs to non-Malta resident investors holding of equity (dividend) or debt (interest) instruments of SCCs;
  • No thin capitalisation restrictions.