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Illumina/Grail: The Continued Search for the Panacea to the Killer Acquisition Conundrum

Chris Grech has authored a case note in the European Competition and Regulatory Law Review (CoRe). The publication provides a detailed overview of the Court of Justice of the European Union’s judgement in Illumina/Grail, which dealt with the issue of killer acquisitions and the possible way forward in this regard, as well as the principles of legal certainty and predictability in merger control. The case note can be accessed here. Author: Chris Grech
08 July 2025
Corporate and Commercial

Struck-Off but still standing: The legal lifeline for companies

On 27th May 2024, the First Hall Civil Court (Commercial Section) (the ‘Court’) delivered its judgement in the names of ‘Usta Holdings Inc. vs. Ir-Reġistratur tal-Kumpaniji’ whereby the plaintiff, as the sole shareholder of Usta Maritime Co. Ltd (C 43902) (the ‘Company’), requested the Malta Business Registry (the ‘Registrar’) to have the name of the Company restored and placed back on the register after it was previously struck off for failure to abide by its obligations. Facts of the Case The Company was struck off the register on 10th December 2020, by order of the Registrar by virtue of regulation 9(3) of Subsidiary Legislation 386.19, namely the Companies Act (Register of Beneficial Owners) Regulations (the ‘Regulations’). Said Regulations dictate that if a company fails to provide information on its beneficial ownership, the Registrar has the right to inform a company of its default by means of a letter as indicated under regulation 9(2). If said information is not provided to the Registrar within one month from said letter, the Registrar may inform the company and publish a notice in the Government Gazette that upon the expiration of three months from the date of the last publication of said notice, the company’s name shall, unless cause is shown to the contrary or the Registrar is satisfied that there are sufficient grounds not to proceed with the striking off, be struck off the register. Following the striking off of a company as described under regulation 9(3) of the Regulations, all assets held by the company will eventually devolve onto the Government of Malta. The main asset of the Company was a pleasure yacht named the ‘m.y. BEY’ (holder of official number 11767), valued at around eight hundred and twenty thousand Euros (€820,000). In order not to lose their main asset, the plaintiff lodged an application in Court to have the Company reinstated onto the register. The plaintiff admitted that the Company was not in compliance with the Regulations and that the Company had also been in default for a number of years, thus understanding the Registrar’s decision to have the Company struck off as defunct. Additionally, the plaintiff also held that these actions were not done in bad faith nor were they done in an attempt to deceive the Registrar, but these were merely a result of alienation by the corporate services provider as a result of miscommunication with the Company. By means of the plaintiff’s application, it was made clear that they had every interest to have the Company restored, to the point that it had already reached out to the defendant Registrar, its corporate services provider and other affected competent authorities to make the necessary amends. Naturally, the plaintiff wanted to retain the Company’s ownership of the yacht with the goal of having the latter managing it, rather than having it devolve onto the government. As a remedy to Company’s wrongdoing, the plaintiff requested the Court to restore the Company onto the register and that it continues its existence by virtue of regulation 9(4) of the Regulations. The plaintiff also requested the Court to order the Registrar to take all of the necessary actions as required by virtue of the laws linked with the reinstating of a company on the register. Regulation 9(4) of the Regulations, as referenced by the plaintiff in their application, states that if a shareholder or a creditor of a company (or any other interested third-party) feels ‘aggrieved’ by the striking off of the company in question, said shareholder, creditor or interested third-party may submit an application within five years from the date of publication of the striking-off notice. A successful action under regulation 9(4) would result in the company being restored onto the register as if it were never struck off in the first place. This would also apply to the officers of the company, in that they would be reappointed back in office as a result of this regulation. Upon the Court’s order, the Registrar shall then proceed to publish a notice in the Government Gazette or on the website maintained by the Registrar (i.e. the Malta Business Registry’s online portal) and in a daily newspaper circulating wholly or mainly in Malta that the name of the company has been restored to the register. In their reply, the Registrar informed the Court that the Company had never submitted information concerning its beneficial ownership throughout its entire lifetime. The Registrar’s first attempt at making amends vis-a-vis the Company, was in the form of a letter dated 27th July 2020. On 10th September 2020, the Company was one of several companies mentioned in a publication on a local newspaper that were to be struck off the register, subject to no objections being made within three months from said date. The Registrar also reminded the Court of the fact that over the years, the Company had accumulated considerable penalties amounting to over seven thousand Euros (precisely €7,013.50) and were left outstanding as at the time of striking off on 10th December 2020. In its reply, the Registrar stated that if the Company was to be restored back onto the register, it requested that all of the outstanding information and documents concerning beneficial ownership and annual returns, for the benefit of third parties. Considerations of the Court Prior to proceeding to pass its judgement, the Court was informed that the Company had already settled all its outstanding dues, both in terms of penalties and in terms of missing documents/information, as a sign of its good faith and in an attempt to rectify the situation as swiftly as possible. As a result of this, the Court ordered: • the Registrar to reinsert the Company’s name back onto the register within 15 days from judgement, on the basis that all of the requirements of regulation 9(4) of the Regulations were satisfied; • the Registrar to effect all the publications that need to be made in order to have the Company placed back onto the register; • the Registrar to restore the Company back onto the register; and • the Company to be held responsible to cover the expenses incurred by the Registrar in reinstating the Company back onto the register. The Court outlined that the adherence to the prescription period mentioned within regulation 9(4) of the Regulations and the plaintiff’s willingness to rectify the situation were the main drivers of its decision. Concluding Remarks The ability for a company to be revived following its striking off by virtue of regulation 9(4) as discussed above, provides an exception to the widespread understanding that the striking off of a company is considered to be the ‘death’ of a company, with no other form of recourse available. Whereas a company which liquidates itself voluntarily and is eventually struck off is considered to be final due to a lack of an ‘aggravation’ by the Registrar, a company which encounters a situation as described in the case above is given ‘one last chance’ to rectify its failure to abide by its obligations and reverse its striking off. Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgment being covered in this law report. This article was first published in ‘The Malta Independent’ on 29/01/2025. Author: Gabriel Debono
08 July 2025
Investment Funds

MFSA clarifies the scope of application of the DORA Framework to VFA Service Providers transitioning towards authorisation under the MiCA Regulation

On the 27th January, 2025, the MFSA released a Circular (the “2025 MFSA Circular”) with an important clarification under Regulation (EU) 2022/2554 (the “DORA Regulation”) pertinent to firms operating within the crypto space. By way of background, on the 26th March, 2024, the MFSA issued a Circular (the “2024 MFSA Circular”) through which the MFSA laid to rest the conundrum which industry had faced in terms of identifying which regime shall be applicable to financial services operators as of the 17th January, 2025 (the DORA Regulation’s application date); you may wish to refer to this publication as a refresher. Annex 1 to the 2024 MFSA Circular included an exhaustive list of the MFSA Authorised Persons which were, and remain, subject to the MFSA’s Guidance on Technology Arrangements, ICT and Security Risk Management, and Outsourcing Arrangements (the “MFSA Guidance Document”), including, by way of example, company service providers and recognised fund administrators. The entities listed in Annex 1 to the 2024 MFSA Circular do not fall in scope of the DORA Regulation. However, the said Annex 1 made no mention of the fate of operators licensed by the MFSA as VFA service providers under the VFA Act (Chapter 590, Laws of Malta (the “VFA Act”)). Against this backdrop, Ganado Advocates sought a clarification on behalf of industry from the MFSA to confirm whether existing operators licensed by the MFSA as VFA service providers under the VFA Act shall or shall not fall in scope of the DORA Regulation between the 17th January, 2025 (the DORA Regulation’s application date), and: the date on which the operator is granted or refused an authorisation as a crypto-asset service provider under Article 63 of Regulation (EU) 2023/1114 (the “MiCA Regulation”); or the 1st July, 2026, being the end of the transitional period referred to in Article 58(3) of the MiCA Act (Chapter 647, Laws of Malta); • whichever occurs first. The 2025 MFSA Circular has now clarified the following: the DORA Regulation applies to, inter alia, crypto-asset service providers as authorised under the MiCA Regulation and issuers of asset-referenced tokens; a VFA service provider authorised under the VFA Act is required to continue following the guidelines set out in the MFSA Guidance Document until the 1st July, 2026, or until the operator is granted or refused an authorisation as a crypto-asset service provider under Article 63 of the MiCA Regulation; and a VFA service provider which receives authorisation from the MFSA as a crypto-asset service provider pursuant to Article 63 of the MiCA Regulation shall, with effect from the date of the receipt of such authorisation: (a) no longer be subject to the MFSA Guidance Document, and (b) qualify as a financial entity under, and become subject to, the DORA Regulation. Complying with the DORA Regulation is a rather complex task which is further compounded by the regulatory and implementing technical standards and guidance documents being released under the DORA Regulation. Ganado Advocates has a DORA-focused team of professionals who are readily available to assist with any queries relating to the application of, and requirements emanating from, the MFSA Guidance Document or the DORA Regulation as may be applicable to your firm. Author: Luigi Farrugia
08 July 2025
Corporate and Commercial

Another Step Forward in Digital Company Law Processes

On the 10th of January 2025, the European Union (EU) published the official text of Directive (EU) 2025/25 (hereinafter referred to as the ‘Directive’) in the Official Journal, which sets out various updates and amendments to Directive (EU) 2019/1151 and earlier frameworks on the use of digital tools and processes in company law. You can access this article by clicking here. The Directive introduces certain key features, such as a multilingual, authenticated EU Company Certificate and a standardised EU Power of Attorney, while also including stricter timelines for domestic company registers to process and publicly disclose company information. This publication aims to identify the main features of the Directive. Improved Company and Branch Incorporations through Digital Mechanisms The Directive introduces targeted updates to further modernize company formation and branch establishment across the EU. While companies can already be incorporated entirely online, the Directive now mandates improved security measures to prevent fraud and enhance reliability, such as advanced identity verification using audiovisual checks and trusted authentication services. In respect of branch registrations, the Directive requires that domestic company registers of Member States ensure that branch registration process can also be completed entirely online, while mandating that such registrations are to be finalised within ten business days, once all necessary documents and fees are submitted. Additionally, branch data should now be included within the EU’s interconnected company register system, which improves accessibility of information. Minimising Administrative Barriers for Cross-Border Transactions A key innovation introduced by the Directive, enshrined in its Article 16b, is the new EU Company Certificate – a standardised document aimed at facilitating cross-border recognition of company information. This electronic certificate shall constitute sufficient evidence, at the time of its issuance, of the incorporation and existence of the company, as well as certain essential company details, including its name, registered office, legal representatives, and other critical information. Such certificate may be obtained at least once per calendar year at no cost. Complementing the above is Article 16c, through which the Directive introduces the EU Power of Attorney – a digital mechanism intended to simplify cross-border representation of corporate entities. By way of a standardised European template, companies may authorise representatives for specific operations in other Member States, without the need to procure an apostille, translation or other similar formalities for authentication or validity. The standard template requires that an outline the scope and details of such representation are inserted, so as to ensure clarity and consistency. Facilitating Document Filing and Authentication The Directive also extends its focus beyond incorporation to the online filing of post-incorporation documents. By reducing the traditional reliance on physical filings, which often leads to delays in registration and increased costs. To meet the Directive’s aims of simplify processes, domestic company registrars are encouraged to adopt advanced electronic controls, such as remote identity verification systems, to minimise the need for in-person interventions. Notwithstanding this, certain robust oversight mechanisms have been included to prevent and combat instances of fraud and misuse. Firstly, all documents filed electronically are to be authenticated using advanced trust services to enhance the security, reliability, and validity of electronic transactions, as prescribed by Regulation (EU) No 910/2014 (the “eIDAS Regulation”). In addition, domestic registrars retain the authority to verify the identity and legal capacity of applicants. In exceptional cases (as may be required for reasons of public interest), such as suspected fraud or identity misuse, domestic registrars may even require the physical presence of applicants. The Maltese Position The Directive enters into force as of the 30th of January 2025, whereas Member States are required to domestically adopt and promulgate the rules set out in therein by 31 July 2027. Locally, the Malta Business Registry (MBR) has already made strides to comply with the standards set out in the Directive, primarily through the launching of its Business Automation Registry Online System (BAROS), wherein users may digitally submit company documentation through a company-linked authorised account on the BAROS website. Notably, it is now a mandatory requirement for Maltese companies to submit their annual accounts online, through BAROS. Additionally, the MBR now accepts company documentation executed via ‘Qualified Digital Signatures’ (QES), which are electronic signatures generated using cryptographic methods designed to be tamper-evident and uniquely associated with the signatory. This allows the MBR to identify the signatory with a high degree of confidence. In fact, QES’ hold the same legal authority and enforceability as handwritten signatures on physical documents. The MBR, through its BAROS platform, provides a QES service free of charge, allowing authorised signatories of company documentation to execute and submit such documentation electronically, provided that they have completed an identity verification process conducted by MBR personnel, in compliance with the standards outlined in the eIDAS Regulation. For further information, please feel free to reach out to Stuart Firman and Benjamin Farrugia who form part of the Corporate Finance and Tax team at Ganado. Authors: Stuart Firman, Benjamin Farrugia
08 July 2025
Litigation and Dispute Resolution

Electronic Service of Judicial Documents: A Game Changer in Reshaping Legal Processes

One of the key pillars of any democratic society is that all persons have access to the justice system. However, one of the most often overlooked yet critical cogs in the judicial process is service i.e. being able to properly notify the respondent of the commencement of judicial proceedings. Effective service seeks to ensure that judicial documents are brought to the attention of the party being served through adequate and practical modes of service that guarantee reasonable assurances that the correct parties are notified, thus preserving the integrity of the judicial process. However, it is often the case that the judicial process is grounded before it can even take off due to the inability to serve the respondent with notice of judicial proceedings. There is therefore a pressing need to ensure that service can be effected properly and without delays The current state of play Under Maltese law, service in Malta is effected either by registered court mail or by the court bailiffs. These modes of service function to a certain extent, however, unfortunately, the system is also fraught with delays that are inevitable due to the reliance on multiple organisational factors, especially when recipients are difficult to locate or notify. Currently, where service could not be completed via either of the traditional modes, the Court may, upon a request filed by the party seeking to serve the document, direct service of the judicial act through affixation and publication in the Government Gazette as well as in local newspapers which results in further delays. This creates a butterfly effect, often leaving proceedings at a standstill for several months until the notification stage is completed. Possible alternative? These delays render the judicial process extremely cumbersome on one level and also make access to effective judicial remedies difficult. Additionally, given the global digital shift, there is an increasing need to modernise the Court system; to adapt and implement more efficient e-communication and notification procedures to expedite the service process. One such way could be by using email to notify parties of judicial acts given that this is both cost and time-effective. The advantages are multifaceted given that the means of service would enhance transparency while at the same time allowing court officials to focus on other important tasks. Practitioners are all too familiar with court officials having to expend significant amounts of time processing physical documents for postal service and waiting weeks for the return of a ‘pink-card’ or postal slip. This problem is exacerbated where addresses indicated by parties in court papers and at the MBR are not genuine bona fide functioning offices. Service by email has the further advantage of providing a quick and clear confirmation of service/ non-service through a delivery/ read receipt. The presumption which applies to the traditional modes of service[1] is that the recipient would have seen the documents once a confirmation of delivery or certificate of service is issued by the Court. Invariably, the presumption typically applied to service under the existing rules is easily applicable to e-modes of service. Assuming electronic service is taken up, some practicalities need to be considered e.g. whether the parties simply send judicial documents directly to a party via email. When would electronic service be considered valid and when is it not permitted? In proposing such a solution, it is also important to ensure that the system retains integrity. Thus, before implementing e-service, there would need to be a comprehensive review of current service rules. Subsequently, attention would need to be on incorporating specific procedures for electronic notification of certain judicial documents. Electronic service would need to be defined and eventually included as one of the main modes of service. The definition and interpretation of electronic service should be broad enough to encompass various forms of electronic communication beyond just email, including social media platforms. In recent UK case law, courts have recognised the validity of service by electronic means, including social media platforms, especially after unsuccessful attempts to serve the documents by post and by court bailiff thereby adapting traditional legal procedures to the digital age and rendering the process of service (i) more efficient and (ii) increasing legal certainty. For this to work seamlessly though, there is the need to enhance the current online platform – to make it more accessible for legal professionals to process and manage filings, and have a system properly set up to monitor formal electronic communications. The online system is functional vis-à-vis case management but not fully operational to receive and process filings. Where service could not be completed via either of the traditional modes, the Court may, upon a request filed by the party seeking to serve the document, direct service of the judicial act via electronic means as opposed to affixation and publication. Procedural matters To the extent this means of service is taken up, then the actual mechanics of how this is implemented needs to be stress tested. In fact, before proceeding with service using electronic methods, there must be an order from the Court authorising e-service. Alternatively, the parties or their legal representatives may choose to formally authorise e-service of pleadings and provide valid email addresses or any other electronic identification. Therefore, the party seeking to serve documents must first establish whether the recipient has agreed to receive service via electronic means or must obtain an order from the Court authorising such service The door to such a means of service has already been left ajar by one of the recent amendments to the Companies Act introducing the requirement that newly incorporated companies must indicate in their Memorandum and Articles, a valid email address of the company. The email address is intended for electronic correspondence between the Registrar and the company and other notifications and could be extended to include service of judicial documents via electronic means. This would expedite the service process, particularly in situations where companies have not updated their registered addresses, or where companies with foreign representatives no longer have access to corporate service providers or have lost contact with those providers. This initiative promotes the use of digital communication. Additionally, with the rise in litigation involving international parties, electronic service enhances accessibility and ensures that all parties are properly notified of proceedings, regardless of their location. Though we have not fully embraced the digital shift in legal communication, implementing electronic service is the logical next step to enhance efficiency within the legal system and improve court operations and processes across the board. [1] Article 187(1) of the Code of Organisation and Civil Procedure. This article was first published in the ‘Times of Malta’ on 19/01/2025. Author: Lindsey Galea
08 July 2025
Banking and Finance

CJEU Clarifies Scope of “Amount Due” under Late Payments Directive

On 12 December 2024, the Court of Justice of the European Union (“CJEU”) delivered an important ruling in Case C‑725/23 in the name of M. sp. z o.o. I. S.K.A. v. R.W. The case arose from a request for a preliminary ruling by the District Court in Katowice-East, Katowice in Poland. The ruling concerns the interpretation of the term ‘amount due’ under Article 2(8) of Directive 2011/7/EU (the “Late Payments Directive” or the “Directive”), which is aimed at combating late payment in commercial transactions. This Late Payments Directive plays a crucial role in protecting the financial health of businesses by discouraging late payments and fostering fair commercial practices. In delivering this preliminary ruling, the CJEU provides much-needed clarity on whether reimbursable costs, such as utilities or property-related expenses, are included within the scope of the ‘amount due’ in the context of commercial agreements. The Late Payments Directive: Purpose and Scope The Late Payments Directive was adopted to address systemic late payment issues in the European Union, which undermine the liquidity and financial stability of businesses, particularly small and medium-sized enterprises (SMEs). Late payments not only complicate financial management but also harm competitiveness and profitability, often forcing creditors to seek external financing during cash flow shortfalls. The Directive applies broadly to “all payments made as remuneration for commercial transactions”, with ‘commercial transactions’ being defined as “transactions between undertakings or between undertakings and public authorities which lead to the delivery of goods or provision of services for remuneration.” The Directive’s key provisions include: • ensuring interest for late payments is due without requiring reminders where the creditor has fulfilled its contractual and legal obligations and has not received the ‘amount due’ on time, unless the debtor is not responsible for the delay; • introducing a fixed sum (at least EUR 40) as a minimum amount of compensation for recovery costs; and • mandating that payment terms are adhered to unless otherwise explicitly agreed upon and not grossly unfair to the creditor. A central concept in this Directive is the ‘amount due’, defined in Article 2(8) as “the principal sum which should have been paid within the contractual or statutory period of payment, including the applicable taxes, duties, levies, or charges specified in the invoice or equivalent request for payment.” However, the Directive does not define “remuneration” for commercial transactions, leaving room for interpretative disputes, as demonstrated by this case. Factual Background of the Case The dispute arose from a lease agreement between M. sp. z o.o. I. S.K.A (“M.”) and R.W., two Polish undertakings. Under the lease agreement, R.W. occupied commercial premises and was required to pay: • rent plus value-added tax (VAT); • utility charges, including heating, gas, and electricity; and • a flat-rate monthly contribution covering property-related costs, such as building common charges and municipal taxes. Following R.W.’s failure to pay 26 invoices, including those for rent, utilities, and flat-rate contributions, M. sought payment and invoked its right to compensation for late payment under Directive 2011/7/EU. This included the EUR 40 fixed sum for each overdue invoice. The Polish referring court questioned whether Article 2(8) is to be interpreted as including within its scope, in addition to the principal sum for the performance characteristic of the contractual relationship in question leading to the supply of goods or the provision of a service, also the reimbursement of costs incurred in connection with the performance of the contract, which the debtor has contractually agreed to pay. Key Legal Issues and Question Referred The central issue before the CJEU was whether the term ‘amount due’ in Article 2(8) of the Directive includes not only the principal payment for the main service (in this case, the lease) but also sums reimbursed by the debtor for costs incurred by the creditor in performing the contract (such as utilities or property-related charges). The Polish referring court raised concerns about a narrow interpretation that might exclude such reimbursable costs. It argued that this would be inconsistent with the Directive’s objective to combat late payments and prevent financial burdens from shifting unfairly to creditors. Such an exclusion could also undermine creditors’ ability to recover full compensation for financial harm caused by late payments. The CJEU’s Analysis and Findings The CJEU emphasised that the wording of Article 2(8) supports a broad interpretation of ‘amount due.’ The use of the term ‘including’ in the definition indicates that the list of items covered—such as taxes, duties, and charges—is non-exhaustive. This suggests that additional amounts linked to the main contractual obligation may also be encompassed. Furthermore, the inclusion of charges distinct from the principal sum, such as taxes and levies, reflects the EU legislature’s intent to address all amounts contractually due between parties, provided they are connected to the performance of the contract. The CJEU highlighted that the Directive applies to all payments made as remuneration for commercial transactions. Importantly, Article 1(2) of the Directive does not differentiate between payments intended to remunerate the main contractual obligation (e.g., rent) and those reimbursing ancillary costs (e.g., utilities). This lack of distinction reinforces the Directive’s broad scope in addressing all payment obligations arising from a commercial transaction. Taking an objective-oriented interpretation, the CJEU explained that the Directive aims to protect creditors from the adverse effects of late payments, including liquidity challenges and financial instability. These effects are not limited to unpaid principal amounts but extend to any contractually agreed costs that the creditor must temporarily bear due to the debtor’s non-payment. Recital 19 of the Directive underscores the need for fair compensation, including recovery of administrative and internal costs incurred due to late payment. The CJEU reasoned that excluding reimbursable costs from the ‘amount due’ would expose creditors to the very risks the Directive seeks to mitigate, thereby defeating its purpose. The Court’s Conclusion The CJEU concluded that the term ‘amount due’ under Article 2(8) of Directive 2011/7/EU encompasses both the principal sum payable for the main contractual service or obligation and any additional costs or charges that the debtor has contractually agreed to reimburse, provided they are linked to the creditor’s performance of the contract. This interpretation ensures that creditors are fully compensated for all overdue payments, reinforcing the Directive’s deterrent effect against late payment practices. This ruling provides clarity for businesses across the EU by confirming that reimbursable costs – such as utilities or property-related charges – are protected under the Directive confirming the comprehensive scope of the Directive. Creditors can confidently claim interest and fixed compensation on all amounts due under a contract, not just principal sums. By affirming this broad interpretation of ‘amount due’, the CJEU strengthened protections for creditors. This is particularly beneficial for SMEs, which are more vulnerable to cash flow disruptions caused by late payments. Disclaimer: Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgment being covered in this law report. This article was first published in ‘The Malta Independent’ on 15/01/2025. Author: Ria Micallef
08 July 2025
Banking and Finance

‘Buy Now, Pay Later’ Schemes Examined by the CJEU under the Consumer Credit Directive

On 17 October 2024, the Court of Justice of the European Union (the “CJEU”) delivered a ruling in the case of Riverty GmbH (legal successor of Arvato Finance BV) v MI (Case C-409/23), on the qualification of the so-called ‘buy-now-pay-later’ (“BNPL”) schemes, where consumers purchase goods or services and are able to postpone payment, in the context of consumer credit rules applicable at European Union level by way of Directive 2008/48/EC Of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers (the “Consumer Credit Directive” or the ”Directive”). This ruling provides an analysis of what type of interest and what costs are to be considered when determining whether a credit agreement falls within scope of the Directive when it comes to BNPL schemes. Facts of the Case The dispute in these proceedings concerned a provider (Arvato Finance BV, operating under the name ‘AfterPay’, who was legally succeeded by Riverty GmbH) of a deferred payment service as a BNPL scheme in the Netherlands. The scheme allowed customers to defer payments for online purchases without paying interest or incurring significant upfront fees, in return for a payment fee of EUR 1. The provider’s general payment terms presupposed that, after acceptance of the request to use that service, the merchant selling the goods or services assigns to AfterPay the fees relating to the amount for which the customer was liable in respect of the order placed online. The customer would therefore pay AfterPay upon receipt of an invoice therefrom and payment was to be made within fourteen days from receipt of the invoice. Any failure on the part of the customer to forward the amount due to AfterPay within the stipulated period would allow AfterPay to charge administrative fees, monthly statutory interest on the amount due and all reasonable costs incurred for collection of the amount, which costs were at a minimum of EUR 40. MI, being the customer in this case, had failed to pay the amount due to AfterPay within the fourteen-day period and thereafter, triggering the imposition of administrative fees and an additional amount of EUR 40 in respect of costs incurred by AfterPay for the collection. The failure by MI to pay the amounts persisted and led to the initiation of action before the District Court of Arnhem in the Netherlands to enforce the payment obligation plus statutory interest. The District Court referred several questions to the Dutch Supreme Court (Hoge Raad der Nederlanden) (the “Referring Court”) in view of Article 2(2)(f) of the Directive, which excludes from within its scope credit agreements which are free of interest and without any other charges and credit agreements under the terms of which only insignificant charges are payable. In this respect, the Referring Court was faced with the question as to whether interest charged other than that relating to fees for making the credit available, and collection costs in the event of non-payment of a credit agreement must be considered as part of the “total cost of the credit to the customer” in terms of Article 3(g) of the Directive, and whether they must be taken into account in the determination as to whether the agreement in question falls within scope of the Consumer Credit Directive. The Findings of the CJEU Given that the credit agreement in question was of a total amount of less than EUR 200, and that the Consumer Credit Directive allows Member States to extend the applicability of the Directive to credit agreements involving a total amount of credit of less than such amount, the CJEU firstly noted that this extension was taken up under the Netherlands national law. The credit agreement was therefore not excluded from the scope of the Directive’s provisions on this basis. In referring to an assessment of the part of Article 2(2)(f) of the Consumer Credit Directive which excludes agreements granted free of interest and without any other charges from the scope of the Directive, the CJEU noted that the interest charged to the defendant for defaulting on the payment obligations and the costs for the collection of the amounts due constitute interest and default charges. The CJEU noted that the Directive does not define ‘interest’ and ‘other charges’, and referred to different language versions of this provision of the Directive in providing an interpretation of such terms. The CJEU underscored that the primary goal of the Consumer Credit Directive is to ensure a high level of consumer protection in credit agreements and so, exemptions under Article 2(2)(f) must be narrowly interpreted to preserve the Directive’s protective framework. In applying such rationale, the CJEU noted that the interest and charges to be considered for the purpose of Article 2(2)(f) must be those provided for at the time of conclusion of the credit agreement and other charges do not form part of the ‘interest’ and ‘other charges’ referred to in such provision. A customer’s failure to pay and the duration of such failure are essentially unforeseeable at the time of conclusion of the credit agreement and are therefore not to be included. Reference was also made to the Directive’s provisions on the calculation of the annual percentage rate of charge, in which the default charges are excluded. The CJEU here noted that such a calculation is based on the assumption that the credit agreement will remain valid for the agreed period and that the creditor and the consumer will adhere to the obligations under the agreement within the time limits stipulated therein. Another point raised by the Referring Court was related to the circumstances at the time of the conclusion of the agreement provide grounds to assume that the liability for charges imposed upon default in payment forms part of the creditor’s business model, and that this should be taken into account when examining the scope of the Directive. The CJEU, however, concluded that it is for the Referring Court to determine whether a creditor is seeking to circumvent its obligations under the Directive by anticipating the non-payment by the consumer from the time of the conclusion of the credit agreement. Conclusion reached by the CJEU The CJEU ruled that the Consumer Credit Directive must be interpreted as meaning that, other than where the creditor anticipates the consumer’s default in payment from the time the credit agreement is concluded, the non-performance by the consumer of the credit agreement in order to seek a financial advantage, the interest payable by the consumer for non-payment and the collection costs imposed do not fall within scope of the concepts of ‘interest’ and ‘other charges’ within the meaning of Article 2(2)(f) of the Directive. This stands irrespectively of whether such interest and other charges are statutory or contractual in their nature. Disclaimer: Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in The Malta Independent on 25/12/2024. Author: Roberta Carabott
08 July 2025
Banking and Finance

Guidelines on ESG risk management emphasize integration of ESG risks across the 3 lines of defence

On 9 January 2025, the European Banking Authority (the “EBA”) published its final report setting out the Guidelines on the management of Environmental, Social and Governance (ESG) risks (the “Guidelines”)[1]. The Guidelines outline how credit institutions should identify, measure, manage, and monitor ESG risks as part of their broader risk management framework. These Guidelines link to the obligation contained in Article 74 of CRD[2] as amended by CRDVI[3] requiring processes to identify, manage, monitor and report the risks that credit institutions are or might be exposed to, including ESG risks. This obligation is expanded upon in the new Article 87a introduced by CRDVI which obliges institutions to establish strategies, policies, processes and systems for the identification, measurement, management and monitoring of ESG risks. These strategies, policies, processes and systems are to consider the short and medium term, and a long-term time horizon of at least 10 years. Against this background, the Guidelines prescribe, amongst others: The minimum standards and reference methodologies for the identification, measurement, management, and monitoring of ESG risks. The Guidelines delve into the detail of the standards and methodologies addressing, amongst others, the expectation that institutions perform institution-specific materiality assessments of ESG risks regularly as well as whenever there are material changes to the business environment. It is pertinent to note that the scope of the materiality assessment should reflect the nature, complexity and size of the institutions’ activities, portfolio services and products, and the impact of ESG risks should be considered on all traditional financial risk categories to which they are exposed; Qualitative and quantitative criteria for the assessment of the impact of ESG risks on the risk profile and solvency of institutions in the short, medium, and long term; The content of plans to be prepared by the Board of Directors in accordance with Article 76(2) as amended by CRDVI. Plans are to include specific timelines and intermediate quantifiable targets to monitor and address the financial risks stemming from ESG factors, including those arising from the process of adjustment and transition trends towards the relevant Member States and EU regulatory objectives in relation to ESG factors. Notable amongst these objectives, achieving climate neutrality by 2050. The documented plans need to specify the scope of risks captured by each part of the plan (for instance, whether the plan applies to environmental, social or governance risks) and should ensure that all aspects of the plan address at least environmental risks. The Guidelines also complement and further specify other guidelines, such as for instance in relation to the EBA Guidelines on Internal Governance[4]. The latter are now deemed to include an obligation of clear communication on the part of the Board (‘tone from the top’) and appropriate measures to promote both knowledge of ESG factors and ESG risks across the institution, as well as awareness of the institution’s ESG strategic objectives and commitments. The internal control framework as prescribed by the EBA Guidelines of Internal Governance is to be redefined to incorporate ESG risks, including by a clear definition and assignment of ESG risk responsibilities and reporting lines as well as incorporation in ICAAP and ILAAP. The role of each line of defence in the area of ESG risks is further illustrated in the Guidelines. The Guidelines will apply from 11 January 2026 except for small and non-complex institutions for which the Guidelines will apply at the latest from 11 January 2027. [1] EBA/GL/2025/01 [2] Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC [3] Directive 2024/1619 of the European Parliament and of the Council of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks [4] EBA/GL/2021/05 Author: Catherine Formosa
08 July 2025
Private client

2024 Amendments to the Trusts and Trustees Act (Fees) Regulations

The Trusts and Trustees Act (Fees) (Amendment) Regulations 2024 (the “Regulations”), published on 24th December 2024 through Legal Notice 372 of 2024, have substituted the previous regulations last amended in 2015. They will be Subsidiary Legislation 331.01 under the Trusts and Trustees Act (Chapter 331 of The Laws of Malta) (the “Act”). These new Regulations introduce two schedules that outline updated fees applicable for the years 2025 to 2029 and thereafter. The changes highlight an increase to the application fees applicable to: • persons applying to be authorised as trustees in terms of article 43(3) of the Act; • persons using the ‘fast-track’ procedure under article 43(8) of the Act; • persons intending to act as mandatories under article 43(13) of the Act; • persons intending to act as trustees, administrators, directors or similar functionary exercising control over the assets of private foundations in terms of article 43(15) of the Act; • family trusts registered under article 43B of the Act; and lastly • notaries applying to be registered under regulation 3(2) of the Trusts and Trustees Act (Registration of Notaries to act as Qualified Persons) Regulations (S.L. 331.05). Application Fees In terms of application fees, individuals applying under articles 43(3), 43(8), or 43(15) of the Act will now be required to pay €2,000 in 2025. This fee will increase to €2,500 in 2026 and €3,000 from 2027 onwards. For applications under article 43(13) of the Act, the fee has been set at €1,000 for 2025, increasing to €1,500 in 2026 and €2,000 from 2027 onwards. Additionally, applications under article 43B of the Act will incur a fee of €1,500 in 2025, rising to €2,000 in 2026 and €2,500 in 2027 and thereafter. Notaries registering under regulation 3(2) of the Trusts and Trustees Act (Registration of Notaries to act as Qualified Persons) Regulations will pay a fee of €600 in 2025, increasing to €720 in 2026 and €860 from 2027 onwards. Notably, when an individual applies under multiple provisions, only the highest applicable fee will be charged. Fees in Relation to the Modification of an Authorisation These new Regulations introduce a framework for fees related to the modification of an authorisation already granted. Under this new provision, individuals applying for additional authorisation will be eligible for a 25% reduction in the applicable fee. Additionally, those seeking to partially cease providing any of the services originally authorised to provide, are required to pay a modification fee of €1,000 upon submitting their request to the MFSA. Annual Supervisory Fees Annual supervisory fees (now clearly classified into two different categories) have also been revised, which must be paid on the date an authorisation is first granted and annually thereafter on the same (anniversary) date. Individuals authorised under articles 43(3), 43(8), 43(13), and 43(15) of the Act must pay an annual supervisory fixed fee of €5,000 annually starting in 2025, with an increase of €500 each year until 2029. With respect to annual supervisory service fees, persons authorised under articles 43(3) and 43(8) of the Act will pay €2,500 annually, those under article 43(13) of the Act will pay €1,500, and those under article 43(15) of the Act will pay €2,000, from 2025 up to 2029 inclusive. Registrations under article 43B of the Act require an annual supervisory fee of €2,000 in 2025, which will increase by €500 each year until 2029. Notaries registered to act a qualified persons under the Trusts and Trustees Act (Registration of Notaries to act as Qualified Persons) Regulations will pay €1,000 in 2025, €1,500 in 2026, and €2,000 from 2027 onwards. Fees not refundable or prorated Finally, the new Regulations emphasise that all fees are non-refundable and will no longer be prorated. This clarification expands upon the previous regulation, which only stated that fees were non-refundable. The revised fees shall apply to fees falling due on 1st January 2025 and shall therefore not affect the liability in respect of any fees due under the previous regulations prior to the coming into force of these new Regulations. Author: Author: Stephanie J. Coppini
08 July 2025
Corporate and Commercial

Is a handshake equivalent to a final agreement?

Introduction In the case Beer House Ltd (the “Claimant”) vs The General Soft Drinks Company Ltd (C3774) (the “Defendant”) & GSD Marketing Limited (called in as a joinder by means of a decree on the 4 January 2022) ( “GSDM”), the Hon. Madame Justice Audrey Demicoli delved into and examined the commercial relationship between the Claimant, the foreign company Swinkels Family Brewers (“SFB”), Defendant company and/or GSDM. Briefly, the Claimant has, since the year 2000, imported the brand of beer “Bavaria” which it eventually started selling to the Defendant and/or GSDM for it to then be distributed locally. This case was decided by the First Hall Civil Court (the “FHCC”) on the 29 November 2024. The Claimant requested the FHCC (i) to declare the Defendant responsible for all damages suffered by the Claimant which included both actual losses and loss of profit; (ii) to declare that the Defendant acted in breach of its fiduciary duties; (iii) to liquidate all damages suffered by the Claimant including any compensation which may be owed due to a breach of fiduciary duties including use of confidential information of the Claimant and/or unjust enrichment, and if necessary, with the help of legal experts and (iv) to condemn the Defendant to pay the Claimant those amounts as liquidated above. Relevant Facts of the Case The Claimant was involved in the importation of beer and was the exclusive distributor of the beer Bavaria, and this in terms of an agreement dated 10 July 2013. For a number of years, the Claimant used to sell directly to the Defendant who would then distribute the product locally. The parties then entered into talks for the Claimant to transfer its business to the Defendant who would begin importing Bavaria and would continue distributing it locally at a fair price. On the 10 October 2018, through various correspondence, the parties had agreed on all aspects of their business and that the Defendant was to acquire the business of the Claimant as of 1 January 2019, given that a due diligence had to be carried out by the Defendant. Then, between November and December of 2018 the Claimant passed on all confidential information in relation to the business, including prices and profit margins, however, the Claimant alleged that the Defendant used this information for its own benefit and for it to be in a position to sell at an advantageous price. Once the transfer of business took place, the Claimant claimed that the Defendant failed to recognise that an agreement was in place between the parties and that it never paid the Claimant the amounts due. The Claimant stated that this was a clear example of bad faith on the part of the Defendant including also a clear example of breach of fiduciary duties on the part of the Defendant, under Article 1124E[1] of the Civil Code. The Defendant, in its Sworn Reply, rebutted the claim on the basis that: Firstly, the Claimant must identify under which provision of the law it is basing its case on; Without prejudice to the first defence, it is not the proper defendant to answer to the claims of the claimant in these proceedings given that it had no relationship or agreement or business with the Claimant and if at all, it was GSDM who had a distribution contract with the Claimant; The claims are unfounded both in fact and in law given that between the parties there existed no agreement; Without prejudice to the other pleas, the Claimant must prove what is the confidential information that it allegedly passed on as well as how and why such information is confidential; Also, without prejudice to the other please, the Defendant caused no damage to the Claimant. In any case, and without prejudice, the Claimant must prove the causal link between the acts of the Defendant and the alleged damages suffered, including also as it tried to minimise the damages. GSDM, in its sworn reply held that: The claims, particularly those in relation to the payment for damages for actual losses and loss of profit are unfounded in fact and in law given that between the parties there existed no agreement; Without prejudice to the first defence, the Claimant must prove what is the information that it allegedly passed on, how and why it is confidential and what it gained from such information; Also, without prejudice to the other pleas, GSDM caused no damage to the Claimant. In any case, and without prejudice, the Claimant must prove both the causal link between the acts of GSDM as well as the alleged damages suffered including also as it tried to minimise the damages. Courts Considerations The FHCC first went into two preliminary points, (1) the action under which the Claimant brought this case and (2) the preliminary plea raised by the Defendant that it is not the proper defendant in these proceedings. As to (1) above, the Claimant in its sworn application provided that it is basing its case on Article 1124E of the Civil Code while also mentioning, in its third claim, the element of unjust enrichment as provided for in Article 1124A (5)[2] of the Civil Code. During the proceedings the Claimant presented a note making reference to Article 1028A of the Civil Code, i.e. an action referred to as actio de in rem verso.[3] However, time and time again, the Claimant made it clear that any reference to unjust enrichment refers to the fiduciary action under Article 1124E and not Article 1028A. In view of this, the FHCC decided to tackle the case as one brought due to a breach of fiduciary obligations in terms of Article 1124E. As to (2) above, the Defendant claimed that it was not the proper defendant that ought to have been sued given that any agreement made, if at all, was made between GSDM and the Claimant. In fact, the Claimant agreed with this given that the two companies advertised themselves as being sister companies, even having the same shareholders. The FHCC referred to caselaw providing that he who states that he is not the proper defendant must prove that he was in no way involved. By applying this principle, the FHCC concluded that the agreement for the distribution of Bavaria was made between Beer House Limited and GSDM since there existed no agreement between Beer House Limited and the Defendant. In fact, that all correspondence was signed off with GSDM’s logo. The FHCC upheld the Defendants’ second preliminary plea that it was not considered to be correctly sued. The FHCC then went into the merits of the case: Payment of damage representing actual losses and loss of profit: The FHCC stated that while the Claimant did make a claim for damages, it did not however state why such damages are due. The Court examined various exchanges between the parties and that none of it constituted an agreement. In fact, up until November 2018, not only was GSDM still awaiting additional documentation as part of its due diligence, but the contract was yet to be drafted. The FHCC noted that what the Claimant was relying on was in no way a formal contract but rather a formal agreement between the parties’ representatives. This was evident from an email where the following was stated “Beer House formally transferred operations to your company to you personally […] sealed by the common understanding of the agreement reached and handshakes on the day of the transfer.” This further confirmed the courts understanding that the Claimant based its case not on a formal agreement but rather a handshake deal which was yet to be formulated into an agreement. The FHCC agreed with GSDM in that since there was no written agreement, it could not be presumed that there was one in place between the parties. In view of this, the court rejected the Claimant’s first claim. Fiduciary Obligations: In its sworn application the Claimant claimed that GSDM used confidential information to acquire its business and this in breach of fiduciary obligations. The FHCC held that it could in no way agree with the Claimant and this for the following reasons: Firstly, the documents passed on were price lists, copies of invoices and financial statements, all of which could in no way be considered as confidential. Secondly, Article 1124A (5) provides that a person subject to a fiduciary obligation who acts in breach of such obligation shall be bound to return any property together with all other benefits derived by him, whether directly or indirectly, to the person to whom the duty is owed. In this case, it was not proven that GSDM acquired some sort of benefit due to a breach of fiduciary obligations further proving that GSDM did not acquire the business due to a benefit but rather due to mistakes and shortcomings on the part of the Claimant which in turn resulted in SFB wanting to terminate the commercial relationship it had in place. Effectively, it was always SFB’s intention to terminate the relationship it had with the Claimant as evidenced by a Termination Confirmation. In view of this the FHCC held that it was not adequately proven that there was breach of fiduciary obligations on the part of GSDM and therefore rejected the Claimant’s claims in their entirety. Decision In conclusion and for the above-mentioned reasons, the FHCC declared that there was in fact no contractual relationship between the parties and for this reason went on to accede to the Defendant’s second preliminary plea that it was not the proper defendant that ought to have been sued in the proceedings and that accordingly, The General Soft Drinks Company Ltd was not considered to be correctly sued while on the other hand rejecting all of the Claimant’s claims in their entirety. __________ [1] It shall be competent to any beneficiary, in order to enforce fiduciary obligations owed to him, to exercise a right of action on the basis of the provisions of this Title. [2] In addition to any other remedy available under law, a person subject to a fiduciary obligation who acts in breach of such obligation shall be bound to return any property together with all other benefits derived by him, whether directly or indirectly, to the person to whom the duty is owed. [3] Whosoever, without a just cause, enriches himself to the detriment of others shall, to the limits of such enrichment, reimburse and compensate any patrimonial loss which such other person may have suffered. Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in The Malta Independent on 08/01/2025. Author: Krista Refalo
08 July 2025
Private client

Launch of Consultation Period on a new draft Rulebook for Trustees and Other Fiduciaries

On 5th December 2024, the MFSA launched a consultation period on a proposed new Rulebook for Trustees and other Fiduciaries (the “New Draft Rulebook”), ending on the 31st January 2025. Whilst the New Draft Rulebook builds on the current Code of Conduct (published on February 9th 2005) and also builds further on a previous draft Rulebook that had been issued for consultation on the 30th December 2016 (including by taking into account feedback received following the consultation period back then), it also contains a number of changes, both in style and of substance. Seeing that both the Code of Conduct and the first draft Rulebook have long been published, it is not a surprise that the rules have been updated to take into account various regulatory developments that have taken place since then, including amendments to the Trusts and Trustees Act in 2017 mainly those to allow authorised trustees to act as company services providers, as well as the clarification that it is the place of operation of a person (whether legal or natural) that is the relevant connecting factor for regulatory purposes and not residence, amendments to the Civil Code (Second Schedule) in 2018 and 2020, the introduction of the MFSA’s Corporate Governance Code in 2022, the MFSA’s Authorisation Process – Service Charter issued in 2021 and updated in 2024, and the more recent Rulebook for Trustees of Family Trusts published on the 27th November 2024. The rules have now been formulated into a rulebook style, following the model adopted for other Authorised Persons such as the Rulebook for CSPs, besides the most recent Rulebook for Trustees of Family Trusts. Indeed, whilst certain principles such as those on Competent and Effective Management, Adequate Personnel, Staff Knowledge, Competence and Continuous Professional Education, Adequate Systems and Controls (which had already been included in the first draft Rulebook) have been reproduced from the Code of Conduct, they are now placed within a dedicated chapter on ongoing obligations for Trustees and other fiduciaries together with other more recent regulatory obligations. The Rulebook is therefore quite far-reaching and the topics are presented in a well-structured, more streamlined manner. The New Draft Rulebook is in fact split into five chapters specifically dedicated to: Chapter 1 – General Scope and High Level Principles; Chapter 2 – Authorisation; Chapter 3 – Ongoing Obligations; Chapter 4 – Supplementary Rules; Chapter 5 – Enforcement Sanctions The most prominent proposed changes introduced by the New Draft Rulebook include; the extended scope and applicability of the Rulebook so that unlike the current Code of Conduct, which was limited in scope and applicability to trustees whether authorised or not required to be authorised, mandataries, and administrators, the New Draft Rulebook also applies to individuals acting as company services providers who have notified the Malta Financial Services Authority (MFSA) under the Company Service Providers (Exemption) Regulations and authorised persons providing services as Qualified Persons. The New Draft Rulebook does not apply to trustees registered in terms of Art43B of the Trusts and Trustees Act seeing that the Rulebook for Trustees of Family Trusts has now been published; further guidance on the application process with the MFSA, over and above that provided in the first Draft Rulebook, by providing added insight into the MFSA’s expectations and time frames with reference to the MFSA’s Authorisation Process – Service Charter. The New Draft Rulebook now adds that that the MFSA also considers the reputation and suitability of the applicant and all other parties connected with the applicant and the adequacy of the applicant’s resources including human, financial and systems in place when considering an application for authorisation. It is worth noting that the New Draft Rulebook clarifies that the burden of proving fitness and properness now lies with the applicant; - a new clarification that persons having an establishment in Malta providing trustee service to persons outside Malta shall be subject to authorisation as they will be providing services from Malta; - a new derogation from the requirement of having an independent Compliance Officer where the applicant/authorised person is a natural person providing the service of administrator of private interest foundations or the service of mandatary only; - the introduction of an obligation to obtain a number of CPE hours on an annual basis following approval of authorisation; - a new dedicated chapter to ongoing obligations which largely reproduces the provisions of the Code of Conduct (for matters such as Competent and Effective management, Adequate Personnel, Staff Knowledge Competence and Continuous Professional Development, Adequate Systems and Controls) which were already included in the first draft Rulebook with certain additions such as the requirement of having in place a personal transaction policy as well as certain additions to the notifications and approvals required to be made to the MFSA. The Chapter related to ongoing obligations now also refers to provisions found in the Corporate Governance Code; - new reference to a retention period (for documents) of 5 years for inspection by the MFSA (without prejudice to any other retention period in terms of applicable law), introducing different cut off dates depending on the type of document (distinguishing between accounts, outsourcing arrangements, training records, legal advice etc); - added matters to be covered by PII as well as added circumstances relating to PII cover which must be notified to the MFSA; - a new dedicated title to CSPS under the Chapter of Supplementary Rules which now also deals with the requirement of notification to the MFSA and the financial resources requirement, besides also setting out procedures for customer due diligence for the various services provided; - a new dedicated title to authorised persons acting as Qualified Persons under the Chapter of Supplementary Rules – on this point whilst the New Draft Rulebook states that for the purposes of ensuring compliance with fiscal, prevention of money laundering and other legal obligations in connection with the relevant property the trustee shall take into consideration ‘any applicable requirements’ to the relevant property (both prior to an on an ongoing basis) – on this point it must be said that it is not entirely clear which applicable requirements are referred to particularly in the context of ‘other legal obligations’. The rules also set out requirements on the considerations to be made prior to accepting to act as qualified person besides setting out guidance on the required notifications to be made; - a new dedicated title to Private Trustees under the Chapter of Supplementary Rules which includes guidance on the details and information to be kept including that the trustee has a clear understanding of the purpose of the trust, the right of the MFSA to request information and documentation as well as guidance on the information and documentation required to be kept. The Rulebook also make the following rules (within the Rulebook itself) applicable to Private Trustees – high level principles, the requirement relating to retention of documents, rules relating to investments and rules on delegation. Once issued the New Draft Rulebook will replace the Code of Conduct. The consultation period is open until the 31st January 2025 and interested parties are encouraged to send in their feedback. Author: Abigail Galea
08 July 2025
Press Releases

Malta implements revised financial thresholds in public procurement law

Public procurement laws have been amended to increase the financial thresholds applicable to different procurement processes through Legal Notice 360 to Legal Notice 362 of 2024. These amendments primarily ensure that procurement opportunities of a certain monetary value fall under the comprehensive national regime that fully incorporates the directives. Subsidiarily, these amendments also affect when the Department of Contracts (“DOC”) becomes responsible for the publication of a tender process. Generally speaking, unless contracting authorities are listed in a specific schedule which entitles them to administer their own public procurement and save for tender processes with smaller estimated procurement values as explained in this note, contracting authorities must administer their procurement through the Sectoral Procurement Directorate and/or the DOC. By virtue of the new legal notices, contracting authorities may now issue public supply tenders independently without involving the DOC where the estimated procurement value does not exceed €143,000. For public works tenders and concessions, this figure is now €5,538,000 instead of the previously applicable €5,382,000. These amounts are always excluding VAT. These numbers differ for tenders in the water, energy, transport and postal services sectors. For public supply and service contracts, the threshold has been increased to €443,000 from €431,000. For works contracts, the threshold is now €5,538,000. Author: Clement Mifsud-Bonnici, Calvin Calleja, Krista Refalo
03 July 2025
Press Releases

Ganado Advocates announces George Bugeja as new Partner

Ganado Advocates is pleased to announce the promotion of George Bugeja to Partner, effective 1st January 2025. Having been with the firm for several years, George has significantly contributed to the growth of the corporate finance team, advising clients on complex corporate law matters, including mergers and acquisitions, restructuring and insolvency, and energy law. He was awarded a Doctor of Philosophy in Law (Ph.D.) from King’s College London in 2018 for his thesis on “The Basel Accords as a Transnational Regulatory Law: A Focus on Regulatory Consistency and Domestic Embeddedness.” George’s appointment reflects his exceptional legal expertise, dedication to client service, and strong leadership within the firm. He has also developed a special focus on energy law, with extensive experience in both regulatory and transactional matters related to conventional and renewable energy projects. In congratulating George on his new position, Andre’ Zerafa, Managing Partner of Ganado Advocates, remarked, “George’s promotion is a true testament to his hard work and commitment to the firm. His deep knowledge and strategic vision have been instrumental in the growth of our corporate finance and energy law practices. We are excited to see him take on this new role and look forward to his continued contributions to the firm’s ongoing success.”
03 July 2025
Press Releases

Litigation in Malta

Ganado Advocates has contributed the Malta chapter in the 2025 edition of the Chambers Litigation Global Practice Guide.\r\n\r\nThe publication focuses on key aspects of the Maltese legal system, particularly on dispute resolution, court processes, enforcement of judgments, and alternative dispute resolution mechanisms. It provides practical guidance for navigating litigation in Malta, tailored for legal professionals and businesses dealing with complex commercial and civil matters. Access the Malta chapter of this publication here.
03 July 2025
Press Releases

European Account Preservation Order: A Multi-Jurisdictional Guide with Commentary

Luisa Cassar Pullicino has contributed to the Malta chapter in the publication entitled ‘European Account Preservation Order: A Multi-Jurisdictional Guide with Commentary’. This book provides a comprehensive, cross-jurisdictional analysis of the European Account Preservation Order (EAPO), established to facilitate cross-border debt recovery in the EU in civil and commercial matters by offering an alternative to national provisional and protective measures. The book explores how the EAPO has been implemented in different jurisdictions and how it is applied by courts across the 26 EU Member States (excluding Denmark). Note: The book is available for purchase here. Author: Luisa Cassar Pullicino
03 July 2025
Commercial

Publication of the Insurance Recovery and Resolution Directive and Amendments to the Solvency II Directive

On the 8th January 2025, the directive establishing a framework for the recovery and resolution of insurance and reinsurance undertakings, better known as the Insurance Recovery and Resolution Directive or IRRD, and the amendments to the Solvency II Directive were officially adopted and published as law in the Official Journal of the European Union. Both directives, being the first two directives of 2025, are expected to have an effect on the European insurance market as a whole and will enter into force on the twentieth day following the date of their publication, therefore on the 28th January 2025. The IRRD is designed to create a framework for a pre-emptive recovery planning and resolution regime to ensure that insurers and relevant authorities in the European Union are better prepared for situations of significant financial distress and to facilitate early and quick intervention of the authorities, even across borders. It establishes harmonised recovery and resolution tools and procedures, with enhanced cross-border cooperation between national authorities with the intention of creating an anticipatory approach to protect insurance policyholders, minimise the impact on the economy and the financial system and avoid recourse to taxpayers’ money. The European Insurance and Occupational Pensions Authority has been entrusted with drafting various guidelines and technical standards to facilitate the harmonisation of the IRRD across the European Union. The Solvency II Directive which entered into force in January 2016, is the prudential regime for insurance and reinsurance undertakings in the European Union aimed at making the insurance market more stable while protecting policyholders and beneficiaries. It is built on a three-pillar structure intended to form a coherent approach across the sector covering various aspects ranging from quantitative requirements relating to capital, qualitative requirements including governance and risk management, to supervision of the insurance and reinsurance undertakings. The amendments published through the new directive in early 2025 is projected to supplement and improve certain aspects including proportionality, quality of supervision, reporting, long-term guarantee measures, macro-prudential tools, sustainability risks and group and cross-border supervision. Member States are required to transpose the IRRD and the amendments to the Solvency II Directive into national law by the 29th January 2027 and such measures shall apply from the 30th January 2027. Author: Emma Cassar Torregiani
03 July 2025
Capital Market

Non-Profit Companies: A Contradiction or a Practical Tool?

When one thinks of a company, trading activities and profit-making typically come to mind, with dividends eventually distributed to shareholders. The trading “purposes” of a company are in its Memorandum and Articles of Association and while the Companies Act allows companies to be established for any lawful purpose, it is unusual for a company’s purpose to focus solely on the public good rather than the financial benefit of its stakeholders—whether shareholders, employees, creditors, or others. In our legal system, non-profit organisations are traditionally the domain of religious and voluntary organisations, typically structured as foundations or associations. In order to avoid confusion in the perception of supporting members of the public, the Voluntary Organisations Act (VOA) expressly states that “a voluntary organisation may not be established as a limited liability company or any commercial partnership.” However, the concept of a non-profit-making company does exist. This raises questions: Is this designation appropriate? Why are these entities not set up as trusts, associations or foundations – the more typical forms – instead? Voluntary Organisations and Trading Activities Voluntary organisations do not usually engage in trading activities. Their primary focus is on public benefit purposes, even when raising funds through public appeals, fundraising activities, or grants. Engaging in extensive trading activities could detract from achieving the organisation’s public benefit objectives. The VOA allows exceptions where trading is essential to achieve an organisation’s objectives—for example, museums selling entrance tickets or schools charging tuition fees. Additionally, a voluntary organisation is permitted to engage in commercial activities provided the income generated remains minor compared to its overall income from public benefit activities. For significant trading activities unrelated to their public benefit purposes, voluntary organisations are required to set up a limited liability company where the focus is the trading activities intended to generate income and which need to be carried on legally, professionally and in a manner compliant with many laws applicable to traders. This ensures a level playing field by subjecting such activities to the same trading, compliance, health and safety, consumer protection and taxation rules as other commercial enterprises, thereby avoiding discrimination within the commercial sector. The VOA seeks to ensure that proper resources are placed within the trading company to ensure that appropriate resources and focus remain dedicated to the voluntary organisation and its public benefit purposes. Without this division, a real risk would arise that the resources (human and financial) needed for the voluntary organisation would be distracted and upset by the challenges posed to operate a trading operation. Although it is much easier to operate an association or a foundation, as there are far less rules applicable to these forms when compared to a limited liability company, many already find the demands of the VOA to be too cumbersome, just imagine adding to these all the rules applicable to trading companies. So, the law requires a dedicated legal form (a limited liability company), if a voluntary organisation decides to stretch itself into trading activities beyond its own public benefit purposes. In such cases, the flow of funds between the company and the voluntary organisation operates similarly to that between a parent and subsidiary. The dominance of the public benefit purpose in this structure requires, for consistency with the most basic principles of voluntary organisations, that no private interest benefits from the profits generated by the limited liability company. How Does This Work in Practice? When a voluntary organisation establishes a limited liability company, the law mandates that non-profit-making principles must apply to the company to prevent abuse. While the company may generate profit, its purpose must not include the promotion of private interests, such as benefiting its directors, nor can that happen in practice. Profits are to be used solely to advance the objectives of the parent voluntary organisation through direct distributions up to the parent only. The company serves as a vehicle for profit generation to help achieve the voluntary organisation’s goals. Upon liquidation, any capital distribution must go exclusively to the parent voluntary organisation. The directors of the company do not directly fulfill the public benefit purposes of the voluntary organisation. Instead, their role is to generate profits, which are then applied to those purposes. Administrators of the voluntary organisation who also serve as directors of the company are generally prohibited from receiving remuneration, ensuring compliance with restrictions on private benefits. If a remunerated director is engaged to better operate the company, as opposed to relying on volunteers, then strict rules apply to such engagement and such persons’ remuneration, which must reflect market conditions. Practical Considerations While establishing a company allows the voluntary organisation to compete effectively in commercial markets, it also imposes significant administrative burdens. Limited liability companies must appoint auditors, adhere to compliance rules, and observe accounting standards. It is often argued that voluntary organisations face considerable strain from increasing bureaucratic burdens. Adding further obligations to the voluntary organisation’s structure for the sake of potential profit generation may not be justifiable in real terms. Each case must therefore be assessed on its own merits, considering factors such as costs, resources, compliance obligations, and feasibility. While establishing a company is legally possible and can provide valuable tools for achieving public benefit goals, it may not always be the best solution for every voluntary organisation. Conclusion When a voluntary organisation makes the choice to set up a limited liability company for trading purposes, and thus complies with the VOA to ensure that none of its generated profits go to any private interest, we have a special case not addressed in the Companies Act. This is an atypical company but one which is clearly regulated in the VOA through a superstructure of additional rules to those in the Companies Act. These rules are not contradictory, and one set merely modifies the other to consistently achieve the public benefit purposes of the former. It is not uncommon for this type of company to be referred to as a “non-profit making company” although the term is not technically used or defined in the VOA. It is, however, in practical terms, an appropriate term to use for this special type of company as it can only make profit for one purpose – that of passing all of it onto the parent voluntary organisation. If this does not happen in such a company, then there would be a serious breach of the VOA, undermining the credibility and good reputation of the voluntary and non-profit sector. So, we all need to be vigilant to ensure that this does not happen. That is what a non-profit making company is under Maltese Law. The authors would like to thank Max Ganado for his contribution to this article. If you have any questions, please contact Christine Borg or Rebecca Micallef at Ganado Advocates. This article was first published in The Times of Malta on 29/12/2024. Authors: Christine Borg, Rebecca Micallef
03 July 2025
Banking and Finance

MiCA Goes Live: A Milestone for Crypto Regulation

On 30 December 2024, the Markets in Crypto-Assets Regulation (MiCA) came into full force across the EU – ushering in a new chapter for the crypto-asset industry. MiCA reinforces Malta’s appeal within the EU’s rapidly evolving digital economy. Malta’s regulatory landscape has long been shaped by the Virtual Financial Assets Act (VFA Act), which positioned the jurisdiction as a forerunner in crypto regulation. Since its implementation in 2018, the legal certainty afforded by the VFA Act, coupled with the accessibility and expertise of the Malta Financial Services Authority (MFSA), has encouraged various market leaders to choose Malta as the base for their crypto operations. MiCA introduces the first harmonised regime for crypto-assets across EU Member States. It applies to both: (i) issuers of crypto-assets; and (ii) crypto-asset service providers targeting EU clients (CASPs). The Maltese framework required minimal adjustments due to the strong alignment between the VFA Act and MiCA. Local rulebooks were aligned in advance, and the Maltese legislator published a new Markets in Crypto-Assets Act (Chapter 647, Laws of Malta) to complement MiCA and the various Level 2 and Level 3 measures at the EU level. The transitional provisions allow existing VFA service providers in Malta – licensed by the MFSA under the VFA Act prior to 30 December 2024 – to continue providing their services in accordance with the VFA Act: (a) until 1 July 2026, or (b) until they are granted or refused authorisation as a CASP under MiCA. Existing VFA service providers in Malta will benefit from the simplified authorisation procedure afforded by Article 143(6) of MiCA, enabling a seamless transition between the VFA Act and MiCA. New CASPs, not already licensed by the MFSA, will need to follow the full authorisation process under MiCA. As MiCA takes effect, collaboration between competent authorities, industry players, and policymakers will be crucial to Malta’s continued success as a centre for blockchain innovation and distributed ledger technology. New CASPs choosing Malta will benefit from the MFSA’s supervisory experience and commitment to fostering a supportive environment for fintech businesses. Authors: Mark Caruana Scicluna, Kelly Cini  
03 July 2025
M&A

Mergers and acquisitions: Are we in for a rebound?

The current reawakening of the M&A market follows a slumber experienced over the past few years. The recent announcement of Goldman Sachs’ proposed acquisition of a significant stake in Melita plc marks a pivotal moment for Malta’s corporate landscape. “Having one of the world’s largest financial institutions investing in a Maltese company is already significant for our market and the country’s reputation, however, this deal is also reflective of a broader global trend which is seeing a reawakening of the mergers and acquisitions market,” says Simon Schembri, partner within Ganado Advocates’ corporate team. Dr Schembri explains that the current reawakening of the M&A market is happening after a slumber experienced over the past few years. “Despite the economic uncertainties and the ongoing geo-political turmoil, the M&A landscape has shown remarkable signs of recovery and companies are showing more willingness to consolidate their positions by accessing new markets and enhancing capabilities in response to evolving market demands. “As we approach 2025, the M&A landscape is likely to continue evolving, and a notable revival is expected, especially following the election outcome in the UK earlier this year and more recently, with President Trump’s re-election last month,” adds Dr Schembri. Dr Schembri had predicted this resurgence in the M&A market in an article for The Corporate Times in August 2023. “In 2021 and early 2022 we had seen an exceptional increase in mergers and acquisitions with Maltese interest, with some very significant and interesting transactions in the local corporate market. Subsequently, Malta experienced a decline in M&A activity, driven by high interest rates, a stricter regulatory environment, and heightened foreign direct investment oversight in other jurisdictions, which contributed to a slowdown in the local M&A market. He explains that higher interest rates often deter companies from pursuing acquisitions, as they raise the cost of debt and complicate valuations. “These factors not only slow the pace of deal-making but also increase the costs associated with completing such transactions, leading to fewer attractive opportunities for both buyers and sellers,” Dr Schembri adds. Despite recent challenges and a persistently stringent regulatory environment, international observers anticipate a shift, with expectations of increased activity driven by a potential easing of regulatory restriction. International outlook Some of this year’s headlines have announced interesting mergers including Mars’ acquisition of Kellanova for $36 billion, Capital One bought iconic financial services brand Discover for $35 billion, Conoco Phillips consolidated the energy business by acquiring Marathon Oil for $23 billion and HP acquired Juniper Networks for $14 billion. Amongst leading international CEOs, private-equity players and the investment banking industry, there seems to be consensus about the M&A outlook for 2025: it’s optimistic and looking promising, driven by factors such as a soft economic landing, rate cuts by the Fed, strong corporate balance sheets, and growing private equity (PE) activity. Companies sidelined due to high interest rates in 2023 are now re-entering the market. EY predicts a 20% rise in overall corporate deal volume in 2024, following a 17% drop in 2023, with private equity deals also set to rebound by 16%. Observers comment that the only way to return money to investors is by selling companies. This influx of capital, combined with favourable economic factors like lower interest rates and stable inflation, is expected to drive M&A activity. Technology: A key role Technology is increasingly playing a key role in the M&A landscape, as businesses increasingly turn to inorganic growth to keep up with rapid digital transformation. AI, cloud computing, and cybersecurity are all critical areas where companies are seeking acquisitions to stay competitive. Generative AI, in particular, is expected to revolutionize deal-making, with 64% of global executives citing it as a game-changer for the industry. Challenges remain. Regulatory scrutiny and rising valuations, driven by high premiums for targets, are pushing up expectations, which could slow deal flow. But despite these complications, sectors like life sciences, energy, and infrastructure are expected to see strong M&A activity, while others, such as consumer products and climate tech, may lag. Malta’s growing appeal The Goldman Sachs-Melita transaction underscores Malta’s potential as a hub for significant international deals. This landmark transaction, reflects the increasing sophistication of Malta’s corporate market. Dr Schembri concludes, “This deal showcases Malta’s growing appeal for global investors and highlights the importance of experienced legal and financial advisors in successfully navigating high-stakes transactions.” This article was first published in The Corporate Times on 29/12/2024. Author: Simon Schembri
03 July 2025

Post-termination non-compete clauses in employment contracts

On April 23, the US’ Federal Trade Commission (US FTC) published the final version of a rather controversial new rule, which will introduce a nationwide ban on the use of post-termination non-competition clauses (NCCs) by employers. The final rule will become effective after the lapse of 120 days from its publication in the Federal Register. NCCs are not only prevalent in the US, but are also quite widespread in the EU. Will the EU follow the US lead in proposing some form of EU-wide regulation restricting the use of post-termination NCCs in employment relationships? And if so, should post-termination NCCs in employment contracts be completely banned as proposed by the US FTC, or simply limited to reduce their anti-competitive and restrictive effects? What are non-competition clauses? While there is no single universal definition of the term ‘non-competition clause’, or in short, ‘non-compete clause’, this generally refers to a contractual promise undertaken by an employee, binding himself/herself to refrain from conducting business of a similar nature to that of the employer. NCCs typically impose restrictions on what an employee can do after the employment relationship has been terminated, regardless of whether the employee has resigned from said employment, or whether the employment relationship has been terminated by the employer. These types of NCCs are typically referred to as ‘post-termination’ NCCs. The main function of a NCC in the context of an employment relationship is that of protecting a company’s business interests, by preventing employees from making use of ‘insider’ knowledge and skills which they would have gained through their employment with a particular company to the benefit of an existing competitor, or to start their own business in competition with that of their former employer. The US FTC’s rule banning the use of non-competes The final rule which was published by the US FTC on April 23, in essence, provides that it is an unfair method of competition (and thus in violation of Section 5 of the US Federal Trade Commission Act which deems ‘unfair methods of competition’ to be unlawful) for employers: to enter into or attempt to enter into a post-termination NCC with a worker; to maintain a post-termination NCC with a worker; or to represent to a worker that he/she is subject to a post-termination NCC where the employer has no basis to believe that the worker is subject to an enforceable NCC. Under the final rule, existing NCCs for senior executives can be retained but cannot be enforced by employers, and employers are prohibited from entering into new NCCs with senior executives. The final rule defines senior executives as workers who occupy policymaking roles, and who earn more than $151,164 annually. Additionally, employers will also be obliged to inform workers bound by an existing NCC that the NCC will not be enforced against them in the future. A look at the EU situation In terms of the situation in Europe, in view of the virtually non-existent intervention of the EU in regulating the use of post-termination NCCs in employment contracts, member states have been predominantly left to their own devices and thus, there is quite frankly a ‘hodgepodge’ of widely varying frameworks in place across the different member states. The regulation of post-termination NCCs in employment contracts varies quite significantly across the different member states, both in terms of form and content, with some member states having elaborate and clear statutory provisions regulating the validity of NCCs in employment contracts, and others with a largely uncertain approach on the topic, characterised by ambiguity and in certain cases, conflicting rulings. In contrast with the socio-political context surrounding the US FTC’s proposed rule, it appears that while traces of a similar sentiment can indeed be identified across the EU, the issue does not seem be as critical so far. It is, however, submitted that the rule which has been published by the US FTC may indeed have the effect of encouraging EU researchers in the field to look into this matter further, and in the event that increased EU-based research were to reveal the existence of abusive practices in this field for example, this may lead to a situation where the EU may decide to step in and legislate on the matter. In any case, it is clear that the EU is monitoring the situation quite closely, and in a press conference held in February 2023, European Commissioner for Competition Margrethe Vestager noted that “the US has done quite an impressive work, they have made it a priority to look at labour market issues”, and that “we don’t see that many [in the EU]… if we did, we would definitely look into it”. Concluding remarks In the field of social policy, previous legislative intervention has shown that the EU often steps in as a response to certain trending issues which, in one way or another, have an impact on the world of work. A number of trends, including the ongoing war for talent that most employers are currently facing, the vast labour shortages which are being reported all over the world, and the emergence of numerous new forms of work, will likely all contribute to the increased scrutiny of NCCs within the EU in the years to come. Therefore, while the issue may currently not appear to be as pressing in the EU, if this matter were to continue gaining momentum across the EU, there is indeed a good chance that the EU will decide to step in and regulate this matter. Author: Nina Fauser
19 November 2024
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