03 March 2020
Under Maltese Law, the foundation is a legal entity, the creation of which is set in motion by the founder and confirmed by the Registrar of Legal Persons.
Foundations in Malta were very much unregulated under Maltese Law and it is only in July 2007 that parliament passed the necessary law to deal comprehensively with the various aspects pertinent to Foundations. In Malta, foundations are today regulated by the Second Schedule to the Civil Code.
Under Maltese Law, the foundation is a legal entity, the creation of which is set in motion by the founder and confirmed by the Registrar of Legal Persons. It is administered by an administrator who ensures that the foundation’s acts are compliant with the objectives set out in its constituting deed. The legislation in Malta allows for the setup of two types of foundation: Private and Purpose Foundations.
In case of Purpose Foundations, beneficiaries might be unascertained at the time the foundation is set, however, they are established exclusively:
- For any charitable, philanthropic or other social purpose;
- As a non-profit making organisation;
- For any other lawful purpose
Unless evident from the statute, a foundation is considered to be a private foundation. Unlike the public foundation, this type of foundation is set up for the benefit of a named person or a class of persons.
Key features of a Malta foundation
Segregated cell Foundations
A foundation may also establish segregated cells within itself in order to achieve particular purposes with particular assets. A segregated cell within a foundation exists when established formally:
- by the statute of the foundation; or
- by the administrators pursuant to a power vested in them by the statute.
A segregated cell does not constitute a legal person and in fact it is not even eligible for registration as a legal person, however, it still does have its own distinct name or designation. When a segregated cell is established subsequent to the creation of a foundation, the following conditions need to be observed:
- The foundation is authorised by its statute to establish cells for the achievement of one or more purposes which are consistent with the main purposes the organisation;
- The administrators of the foundation resolve in writing to establish such cells and
- A notice relating to the establishment of a segregated cell is delivered to the Registrar for Registration.
The separate patrimony of each cell entails that the assets of the cell must be segregated from all other assets of the foundation and must therefore be held and administered separately, with distinct accounts being maintained in relation to each cell.
Contact Rudolph Psaila to find out more.