MALTA Law and Practice Contributed by: Rosanne Bonnici and Rebecca Diacono, Fenech & Fenech Advocates
most cases, however, the key issue remains control, which the older generations are sometimes less than willing to relinquish. A robust shareholders’ agreement may go a long way towards regulating key concerns such as what happens in the case of the marriage of family mem - bers (which is crucial in Malta when considering that the default matrimonial regime is the community of acquests) or the manner in which a family member may exit the family business, including rules regulating transfers of shares in the business. Another step that families are taking of late in terms of future-proofing their businesses is the inclusion of independent non- executive directors at board level; said directors may make a significant contribution in terms of offering expert advice on key areas of the business, improv - ing corporate governance standards and acting as In a transfer of shares in a Maltese company, the local capital gains tax rules distinguish between a transfer of a controlling interest and that of a smaller holding. A transfer of a controlling interest shall be deemed to have been made at the higher of the consideration and the market value of the shares. However, when dealing with the transfer of a non-controlling interest, the transfer value is determined depending on several factors, such as the date of acquisition of the shares in question. The DDTA applies both in the case of transfers inter vivos and in the case of a transmission of shares on death, but makes no such distinction. mediators in situations of conflict. 4.3 Transfer of Partial Interest
child or carers, with the deceased having been driven to leave significant assets to such individuals or hav - ing had their assets depleted by them. In more recent years, there have been allegations of trusts or foundations having been used by the deceased to hide assets from family members, or to provide for second families/partners of which the The courts do not typically award damages to aggrieved parties in wealth disputes or disputes involving trusts, foundations or similar entities. The focus of the judgment in such cases is on ensuring that the party in question gets what is rightfully theirs – for instance, a child excluded from its parent’s inher - itance is awarded assets equivalent to the reserved portion to which it is entitled by law. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries The Trust and Trustees Act regulates both corporate and private trustees, as defined. Corporate trustees are typically regulated by the local financial services authority, and regularly act as trustees of trusts locally. The Act also caters for private trustees, providing that it is only an individual that may act as a private trus - tee, and then only if they are related to the settlor, by consanguinity or affinity in the direct line up to any degree or in the collateral line up to the fourth degree inclusively, or if they have known the settlor for at least ten years, and in either case provided the individual is not remunerated for their role as trustee (except as permitted by the financial services authority) and does not habitually hold themselves out to be a trustee. On similar lines, in terms of the Civil Code, administra - tors of foundations may be both corporate (if operat - ing locally, regulated by the local financial services authority) and natural persons. deceased’s family had no knowledge. 5.2 Mechanism for Compensation In terms of standards, while the Civil Code specifi - cally regulates the rights and obligations of fiduciar - ies generally, both sets of laws regulating trusts and
5. Wealth Disputes 5.1 Trends Driving Disputes
Disputes relating to succession matters are quite common in Malta and very much in line with similar trends in the rest of Western Europe. Most disputes relate to a spouse or child that has been excluded from the deceased’s will, or who has been left merely the reserved portion catered for by law, challenging said deceased’s will. Other cases refer to instances of alleged manipulation of elderly people by their spouse,
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