MALTA Law and Practice Contributed by: Damien Degiorgio and Ramona Galea, Fenech Farrugia Fiott Legal
5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets The different types of entities that are available to investors include limited liability companies, commercial partnerships and trusts. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Limited Liability Companies Limited liability companies (LLCs) are those companies whose shareholders have limited liability and therefore their own personal assets shall not be liable to financial risk should the company encounter financial difficulties. Hence, a shareholder’s liability is limited to only the amount invested within the company. As a rule, LLCs must have a minimum of two shareholders and a maximum of 50 shareholders, which can be either natural or legal persons. Such compa - nies must have at least one individual director. The directors shall be responsible for the man - agement of the company, its administration and ensuring that all acts are done in the best inter - ests of the company and its shareholders. Commercial Partnerships Partnerships en commandite have two types of partners: general partners who have unlimited liability, managing the partnership; and limited partners who have limited liability, having no connection with the partnership’s management. Alternatively, in partnerships en nom collectif , all partners have unlimited liability for the partner - ships’ debts and liabilities, and therefore all part - ners take part in the partnership’s management. Trusts Lastly, a trust is created by a settlor who transfers assets to the trustee. The settlor can be either an individual or a company and can be either a
Maltese resident or non-resident. A trustee is a person or a company who holds and administers assets for the benefit of a third party. In Malta, a person or a company acting as a trustee must be licensed by the Malta Financial Services Author - ity (MFSA) and must fulfil a number of require - ments. The beneficiary of the trust can be either an individual or a company and can be a resident or non-resident of Malta. 5.3 REITs The real estate investment trust (REIT) is a rela - tively new concept that is being introduced to the Maltese market. Currently, the government is undertaking consultation on the possibility of offering fiscal incentives which can induce such investment. Small investors will have the opportunity to invest in company shares whose portfolio consists of rented immovable property and which company will be bound to distribute at least 85% of its dividends to its shareholders on an annual basis. In terms of the tax applicable, rental incomes will not be taxed and instead the dividends to be granted to shareholders will be taxed at a 15% rate. Given that such investment vehicle is still in its initial stages, it remains to be seen how this will develop within the market and whether it will be a useful form of investment. 5.4 Minimum Capital Requirement The only entity subject to a minimum share capi - tal is the limited liability company, which must have a minimum authorised share capital of EUR1,164.69. 5.5 Applicable Governance Requirements Limited Liability Companies A limited liability company must be registered with the Registrar of Companies and must have
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