Private Foundations in Malta

Introduction

The law regulating foundations in Malta is new, just off the shelf. Act XIII of 2007 (the Act) was promulgated on the 24th of July, 2007 and is the offspring of a recent legislative project that had, as its principal scope, the creation of an extensive, legal regime that addresses, in one piece of legislation, the various rules that apply to all organisations, such as foundations, associations and the like. The scope of this project was to cater for all organisations whether governmental or private and whether intended for a social purpose or otherwise, including those that are non-profit making and those that are not. In this sense, the Act has been termed ‘sector neutral’. In essence, the Act makes various amendments to the Civil Code and particularly creates a schedule to the Code that specifically deals with the various issues appertaining to organisations. It does this in a general and comprehensive manner, in the continental law style.

This legislative project also involved the passing an independent Act of Parliament that addresses, specifically, voluntary organisations. Act No. XXII of 2007 was promulgated on the 16th October, 2007 with its stated scope being that of “regulating voluntary organisations and their administration”. The said Act is officially entitled the Voluntary Organisations Act, 2007 (hereinafter referred to as the “VOA”). It is expected that the VOA will work in tandem with the Civil Code for those cases where the particular organisation qualifies as a ‘voluntary organisation’ (or non-profit making) as defined in the law.

This means, insofar as foundations are concerned, that the general rules regulating foundations are found in the Civil Code, whereas the special rules that apply to those foundations that also qualify as voluntary organisations are regulated further by the VOA. This paper will not address the latter – instead the focus will be predominantly on private foundations.

Prior to the coming into force of the Act, foundations were very much unregulated under Maltese. However, as the string of judgements of the Maltese Courts dealing with foundations demonstrate, it has always been settled that foundations are a valid and legal vehicle under Maltese law intended to achieve certain aims and functions. The Courts have also respected the proposition that, even though unregulated, foundations, nevertheless, enjoy a stand-alone, juridical personality that is independent from that of its founders, administrators or beneficiaries. This is now of academic interest only, once the Act amending the Civil Code has been brought into force, effectively plugging the legal lacunae.

What is a Foundation Under Maltese Law and Specifically What is a Private Foundation?

Foundations

Indeed, foundations are not new to the Maltese legal sphere: rather the opposite. Foundations have been employed by various sectors of society in a multitude of contexts, albeit this has been done in a somewhat uncharted, legal void that has been dependent for comfort, if at all, solely on the judicial pronouncements forthcoming from the local courts along the years. In contrast, the new law now presents a well-defined, comprehensive, legal structure within which to function. Naturally, the starting point of any analysis of this welcome legislation must be its definition of foundation.

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