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* New legislation opens opportunities in MaltaThe assets of the foundation may originate from any lawful business activity and may consist of present or future assets of any nature.
On the other hand, an association is an agreement between three or more persons to establish an organisation with defined aims or purposes to be achieved through the dedication of efforts and resources by such persons and others who may join voluntarily.
Even though associations are not bound by law to register as legal persons, they may elect to do so. The patrimony of the foundation or of an association must be kept distinct from its founder, administrators or beneficiaries. The law also provides for hybrid associations which are established as a foundation but which have the features of an association or vice-versa. These qualify for registration both as foundations and as associations.
Afoundation may be constituted by virtue of a public deed inter vivos or by awill. The deed of foundation must contain an endowment of money or propertyworth at least €1,500 with the exception of a foundation which is established exclusively for a social purpose or as non-profit-making, in which case the endowment shall be worth at least €250.
A foundation may be formed for a maximum period of 100 years. The exception to this rule is in the case of a purpose foundation (used as a collective investment vehicle or a foundation used in a securitisation transaction),which may be established for an unlimited term. Afoundation may not be established to trade or carry on commercial activities even if the proceeds of such efforts are destined for social purposes.Afoundation therefore would qualify as a securitisation vehicle in terms of S.3(1) of the SecuritisationAct. Thus it may engage in transactions whereby it directly or indirectly (a) acquires securitisation assets from an originator by any means; or (b) assumes any risks from an originator by any means; or (c) grants secured loans or other secured facility or facilities to an originator; and finances any or all of the above, directly or indirectly, inwhole or in part, through the issue of financial instruments, and includes any preparatory acts carried out in connectionwith the above.
The provisions of the Income Tax Act relating to trusts, settlers and beneficiarieswill be extended to foundations, their founders and the beneficiaries thereunder aswell as to any personswho are donors of property to the fund. The Duty on Documents and Transfers Act in S.32C also provides that the administrators of a foundation may elect that the foundation be treated as a trust for an exemption of duty insofar as it is the case to transfer immovable property or any real right over an immovable property by a founder to the foundation created for the purpose of a designated commercial transaction, including the securitisation of assets.
The above provisions relating to foundations and associations are not yet in force. Regulations will be issued in due course.