|
Redomicile Your Captive in Malta
|
Matthew Bianchi
Prof. J.M. Ganado & Associates, Advocates
171, Old Bakery Street, Valletta, Malta
lawfirm@jmganado.com
In a bid to tap into the captive insurance market
the Maltese legislator, has recently published regulations providing for
the redomiciliation of captives incorporated in Malta or in any other
jurisdiction, from or to Malta. It is hoped that redomiciliation will
appeal to captive owners wishing to relocate their captive in Malta without
a break in its legal existence and operations.
Captives registered in Malta benefit from several
key advantages including lower licensing and regulatory requirements,
favourable tax treatment and access to Malta’s diffuse double taxation
network. The Maltese Financial Services industry regulatory framework
has been largely overhauled in recent years and the business of insurance,
particularly that of captive insurance is certainly no exception. The
Malta Financial Services Centre (“MFSC”) Insurance Unit recognises
the varying business techniques and numerous accounting conventions applicable
in different countries where Captive parent companies may be situated
and the overall approach is generally aimed at establishing acceptable
requisites tailored to meet the applicant’s specific business requirements.
The Insurance Business Act (“IBA”) establishes
a 3 month time frame which must be honoured by the Centre when
approving and authorising applicant Captive companies to carry out business
in Malta. The 3 month period starts running from the moment
that an application form together with the relevant documentation is lodged
with the centre by an applicant Captive. The relevant application form
and a list of materials that must be attached thereto are contained in
the 1st schedule to Insurance Directive 6 of 1999 and a copy of same is
easily procured through a local representative.
Affiliate insurance companies (captives) are attributed
the same legal status as any other insurer authorised to conduct business
in Malta. They however enjoy ‘privileged’ legal treatment tailor-made
to alleviate the conduct of their business and prove a worthy attraction
to persons seeking a Captive domicile. Amongst other key benefits Captives
registered in Malta enjoy -
- Favourable Tax Treatment especially if the Captive
is owned by non-resident persons
- Access to Malta’s diffuse double taxation
agreements
- An exemption from the maintenance a Guarantee
Funds
- An exemption from the payment of Duty on any
contract of insurance relating to risk situated outside Malta
- An exemption from Exchange Control if the insured
is a non-resident
- An exemption from the publication of Accounts
- Considerably lower ‘own funds’ requirements
than ‘regular’ insurance companies in Malta
- Not subject to the Protection Fund rules
- Not subject to the Compensation Fund rules
- Not subject to the rules regulating the Transfer
of Business of Insurance which demand approval by the Centre for transfers
of portfolios
- Not bound to apply currency matching rules and
localisation requirements
Redomiciliation Regulations – 2000
Redomiciliation is not a relatively new concept
in Maltese law and is limited in the field of insurance to captive companies.
Redomiciliation allows a captives to ‘continue’ their corporate
existence and legal personality in Malta or from Malta without a break
in their corporate life.
We are confident that redomiciliation will appeal
to all those captive owners and operators who are eager to benefit from
a Maltese domicile but are reluctant to wind-up operations in their present
domicile and set up afresh elsewhere.
In terms of the ‘Insurance Business (Continuance
of Companies Carrying on Business of Affiliated Insurance) Regulations,
2000’ published on the 6th of June 2000;
(a) ‘…a body corporate, formed and incorporated
or registered in a country outside Malta, which is similar in nature to
a company and which would, if it were such a company, qualify to be authorised
under the Insurance Business Act 1998 to carry on business of affiliated
(captive) insurance, may be continued in Malta as a company formed and
registered under the Companies Act, 1995 and authorised under the Insurance
Business Act to carry on business of affiliated (captive) insurance, if
its continuance is permitted by the law of the country of its incorporation
or registration, and
(b) a company authorised under the Insurance Business
Act to carry on the business of affiliated (captive) insurance in Malta
may be continued as a body corporate incorporated or registered under
the laws of a country outside Malta, in terms of these regulations’
In both cases, continuance is a relatively simple
process.
In either case, it is necessary that the continuance
of the company or body corporate is within its powers and is approved
by a majority of members in an extraordinary resolution or equivalent
act under the laws of its incorporation or registration.
The continuance of a body corporate formed, incorporated
or registered in a country outside Malta as an affiliated (captive) insurance
company in Malta is effected by the delivery of an ‘Instrument of
Continuance' to the Registrar of Companies for registration. The instrument
is to contain on the face of it; evidence of the approval to continue,
a ‘declaration of continuance’, and provisions equivalent to
those contained in a memorandum and articles of association of a company
under Maltese law. This serves as the memorandum and articles of association
of the company for all purposes of the Companies Act 1995 and the Registrar
must treat it accordingly and proceed to register it as such.
Registration marks the birth of the company under
Maltese law and the company may immediately seek authorisation under the
Insurance Business Act to operate as an affiliated (captive) insurance
company. The Insurance Business Act establishes a three month time
frame which must be respected by the regulator – the ‘MFSC’
- when approving and authorising applicant affiliate (captive) companies
to carry out business in Malta and applicants are encouraged to hold informal
discussions with the MFSC especially in the initial stages.
Upon its registration with the Company Registry
and its authorisation to operate as an affiliated (captive) insurance
company as aforesaid, the body corporate; ’shall cease to be a
body corporate under its previous jurisdiction and shall continue its
corporate existence, and retain all its assets, rights and liabilities
as a company otherwise formed and registered under the Companies Act,
1995 and authorised under the Insurance Business Act’. This ensures
a smooth transition of domicile to Malta without a break in the fundamental
legal existence and validity of the captive insurer and with an assurance
to all insured parties and other creditors that the captive will be unable
avoid payment merely as a result of its redomiciliation in Malta.
Affiliated (captive) insurance companies in Malta
desiring to continue under a foreign jurisdiction are similarly authorised
to do so in terms these regulations. The process and effects of continuation
(or similar process, including conversion) to a foreign jurisdiction should
be substantially similar to that contemplated in the regulations for the
continuance of ‘foreign captives’ in Malta. In this respect
the continuance (or similar process) must necessarily secure ‘the
continuation of the corporate existence of the affiliated (captive) insurance
company as, or its conversion into, a body corporate which will continue
to retain or will succeed to all the assets, rights and liabilities of
the affiliated insurance company.’ Moreover such continuance
may only take place if it is permitted by the law of the foreign jurisdiction
chosen as the new captive domicile.
The affiliated (captive) insurance company only
ceases to be a company subject to Maltese jurisdiction once the Registrar
of Companies has received notice in writing of the continuance (or other
process) made as aforesaid and, being satisfied that the requirements
of these regulation have been complied with, has proceeded to register
such continuance and has struck the name of the company off the Maltese
register of companies.
Over recent years the Maltese legislator has introduced
attractive insurance and fiscal legislative incentives particularly in
respect of the business of affiliated (captive) insurance. The attractions
are multi-faceted aimed to target both the captive company and its operators,
managers and advisors. It is hoped that these regulations will afford
a further attraction to all in the business who wish to enjoy the benefits
that the Maltese islands have to offer, only a stone throw away from mainland
Europe.
Matthew Bianchi
Prof. J.M. Ganado & Associates, Advocates
171, Old Bakery Street, Valletta, Malta
lawfirm@jmganado.com
 Back
to Malta Menu
|
