In Malta securitisation has enjoyed the support of successive Maltese governments and local authorities. Structuring Maltese securitisation transactions is regulated by the Securitisation Act.
'Securitisation, It's Back'1 and the European Commission's endorsement of securitisation transactions is testament to this fact in Europe, promoting securitisation transactions as a catalyst to stimulate credit, investment and job creation in Europe.2
In Malta securitisation has enjoyed the support of successive Maltese governments and local authorities. Structuring Maltese securitisation transactions is regulated by the Securitisation Act.3 This Act and its related statutes were purposefully drafted to make Malta a jurisdiction of choice for securitisation transactions. Their impact cannot be ignored, Malta reportedly is the fastest growing securitisation jurisdiction within Europe.4
Data in table sourced from the official website of the MFSA5
The activities of a Malta securitisation vehicle ('SV') can achieve tax neutrality through the application of the general rules on the deduction of allowable expenses in terms of the Maltese Income Tax Act and rules on the deduction of allowable expenses in terms of the Malta Securitisation Transactions (Deductions) Rules.6 In turn Non-Maltese resident originators and investors can typically also achieve tax neutrality under the general provisions of the Income Tax Act and Duty on Documents and Transfers Act.7
The structuring of securitisation transactions using Maltese securitisation vehicles offer the following additional advantages:
- no restrictions on the type of securitisation assets;
- securities issued by an SV may be listed on a regulated market, whether in Malta or outside;
- SVs are excluded from the scope of AIFMD by virtue of the Securitisation Act;
- SVs may issue securities backed by underlying alternative investments and target funds to purchase their securities;
- all forms of securitisation transactions are permitted, covering outright acquisition of the securitisation assets, assumption of risks and the taking control of whole businesses;
- non-EU licenced fund managers may use securities issued by SVs, backed by units in non-EU funds, as a route to accessing finance within the EU;
- transfers to SVs of securitisation assets are final, cannot be challenged / recharacterised;
- bankruptcy remoteness of the originator is provided for expressly by statute;
- the Securitisation Act restricts litigious recourse against an SV;
- legal formalities for transfer of securitisation assets to an SV are simplified; securitisation investors and creditors are granted preferred claims by law;
- light touch regulatory oversight;
- swift incorporation of SVs, requiring only a day or two to complete registration from the submission of the constitutive documents in the case of limited companies or partnerships.
KPMG Malta can assist you in structuring and implementing securisation transactions, in establishing Malta securitisation vehicles and with their ongoing obligations thereafter.
1. The Economist, Securitisation, It's Back, 11th January 2014 http://www.economist.com/news/leaders/21593457-once-cause-financial-worlds-problems-securitisation-now-part-solution-its
2. European Commission, Proposal for a Regulation of the European Parliament and of the Council, laying down common rules on securitisation and creating a European framework for simple and transparent securitisation and amending Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 and Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms, p. 4 – 7 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015SC0185&from=EN
3. Chapter 484 of the laws of Malta
4. http://www.financemalta.org/sections/capital-markets/financemalta-capital-markets-articles/detail/maltese-issuers-of-structured-investment-products-rank-top5-deutsche-borse-frankfurt. Also reported that 'In the January 2016 report of the German Derivatives Association, Maltese Securitisation Companies ranked Top5 of Issuer of delta1 structured investment products based on jurisdiction. Malta even overtook Luxembourg in the ranking, while the first four jurisdictions were Germany, France, Switzerland and Italy. One of the Maltese Issuer - ETI Securities plc, established under the Securitisation Act of Malta and arranged by Argentarius ETI Management Ltd - ranked 9th overall confirming the leadership as bank-independent issuer within the German marketplace.'
5. http://www.mfsa.com.mt/pages/licenceholders.aspx - accessed on 11 October 2019
6. Chapter 123.128 of the laws of Malta
7. Chapter 364 of the laws of Malta
Download: Malta Securitisation – December 2019 (pdf)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.