Disclosure requirements – Malta
Disclosure Category [2]
An obligation may fall on Clearstream Banking, as a custodian, to disclose details of its account holders to issuers and/or to regulators (in Malta, primarily the Malta Financial Services Authority (the MFSA)) on request in certain specific circumstances.
Investors that hold securities in the Maltese market are required to report if they exceed the set thresholds.
Investors seeking to acquire or divest of a shareholding in regulated entities past or below certain thresholds must notify the MFSA and, where relevant, obtain the MFSA’s prior approval.
Other laws may also impose disclosure requirements in certain instances (for example, unlisted Maltese companies are subject to register of beneficial owners' obligations).
Consent
Clients are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, but not limited to the issuer or its agent) as their attorney-in-fact, under power of attorney, to collect from Clearstream Banking such information as is required to be disclosed under applicable law and rules. Clients not willing to give this consent cannot hold such securities and/or financial instruments in their account with Clearstream Banking.
Background and legal basis
As an EU Member State, Malta has transposed relevant EU Directives on disclosure including the EU Transparency Directive and the EU Shareholders Rights Directive II.
The EU Transparency Directive (Directive 2004/109/EC), as amended by Directive 2013/50/EU (the TD Law) requires shareholders in listed companies to notify the issuer and the competent authority when certain thresholds of voting rights have been crossed. The requirements of the TD Law were implemented in Malta by means of the Capital Markets Rules issued by the MFSA under the Financial Markets Act (Cap. 345, laws of Malta).
The EU Shareholders Rights Directive II (Directive 2017/828 amending Directive 2007/36/EC) (the SRD II Law) requires that issuers have the right to identify their shareholders (including by asking intermediaries for such information). The requirements of the SRD II Law were also implemented in Malta by means of, among other things, the Capital Markets Rules. Malta has not set a minimum shareholding or voting right threshold for the issuer’s right to request information under the SRD II Law.
In addition to the above disclosure obligations may arise from, among other things:
Companies Act / RBO Laws – The Registrar of Companies has, under the Companies Act (Cap. 386, laws of Malta), the power to investigate the ownership of any Maltese company and require information from any person, including names and addresses of the persons interested in such company. The Companies Act does not define “interested” but this is generally read in its broad sense, including both ownership interests (that is, direct rights over the shares) as well as beneficial interests (i.e. indirect rights over the shares). In addition, Maltese companies whose shares are not listed on a regulated market and subject to the TD Law or equivalent rules must, under regulations issued under the Companies Act, maintain a register of beneficial owners and make certain disclosures to the Malta Business Registry. The issuer and the Malta Business Registry have the power to request any relevant information from any shareholder for this purpose. Such information would typically include, in relation to each beneficial owner: (i) the name, (ii) the date of birth, (iii) the nationality, (iv) the country of residence, (v) an official identification document number indicating the type of document and the country of issue, (vi) the nature and extent of the beneficial interest held, and (vii) the effective date when a beneficial interest was acquired or ceased to be held, and may include documents supporting same (e.g. a certified structure chart or copy of the official identification document). There are no strict timelines for the provision of such information although they should be provided without delay.
EU FDI / Foreign Subsidies Regulation Screening Regulations – EU regulations such as the EU Foreign Direct Investment Regulation (Regulation (EU) 2019/452) and the EU Foreign Subsidies Regulation (Regulation (EU) 2022/2560) may require prior notifications and screening before an investment is made by a non-EU national into a Maltese company. Likewise competent authorities under such legislation (e.g. in Malta the NFDIS Office) have the power, besides requesting other competent authorities to request information, to unwind investments or declare investments in breach of the relevant requirements null or without effect.
Sanctions
Failure to comply with disclosure requirements (including under the TD Law and SRD II Law) may result in administrative sanctions (fines of up to €10m or 5% of annual turnover and suspension of voting rights) and criminal sanctions.
The MFSA has wide powers in relation to shareholdings in regulated entities, particularly where a qualifying shareholding has been acquired or increased past a threshold without MFSA approval, including the power to declare an acquisition void and of no effect.
Obligation to report threshold crossings under the TD Law
The TD Law requires certain notifications to be made by a shareholder in an issuer whose shares are admitted to trading and to which voting rights are attached. Under the TD Law, when a shareholder acquires or disposes of such shares with voting rights, the shareholder shall notify the issuer (and the MFSA, see below) of the proportion of voting rights held by the shareholder as a result of the acquisition or disposal where that proportion reaches, exceeds or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75%, and 90%. The notification must be made within four (4) trading days after the date that the voting rights were acquired or disposed of using the appropriate form (available here: https://www.mfsa.mt/our-work/capital-markets-supervision/#CMS (click on “Listed Entities” / “Continuing Obligations” (bottom of page) / “ESMA Documents”).
The information that the shareholder provides to the issuer must also be filed with the MFSA at the same time. Disclosure to the MFSA can be made by email or by post.
Custodians such as Clearstream Banking are exempt from the TD Law notification requirement provided such custodians can only exercise the voting rights attached to such shares under instructions from the beneficial owner(s).
Shareholder identification as set out in the SRD II Law
The SRD II Law provides for the right of issuers to identify their shareholders.
Issuers can request intermediaries at each level of a custody chain to promptly provide relevant information to facilitate such identification.
In accordance with SRD II Law as amended, an intermediary (in this case, Clearstream Banking) shall, upon receipt of the shareholder identification disclosure request, transmit a similar request to the next intermediaries in the custody chain (that is, Clearstream Banking clients with holdings in the requested securities). A response to the shareholder identification disclosure request shall be sent by every intermediary in the custody chain directly to the recipient's address defined in the request and without delay. Clearstream Banking will generate the response as required, with information regarding the shareholder's identity, limited to Clearstream Banking books only.
Regulated Entities (Qualifying shareholdings)
Investors in local banks, insurers, insurance intermediaries, investment firms, fund managers, and other MFSA regulated entities may be subject to prior approval requirements. In general, the MFSA’s prior approval is required before a person may acquire, directly or indirectly, a qualifying shareholding (10% or more of the issuer's share capital or voting rights) or increase such shareholding past certain thresholds (20%, 30% or 50%). Similarly, prior MFSA notification requirements apply where a person has decided to dispose of a qualifying shareholding or reduce such shareholding below the above thresholds. Beneficial owners must ensure that the necessary approval requirements are met before acquiring or disposing of qualifying shareholdings in Malta.
Applicable financial services sectorial laws should be followed when applying for approval from (or notifying) the MFSA and filing required documentation.
MFSA may request Clearstream Banking to disclose the shareholder’s identity in the case of non-respect of the requirement to obtain prior approval when acquiring or disposing of a above-mentioned qualifying shareholdings.
Other disclosure requirements
Other laws such as the Companies Act or EU laws such as the EU Foreign Direct Investment Regulation or the EU Foreign Subsidies Regulation grant competent authorities the power to request information from intermediaries such as Clearstream as well as impose additional disclosure or prior notification requirements on shareholders and beneficial owners.