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Malta Foundation


The law regulating foundations in Malta is contained in Act XIII of 2007 1. In reality, foundations are not new to the Maltese legal sphere: they have been employed by various sectors of society in a multitude of contexts but this use had, prior to the enactment of Act XII of 2007, been done in a somewhat disorganized fashion being dependent on judicial pronouncements.

There are various types of Foundations including governmental or private ones, those intended for a social purpose or otherwise and those that are non-profit making and those that are intended for profit. 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 organizations.

The Government of Malta also enacted a separate Act of Parliament – the Voluntary Organizations Act, 2007 (VOA)2 – that specifically regulates voluntary organizations and their administration. The VOA will work in conjunction with the Civil Code for those cases where the particular organization qualifies as a ‘voluntary organization’ (or non-profit making) as defined in the Law.

Accordingly, profit-making foundations are regulated by Civil Code whereas those foundations that also qualify as voluntary organizations are regulated further by the VOA.

1 Enacted on the 24th of July, 2007.
2 Act No. XXII of 2007 enacted on the 16th October 2007.

Private Foundation – definition

The foundation is defined as an organization consisting of a universality of things constituted in writing, including by means of a will, by a founder or founders whereby assets are destined either (a) for the fulfillment of a specified purpose; or (b) for the benefit of a named person or class of persons, and are entrusted to the administration of a designated person or persons. The patrimony, namely assets and liabilities, of the foundation is kept distinct from that of its founder, administrators or any beneficiaries3.

When a foundation is established exclusively for a charitable, philanthropic or other social purpose or as a non-profit organization or for any other lawful purpose it is referred to as a Purpose Foundation. When it is established for private benefit it is referred to as a Private Foundation. This fact-sheet is concerned principally with Private Foundations though, in reality, most of the rules apply regardless to both categories of foundations.

3 It should be noted that the focus is on “universality of things” as distinct from the definition of an association where the emphasis is on the members or associates that form the association and not its patrimony.

Assets of the foundation

These may originate from any lawful business or activity and may consist of present or future assets of any nature.

Formalities for setting up a foundation

A foundation may only be constituted by:

  • virtue of a public deed “inter-vivos” published by a public notary and registered in the Public Registry; or
  • a will that may be public or secret.

The instrument establishing the foundation should contain, on pain of nullity, an endowment of money or property worth at least €1165.

When the property endowed is not cash, the administrators must declare that in their considered opinion the property endowed upon or vested in the foundation has a value of at least €1165 4.

4 In a statement that is attached to the application form for registration. A foundation that has been duly registered will not lose its eligibility to remain registered if, subsequent to registration, the value of its assets is reduced to less than €1165.

The instrument establishing the foundation should contain “ad-validitatem” the following information:

the name of the Foundation, which shall include the word “foundation”;

the registered address in Malta;

the purposes or objects;

the constitutive assets with which it is formed;

the composition of the board of administration and the names of the first administrators and, if not yet appointed, the method of their appointment;

the legal representation of the Foundation;

the term for which it is established, if any;

if the administrators of the foundation are not residents of Malta, the name and address of a person resident in Malta who has been appointed to act as the local representative of the foundation in Malta.

Furthermore, in the case of Private Foundations, the instrument must contain:

  • the names of the beneficiaries; or
  • instead of such a declaration, a declaration that the Foundation is constituted for the benefit of beneficiaries.

In this case, the beneficiaries must then be indicated in a written instrument that need not form part of the deed, called the “beneficiary statement”. This instrument must be signed by the founder and addressed to the administrators. It is also required that it be authenticated by the Notary Public who publishes the instrument establishing the Foundation.

The founders are required to sign the Foundation’s statute. A person subscribing to the statute after a Foundation is established is deemed to have consented to all its provisions and to all the rules that may have been validly promulgated by the Foundation until such date. The written consent of the administrators named in the statute to act as administrators of the Foundation should be delivered to the Registrar of Legal Persons prior to registration of any Foundation.


The general rule is that the term of a Foundation’s life cannot exceed 100 years. When no term is specified, a Foundation will last for 100 years from its establishment. If a longer term is stated in its instrument, that Foundation will terminate on the 100th anniversary from when it came into existence.
The only exception is in the case of Foundations:
  • used as a collective investment vehicle; and
  • used in a securitization transaction, where the term may be unlimited.

Registration and Legal Personality

There is the requirement “ad-validitatem” that Foundations be registered for the purposes of acquiring legal personality5. Accordingly, once a Foundation is registered it becomes a legal person with a separate and distinct legal personality from that of its founders and administrators. It is the responsibility of designated administrator of a Foundation to register it in terms of Law.

Legal personality gives a measure of limited liability to a Foundation in the sense that creditors of a Foundation can enforce their claims upon its patrimony and not beyond.

Foreign foundations will, likewise, be recognized under Maltese law as having legal personality if this arises under the law by which they are established.

5 In contrast with foundations, associations need not be registered.

Formalities required for registering a private foundation

If created by public deed, it is the constitutive deed that must be filed with the Registrar. The beneficiary statement need not be filed. In its stead, a note of reference referring only to the founder is filed with the Registrar of Legal Persons.

Where the Foundation is created by a public or secret will, an extract of the relevant part, duly authenticated, must be delivered to the Registrar of Legal Persons by a testamentary executor or by the heirs of the deceased.

Registration is to be effected within 3 months from the date of the deed or, if created by public or secret will, from the date of death of the founder or from the date of the publication of the will respectively, as the case may be. Once the Registrar of Legal Persons receives the documents and is satisfied that all is in order, he will register the Foundation. Penalties will arise for failure to register the documents within the prescribed time-frames.


Registration records are private and the Registrar of Legal Persons is required to implement procedures to ensure the privacy of Private Foundations, their assets, activities and beneficiaries. Naturally this is subject to the right of access enjoyed by persons who have a legitimate interest in those records.

The documents of Private Foundations, other than those which are registered, held by the Registrar of Legal Persons are not available to third parties unless such parties obtain the prior written consent of the administrators, the supervisory council, if any, or the Court. This is subject to the condition that such third parties hold a legitimate interest in the information contained in such documents. Even Court proceedings concerning Private Foundations are confidential and, accordingly, held in camera so that only the parties to the proceedings, the administrators, the beneficiaries, and their respective advocates and legal procurators are allowed in Court during the hearings.

Likewise, decrees or judgments of the Court must preserve the confidentiality of the proceedings and will only reveal those facts as may be necessary to make the same intelligible and enforceable by the parties and the administrators. All applications, responses, affidavits, opinions, statements and other documents or evidence are to be kept by the Registrar of the Court in a confidential manner and no access shall be given thereto except with the written consent of the Court.


Foundations cannot be established to carry on trade or to carry on commercial activities, even if the proceeds of such efforts are destined for social purposes. However, there are the following exceptions to this rule:

A Foundation may be endowed with commercial property or a shareholding in a profit making enterprise, a franchise, a trade mark or other asset which gives rise to income, as well as a ship as long as the Foundation is only the passive owner of such assets.

A Foundation may be used as a collective investment vehicle and issue units to investors therein, for the passive holding of a common pool of assets, the management of which is delegated to a third party, including a pension or employee benefit arrangements.

A Foundation may be used as a vehicle for the purpose of a securitization transaction, borrow monies against the issue of bonds and do all relative and ancillary acts.

Rights of Beneficiaries

As already outlined above, a Private Foundation is one that is established for the private benefit of one or more persons or of a class of persons. Accordingly, beneficiaries are entitled to those benefits contemplated in the Foundation’s statute. A corollary to this principle is that the persons who administer the Foundation owe fiduciary obligations inter alia towards the beneficiaries. The rules relating to beneficiaries of Private Foundations are very similar to those dealing with the beneficiaries of trusts.

The benefit under a Foundation is personal to the beneficiary. Consequently, creditors, spouses, heirs or legatees of the beneficiary may have rights only to the extent of the beneficiary’s entitlements (the benefit) under the Foundation. They do not have rights in relation to the assets of the Foundation.

Upon the death of the beneficiary, his/her entitlement does not devolve to the heirs but will terminate. This rule does not apply if the instrument establishing the Foundation expressly provides otherwise. If the beneficiaries are a class of persons, that class of persons must be clearly named in the statute. In those cases where it is intended that a particular person or persons are to be beneficiaries, he, she or they must likewise be indicated as clearly and as fully as possible in the instrument establishing the Foundation.

If there are no identifiable or ascertainable beneficiaries, the Foundation is deemed to be for the private benefit of the founders or of their successors in title. Identification of the beneficiaries need not be made in the instrument establishing the Foundation but may be made in a separate document referred to as a beneficiary statement. Persons who are not yet conceived at the time of the creation of a Foundation may be named as beneficiaries or form part of a class of beneficiaries but their rights only arise once they are born viable. It should be noted that the founder(s) of a Foundation may be a beneficiary/ies of that same Foundation, alone or with others.

Appointment of Beneficiaries

A beneficiary may be appointed subject to a condition and/or for a specified time and/or up to a specified value of benefit, as the founder deems appropriate. After the death of the founder, a beneficiary may apply to the Court requesting to eliminate any condition or requirement which is considered to be unreasonable paying regard to all the circumstances. Those persons who are unworthy of receiving under a will also cannot receive as beneficiaries under a Foundation.

Addition or exclusion of Beneficiaries

Here again the law on Foundations is very similar to that of trusts. Thus, for example, it is perfectly permissible to provide in the terms of the Foundation for the addition of beneficiaries or for the exclusion of beneficiaries from benefit and this at the discretion of the administrator. For such power to be valid, the Law specifically states that sufficient indication must be given in the instrument establishing the Foundation or in the beneficiary statement as to the class of which the beneficiary forms part. In the absence of such indication that power will be null and void.

An administrator may be granted the power to decide at his absolute discretion which beneficiaries are to benefit, the quantum of any benefit, at what time and in what manner they are to benefit and such other powers relating to the appointment, application or advancement of property of the Foundation.

A person who potentially qualifies to be appointed a beneficiary in terms of aforementioned power granted to the administrator cannot be considered to be a beneficiary until he or she is actually appointed as such by the administrator. Until such time, that person will not enjoy any rights in relation to the Foundation or vis-à-vis the administrator.

A similar rule applies in those cases where a beneficiary in whose favor discretion to distribute or appoint property may be exercised. In such a situation, the beneficiary will not have rights to specific property of the Foundation until such time as such discretion is exercised.

The right of the Beneficiary to alienate his/her interest

Subject to the terms of the Foundation, a beneficiary may, by instrument in writing, sell, charge, transfer or, otherwise, deal with his interest in any manner.

The terms regulating the interest of the Beneficiary

It is permissible to include terms in the Foundation that contemplate the termination of the beneficiary’s interest. Alternatively, the Foundation can be drafted in such a way that restricts the alienation or dealing of the beneficiary’s interest. The Law also contemplates the possibility of making that interest subject to diminution or termination in the event that the beneficiary goes bankrupt or that his property becomes liable to seizure by creditors of the latter.

The Law also creates a very particular rule that applies only in situations when the beneficiary’s interest is intended for the maintenance of the beneficiary or as a pension. Acknowledging the special nature of such situations, the Law allows the terms of the Foundation to provide that, in such circumstances, the interest will not be liable to termination or to attachment under a garnishee order without the prior consent of the Court6.

6 Similar rules apply where the benefit consists in an annuity or pension or the use and enjoyment of property and the enjoyment of fruits there from.

Disclaiming the Benefit

A beneficiary may disclaim his whole interest in writing and such a disclaimer shall be irrevocable. Alternatively, a beneficiary may disclaim part of his interest, whether or not he has received some benefit from his interest. In any such case, a disclaimer may, by the instrument by which the interest is disclaimed, be made revocable and will then be capable of revocation in the manner and under the circumstances mentioned therein.

Foundation in favor of a Class of Persons

Where an interest under a Foundation is in favour of a class of persons, that class is considered ‘closed’ when it is no longer possible for any other person to become a member of that same class7.

7 For example, a woman who is over 55 years of age shall be deemed to be no longer capable of bearing a child.

Termination of the Foundation other than by death of the beneficiary

If the Foundation terminates for any other reason at Law (saving death of the beneficiary discussed in the preceding paragraphs), the assets of the Foundation devolve on the founder or on the heirs.

Changes to the instrument of establishment of a Private Foundation

The Law allows the founders to freely amend the instrument establishing the Foundation and to substitute, add or remove beneficiaries. Naturally, any changes made to the instrument cannot retroactively render invalid anything already carried out by the administrator(s). The Law also prohibits any changes from affecting or interrupting acts that are “in progress” or commitments that have been given and are not yet fulfilled by the administrators.

Augmentation of the Foundation’s fund

One can increase the Foundation’s fund and there are various rules that apply as to how this is done. A fund is augmented when an endowment is made to the Foundation.

The administrator is bound to file with the Registrar, within 3 months from any grant, an inventory or descriptive note of the assets added to a Foundation. Unless expressly stated otherwise, grants or donations to Foundations are irrevocable8.

8 In those cases where an endowment is stated to be revocable, complexities may arise, particularly at the stage when that endowment is revoked. The Law strives to foresee the issues that may arise and solve them. The first point the Law makes is that the fact that an endowment is stated to be revocable does not imply any limitation on the use or appointment of the capital or income by the administrators. In the case that the grant is revoked, the grantor will only be entitled to the balance of the capital that may have remained unutilised. Revocation of an endowment does not affect or invalidate acts already carried out or interrupt acts in progress, nor affect commitments made and not yet fulfilled. Revocation of an endowment is suspended until such time as the administrators certify to the Registrar that all commitments have been fulfilled and are deemed to refer only to such amount as ould not have been utilized in fulfillment of such commitment.


Administrators of a Foundation may either be natural or juridical persons. In the latter case, there must be, at east, 3 directors. Upon relinquishing their administration, administrators are bound to submit an account of their administration to the succeeding administrators or, in their absence, to the Registrar.

Within 30 days from taking up office, the new administrator can choose to inform the Registrar and any interested parties of any reservations he may have regarding anything relating to the Foundation or the actions of the previous administrators and he shall not be liable for any matters so reserved until such time as the reservations are operative.

Remuneration of Administrators

It is perfectly permissible for an administrator to be remunerated from the income or capital of the Foundation9. The remuneration can be fixed in the instrument creating the Foundation or in an agreement between the founder and the administrator. It is also possible to have recourse to the Courts in order to establish the remuneration.

Resignation of Administrators for an administrator to resign from office he must give notice in writing to his co-administrators. If there is no other administrator, notice must be given to the founder or to the beneficiaries. If this is impracticable, notice must be given to at least 1 beneficiary or, if there are none to whom notice can be given, to the administrator’s duly appointed successor. Resignation takes effect on delivery of the aforesaid notice. In order to safeguard against abuses, the Law provides that a resignation intended to facilitate a breach of duty will not have effect.

A resignation will be of no effect if, following the resignation of an administrator, the Foundation ends up without an administrator. In this eventuality, the administrator will only be entitled to resign office if, prior to resignation, he or she applies to the Court for the appointment of a new administrator. In such cases, the resignation will come into effect as from the appointment of a new administrator thereby avoiding the situation where a Foundation is without an administrator at any given point in time.

9 The Foundation could, however, provide otherwise, in which case this would not be possible.

Termination of the office of Administrator

The office of an administrator ceases either by Court order or upon the coming into effect of a condition in the Foundation that envisages the removal of an administrator. In those cases where the administrator is a legal person, the office of administrator terminates when steps are taken for the winding up of the latter.

Upon termination of office, the administrator is duty bound to immediately deliver all of the Foundation’s belongings in his possession to the remaining or successor administrators.

It is also his duty to take all those steps as may be necessary in the interest of the Foundation.


The founder10 may exercise supervision over the administration of a Foundation. The founder is also entitled to intervene in the matter of appointment of administrators or in the disposal of the assets when these issues are being dealt by a Court of Law11.

A founder may be an administrator of a foundation. The founder may also be the beneficiary of a Private Foundation during his lifetime. However, if the founder is a beneficiary, that founder may not, at the same time, act as the sole administrator of such a foundation.

10 Together with any other person or persons who may be designated in the instrument establishing the foundation.
11 This will include the right to obtain a copy of the accounts held by the administrators, a copy of the inventory or descriptive notes of property.

Supervisory Council & Protectors

In order to have independent persons having the power to supervise the acts of the administrators, the terms of the Foundation may provide for the establishment of a supervisory council consisting of at least 1 member or for the office of a protector or protectors with similar functions to the institute of trusts12.

12 The Supervisory Council or the Protectors can be vested with the power of appointment, removal, substitution or addition of administrators. The exercise of any action or discretion on the part of the administrators may also be made subject to their express consent (Article 37(4)(5)).

Right to information

The founder, the Court, the supervisory council or protectors, any other person who is vested with such right in the instrument establishing the Foundation and any beneficiary13 of the Foundation are all entitled to demand the administrator to provide them with information regarding the state and amount of the Foundation’s assets14. The request must be made to the administrator in writing. Once that request is received, the administrator must provide full and accurate information within a reasonable time of receiving it.

Notwithstanding the above, the Law makes an exception in case of Private Foundations where the administrator is specifically not required to disclose any document or information that divulges the deliberations or reasons why that administrator acted in a particular way when exercising his power or discretion.

The administrator is under a legal obligation to inform the beneficiaries of their entitlement. The administrator must do this in writing and within a reasonable time from when he accepts to act. This rule applies unless the terms of the Foundation expressly determine the time when and the method how beneficiaries are to be informed of their entitlement under the Foundation. In the latter case, it will be terms of the Foundation that will apply.

In those cases where the terms of the Foundation provide for the addition of beneficiaries at the discretion of the administrator, a different rule applies. In such cases, the obligation to inform beneficiaries of their entitlement is suspended, until such time as the discretion is exercised. The corollary to this rule is that persons who may be added as beneficiaries do not enjoy the said right to information until such time as the administrator appoints them beneficiaries.

If the deed of Foundation expressly provides for the notification of information to beneficiaries without reference to a given point in time, such term shall be construed as implying a duty upon the administrator to inform such beneficiaries within a reasonable time after the death of the founder.

13 If a minor, to his lawful guardian or representative.
14 Including the accounts of the foundation and the conduct of the administration.

Revocation of a Foundation

It is permissible to terminate a Private Foundation prior to the term for which it is established if all the beneficiaries of the Foundation demand this but provided they are all in existence, have been ascertained and no one of them is interdicted or a minor. The founder may take measures to exclude this possibility in the instrument establishing the Foundation.

If the founder is still alive at the time when the beneficiaries agree on revoking the foundation, the consent of the founder will also be required. The founder may make the termination of the Foundation subject to the consent of a person stated in the Foundation’s statute.

The Court has the power to dissolve and wind up any Private Foundation when so requested by all the beneficiaries of the Foundation. This will be carried out if the Court is satisfied that the continuance of the Foundation is no longer necessary to achieve the intentions of the founder. The power of the Court to dissolve the Foundation overrides anything said to the contrary contained in the Foundation’s statute. However, such a request will succeed only if it is done after the death of the founder.

The statute of a Foundation may provide that it is revocable15. Naturally, revocation cannot serve to affect or invalidate acts already lawfully carried out or to interrupt lawful acts in progress. Neither does revocation affect any lawful commitments that were made (prior to revocation) and not yet fulfilled. Termination by revocation, in fact, is suspended until such time as the administrators certify to the Registrar that all lawful commitments have been fulfilled.

15 The express reservation by the founder of the right to revoke a foundation cannot be exercisable by the heirs or spouse of the founder unless the deed of foundation expressly provides otherwise. Creditors of the founder may not exercise the right to revoke a foundation.

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