S.L. 325.6 Art. 8Soft loans.

(1) Where the Corporation is satisfied that the activities of a qualifying company, being a company which qualifies as such in terms of article 3(1)(a) and (b) of the Act, may contribute to the development of the economy as is consistent with the aims and objectives of the Government, the Corporation may grant loans to the said company, which loans shall not exceed 75% of the qualifying expenditure.

(2) The rate of interest charged by the Corporation on loans granted in terms of this regulation shall be at least equal to a rate to be arrived at by deducting two and a half percentage points from the minimum discount rate established by the Central Bank of Malta by means of directives issued in terms of the Central Bank of Malta Act.

(3) The repayment of principal and the payment of interest on any loan granted in terms of the provisions of this regulation shall be secured by a general hypothec over the property of the company receiving the loan in addition to any other security which the Corporation may require:

Provided that for the purposes of Title XXIII of Part II of Book Second of the Civil Code, the Corporation may allow a hypothecary debt in respect of a loan or other banking facility granted by a financial institution to rank immediately prior to the general hypothec or other security of the Corporation relative to such loan: Provided further that the Corporation may accept a prime bank guarantee or other similar security in respect of its loan instead of or in addition to a general hypothec as aforesaid.

(4) The repayment of any loan granted under the provisions of this regulation and the payment of interest thereon shall be made within a period of time and at instalments to be agreed upon with the Corporation, but such period shall in no case exceed ten years from the date on which the first loan amount was received by the company:

Provided that, unless otherwise stipulated by the Corporation, for the first two years of the duration of the loan the company shall only be required to pay interest on the loan.

(5) Where the Corporation has approved that a loan be granted by instalments, and any part of such loan has not yet been advanced, the Corporation may, without prejudice to any other remedy, withhold any portion of the loan still outstanding if -

(a) any sum of money, whether principal or interest, due in respect of any loan provided under this regulation or article 16 of the Act, remains unpaid; or

(b) any prior loan made under this regulation or under article 16 of the Act has not been applied for the purpose for which it was made or has not been expended in a careful, timely and economical manner; or

(c) the company has gone into liquidation or has become insolvent or has assigned property for the benefit of creditors; or

(d) there has been a breach or non-observance of any condition attached to the loan.

(6) The granting of loans made under this regulation shall not be subject to the provisions of the External Transactions Act.

(7) A company which carries on or intends to carry on the activities referred to in regulation 4(3)(e), (f) or (j), either solely or together with any of the activities referred to in article 3(1)(a) and

(b) of the Act shall, subject to the approval of the Corporation, be entitled to the benefit provided by this regulation.

(8) No new loans may be granted by the Corporation in terms of the provisions of this regulation with effect from the first (1) day of July of the year 2019.