S.L. 16.6 Art. 3Non-applicability of Title IV and Title XVII of Part II of Book Second of the Civil Code or of any other law.

(1) The provisions of Title IV and Title XVII of Part II of Book Second of the Civil Code or of any other part of the Civil

Code or of any other law in so far as they limit or restrict the charging of interest and the compounding of interest shall not apply to any:

(a) debts and other obligations which may arise from financial transactions where one of the parties is a designated entity: Provided that no party to the financial transaction may be a natural person;

(b) debts and other obligations which are (i) secured by a mortgage over, or (ii) due under a lease of a ship or aircraft, including an aircraft engine, whether registered in Malta or otherwise and whether governed by Maltese law or otherwise;

(c) debts and other obligations where -

(i) such obligations arise under a contract governed or otherwise regulated by the law of a country other than Malta; and

(ii) the agreed rate of interest and, or compounding of interests are in accordance with international market conditions prevailing at the time that the debt or the obligation has been contracted; and

(iii) the payor of interest is not a natural person;

(d) security (including guarantees, suretyships, indemnities and other similar undertakings, pledges, privileges, hypothecs, mortgages and any other collateral arrangements, whether by way of title transfer or otherwise) which is governed by Maltese law and which is entered for the purpose of, or in connection with, any transaction specified in paragraph (c);

(e) debts and obligations arising from the offer of financial instruments within the meaning of the Financial Markets Act where the issuer of such instruments is a body corporate or similar entity and the total consideration of the financial instruments offered is at least two million Euro;

(f) debts and obligations arising from transactions entered into between companies or undertakings forming part of the same group of companies and, or undertakings; or where a debt or other obligation arises from a transaction entered into by a natural person and a company in which he has a controlling interest and the obligation to pay interest is an obligation undertaken by the company towards the natural person. The reference to "group" and "undertaking" shall have the same meaning as in article 2 of the Companies Act;

(g) profit participating loans or profit participating notes and other similar obligations or instruments where the return on the obligation or instrument is variable and is linked to the performance of the business of the borrower or issuer or the performance of an asset or a basket of assets: Provided that the aggregate principal sum of the loans or notes and other similar obligations or instruments is at least two million euro, and that the issuer or the borrower, as the case may be, of the said loan, notes, obligations or instruments is not a natural person;

(h) equity release financial products as regulated by the Equity Release Financial Products Regulations:

Provided that interest fallen due may bear other interest if such interest be due for a period not less than one (1) year.

(2) In this regulation "controlling interest" refers to the right at least to exercise majority of voting rights at general meetings or to appoint a majority of the directors.