S.L. 459.1 Art. 5Formal requirements.

(1) Without prejudice to the provisions of regulation 3, the creation, validity, perfection, enforceability or admissibility in evidence of a financial collateral arrangement or the provision of financial collateral under a financial collateral arrangement shall not be dependent on the performance of any formal act.

(2) Without prejudice to the provisions of regulation 3, when credit claims are provided as financial collateral the creation, validity, perfection, priority, enforceability or admissibility in evidence of such financial collateral between the parties is not dependent on the performance of any formal act such as the registration or the notification of the debtor of the credit claims provided as collateral.

(3) When credit claims are provided as financial collateral, and without prejudice to the foregoing subregulation, insofar as validity and enforceability of the financial collateral arrangement against debtors or third parties is concerned, notice of the financial collateral arrangement shall be given to the debtor by the collateral taker or the collateral provider. The notice shall not be necessary if the debtor has acknowledged the financial collateral arrangement.

(4) When credit claims are provided as financial collateral, for the purposes of this regulation the debtor shall be deemed to be notified of the financial collateral arrangement upon any one of the following events taking place at the option of the collateral taker or the collateral provider:

(a) notification to the debtor in writing; or

(b) on the publication of a notice as follows:

(i) in a daily newspaper circulating wholly or mainly in Malta, and

(ii) where it appears that the majority of the debtors reside outside Malta, in a daily newspaper circulating wholly or mainly in such other jurisdiction outside Malta; and

(iii) where there is doubt as to where the majority of the debtors reside, in a daily newspaper which has wide international circulation.

(5) Such notification shall be effective for all purposes and effects of the Civil Code with regard to third parties, including the debtor, as follows:

(i) when notification is made in terms of article 187 of the Code of Organization and Civil Procedure, on the date of service and the provisions of the said Code of Organization and Civil Procedure shall determine such date of service; or

(ii) when notification is made by mail, two days after dispatch by mail by the collateral provider or collateral taker of the notice in writing to the debtor’s last known address; or

(iii) when notification is made by publication in a newspaper, the time of the opening of business in the place of publication of the notice in the newspaper, or

(iv) when notification is made by any electronic means, one day after dispatch of the electronic notification, as the case may be, unless the said notice expressly mentions a later date for the effects to commence.

(6) For the purposes of this regulation, "formal act" includes any judicial act, registration, notification, note in any public registry, acknowledgement, advertisement published in any newspaper or journal, any form of delivery, or any similar act upon which the creation, validity, perfection, enforceability or admissibility in evidence of a financial collateral arrangement or the provision of financial collateral under a financial collateral arrangement may be dependent: Provided that any act required by law as a condition for effecting the transfer or creation of a security interest on instruments, other than book entry securities, including endorsement in the case of credit instruments, or any recording on the issuer’s register in the case of registered instruments, shall not be considered as a formal act.

(7) Without prejudice to the provisions on unfair terms in consumer contracts in the Consumer Affairs Act, debtors of credit claims may validly waive, in writing:

(a) their rights of set-off against the creditors of the credit claim and against persons to whom the creditor assigned, pledged or otherwise mobilised the credit claim as collateral; and

(b) their rights arising from article 34 of the Banking Act and article 3 of the Professional Secrecy Act in relation to confidentiality and professional secrecy that would otherwise prevent or restrict the ability of the creditor of the credit claim to provide information on the credit claim or the debtor for the purposes of using the credit claim as collateral.