Cap. 16 ст. 2095ESecurity trusts.

(1) Security may be created in favour of a trustee, called a security trustee, for the benefit of any creditor or creditors, present or future, or in favour of a class or classes of creditors by either constituting security in favour of the trustee in the manner provided for by applicable law of Malta relating to particular types of security, or, by the settlement of property in favour of the trustee under written terms governing the trusts intended to operate for the purposes of providing security. For the purposes of article 2042 and other provisions under special laws which may be applicable to security, the trustee shall be treated as a creditor and shall be entitled to be registered as holder of the security, indicating his position as trustee.

(2) The security trustee shall enjoy all such rights and be subject to such obligations as may be stated in the instrument in writing regulating -

(a) the appointment of the security trustee, and

(b) the security granted to the security trustee for the benefit of the creditor or creditors.

(3) Security, for the purposes of this article, means any arrangement whereby the rights of a creditor are legally protected including any undertaking, guarantee, mandate, pledge, title, transfer, grant, privilege or hypothec or the placing of property in possession or control of the trustee with rights of retention and sale as may be agreed.

(4) When a hypothec is created in favour of a security trustee which is a bank or other entity which is authorised in terms of the Banking Act or in terms of equivalent legislation overseas, such hypothec may, notwithstanding any other provision of law, be granted to secure future debts by the same debtor to the security trustee or the beneficiaries of the security trusts, present or future, as may be defined in the trust instrument. Such a hypothec shall be valid on condition that the deed constituting the hypothec expressly states that it secures future debts of the same debtor and limits the effects of the hypothec to a stated maximum sum. Such information shall form part of the relative note of registration for the purposes of article 2042 in lieu of the requirements of article 2042(c), (d) and (e).

(5) The Minister may make regulations to regulate the operation of security granted in favour of a security trustee to secure future debts.

(6) When security is granted to a security trustee, such trustee shall have the power and legal interest to file any legal proceedings for the enforcement thereof even where under the terms of the deed of trust and the security -

(a) the trustee is not the creditor of the principal debt or obligation; or

(b) all creditors enjoy the right to sue, jointly and severally, for the enforcement of the debt:

Provided that payment by the debtor either to the security trustee or to the beneficiaries, if also creditors, shall discharge the obligations of the debtor to the extent of the payment made.

(7) Subject to the preceding sub-article, nothing in the Code of Organization and Civil Procedure shall hinder the action of a security trustee for the benefit of the beneficiaries under a trust on the basis of any simultaneous judicial or other action by any beneficiary under the trust.

(8) A security trustee shall not be subject to any of the obligations of the creditors for whose benefit he may hold security except to the extent to which he has expressly agreed in writing.

(9) A security trustee may resign, retire or be substituted in accordance with the terms of the trust and in such case the original security trustee shall assign any security held by him to the substitute security trustee in the form required by law for the particular security held.

(10) Beneficiaries of a security trust who may be vested with the debt, may assign the debt to third parties and the provisions of article 1475 shall apply to the security for such debt even when held by a security trustee and in such case the assignees of such debt shall enjoy the rights of beneficiaries under the security trust upon notice to or acknowledgement by the trustee without the need of a separate assignment of the beneficiary rights under the trust deed.

(11) The appointment of a security trustee to hold security, his removal or his substitution by another trustee and any related transactions shall not operate as a novation nor shall they affect the security validly constituted in any manner.

(12) A security trustee may also act as an agent or mandatory for the beneficiaries of the security trust and may carry out functions under such contract in accordance with its terms.

(13) In the exercise of any right relating to the enforcement of any security, the security trustee shall be bound by the legal provisions relating to the particular type of security and in any case where the security arrangements are not subject to rules as to its enforcement, the security trustee shall act in a fair and reasonable manner in relation to the debtor.

(14) The provisions of article 1967 shall apply mutatis mutandis where a pledge is granted by the debtor or a third party for the debtor, to a security trustee, for the benefit of any creditor or creditors, present or future, or in favour of a class or classes of creditors.