The Trader

Definition of a Trader

Section 4 of the Commercial Code –

The term "trader" means any person who, by profession, exercises acts of trade in his own name, and includes any commercial partnership.

The fact that a person is considered to be trader has certain consequences and brings about certain rights and obligations.

The requirements for becoming a trader:

1. No formality such as registration.ButA commercial partnership requires registration.

Break down of section 4 2. exercise of acts of trade.

-The law requires the exercise of objective acts of trade. - There must be a certain continuity in the exercise of these acts of trade. Therefore a one off transaction does not give a person the status of a trader.- There is no fixed number of acts of trade which give a status of trader, it all depends on the nature of the act of trade in question, e.g. a person who deals in property may have the status of a trader even if he performs two or three acts of trade a year, but if a green grocer performs two or three transactions per year – he will hardly be considered to be a trader.- The Court will decide if there is sufficient exercise of acts of trade to allow status of trade.- The trader need not perform the acts of trade personally, he may perform the through an agent. – WHAT IS IMP IS THAT THE ACTS OF TRADE ARE EXERCISED IN HIS OWN NAME. - VIP the exercise of acts of trade must be performed with the intention of speculation – “FINIS MERCATORUM LUCRUM EST”.

3. Acts of trade must be exercised in his own name.

- Vis a vis third parties the trader must assume full responsibility for the acts performed by him.

- distinction between trader and persons auxiliary to trade. Agent, director, manager, the commercial traveler, the master of a ship, the curator of a minor are not traders.

4. The exercise of acts of trade must be done by profession. - The law is not satisfied with a repetition of the acts of trade, but

it wants the exercise of the acts of trade to be the object of one’s continued activity. Therefore the performance of acts of trade must be the person’s only, or at least primary and constant source of income. An employee who does a few transactions annually, does not become a trader.

- Dr Edward Amato vs Spiro Xuereb Vol. XXII, Pt III, p. 204. – In order that a person becomes a trader he must devote his services to trade in such a way that it becomes his only or his principal occupation.

- The notoriety of the exercise of the acts of trade is not necessary. Infact the source of our Commercial Code – The French Commercial Code, speaks of definition of a trader as “a person who notoriously exercises acts of trade as his principal profession”, while our legislator left the element of notoriety out completely.

5. The question whether a person is or is not a trader is a matter of fact, and the person alleging it must prove it – “Onus probandi incumbit ei qui dicit, non ei qui negat”.

Commercial Partnerships

Commercial partnerships: three types

Regulated by Chapter 386 Companies Act.

From moment of issue of certificate of registration you have a trader.

Professions incompatible with status of trader

Broker Broker cannottransact businessfor his ownaccount, etc.

88. No public broker shall transact any commercial business for his own account, or have any interest therein, either directly or indirectly, in his own name or through the medium of a third party,whether alone or in partnership with others; nor shall any public broker lend his name for any transaction whatsoever to any person not authorized to exercise the office of a public broker: Provided that two or more public brokers may form a partnership between them for the purpose of brokerage only.

Notary

Sec. 3 (1) Notarial Profession and Archives Act3. (1) No person holding the warrant of advocate or legal procurator or being a bank manager, trader, certified broker or exchange agent may practise as a notary:

Provided that the President of Malta may authorize any such person to practise as a notary, on his surrendering the said warrant or certificate or on his ceasing to be a bank manager, trader, certified broker or exchange agent, as the case may be.

Judges & MagistratesCOCP 16. It shall not be lawful for any judge or magistrate to carry out any other profession, business or trade, or to hold any other office of profit whatsoever, even though of a temporary nature, with the exception of any judicial office on any international Court or tribunal or any international adjudicating body, the office of examiner at the University of Malta.

Code of Ethics

Public servantsPublic service management code, previously estacode.

MINORSSection 8

S. 8 . Any person capable of contracting, may trade, unless the law precludes him from carrying on trade.

The Commercial Code has exceptions to the rule:

9. A minor who has attained the age of sixteen years, may trade and shall be deemed to be a major with regard to obligations contracted by him for purposes of trade, if -(a) he has previously been authorized to that effect by the parent to whose authority he is subject, by means of a public deed registered in the Civil Court, First Hall; or, where both parents are dead, interdicted or absent, he has been authorized by the judge of the Civil Court, First Hall; and(b) a summary of the deed of authorization or of the decree aforementioned has been published by means ofa notice in the Exchange, in the Government Gazette and in another newspaper.

This authorization may be:(i) General (to trade in general)(ii) Special (to exercise trade in respect to one particular branch) (iii) Limited (to one or more acts of trade).

Once the publication of the deed is done, there is a jure et de jure presumption that everyone knows that the minor has been emancipated to trade.

10. Minors who are traders authorized as aforesaid can by reason of their trade charge, hypothecate and even alienate their property, without any of the formalities prescribed by the civil law.

11. The provisions of articles 9 and 10 shall apply to minors not being traders, with respect to acts declared to be acts of trade.

12. (1) The authority granted to a minor by the parent vested with parental authority to carry on trade may, at any time, be revoked by the parent exercising such authority by means of a public deed duly served on the minor. (2) The deed of revocation shall be registered in the Civil Court, First Hall, and published by means of a notice in the Exchange, in the Government Gazette and in another newspaper.(3) Such revocation shall in no case injuriously affect the rights acquired by a third party, even in regard to transactions which are still in the course of negotiation.

Effects of emancipation:For the purposes of trade the minor assumes full, direct and personal liability for all obligations contracted by him and he will have to guarantee that liability with all his property, present and future.

Because the minor is considered to be a major these consequences arise:

1. He may be interdicted or incapacitated;2. he may demand rescission of contracts only on the grounds on which a

major can;3. he may sue or be sued in his own name, without the necessity of being

represented by his father or curator;4. If he acquires status of trader all acts performed by him are subjective

acts of trade, and he may be adjudged bankrupt;5. He may charge, hypothecate or alienate his property, but only if such

charge, alienation or hypothecation is done in connection with their trade. This is due to the wording in section 10, which says “by reason of their trade”.

RevocationSection 12

Parents can do this at any time.There is no right of appeal for minor against this.

DUTIES OF TRADER

There are three duties in the Commercial Code:

1. Keeping of trade books;2. Publication of marriage contracts3. Limits of competition.

Keeping of trade books:Sections 13 – 26

Trade books are the registers wherein traders keep a written and minute account of their business transactions.

Why imp.?1. Trade books if kept according to law are admissible and constitute evidence of their contents in terms of the law of Civil Procedure. THIS IS IN THE INTETEST OF THE TRADERS THEMSELVES.2. In the interest of third parties. It is only fair that third parties (creditors) would have a record as to how the money advanced by them to the trader have been spent.3. Ion the interest of society at large. In case of suspension of debts, its important for society to establish whether the bankruptcy is a genuine one or a fraudulent one.

There are particular provisions in the Companies Act with regards to Companies.

2. Publication of Marriage Contract

Sections 27 – 31 of the Comm. Code.

The marriage contract we are envisaging here is the marriage settlement agreement, “kitba taz-zwieg”.

Normal regime is the Community of Acquests.

Paraphernal Property

Separation of Property – Community of residue under separate administration

Original marriage contract used to consist of:a) inventory of what is paraphernalb) what is dotal property. There is to be a GH equivalent to dowry, to guarantee proper

administration of the wife’s property.c) sum given by way of dower with a GH in favour of wife.

Dowry and dower now abolished.

When husband is trader it is wise to have separate administration and have assets put on wife’s name.

(This could be bypassed because with the advent of limited liability company, this is the most efficient tool. Yet in small business, keeping a limited liability company is becoming cumbersome and you are having the return of the trader).

Title VOF MARRIAGE CONTRACTS

1236. Except with regard to the acquisitions referred to in Subtitle III of this Title, no partnership or community of property between the spouses is established by law.

1237. (1) It shall, however, be lawful for the future spouses to enter into any other agreement, which is not contrary to morals, or inconsistent with the rules contained in this and the following articles of this Code.(2) The spouses may, in an ante-nuptial or post-nuptial contract agree that their property acquired during their marriage shall remain separate or that it shall be governed by the system of community of residue under separate administration under Sub-title V of this Title, and without prejudice to sub-article (3) hereof, no partnership or community of property in general, may be established between the spouses except that referred to in this article or in article 1236.

(3) The spouses may, without the intervention of any court, whether alone or with others, and whatever system regulates their property, form a limited liability company under the Commercial Partnerships Ordinance*; voting rights attached to shares registered in the name of a spouse shall be exercised by the spouse in whose name the shares are registered. The ownership of the shares in any such company shall remain governed in accordance with the system governing the property of the spouses.*Repealed by Act XXV of 1995 (Cap. 386).

1238. (1) It shall not be lawful for the future spouses to enter into any agreement whereby either of them is established as head of the family, or into any agreement in derogation of any of the rights deriving from parental authority, or of the provisions of law relating to minority, or of any prohibitory rule of law.

(2) Nevertheless, any stipulation that all the children, or any of them, shall be brought up in the religion of either of the spouses shall be valid.

1239. It shall not be lawful for the future spouses to enter into any agreement or to make any waiver tending to vary the legal order of succession either with respect to themselves in regard to the succession of their children or descendants, or with respect to the children between themselves, saving such testamentary

dispositions and such donations as are allowed under the provisions of this Code.

1240. (1) A promise made in a marriage contract by the parent of one of the future spouses to such future spouse - (a) not to leave to such future spouse out of his or her estate a portion smaller than that which such futurespouse would take on an intestacy; or (b) not to diminish such portion by any donation in favour of his or her other children or of any other person; or(c) not to give or leave, by donation or will, to any of his or her other children more than that which he or she would give or leave to such future spouse, shall be valid.(2) It shall also be lawful for either of the future spouses to renounce the succession of any of his or her own parents or other ascendants in return for what is given to him or her by such parent or other ascendant by way of donation in contemplation of marriage.(3) Any such waiver, however, shall not be valid unless it is expressly stated.

1241. Marriage agreements entered into by a minor with the consent of the parents or parent exercising parental authority, or where both parents are absent, dead, interdicted or of unsound mind, with the authority of the court, are valid.

1242. The authority of the court shall, in all cases, be necessary for the validity of a marriage agreement entered into by a person who is under disability to contract.

1243. Any variation or counter-declaration made in respect of the marriage contract by the future spouses before the celebration of marriage shall not be effectual unless it is made with the consent of all the parties to that contract.

1244. (1) After the celebration of the marriage, the spouses may, with the authority of the court, vary their marriage agreements, without prejudice to the rights of the children or of third parties.(2) Where no ante-nuptial agreement was made, the spouses may also, with the authority of the court, enter into a marriage contract.(3) Any agreement prohibited by law in respect of a pre-nuptial agreement is also prohibited in any post-nuptial agreement. (4) After the celebration of the marriage the spouses may, without the necessity of any authority of the court, substitute a special hypothec for any general hypothec established in the marriage contract.

1245. Any marriage contract, as well as any variation or counter-declaration made in respect thereof, shall, on pain of nullity, be expressed in a public deed.

1246. No marriage contract, variation or counter-declaration shall be operative in regard to third parties, unless it is registered in the Public Registry Office.

1247. In case of any variation or counter-declaration, the notary shall, under the penalties established in the Notarial Profession and Notarial Archives Act, draw up a note of reference as in the case of a deed of cancellation or rescission.

WHAT ARE THE DUTIES ON TRADERS IF THERE IS THIS MARRIAGE CONTRACT ?

Marital regimes:

OF PUBLICATION OF MARRIAGE CONTRACTS

27. (1) Every notary receiving a marriage contract or any deed varying such contract between persons any one of whom is described in the deed as a trader, shall, within fifteen days from the date of such contract or deed, file with the Registrar of Courts of Malta or with the Registrar of Courts of Gozo, according to the residence of the party described as a trader, a note containing the following particulars:(a) the date of the contract or deed and the name of the notary receiving such contract or deed;(b) the name of the party described as a trader;(c) the amount of the dowry and of the dower. (2) The registrar shall cause a copy of the note aforesaid to be posted up at the Exchange and published in the Government Gazette.

28. (1) The Registrar of Courts of Malta and the Registrar of Courts of Gozo and Comino shall keep an Index, in alphabetical order, of the notes filed with them respectively under the provisions of the last preceding article.

(2) The Index shall be open to inspection by the public.

29. Every notary who fails to comply with the provisions of article 27 shall be liable, on conviction, to a penalty not exceeding ten liri, at the suit of any interested party, or of the Attorney General, by summons before the Civil Court, First Hall, or before the Court of Magistrates (Gozo) in its superior commercialjurisdiction, as the case may be.

30. (1) Where any one of the spouses engages in trade after the marriage, or although already engaged in trade has not been so described in the marriage contract, the obligations mentioned in article 27 shall devolve upon such spouse.

(2) If such spouse fails to carry out the said obligations, such spouse shall be liable to the penalty prescribed in the last preceding article and may, moreover, in the event of bankruptcy, be adjudgeda fraudulent bankrupt.31. (1) The registrar shall cause every demand for the separation of property between spouses any one of whom is described in the Index mentioned in article 28 as a trader, to be published in the Government Gazette.

(2) The registrar shall likewise cause the judgment on the said demand to be published in the Government Gazette, and shall enter a reference to such judgment in the said Index.

The aim of the law is to ensure that creditors should be aware.

13. Every trader is bound to keep the following books:(a) a waste-book;(b) a journal;(c) a cash-book;(d) an inventory-book;(e) a ledger.

Waste-book. 14. Every trader shall immediately enter in the waste-book every commercial transaction which he makes, showing all the conditions or terms to which it is subject.

Journal. 15. The journal must show day by day all the transactions concluded by the trader, his debts and credits, his negotiations, acceptances and endorsements of bills, and, generally, all that he receives or pays for any cause whatsoever; and must show month by month the sums disbursed for household expenses.

Cash-book. 16. The cash-book must show in detail, day by day, all the sums received and those paid out by the trader, compared with the journal; it must be balanced at least once a month.

Inventory-book. 17. (1) The trader shall make every year an inventory containing a description and valuation of his whole estate, assets and liabilities, whatever may be their nature and origin.(2) The annual inventory shall be closed with a balance and with a statement showing the profits and losses, and shall be copied out year by year in the aforesaid inventory-book.

Ledger. 18. The ledger shall show an accurate and up-to-date record of all transactions classified as personal and impersonal accounts and so kept as to render possible the drawing up of a true and correct picture of the state of affairs of the business or trade at any given time.

OPTIONAL TRADE BOOKS

19. Besides the books mentioned in the foregoing articles of this sub-title, traders may keep other books and other papers wherefrom the extent and the progress of their business shall appear in a more detailed manner.

DUTY TO KEEP LETTERS Etc. ¬

20. Every trader shall keep, by order of date, the original of all letters, invoices and telegrams received by him, and a copy, whether hand-written or type-written, or a press-copy, of all letters, invoices and telegrams forwarded by him.

Formality21. (1) All books which traders are required to keep, with the exception of the waste-book, shall be numbered and kept, by order of date, without blanks or marginal notes.(2) Whenever it shall be necessary to make any cancellation, this shall be made in such a manner as to leave the cancelled words legible.

Similarity To VAT Books

PRIMA FACIE EVIDENCE

22. (1) Trade books, whether obligatory or optional, shall constitute evidence in terms of the Code of Organization and Civil Procedure.

(2) Nevertheless, it shall not be lawful to divide the contents of such books.

23. (1) In the course of an action, the court may, at the instance of one of the parties or of its own motion, order the production of all correspondence touching the question at issue, and of the trade books in order to abstract therefrom such portion only as relates to the controversy.(2) In such case, a qualified accountant chosen by agreement between the parties or, in default, nominated ex officio by the court, may be appointed in order to ascertain, without removing the books and in the presence of the person producing them, whether such books are in order, and to abstract therefrom such entries as relate to the controversy.(3) The opposite party may in counter-evidence produce his own books kept according to law.

24. In cases of winding up or liquidation of a partnership, or of property in community or of successions, the court shall have power to allow the examination of all the books subject to such conditions and formalities as the court may in each case prescribe.

Important sections:

S. 480 dealing with Bankrupcy 477. Every trader who suspends payment of his debts is in a state of bankruptcy.

478. (1) The trader or his lawful representative can, on the suspension of payments, make a declaration thereof in the Civil Court, First Hall.

480. On making the declaration mentioned in the foregoing articles, the trader shall, at the same time, file in the Civil Court, First Hall, all his commercial books and papers.

494. The books and papers of the bankrupt shall be open to inspection by all the parties interested, and, by permission of the judge, they may be delivered, wholly or in part, to the curators.

539. (1) The benefits granted by law in favour of bankrupts shall not apply in the case of fraudulent bankruptcy.(2) A bankrupt shall be deemed to be a fraudulent bankrupt in each of the cases following:

(a) if he makes an untrue statement in respect of the debts owing to or from him, or in respect of his insolvency;

(b) if he has simulated any expenses or losses or if he fails to give a satisfactory explanation of the manner in which his receipts have been disposed of;

(c) if he has concealed or removed any sum of money, or any debt due to him, goods, merchandise or othermovable effects;

(d) if he has made fictitious sales, transactions or donations;

(e) if he has simulated collusive debts between himself and fictitious creditors, by simulated writings or bydeclaring himself debtor, without consideration or cause, in any public or private act;

(f) if he has concealed or destroyed his books, documents or other papers relating to his accounts.

540. A bankrupt may in the cases following be adjudged a fraudulent bankrupt, unless he sufficiently proves that he had no intent to defraud -(a) if he has not kept books or if his books do not show the true state of his assets and liabilities;(b) if, on being lawfully summoned for examination, he fails to attend;(c) if he has not aided in the making up of the inventory.

Retailers.

25. Retail traders are not bound to enter in their books the sales made for ready cash: it will be sufficient for them to enter each day the total amount of the sales made on such day.

26. Traders are bound to keep their trade books, letters, invoices and telegrams received by them, for a period of five years to be reckoned, in the case of trade books, from the date of the last entry made in each book.

WHAT DOCUMENTS IS A LIMITED LIABILITY COMPANY REGISTERED IN MALTA DUTIBOUND TO KEEP?

Any company that is registered as a limited liability company in Malta in accordance with the Companies Act of 1995 must comply with all the corporate legislation that is pertinent to limited liability companies.

The major obligation of limited liability companies with respect to corporate documentation is the keeping of trade books and proper accounting records. In this respect reference is made to two pieces of legislation: the Commercial Code and the Companies Act.

The Commercial Code

In virtue of section 4 of the Commercial Code, a limited liability company, as a commercial partnership, is ex lege considered to be a trader. One of the basic duties of a trader in the same Commercial Code is the keeping of trade books. However most of the duties, related to the keeping of trade books, found in the Commercial Code have been superseded by more onerous duties introduced in virtue of the Companies Act, section 163 et sequitur.

However section 20 of the Commercial Code imposes an obligation on every trader to keep, by order of date, the original of all letters, invoices and telegrams received by him, and a copy, whether hand-written or type-written, or a press-copy, of all letters, invoices and telegrams forwarded by him.

According to the Commercial Code, the period for which such documentation is to be kept is five years. Thus section 26 provides: " Traders are bound to keep their trade books, letters, invoices and telegrams received by them, for a period of five years to be reckoned, in the case of trade books, from the date of the last entry made in each book."

This last obligation, emanating from section 20 of the Commercial Code, has not been superseded by the Companies Act and is still in force till the very day.

The Companies Act

Chapter X of the Act, imposes the obligation of the keeping of proper accounting records. Thus section 163 of the Companies Act lays down:

163. (1) In lieu of the requirements of sections 13 to 18 of the Commercial Code a company shall be required to keep proper accounting records with respect to -

(a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;

(b) the assets and liabilities of the company;

(c) if the company's business involves dealing in goods:

(i) statements of stocks held by the company at the end of each accounting period of the company;

(ii) all statements of stocktakings from which any such statement of stocks as is mentioned in sub-paragraph (i) of this paragraph has been or is to be prepared; and

(iii) except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified.

(2) For the purposes of subsection (1) of this section, proper accounting records shall be deemed to have been kept with respect to the matters aforesaid if such records are sufficient to show and explain the company's transactions and are such as to -

(a) disclose with reasonable accuracy, at any time, the financial position of the company at that time; and

(b) enable the directors to ensure that any balance sheet and profit and loss account prepared under this Chapter complies with the requirements of this Act.

(3) The accounting records shall be kept at the registered office of the company or at such other place as the directors think fit, and shall be at all times open to inspection by the officers of the company:

Provided that if accounting records are kept at a place outside Malta there shall be sent to, and kept at a place in Malta and at all times be open to the inspection of the officers of the company such accounts and returns with respect to the business dealt with in the accounting records so kept as will disclose with reasonable accuracy the financial position of that business at intervals not exceeding six months and will enable to be prepared, in accordance with this Act, the company's balance sheet and its profit and loss account.

(4) A parent company which has a subsidiary undertaking, in relation to which the above requirements do not apply, shall take reasonable steps to secure that the subsidiary undertaking keeps such accounting records as to enable the directors of the parent company to ensure that any balance sheet and profit and loss account prepared complies with the requirements of this Act.

(5) Notwithstanding the provisions of section 26 of the Commercial Code, the accounting records of the company shall be kept for a period of ten years:

Provided that where the accounting records are kept in a bound or unified form, the ten years shall commence to run from the date of the last entry made therein.

(6) If a company fails to comply with any provision of subsections (1) to (4) of this section, every officer of the company who is in default shall be guilty of an offence and liable on conviction to a fine (multa) of not more than five thousand liri, unless he shows that he acted diligently and that, in the circumstances in which the company's business was carried on, the default was excusable.

(7) If a company fails to comply with the provisions of subsection (5) of this section, every officer of the company who is in default shall be liable to a penalty.

It is important to note section 163 (5), above quoted, that imposes a duration of ten years for the obligation of the keeping of proper accounting records.

In addition to the above, the Companies Acts also binds companies to keep: a register of members, a register of debentures, minutes of proceedings of general meetings as well as minutes of proceedings of board meetings.

FISCAL LEGISLATION

Fiscal Legislation also imposes an obligation for the keeping of certain corporate documentation. The major pieces of legislation regulating this aspect are: The Income Tax Management Act, and the Value Added Tax Act.

The Income Tax Management Act:

Section 19 of the Income Tax Management Act is specific as to the corporate documentation responsibilities of companies and lays down: 19. (1) Every person carrying on a trade, business, profession or vocation shall keep proper and sufficient records of his income and expenditure to enable his income and allowable deductions to be readily ascertained.

(2) The records referred to in subsection (1) of this section shall include:

(a) proper accounts with respect to -

(i) all sums of money received or expended and the matters in respect of which the receipt or expenditure takes place; and

(ii) all sales, purchases or services rendered, as well as any other transaction, act or operation pertaining to the trade, business, profession or vocation;

(b) a profit and loss account or equivalent annual statement;

(c) a statement of the assets and liabilities as on the date on which the annual accounts of the trade, business, profession or vocation are made up or, in the case of a company, a balance sheet.

(3) Subject to such conditions as he may deem fit to impose, the Commissioner may exempt any person in respect of any year of assessment from keeping any record or statement referred to in subsection (2) of this section.

(4) The records required to be kept under the provisions of this section shall be supported by such documents as may be appropriate in the circumstances, including -

(a) in the case of a company resident in Malta, the balance sheet and profit and loss account, which shall comply in every respect with the applicable provisions of sections 167, 168 and 169 of the Companies Act, 1995 and notwithstanding any exemption made by that Act or by any other law, such balance sheet and profit and loss account shall be accompanied by a report made out by a certified public auditor as provided by the applicable provisions of sections 179 and 181 of that Act;

(b) in the case of a cooperative society, the audited financial statements of the society, prepared in all respects as required by the law for the time being in force regulating cooperative societies and accompanied by any report which is by any such law required to accompany the audited financial statements of the society.

In virtue of section 19 (5) of the same Income Tax Management Act, the obligation for the keeping of the records mentioned extend to not less than nine years after the completion of the transactions, acts or operations to which they relate.

The Value Added Tax Act

Part VI of the Value Added Tax Act deals with records and information. The most important section in this respect is section 48 which binds every person registered under the Act to keep proper and sufficient records of all transactions carried out in the course of furtherance of his economic activity to enable the date, the value and the nature of such transactions, the tax chargeable thereon and the deductions allowable in respect thereof. In virtue of section 48 (2) the obligation for the keeping of these records extends to six years from the end of the year to which they relate, and such obligation persists irrespective of whether one remains registered with VAT Department or not.

The Twelfth Schedule to the above act also deals with the documentation that is to be kept by every VAT registered person. Notably section 1 of the Schedule states

1. Every registered person shall, for the purpose of accounting for the tax, keep the following records and documents -

(a) proper accounts and records of his economic activity;

(b) his value added tax account;

(c) his annual value added tax account;

(d) copies of all tax invoices issued by him;

(e) all tax invoices received by him;

(f) documentation relating to importations and exportations by him;

(g) copies of all fiscal receipts issued in terms of the Fourteenth Schedule to this Act;

(h) all credit notes, debit notes and other documents issued by him or received by him which evidence an increase or a decrease in the consideration for any supplies or for importation.

HUMAN RESOURCES:

The Conditions of Employment Regulation Act (CERA):

CERA also lays down certain records that are to be kept by a company. Notably section 14 of the Act states that every employer who employs an employee shall keep a register or registers showing, in respect of each such employee:

"(a) the name, address, sex and date of birth;

(b) the nature of the work in which he is engaged;

(c) the time, paid for at ordinary time rates, during which he is employed;

(d) the time, paid for at overtime rates, during which he is employed;

(e) the time, paid for at other special rates, during which he is employed;

(f) the periods of daily and weekly rest accorded to him; and

(g) the total wages paid to him each week."

The same section goes on to state what records are to be kept with respect to employees who are out workers, or whose wages consist of a share in the profits or of a commission on sales or payments made or received by the employer.

In addition section 15 of CERA imposes an obligation on employers to exhibit a copy of every wage regulation order applicable to its employees drawn up in English and Maltese. This is to be exhibited by the employer in a conspicuous position in the place of employment.

Section 33 of CERA binds the employer to keep a copy of all the contracts of service.

The Disabled Persons (Employment) Act:

This act deals with the employment of disabled persons by companies, or corporations, that have more than twenty employees. If a limited liability is subject to this Act, then it must comply with the requirements of section 20 of the same act which imposes an obligation on such company to keep a register showing - " (a) the number and the names of persons employed by him;

(b) the number and the names of registered persons employed by him;

(c) such other matter as shall be necessary to show compliance by the employer with the provisions of this Act. "

The Employment and Training Services Act:

This act also lays down in section 36 obligations with respect to the keeping of records of apprentices and trainees.

The Duty on Documents and Transfers Act:

Section 7 of the Duty on Documents and Transfers Act, lays down that every document mentioned in the Act is to be preserved by the owner thereof for at least four years after the day on which duty thereon has or ought to have been paid, and any person who destroys or mislays or fails to produce any such document before the lapse of the said period shall be liable to the same penalty as if the duty had not been paid.

Section 2 of the Act defines a "document" as: "document" includes policy of insurance, bill of sale, a banking credit card, a notarial deed and a schedule of redemption of ground-rent filed in court;

The Electronic Commerce Act

Of relevance to the above opinion, is section 8 of the Act, which provides that: (1) If under any law in Malta, a person is required to record information in writing, that requirement is deemed to have been satisfied if the person records the information in electronic form:

Provided that such information in electronic form is readily accessible so as to be usable for subsequent reference and it complies with such regulations as may be prescribed.

(2) If under any law in Malta, a person is required to retain, for a particular period, a document that is in the form of a paper or of any other substance or material, the requirement is deemed to have been satisfied if the person retains an electronic form of the document throughout that period:

Provided that if:

(a) having regard to all the relevant circumstances at the time of the generation of the electronic form of the document, the method of generating the electronic form of the document, provided a reliable means of assuring the maintenance of the integrity of the information contained in that document; and

(b) at the time of the generation of the electronic form of the document, it was reasonable to expect that the information contained in the electronic form of the document would be readily accessible so as to be usable for subsequent reference; and

(c) it complies with such regulations as may be prescribed.

(3) For the purpose of subarticle (2) of this article, the integrity of information contained in a document is only maintained if the information has remained complete and unaltered, save for:

(a) the addition of any endorsement; or

(b) any change not being a change to the information, which is necessary in the normal course of communication, storage or display.

(4) If under any law in Malta, a person is required to retain, for a particular period, information that was the subject of an electronic communication, that requirement is deemed to have been satisfied if that person retains, or causes another person to retain, in electronic form, that:

(a) at the time of commencement of the retention of the information, it was reasonable to expect that the information would be readily accessible so as to be usable for subsequent reference; and

(b) having regard to all the relevant circumstances, at the time of commencement of the retention of the information, the method of retaining the information in electronic form provided a reliable means of assuring the maintenance of the integrity of the information contained in the electronic communication; and

(c) through the period that person also retains, or causes another person to retain, in electronic form, such additional information obtained as is sufficient to enable the identification of the following:

(i) the origin of the electronic communication;

(ii) the destination of the electronic communication;

(iii) the time when the electronic communication was sent;

(iv) the time when the electronic communication was received; and

(d) at the time of commencement of the retention of the additional information specified in paragraph (c) it was reasonable to expect that the additional information would be readily accessible so as to be usable for subsequent reference; and

(e) it complies with such regulations as may be prescribed.

(5) For the purposes of subarticle (4) of this article, the integrity of the information which is the subject of an electronic communication is only maintained if the information remains complete and unaltered, save for:

(a) the addition of any endorsement; or

(b) any change not being a change to the information, which arises in the normal course of communication, storage or display.