TRANSP ARENCY OF FINANCIAL RELATIONS
BETWEEN THE STATE AND PUBLIC UNDERTAKLINGS [S.L.174.05 1
SUBSIDIARY LEGISLATION 174.05
TRANSPARENCY OF FINANCIAL RELATIONS 
BETWEEN STATE AND PUBLIC UNDERTAKINGS 
REGULATIONS
11th February, 2005
LEGAL NOTICE 45 of 2005, as amended by Legal Notice 269 of 2007.
Title. 1. The title of these regulatio ns is the Transparency of
Financial Relations between the State and Public UndertakingsRegulations.
Interpretation.
Amended by:L.N. 269 of 2007.2. In these regulations, unless the context otherwise requires:
"the Commission" means the Commission of the European Union
as established in the Treaty as subsequently amended;
"different activities" means, on the one hand, all products or
services in respect of which a special or exclusive right is granted
to an undertaking or all services  of general economic interest with
which an undertaking is entrusted and, on the other hand, each
other separate product or serv ice in respect of which the
undertaking is active;
"the Directive" means Commission Directive 80/723/EEC of 25
June 1980 on the transparency of financial relations betweenMember States and public undertak ings as well as on financial
transparency within certain unde rtakings as amended by Directive
85/413/EEC of 24 July, 1985, Directive 93/84/EEC of 30September, 1993, Directive 2000/52/EEC of 26 July, 2000 and
Directive 2005/81/EC of 28 November, 2005;
"dominant influence" means -
(a) the holding of the major part of the undertaking’s
subscribed capital; or
(b) control over the majority of the votes attaching to
shares issued by the undertaking; or
(c) the capacity to appoint more  than half of the members
of the undertaking’s administrative, managerial, orsupervisory body;
"exclusive right" means the right that is granted by the
Government of Malta to one undertaking through any legislative,
regulatory, or administrative instrument, reserving it the right to
provide a service or undertake an activity;
"Member States" means a member state of the European Union;
"public undertakings " means any undertak ing or entity over
which the Government of Malta may exercise directly or indirectly
a dominant influence by virtue of its ownership in it, financial
participation therein, or rules which govern it;
"public undertakings in the manufacturing sector’ means all
2 [S.L.174.05TRANSP ARENCY OF FINANCIAL RELATIONS
BETWEEN THE STATE AND PUBLIC UNDERTAKLINGS
undertakings whose principal area of activity, defined as being at
least 50% of the total annual turnover, is in manufacturing. These
undertakings are those whose ope rations fall to be included in
Section D - Manufacturing (being  subsection DA up to and
including subsection DN) of th e NACE (Rev 1) classification;
"special right" means the right th at is granted by the Government
of Malta to a limited number of undertakings, through any
legislative, regulatory, or administrative instrument, which:
(a) limits to two or more the number of such undertakings,
authorised to provide a service or undertake an
activity, otherwise than according to objective,
proportional and non-discriminatory criteria, or
(b) designates, otherwise than according to such criteria,
several competing undertakings, as being authorised toprovide a service or undertake an activity, or
(c) confers on any undertaking or undertakings, otherwise
than according to such criter ia, any legal or regulatory
advantages which substantially  affect the ability of any
other undertaking to provide the same service or to
operate the same activity under substantially
equivalent conditions;
Cap. 460. "Treaty" has the same meaning as in article 2 of the European
Union Act.
Transparency of 
financial relations.3. (1) Any financial relations between the Government of
Malta and public undertakings shall be transparent as provided in
the Directive.
(2) In such financial relations, therefore, the following shall
emerge clearly:
(a) public funds made available by the Government of
Malta to the public undertakings concerned;
(b) public funds made available by the Government of
Malta through the intermediary of public undertakings
or financial institutions;
(c) the use to which these p ublic funds are actually put.
(3) The transparency referred to  in this regulation shall apply
in particular to the following aspects of financial relations betweenthe Government of Malta and public undertakings:
(a) the setting-off of operating losses;
(b) the provision of capital;
(c) non-refundable grants, or loans on privileged terms;
(d) the granting of financial advantages by forgoing
profits or the recovery of sums due;
(e) compensation for financial burdens imposed by the
Government of Malta;
(f) the forgoing of a normal return on public funds used.
TRANSP ARENCY OF FINANCIAL RELATIONS
BETWEEN THE STATE AND PUBLIC UNDERTAKLINGS [S.L.174.05 3
Public 
undertakings to which transparency 
requirements do 
not apply.4. The transparency requirements referred to in regulation 3
shall not apply to financial relations between the Government ofMalta and:
(a) public undertakings, as regards services the supply of
which is not liable to af fect trade between Member
States to an appreciable extent;
(b) the Central Bank of Malta;
(c) public credit institutions, as regards deposits of public
funds placed with them by the Government of Malta
on normal commercial terms;
(d) public undertakings whose total annual net turnover
over the period of the two financial years preceding
that in which the funds referred to in regulation 3 aremade available or used ha s been less than Euro 40
million except for public credit institutions where the
corresponding threshold shall be a balance sheet totalof Euro 800 million.
Public 
undertakings required to 
maintain separate 
accounts.Amended by:
L.N. 269 of 2007.5. (1) A public undertaking that en joys a special or exclusive
right granted by the Government of Malta pursuant to Article 86(1)of the Treaty, or that is entruste d with the operation of a service of
general economic interest pursuant to Article 86(2) of the Treaty,
and receives public service compen sation in any form whatsoever
in relation to such service and which carries on other activities, is
required to maintain separate accounts that reflect clearly its
financial and organisational structure in:
(a) the costs and revenues associated with different
activities;
(b) the full details of the methods by which costs and
revenues are assigned or allocated to different
activities.
(2) For the purpose of subregulation (1), an undertaking that is
required to maintain separate accounts shall take the following
measures:
(a) the internal accounts co rresponding to different
activities shall be kept separate;
(b) all costs and revenues shall be correctly assigned or
allocated on the basis of consistently applied and
objectively justifiable cost accounting principles;
(c) the cost accounting principles according to which
separate accounts are main tained shall be clearly
established:
Provided that the requirements in this regulation shall not
apply to:
(i) undertakings, as regards services the supply of
which is not liable to affect trade between
Member States to an appreciable extent;
(ii) undertakings whose total annual net turnover
over the period of the two financial years
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BETWEEN THE STATE AND PUBLIC UNDERTAKLINGS
preceding any given year in which they enjoy a
special or exclusive right granted by the
Government of Malta pursuant to Article 86(1)of the Treaty, or in whic h they are entrusted with
the operation of a service of general economic
interest pursuant to Arti cle 86(2) of the Treaty is
less than Euro 40 million, except for public
credit institutions where the corresponding
threshold shall be a balance sheet total of Euro800 million;
(iii) undertakings which have been entrusted with the
operation of services of general economic
interest pursuant to Article 86(2) of the Treaty ifthe State aid in any fo rm whatsoever, including
any grant, support or co mpensation they receive
was fixed for an appropriate period following anopen, transparent and non-discriminatory
procedure.
Public 
undertakings 
required to provide 
information.6. (1) Public undertakings shall ensure that information
concerning the financial relations referred to in regulation 3 shall
be kept at the disposal of the G overnment of Malta for five years
from the end of the financial year in which public funds were madeavailable to them. However, wher e the same funds are used during
a later financial year, the five-year limit shall run from the end of
that financial year.
(2) Public undertakings shal l ensure that information
concerning the financial and orga nisational structure referred to in
regulation 5 shall be kept at the disposal of the Government of
Malta for five years from the end of  the financial year to which the
information refers.
(3) Wherever the Government of Malta considers it necessary
so to request, such public undertakings shall supply to the Ministryresponsible for finance the information referred to in
subregulations (1) and (2), togeth er with any necessary background
information, notably the objectives pursued:
Provided that the financial information as regards public
undertakings operating in the manufacturing sector shall besupplied by the public undertakings to the Ministry responsible for
finance on an annual basis:
Provided further that such information shall be provided by
all public undertakings whose turnov er for the most recent financial
year was more than Euro 250 million.
(4) The information given in pursuance of this regulation shall
be the following:
(a) the annual accounts and an nual report in accordance
with Council Directive 76/660/EEC. These annualaccounts and annual report shall include the balance
sheet and profit and loss account, explanatory notes,
together with accounting policies, statements bydirectors, and segmental and activity reports.
TRANSP ARENCY OF FINANCIAL RELATIONS
BETWEEN THE STATE AND PUBLIC UNDERTAKLINGS [S.L.174.05 5
Moreover, notice of share holders’ meetings and any
other pertinent information shall be provided; and
(b) the following details, in so far as not disclosed in the
annual accounts and annual report of the public
undertaking, shall also be provided:
(i) the provision of any share capital or quasi-
capital funds similar in nature to equity,
specifying the terms of the relative provision
(whether ordinary, preference, deferred, orconvertible shares, and interest rates, the
dividend or conversion rights attaching thereto);
(ii) non-refundable grants, or grants which are only
refundable in certain circumstances;
(iii) the award to the undertaking of any loans,
including overdrafts and advances on capital
injections, with a specification of interest rates
and the terms of the loan and its security, if any,
given to the lender by the undertaking receiving
the loan;
(iv) guarantees given to the undertaking by the
Government of Malta in respect of loan finance(specifying terms and any charges paid by the
undertaking for these guarantees);
(v) dividends paid out and profits retained;
(vi) any other form of State intervention, in
particular, the forgoing of sums due to theGovernment of Malta by a public undertaking,
including inter alia  the repayment of loans,
grants, payment of corporate or social taxes orany similar charges.
Time limits to 
provide 
information.7. The information required in regulation 6 shall be provided
within ten working days from the date of the publication of the
annual report of the public un dertaking concerned. In any case,
specifically for undertakings that do not publish an annual report,
the required information shall be submitted not later than six
months following the end of such undertaking’s financial year.