Issue link: https://maltatoday.uberflip.com/i/797847
maltatoday, SUNDAY, 12 MARCH 2017 6 Party companies fail to submit accounts to MFSA for several years running YANNICK PACE TWO main media organisations as well as other companies owned by the Labour and Nationalist Parties have failed to comply with the legal requirement to submit audited ac- counts to the MFSA for several con- secutive years. Some companies have been in de- fault of this requirement for as long as 12 years. The Companies Act requires com- panies to keep proper accounting records and to deliver to a copy of the annual accounts laid and the auditors' and directors' report every year to the companies registrar. Annual accounts, along with other company documents and details of directors and shareholders, are publicly available for viewing, show- ing that currently seven companies owned by the two main political parties – five owned by PL and two owned by PN – are in breach of this obligation. Asked for an explanation, PL chief executive Gino Cauchi said that while audited accounts for media arm One Productions had not yet been filed with the MFSA, they had been finalised and were "awaiting approval for submission". He added that the company's ac- counts up until 2015 had been pre- sented in court during proceedings brought against One Productions by the Performing Rights Society. Cauchi also said Consultancy & Re- search and MLP Holdings were non- trading companies, and that Sunrise Travel had not operated since 2003. Nevertheless, the Companies Act makes no exceptions for non-trad- ing or 'non-operational' companies. A PN spokesman acknowledged the company's irregular position. "The updating process of Media. Link Communications Limited is currently in progress and the com- pany confirms that it is focusing on regularising fully its position within the shortest time-frame possible," he said. An MFSA spokesman confirmed that both Media.Link Communica- tions and One Productions are cur- rently incurring penalties for failure to submit accounts. "It may be fairly common for a number of companies to fail to sub- mit their annual accounts as obliged to do by law," said Dr David Fabri, the head of the Department of Com- mercial Law at the University of Malta and former MFSA director. Fabri said when companies are fined, their obligation to file ac- counts remains and they are obliged to do so "for the information of shareholders and the public and to guarantee a small degree of financial transparency." "Publication and disclosure of the statute, any eventual changes, financial statements and other rel- evant information is the fair price companies and their shareholders and directors have to pay in return for having been given by the State the huge privileges of incorpora- tion, a separate legal personality and the limited liability of share- holders," he added. An MFSA spokesman confirmed that penalties have been issued and are being incurred for non- filing of annual accounts, specifi- cally an annual penalty of €25 for non-submission or late submission of annual accounts and a penalty of €0.50c for every day until the accounts are filed was being im- posed. While the Companies Act lists the maximum penalties for fail- ure to submit annual accounts as €2,329.37 annually and a daily pen- alty of €46.59 per day, the actual rate charged is at the discretion of the Registrar. Directors and other officers of the company may be held personally li- able for fines incurred as a result of a breach in the provisions of the Act. The penalty rate currently in force adds up to less than €200 a year, which is "relatively low", Fabri ac- knowledged – particularly in com- parison to the sum a company might expect to pay to engage an auditor and accountant. Fabri added that this was the result of a policy decision taken in 1996. "[The policy] should have lasted just a few years [but] as often happens, with time these policies acquire a sort of permanence," he said. Fabri added that fines must be re- covered within five years as "other- wise, they lapse due to prescription." While a case could be made for increasing penalties, Fabri said this would be "inevitably and predict- ably" opposed by trade associations seeking to protect the interests of their members. "One may also not exclude political pressure not to in- crease these regulatory burdens on business," he added. Although some companies can get away with not filing accounts, greater scrutiny is placed on publicly listed and licenced companies. Fabri would not be drawn into whether companies owned by political par- ties should face greater scrutiny, similar to the scrutiny faced by pub- licly listed companies. "All com- panies have the same obligations except that public and public listed companies have more onerous filing and disclosure requirements than smaller private companies, for rea- sons of investor protection. Com- panies owned by political parties are in the same boat as other companies and enjoy no special privileges," he said. News es Environment & Resourc Authority Hexagon House, Spencer Hill, Marsa. DO YOU IMPORT ELECTRICAL & ELECTRONIC EQUIPMENT, BATTERIES, PACKAGING OR PACKAGED GOODS? The Environment and Resources Authority is reminding importers, manufacturers and/or producers of Electrical & Electronic Equipment, Batteries & Accumulators, and Packaging or Packaging Material to register or renew their registration till the 31st March 2017. Application forms can be downloaded from the Authority's website through the following links: • Electrical & Electronic Equipment: http://era.org.mt/en/Pages/WEEE.aspx; • Batteries & Accumulators: http://era.org.mt/en/Pages/waste-batteries.aspx; • Packaging or Packaging Material: http://era.org.mt/en/Pages/Packaging-Waste.aspx. Completed forms are to be submitted on: epr.permitting@era.org.mt or sent by post to: The Environment & Resources Authority Hexagon House, Spencer Hill, Marsa, MRS 1441 Late renewals for EEE and Batteries & Accumulators will be processed at an additional charge of €20 per month thereafter. For clarifications, one may contact the Authority on 2292 3500. Company Majority Shareholder Year of last submission Euro Tours Company Limited (C9059) Media.Link Communications Company Limited (C6170) 2010 Media.Link Communications Company Limited (C6170) Nationalist Party 2005 ONE Productions Limited (C12946) MLP Holdings Limited (C21186) 2012 Sunrise Travel Limited (C14947) MLP Holdings Limited (C21186) 2002 Consultancy & Research Limited (C13204) MLP Holdings Limited (C21186) 2002 Sound Vision Print Limited (C7386) MLP Holdings Limited (C21186) 2013 Redtouch Fone Limited (C44463) ONE Productions Limited (C12946) 2012 Stricter rules 'too great a shock to the system' YANNICK PACE THE former Nationalist MP Fran- co Debono, one of the main au- thors of the political financing law – the result of a bill he had drafted in 2012 – has said that extending the reach of financing rules to the companies owned by political par- ties, would be too much of a shock to the system for Malta's political duopoly. A l l e g a t i o n s that the PN has issued false invoices through its c o m p a n y M e d i a . L i n k to accept donations from the DB Group intended at paying top party executives are so far unveri- fied. But the party has refused to confirm whether it rendered com- mercial services to the DB Group, which says it invoiced the party for the 'donations' it paid. But Franco Debono insists that the party financing law, which does not regulate these compa- nies, remains effective and that legislators had wanted to avoid "creating earthquakes" when drafting the law. "The current law is already a shock to the system. It was intro- duced in an environment where there was no legislation," Debono said, arguing that too comprehen- sive a law could at this stage "kill political parties" which need do- nations to survive. He said that while additions to the law might be desirable in the future, the importance of the law lies in the fact that it provides a regulatory structure to the prac- tice. "The donation thresholds are arbitrary, what is important is there being a structure," he said. Party financing laws have been at the centre of discussions sur- rounding revelations by the db Group, that it had effectively made a donation of €70,800 to Media. Link in 2016. According to the Financing of Political Parties Act of 2014, the accounts kept by po- litical parties must include "details of entities, including commercial enterprises, which are related, di- rectly or indirectly to a political party or are otherwise under its effective management or control," however it contains no clear defi- nition of 'details.' Debono stressed however that "a country like Malta" should be fo- cusing on enforcement of the law rather than discussing changes to it. "In politics when you carry out a reform like that you need to give it time," he said. "I agree there should be greater regulation of these companies but let's not lose focus, it's not time to change the law, but to enforce it." If the allegations being made about the PN are true, it would show that the law is in fact effec- tive, said the outspoken Commis- sioner of Laws, comparing an in- effective law to a sieve that allows everything to pass through. Debono also hit out at the PN and its decision to appoint retired judge Giovanni Bonello to head a party commission to propose 'radical changes' to party financ- ing laws. "It's quite ironic that those who resisted this law for so long, want to change it now that it seems they are in breach of it," said Debono. Franco Debono