Curmi & Partners


What are shares, stocks and bonds?

  • The ownership of a limited liability company is divided amongst its shareholders, which are people who have subscribed a sum of money for an amount of shares in return for a proportion of the profits.
  • Stocks are fixed interest securities, normally with a nominal value of EUR 100.
  • Bonds are also fixed interest securities, normally issued by governments and corporations for a certain fixed period. In most cases repayment is guaranteed or underwritten by a government or corporation.

Do shares and bonds pay any interest?

Shares do not pay any interest but companies distribute a proportion of their profits in the form of dividends. Bonds on the other hand pay a fixed yield in the form of a coupon.

What are the functions of a stockbroker?

The main functions of a stockbroker are the following:

  • The acceptance of client orders and the execution of such orders, against the payment of a commission.
  • Acting as an advisor to clients in relation to shares and stocks, which are listed on the Malta Stock Exchange.
  • Supporting the listing of shares and stocks and assisting the applicant company in all aspects such as giving professional advice and making sure that the company is properly presented in the public.
  • Managing portfolios of clients in relation to any securities which are quoted on the exchange.
  • Undertaking research into companies trading on the exchange as well as other companies seeking listing on the stock exchange.
  • Providing advice on corporate finance.

How is the market price of a share determined?

The market price of a share is determined by the intersection of demand and supply. This means that the price of a share is the prevailing price; people are willing to buy or sell a particular share in the market.

How often are shares traded?

Shares are traded on every business day, from 10:15 am till 12:00 pm.

Can I place an order via the telephone?

Yes an order can be placed via the telephone; however still, a written document will be required to confirm the order.

How do I purchase and sell shares?

Shares listed on the Malta Stock Exchange are bought via a licensed stockbroker. The process is the following: A written instruction including the MSE account number (if available), and the price at which one would like to purchase/sell the particular shares, must be sent to the stockbroker The stockbroker will then, try to match your bid/offer at the stock exchange When the stockbroker manages to affect the deal, he will send you a contract note, which will show all the details of the transactions made on your behalf.

When do deals get settled and to whom shall I address my payment?

Deals are settled on a T + 2 basis i.e. two working days after the deal is made. Payments shall be addressed to the stockbroker who has made the deal for you.

Do I have to pay any taxes or charges when buying and selling shares?

When deals are made on the stock exchange, no taxes are charged, however one has to pay commission to the stockbrokers.

Will I be charged any tax from the money I earn from shares?

In Malta, no taxes on capital gains exist for shares that are listed on the Malta Stock Exchange, so the money earned from the transfer of shares is not taxed.

What is the difference in the tax treatment of shares and bonds?

Money earned from shares in the form of dividends is taxed at the prevailing personal or corporate tax rate, while interest earned on bonds is charged a withholding tax of 15%.

Can I opt not to pay withholding tax?

One can always opt not to pay withholding tax, by asking the registrar to issue the interest on a bond as gross and to inform the Inland Revenue commissioner about these earnings. These earnings will be declared with gross income thus paying income tax.

Can I opt not to pay tax on my dividends?

The dividend declared by a corporate entity is paid out of profits, which have already been subject to corporate tax. The recipient of the dividend has the option of either not declaring the dividend income or, in the instance that it is in his interest, to declare the dividend income in his tax return and claim a credit for tax already paid by the company on those dividends. This second option is worthwhile in the circumstance that the recipient's personal tax rate is lower than the rate at which the dividends were subject to tax.

How often are dividends and coupons normally paid?

Government stocks pay interest at pre-set six monthly intervals while corporations vary in their payment periods. Some corporation pay coupons and dividends annually while others make their payments twice a year.

Can I buy shares directly from a friend of mine?

One can buy shares directly from someone else, but through a stockbroker. This procedure, where the stockbroker affects a simultaneous deal for the two clients is known as put-through.