The OECD's new measures on base erosion and profit shifting have caused much uncertainty for companies throughout Europe. However, as Malta already has a transparent tax system in place, this could prove to be a positive step, Max Ganado tells MaltaProfile.
1. Can you give an overview of the firm, its core business segments and key markets?
GANADO Advocates is a long established firm. Professor Joseph Ganado established the firm on the same model it has now in the early 1950s, after specialising in London just after the war. It moved from being a family firm in the early 1970's to a fully fledged commercial law firm with over 70 lawyers and other professionals today. Its business is focused on three main pillars being shipping and aviation, corporate and financial services, with the tax, litigation and labour law practice areas servicing all other sectors. The firm's key markets reflect the business practice areas: Pireaus, Hamburg and London for shipping, London, New York, Paris and Frankfurt for financial services and globally for corporate, tax, immigration and fiduciary services.
2. For both local and international clients, what would you highlight as your competitive edge over other firms in the industry?
We focus a lot of our efforts on the main areas of law we specialise in and avoid the distraction of trying to do everything. That has allowed us to lead in areas like shipping, investment services, insurance and banking as well as trusts and foundations. We are determined to excel in areas we choose to promote and consciously avoid some areas such as gaming, even though it is a very successful area of activity. In such area, we limit ourselves to M&A matters, capital markets, litigation and other specialist tasks.
We take initiatives to propose legislative development in areas of our specialisation and often draft relevant legislation based on competitive and innovative ideas.
Organisationally. we are structured in teams that work towards the same focus. We operate as an association of lawyers without equity and we promote a sharing culture, which means that all associates share a common focus within a lockstep structure. This has resulted in a high level of collaboration and common orientation to clients, tasks and development.
3. What sectors do you see as having the most opportunity for growth potential at the moment?
We see very good potential in the areas of aviation, investment services and insurance, capital markets and intellectual property.
4. The aviation sector is growing considerably in Malta, how is your firm adapting to this?
We have been at the forefront of these developments and have contributed to the design of the legislation in place, supporting the Government with the ratification of the Cape Town Convention and extending education on the subject as much as we are able to. We have just finalised a review of the legislation and proposed some amendments for consideration, intended to strengthen Malta's offering in this sector. We have sought to develop thought around the current alternative financing opportunities and the use of Malta as a good location for capital market solutions in this sector. We are seeing some good results and high levels of professionalism in the legal and accounting fields which have helped the sector achieve good results.
5. What kind of major developments are shaping the legal sphere in Malta?
The crisis we are seeing in the banking sector is a major global problem that is opening opportunities for Malta to develop its capital markets capacity. Likewise, securitisation is on the rise again and focus on IP as a bankable asset is increasing. Not all countries are open to new ideas while Malta usually is – or has been so far. Wherever intermediation is important, we see an opportunity for Malta. EU legislation is always a good source for new ideas to come into the Maltese legal system, though sometimes it has the opposite effect when basic EU principles, like the freedom of movement of services or capital, is ignored in favour of dominant jurisdictions. This closes markets for Malta which is a peripheral state. A stark example is in investment services, where instead of opening the market to cross border services, we see doors being closed through the imposition of local custodians for certain types of funds. This is nonsense in an open market and since Malta always used Irish, Luxembourg, UK or US custodians for its funds, this poses a closed door to cross border services, which is seriously detrimental. We think Malta should contest the obvious violation of this basic and fundamental visionary value, as that was the basis on which Malta joined the EU and invested so heavily in investment services.
6. What are the key challenges facing the legal profession at the moment, and how is your company attempting to tackle them?
The legal profession is not regulated in an effective manner and we have been lobbying for a Legal Professions Act for a long time. Our regulatory infrastructure is slow and non-transparent and is focused on issues which many of us do not understand, rather than on the serious fraud cases we have been unfortunately seeing in the last few years. Few lawyers have been disbarred and, unless serious regulation comes in, we risk losing the excellent reputation our profession enjoys. Continuing Professional Education is not mandatory. We do not have limited liability firms. We cannot associate with non-lawyers, although the services industry all around us is fast becoming multi-disciplinary. Simple, non aggressive advertising is prohibited, although our rules state otherwise, resulting in inconsistent practices.
As a firm, we have created legal education structures to deal with continuing education and we apply full effects of positive peer pressure within the GANADO association of lawyers to ensure the highest levels of competence, integrity and efficiency for all lawyers at the firm. We are members of a law firm association called Lex Mundi, which ensures we get the best support for law firm management, training systems and like matters. This has worked very well and it extends to our CIO and CFO, apart from our knowledge management and human resources officers.
The large Audit firms remain a major challenge due to their international connectivity, their networks and excellent reputations, which when used to offer full range services and one stop shop ideas to clients often leads to legal work being undertaken as part of the brief, to the natural detriment of lawyers who offer only legal services. The trend among these audit firms to own and operate large law firms in their own right can also be very detrimental to general practice legal firms, though it is less of a problem to specialist legal firms, such as ours, as we retain the thought leadership in very focused areas of law which remains a unique selling point for us.
7. What is your opinion on the state of Malta's current legal and court system?
The legal system is sophisticated and lives up to expectations, sometimes surpassing expectations because of innovation drives. The Court system is continually under review, but the focus is mostly dominated by domestic orientations which miss the international expectations. It is clear we need to speed up processes which are still too slow because of procedural rigidity. Whilst some positive things are happening in that regard, much more can be done. Specialisation in new commercial areas of importance is lagging behind.
There is a specialist judge for corporate and insolvency matters and another for maritime law, which has worked very well. However, this is rather informal and has not been enhanced by resources and greater focus, apart from not being extended to financial services, for example. We will not see radical advance in this area as long as politicians continue to focus on domestically relevant law like family or criminal law rather than commercial law, the latter being less relevant to them in their constituencies. We have been lobbying for a review of the law of insolvency and it is only now, after years of effort, that we are seeing some small steps in that direction.
However, international commercial specialisation assumes co-ordination with specialist professional groups. While this does sometimes happen, the link with the judiciary is very superficial and that with politicians is fairly inconsistent. Most specialist legislation is happening through the interaction with the regulatory authorities. Some new legislative drives on family business, social enterprise, intellectual property and the like are happening and we have no doubt we will see new laws on these subjects within the next year.
8. How do you view the OECD's measures on base erosion and profit shifting, and what are your thoughts on the impact of the 15-point plan on Malta?
We welcome and support the BEPS initiatives taken by the OECD in order to have a better co-ordinated approach by all countries so as to ensure global transparency and responsible taxation. Malta's tax system is a transparent one, and is generally in harmony with the rationale behind the BEPS project and the 15-point plan. Our tax laws have a GAAR (General Anti-Avoidance Rule) which has been in place for a long number of years, and Malta has been one of the early adopters of full exchange of information with its Tax Treaty partners as well as being one of the first States to sign an Inter-Governmental Agreement with the US.
Whilst a number of the proposed measures in the OECD Action Plan could be of particular relevance to Malta, it is clear that all countries are currently studying the voluminous reports to understand their implications. The recommendations in the Reports would have to be implemented by countries separately or by means of multinational instruments, and we will be actively monitoring whether such eventual implementation would have any impacts on Malta. However, in view of the transparency of the Maltese tax system and all the safeguards in place to avoid abuses of our tax rules, we are confident that Malta will be able to – as it has done in various other instances in the past – take up these international developments as an opportunity to enhance its attractiveness for foreign direct investment into the country. The Maltese Government and all political parties are also committed to support the retention of Malta's attractiveness for such foreign investment, financial services, and international business.
9. What should the government be doing to ensure a business environment in which the Maltese economy can thrive over the next decade?
We have to continue doing what we have been doing well since we joined the EU ten years ago, which can be summarised as follows:
- adopt EU legislation effectively and, when we do so, make sure that where there is the option, we choose the business friendly approach over the bureaucratic and over-regulation approach
- review commercial and financial legislation regularly and ensure that we keep at the cutting edge of thought on subjects which are relevant, such as laws on legal organisations, security, enforcement of rights and insolvency, whilst avoiding slow, impractical and bureaucratic rules with over formalistic tendencies
- introduce new laws on opportunity areas early in the discussion and do not wait for all the other countries of Europe, America, Australia and others to adopt them before acting
- develop the environment around the new legislation robustly and quickly address obstacles which emerge. For example, it is obvious that laws on dematerialised securities are needed to expand the capital markets sector. This is because the new realities of the digital age cannot be regulated by old rules from the paper age. We cannot do this with small steps to solve single issues, as that does not change the legal environment, but we need to do this holistically and across the board.
10. What personal message would you like to share with the international business community about Malta?
Malta is an exciting and very pleasant place to be in. Those who visit us often like the country very much. Sometimes, there is a frustrating insistence on keeping inefficient systems in place. But on the whole people achieve what they set out to do, sometimes with some frustration, but on the whole constructively and amicably. There are cultural idiosyncrasies due to our history of external powers coming from different places and this is even reflected in our language skills, making most of us multilingual and capable of working across foreign systems, even across common law and civil law, of which we have both!
11. Dr Louis Cassar Pullicino took over the firm as Managing Partner in the summer of 2015. Looking to the future, what are GANADO Advocates' growth plans for the next three to five years?
We still have a growth agenda within the firm. Recruitment is becoming more difficult because greater success around us has led to many more opportunities in so many areas of specialisation we did not have before. As for our firm, Louis Cassar Pullicino's challenge is to maintain GANADO's drive for quality in client service and commitment, systems and processes, so that our management can provide the best back-up for the 75 lawyers of the firm, and those joining in the next five years, and so that clients can feel well served and getting value for their money.
He will, no doubt, continue to promote specialisation through education, internal and external and through secondments overseas and study international trends on alternative billing methods and clients feedback systems. The firm is investing heavily in our IT infrastructure and we are growing our regulatory team, mixing lawyers with other professionals. We continue to focus on innovation in the law so that we can survive in a world which is determined to eliminate tax as a differential basis for choosing locations of business or products. It is our excellence in providing support and solutions to complex commercial issues which will allow us to compete in the future in a borderless Europe and the wider world.
This interview with Dr Max Ganado was first published on maltaprofile.info.
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