Company formation in Malta
Principal legislation is the Companies Act of 1995 which is principally based on English Company law. Shipping companies are regulated by the Merchant Shipping Act.
Limited liability company
The limited company can be of either a private nature (Limited or Ltd.) or of a public nature (plc). The minimum number of subscribers or shareholders for public and private companies is two, but a private limited liability company may also be formed as a single-member as long as the director is not a corporate entity, and the objects clause restricted to one main activity.
The limited liability company is the preferred vehicle due to the separate legal personality and limited liability it offers.
Maltese company law also offers the possibility of having a partnership, with either the ‘Partnership en commandite’ being a partnership with at least one unlimited partner and other limited partners (designated as LP) and the ‘Partnerships en nom Collectif’, being an unlimited partnership where all partners have unlimited liability.
The minimum authorised and issued share capital under Maltese law is as follows:
private companies - €1,165 with at least 20% thereof paid up upon subscription;
public companies - €46,588 with at least 25% thereof paid upon subscription.
The company’s share capital may be denominated in any currency. This, coupled with the fact that Malta does not impose any exchange control restrictions, facilitates the use of a Maltese corporate vehicle for international business. Exchange risk is further minimised by the fact that the company’s income tax is paid in the same currency of the share capital. Any tax refunds are also given in the same currency.
The registration of a company is done by submitting the necessary documentation to the Registry of Companies. The documentation includes the Memorandum and Articles of Association (M&A) together with an identification document of the subscribers, and proof that initial share capital has been paid up. The M&A must be signed by the subscribers or their attorneys, but does not need to be executed in front of a notary public.
Once all the documentation is submitted to the Registry of Companies the company incorporation or registration is done within 24 hours.
Malta adopts a strong stance against money laundering hence service providers are legally bound to conduct due diligence checks on prospective shareholders, beneficial owners and officers of the company.
Malta has a fully fledged trustee regime and hence shares in Maltese companies may be held by licensed trustees in a fiduciary capacity for and on behalf the subscribers.
A registration fee is payable to the Registry of Companies and depends on the amount of authorised share capital. The fee ranges between a minimum of €245 and a maximum of €2,250.
An annual registration fee is also payable to the Registry of Companies with the minimum fee being €100 for companies having a share capital not exceeding €1,500.
Directors and Company Secretary
Companies must appoint at least one director and one company secretary. A director may be a corporate entity but the company secretary must be an individual. Furthermore, a sole director cannot occupy the post of company secretary as well unless the company is a single member company.
The general meetings need not be held in Malta and may be done via a telephone or video conference. Moreover, a company may opt not to convene a general meeting if all the shareholders are in unanimous agreement and sign a resolution to such effect.
Companies must submit an annual return upon each anniversary of the company’s registration date.
After the financial year end, audited financial statements must be laid before and approved by the general meeting of the company and eventually submitted to the Registry of Companies. A company may opt for a financial year end other than 31st December as long as the first period is not less than six months and not more than 18 months. The time allowed for the submission of accounts before the general meeting is ten months after the financial year end for private companies and seven months after the financial year end for public companies.
Form of Accounts
Audited financial statements must be prepared in accordance with the Companies Act and with IFRSs. Small companies are allowed to submit abridged accounts.
Continuation of Companies
Maltese law allows companies to change their domicile in and out of Malta. Companies moving their domicile to Malta must come from a jurisdiction which allows such redomiciliation. This possibility enables companies to freely move from one jurisdiction to another without the need of going through a liquidation process.
Upon an application to redomicile to Malta the Maltese Registrar will issue a provisional certificate, which will eventually be converted into a ‘Certificate of Continuation’ upon the presentation of evidence that the company has ceased to exist in the foreign jurisdiction.