Overview of Malta companies

Published 10 Mar 2016

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Malta’s Companies Act, Chapter 386 of the laws of Malta is principally based on English company law and is in conformity with EU Directives. The Malta Financial Services Authority (MFSA) is the single regulator for financial services activities in Malta.

The Companies Act provides for three types of commercial partnerships:

  • Partnership en nom collectif – which may be formed by two or more partners, operates under a partnership name and has its obligations guaranteed by the unlimited and joint and several liability of all the partners;
  • Partnership en commandite – which may be formed by two or more partners, operates under a partnership name and has its obligations guaranteed by the unlimited and joint and several liability of one or more partners, called General Partners, and by the liability, limited to the amount, if any, unpaid on the contribution, of one or more partners, called Limited Partners;
  • Limited liability company – which may be formed by at least two shareholders and is automatically vested with separate juridical personality from that of its shareholders, which will only subsist until the name of the company is struck off the Register.

 

Limited Liability Company

A limited liability company can be of either a private nature or public nature.

 

Private

Limited liability company

Public  

Limited liability company

 

Capital and Shareholding

   

Minimum share capital

 €1,200  (or equivalent)                                              

    €46,600 (or equivalent)

Minimum paid up share capital 

20%                                           

     25%

Minimum number of shareholders

 2                                                

   2

Maximum number of shareholders

 50                                              

  Unlimited

Different classes of shares permitted

 Yes                                            

  Yes

Licenced fiduciary shareholding permitted

 Yes

  Yes

Corporate shareholders permitted

 Yes

  Yes

Local shareholders required

 No

  No

Bearer shares

 Not permitted

  Not permitted

Shelf Companies

 Not available

  Not available

Public subscription

 Not permitted

  Permitted

 

Registered office, directors and company secretary

   

Local registered office address required

  Yes

  Yes

Minimum number of directors

   1

   2

Corporate directors permitted

   Yes

  Yes

Minimum number of company secretaries

   1

  1

Corporate secretary permitted

   No

  No

registration of limited liability company

The objects of a limited liability company may comprise of any lawful purpose, although the main activities must be described in detail in the Memorandum of Association. A limited liability company can perform specific active (trading) or passive (holding) activities, or a mixture of both.

A company formation procedure is constituted by a Memorandum of Association being entered into and subscribed to by the shareholder/s and a certificate of registration being issued in respect thereof by the Registrar of Companies.

Documentation accompanying the Memorandum of Association includes:

  • Articles of Association;
  • Name reservation;
  • Evidence of paid-up share capital in the form of a bank deposit advice;
  • Identification documents, reference and declarations by trustees where applicable;
  • Registration fees, which are dependent on the amount of authorised share capital (the minimum charge is €245 and rises to a maximum of €2,250).

Once the Registrar is in receipt of all the necessary documentation and information, the company may be formed in as little as 24 hours.

 

Compliance

Shareholders’ meeting

The company is required to hold its first Annual General Meeting (AGM) not later than 18 months after its registration. Thereafter, the company must hold a general meeting each year. Extraordinary General Meetings (EGM) may be convened by the directors at any time and as often as they think necessary.

In terms of Maltese company law, in case of a private company, a resolution in writing signed by all the shareholders shall be as valid and effective as if the same had been passed at a general meeting of the company duly convened and held.

Board meeting

Contrary to shareholders’ meeting, resolutions of the board are significantly less regulated, predominantly because the effective management of the company is entrusted to the directors as part of their core function. The board may convene board meetings at any time to resolve matters pertaining to the management of the company.

Annual Returns

All companies are required to prepare Annual Returns upon each anniversary of the company’s registration, with a grace period for submission with the Registrar of Companies of 42 days. An annual fee is payable together with the Annual Return.

Annual Accounts

All companies are required to prepare and submit a copy of the annual accounts. Annual accounts should be accompanies by a local auditors’ report and the directors’ report.

Private companies:

Annually, 10 months after the end of the relevant accounting reference period, with a grace period for submission with the Registrar of Companies of 42 days.

Public companies:        

Annually, 7 months after the end of the relevant accounting reference period, with a grace period for submission with the Registrar of Companies of 42 days.

A default financial year end of 31st December applies, unless the company elects otherwise.

Income Tax

A tax return must be filed within 9 months from the end of the financial year or 31 March of the following year, whichever is later. Any balance of tax due must be paid by the date the tax return is due.

A tax refund is considered to fall due when the company’s audited financial statements indicating the dividend distribution, as well as a complete income tax return, are submitted to the tax authorities. The tax refund will be paid in the same currency in which the tax is paid by the company within 14 days from when the tax is paid by the Company and a valid claim for refund is submitted to the tax authorities for processing.

Valued Added Tax (VAT)

VAT is a European-wide sales tax. The standard VAT rate in Malta is 18%. If a company makes taxable supplies in Malta or supplies services within the territory of another EU Member State, it will be required to register and account for Maltese VAT. On the other hand, if a company makes exempt without credit supplies only, then it cannot register for VAT.

Most registered companies are required to submit VAT returns on a quarterly basis.

 

liquidation (dissolution)

A company may be dissolved and consequently wound up in the following cases:

  • Members’ voluntary winding up; or
  • Creditors’ voluntary winding up; or
  • Winding up by the court (involuntary winding up)

Maltese company law extensively regulates each procedure. In the case of voluntary winding up, the assets of the company are realised and the proceeds, if any, are distributed. The company’s liabilities must be paid first, with any remaining surplus to be then distributed to the shareholders. If the assets are insufficient to pay the company’s liabilities in full, the creditors will only be able to receive part payment.

 

Continuation of companies - redomiciliation

Once the Registrar of Companies is satisfied with all required documentation submitted with a view to requesting the company to be continued to Malta, a ‘Provisional Certificate of Continuation’ would be issued in favour of the company. Upon the issuance of the Provisional Certificate of Continuation, the company will be deemed to be validly registered as a Maltese company for all purposes of law and will therefore be capable of exercising all the processes of a company registered in Malta.

The aforementioned certificate is then converted into a ‘Certificate of Continuation’ upon the presentation of evidence that the company has ceased to exist in the foreign jurisdiction. As a result of the redomiciliation, the company will retain all the assets, rights, liabilities and obligations previously held or due by it.

 

oversea company

Companies incorporated or constituted outside Malta may conduct business in or though Malta by using a branch or a place of business in Malta. If a branch of an oversea company is managed and controlled from Malta, and therefore, resident in Malta for tax purposes, it would be taxable in Malta only on income arising in Malta and on income arising outside Malta but if remitted to Malta. In this regard, such oversea companies may achieve certain fiscal advantages by splitting ‘registration’ and ‘domicile’ across two separate jurisdictions.

Registration

The oversea company is required to deliver to the Malta Registrar of Companies for registration certain prescribed documents, including an authentic copy of its charter, statutes or memorandum and articles of the oversea company, a list of the directors and company secretary, if any, or of the persons vested with the administration and representation of the oversea company.

Compliance

Every oversea company shall, within 42 days from the end of the 10 month period, deliver to the Malta Registrar of Companies for registration annual accounts.

Exit Procedure

The affairs in Malta of a branch may be dissolved and its affairs could be wound up either voluntarily by its members or involuntarily by its creditors or otherwise by order of the court.

 

This publication is intended to provide an overview of the subject matter (errors and omissions excepted) and is not comprehensive in nature or to be construed as legal, tax or investment advice. We recommend that clients seek professional advice on any particular matter. 

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