Introduction
Malta has had for many years a remarkable record as one of the best destinations for international investors. Malta has succeeded in attracting new investors to set up a business.
Having the foresight, Malta has shifted from a labor-intensive society to that of investing in knowledge and business is its core focus. Malta has been promoting itself aggressively and ambitious to promote itself as a financial hub, becoming a leader in various sectors such as the pharmaceutical, maritime, IT and iGaming, banking, and tourism sectors. Having gone this route and investing in people’s education has attracted international investment and this has put Malta firmly in the economic world.
As competition grows to find the best location to set up a business Malta has the prestige and credibility and can add value and contribute to a company’s all-around success.
The provisions governing the limited liability company in the Companies Act are heavily based on English Law, while provisions governing the partnerships find their roots in Continental Law (French Law). When the first Act in Malta was introduced, it was called the Commercial Partnerships Ordinance and with the new legislation in 1995 it was replaced. Maltese companies had to transform their structures according to the new Act and register with the Registry of Companies in Malta.
Malta has four different types of companies:
1.1 Limited Liability Company, this is the most common type which, and in turn, can be private or public, the private limits the number of its members to fifty and the public cannot subscribe to any of the shares or debentures whilst a public company can offer shares or debentures.
1.2 General Partnership, there are two types of partnership one is En Nom Collectif and refers to a partnership that is between two or more partners, one needs to be an individual or a corporate body, and another partnership is En Commandite, it is also known as Limited Partnership, the members of a limited partnership hold limited liability over the company.
1.3 Single Proprietorship or a Single Member Company, is a company held in ownership by one person. This can be when it is incorporated or through the acquisition of all shares by one person.
1.4 Overseas Companies, is a company that has a corporate body that is outside of Malta but with a branch located in Malta.
What are the steps to incorporate a Maltese private limited liability company?
It is very easy to incorporate a company in Malta and the steps are not lengthy. A corporate service provider before registering a company must have in hand all necessary information and documentation required. If the shareholders are from the European zone or the company is from the European zone, then the company can easily be incorporated within twenty-four hours to forty-eight hours. When it comes to non-EU citizens and non-EU companies to set up, although they are permitted to do so in Malta, to be in line with the EU law, mostly it may require an assessment and investigation by the Malta Foreign Direct Investment Screening Unit.
Steps needed to take for the incorporation of a Maltese private limited liability company.
Step 1: Choosing the company name is important. When choosing a name of a company it must not be a copy or that of an existing/pre-existing company, it also must not contain certain words that may be offensive. The company name must be representing the nature of the company. The registrar might ask for evidence that you are allowed to use certain words in a company name, if for example, the company is in the marketing business you cannot use the word “Bank” as this word is misleading to the nature of the business. It must be an original name that properly represents the firm’s functions.
Step 2: This is the step where the Memorandum and Articles of Associations must be prepared to submit to the registry for incorporation. The Memorandum is prepared, and it is a document that contains relevant information.
Step 3: Deposit the minimum share capital then the bank will issue a receipt and proof of such deposit must be given to the registrar. When registering a new company and any of its shareholders is a corporate entity, form BO1 must be annexed. This form will contain information on the identification of the company’s ultimate beneficial owners (UBO).
Other steps to consider after obtaining the certificate of registration number from the registrar and the company has been formed, one should apply for a VAT number, TAX number, PE number, and any other licence that may be required.
Memorandum of Association
The memorandum of the company name must end with the words, Limited or Ltd. Naturally, as explained in step 1, a company name must not be identical or even similar to the name of another company that is already registered. The company name can be reserved beforehand for a period of three months.
If the company is public or private this must be included in the memorandum.
Include the personal details of each of the shareholders, the name, residential address in full, and ID card number or the passport.
The objects of a company must be clear and may not simply be any lawful purpose or trade in general and the main trading activities and powers of a company most of the time the objects are typically listed in detail.
The objects in the Memorandum of Association of a company must specify the nature of its main trading activity and the business must then lie with that activity.
The memorandum must state the registered office in Malta of the company, this clause sets out the address where the registered office of the company is to be situated. This address is important for the receiving of any official documents. The registered office must be in Malta and it needs to be a physical address and not a PO Box. This address is the place where certain documents are to be kept if not stated otherwise.
The memorandum must include the authorised and issued share capital of the company, divided into shares of a fixed nominal value. The authorised and issued share capital must not be less than €1,165. Accordingly, where the authorised share capital is equal to the minimum €1,165 then it is to be fully issued and allotted upon incorporation. The issued share capital doesn’t need to be fully paid but 20% of the nominal value of each share must be paid up. The share capital of a company may be denominated in Euro or in any foreign convertible currency.
The number of shares taken up and the amount paid up for each shareholder, the amount paid is in respect of each of the shares and if the share capital is divided into different classes of shares, the rights attached to the shares of each class is to be included.
Class rights may comprise a right
(i) to dividends;
(ii) to a return of capital;
(iii) to participate in surplus assets on a winding-up;
(iv) to attend and vote at meetings; and
(v) right to appoint and/or remove directors.
The number of directors and their personal details or in case of a company the details of the company, Private companies must have at least one director and can be of any nationality and doesn’t have to be Maltese.
The legal representation of the company is to be mentioned and the name of the first person or more vested with such representation.
The director/s of a company are typically vested with the legal and judicial representation of a company (acting alone or jointly).
All companies must appoint a company secretary. Personal details of the company secretary need to be included and the company may provide for one or more company secretaries and company secretaries must be a physical person. If in case more than one secretary is to be appointed then the appointed would be jointly and severally responsible for their actions.
If there is any period fixed for the duration of the company this must be included in the memorandum.
Articles of Association
As the Memorandum only offers basic information about a Maltese company, its Articles of Association will contain the internal regulations of the company. The Articles of Association may contain special provisions on the company’s shares or attest to special rights for shareholders. The roles of the directors in the company will also be established in the Articles of Association. One can opt not to register the articles of association, if the articles of association is not registered, it will be implied that the company will adopt the model articles that are found in the First Schedule to the Companies Act which the Act provides a template for such articles.
Conclusion
In conclusion and to summarise the registration of a Private limited liability company the following steps must be taken:
- Evidence of paid-up share capital should also be produced and can be submitted in the form of bank deposit advice.
- A registration fee is payable to the registrar which is not refundable, and this amount depends on the company’s authorised share capital.
- The Memorandum of Association must specify the objects for which the company is set up.
- The articles of association is a document that prescribes the internal regulations of the company. One can opt to register the Articles of Association in that case it is assumed that the model articles of association in the First Schedule to the Companies Act have been adopted.
- The limited liability company is validly constituted in accordance with the Companies Act once the Registrar certifies under his hand that the company is registered, and the partnership shall come into existence and shall be authorised to commence business under the company name as from the date of the certificate.
Further to this, the registration of the company by the registrar shall be without prejudice to any other license or other authorization.
Leave a Reply