The limited liability company is the most commonly used corporate legal entity for trading, due to a number of advantages which it presents, as will be outlined within the article. In particular, Maltese companies may benefit from various tax benefits which are further described here.
Maltese company law is regulated by the Companies Act (Chapter 386 of the Laws of Malta) which is based on the U.K. Companies Act, 1985 and the Insolvency Act, 1986. The Companies Act has been amended periodically to allow for implementation of applicable EU Directives on company law. The Malta Financial Services Authority (“MFSA”) is the authority tasked with the registration and regulation of companies in Malta.
A company is, by definition, formed by means of a sum of capital (the ‘share capital’) divided into shares of a fixed amount held by its members. The fixed amount would correspond to the nominal value of the share, which is not necessarily the same as the market value of the same share. Shares generally confer upon their holders rights to dividends, to the proceeds on a winding up, to vote at meetings as well as certain duties, such as, that of paying up any unpaid dues on the shares. Shares may be divided into different classes, with different rights attached to each class.
One of the most obvious benefits of this type of structure is the limited liability of the company’s shareholders: while the liability of the company itself (as a separate juridical entity) is unlimited, the liability of its shareholders is limited to the amount, if any, unpaid on the shares respectively held by each of them.Of course, despite this general rule, there are some exceptional circumstances where liability can be imposed on certain officers the company, such as situations where the directors have been involved in reckless, wrongful or fraudulent trading.
Limited liability companies can be private or public. A private limited liability company is one where the right to transfer of shares is limited, the number of members cannot exceed fifty (50) and invitations to the public to subscribe to shares or debentures of the company are prohibited. A public limited company must have an authorised share capital of at one thousand two hundred Euro (€1,200) of which at least twenty per cent (20%) must be paid up. The name of a public limited company must end with ‘limited’ (‘Ltd.’).
A private company can also be established as a private exempt company where the number of persons holding debentures in the company is not more than fifty (50) and no body corporate has any interest in any shares or debentures of the company. The latter rule is subject to exemptions where the body corporate shareholder is itself a Maltese private exempt company, is a director thereof, or has a determinable influence on the management of the company. Private exempt companies are exempted from various regulations under Maltese law. Private exempt companies may have a single memberwhere all the company shares are owned by one person. This may be the case on incorporation or may occur at a later stage through transfer of the shares.
A company that is not a private company is a public limited company. A public company must have at least two (2) members and may offer its shares or debentures to the public, by following the necessary procedure. A public limited company must have an authorised share capital of at least forty-six thousand Euro (€46,600) of which at least twenty-five per cent (25%) must be paid up, at least two (2) directors and two (2) shareholders. The name of a public limited company must end with ’public limited company’ (‘p.l.c.’).
A company may be registered in Malta by the shareholders or their respective authorised attorney/s subscribing to a Memorandum of Association. Equinox is able to guide prospective shareholders in relation to all the requirements and information needed for registration of a Maltese company. As a minimum, the following information must be indicated within the Memorandum of Association:
- name of the company;
- the name, address and identification details of the subscribers (shareholders) thereto;
- whether the company is a private company or a public company;
- the registered office of the company in Malta;
- the objects of the company;
- details regarding the authorised, issued and paid-up share capital;
- the number of directors and the particulars of the first directors and secretary; and
- the manner in which the representation of the company is to be exercised.
Barring a few exceptions discussed above, a limited liability company must, at all times, have a minimum of two (2) shareholders who may be either private individuals or bodies corporate (or both). Shares may also be held in a fiduciary capacity by appropriately established fiduciary or trustee companies duly licensed by the MFSA.
A limited liability company must have a registered office address in Malta. A change of the registered office in Malta can easily be carried out by a resolution of the directors and a statutory form which is to be registered with the MFSA.
Registration feesare payable to the MFSA upon incorporation. The fees vary from a minimum of EUR 245 to a maximum of EUR 2,250, depending on the value of authorised share capital as follows. Details in relation to fees levied by the MFSA can be found here. It should be noted that such fees as independent of fees charged by Equinox Advisory.
Incorporation of Maltese companies is done with the MFSA and may take as little as twenty-four (24) hours, provided that all the required documentation has been submitted.
Equinox is able to assist clients in any of the following matters:
- Registration of Maltese holding and trading companies and preparation of necessary documentation;
- Services ancillary to registration of the company, including opening of bank accounts, applications for licences, data protection, VAT, opening of back accounts;
- Drafting of shareholders’ agreements;
- Day-to-day assistance in the running of the company and ancillary services;
- Accounting services;
- Directorship and registered office services;
- Tax planning and advice;
- Re-domiciliation of companies;
- Mergers, acquisitions and restructuring of companies;
- Assistance in employment matters;
- Assistance in data protection matters;
- Assistance and training in anti-money laundering procedures;
- Registration of trademarks and domain names;
- Provision of competition law / antitrust advice;
- Drafting of commercial agreements required.