Malta, being an EU Member State since 1 May 2004, has established itself as an international financial centre. The legislative framework is in conformity with EU law. The Companies Act is modelled on the UK Companies Act and provides for various types of entities such as SICAVs, INVCOs, foundations, limited partnerships, general partnerships, single member companies, limited liability companies and public companies.
The most commonly used entity is the limited liability company which can be either private or public:
- A private company must include ‘Limited’ or ‘Ltd’ as the last word in its name. It may be exempt or non-exempt and it is also possible to have just one shareholder (referred to as a single member company). A private company must have less than fifty shareholders and the company must prohibit invitations to the public to subscribe to any shares or debentures.
- A public company (Plc) is defined as a company that is not a private company and therefore it may offer its’ shares or debentures for subscription to the general public.
The company incorporation and registration procedure is very efficient and the following three simple steps must be followed:
- Provide all the necessary information and documentation to satisfy the KYC or CDD requirements of EU Directives and the Prevention of Money Laundering and Funding of Terrorism Regulations;
- Establish a banking relationship and transfer the funds representing the initial paid up share capital of the company; and
- Draw up a Memorandum and Articles of Association which must include the company name, its registered address in Malta, its objects and powers, details of the share capital structure and the shareholders, details of the directors, legal and judicial representatives and company secretary. The Memorandum and Articles of Association must be signed by the promoters / shareholders and need not be executed in front of a notary.
The following are a summary of the main statutory requirements relevant to companies:
| Requirements | Description |
|---|---|
| Share Capital | The minimum authorised and issued share capital for private companies is €1,164.69 with at least 20% of the nominal value paid up, whilst that of a public company is €46,587.47 with at least 25% of the nominal value paid up. |
| Currency | The company’s share capital may be denominated in any currency. The Companies Act requires that financial statements are prepared in the same currency in which the share capital is denominated whilst the Income Tax Act provides that the tax payment and any tax refunds are done in the same currency of the share capital. |
| Registered Address | A company must have a registered address in Malta. |
| Objects and Powers | The Company’s activities must be clearly laid down in the Memorandum of Association. A single member company must restrict its objects. Certain activities may require a license from the regulator, the Malta Financial Services Authority. |
| Shareholders | There are no restrictions with respect to shareholders. Natural persons, corporate entities and trustees may all hold shares in a Maltese company. Malta has adopted the EU Directive on the Register of Beneficial Owners (RBO) and therefore a natural person having an ownership interest or voting rights of more than 25% or exercises control must be disclosed. |
| Board of Directors | The Board may be composed of just one director. Directors may be natural persons or corporate entities and there are no restrictions with respect to nationality or residence. However, for substance requirements and management and control purposes, board meetings must be held in Malta, with the meetings properly minuted and decisions effectively taken in / from Malta. |
| Legal and Judicial Representative | Maltese legislation provides that a company must have a legal representative/s who is empowered to represent the company on agreements, contracts etc. A judicial representative is empowered to represent the company in legal proceedings at the law courts etc. The directors, or any of the directors may occupy these posts. |
| Company Secretary | A company must have a natural person occupying the post of company secretary. There are no restrictions with respect to residence or nationality. |
| General Meetings | An Annual General Meeting (AGM) must be held every year to approve the audited financial statements. Such general meeting need not be held physically in Malta. In terms of the Companies Act, a resolution signed by all the shareholders is tantamount to a physical meeting. |
| Financial Year | A company may opt for a financial year end other than 31 December as long as the period is not less than six months and not more than eighteen months. Approval must be sought from the tax authorities and notification given to the Registry of Companies. |
| Annual Accounts | Companies must keep proper accounting records and have their accounts audited. Audited financial statements must be approved at the company’s AGM within ten months after the financial year end for private companies and within seven months after the financial year end for public companies. Licensed companies are required to submit their audited financial statements to the Malta Financial Services Authority within four months of the financial year end. All audited financial statements must be filed with the Registry of Companies and they are available online. |
| Form of Accounts | Malta adopts International Financial Reporting Standards as adopted by the EU. However, a qualifying company may adopt the General Accounting Principles for Small and Medium-Sized Entities (GAPSME). |
| Annual Return | All companies must submit an annual return to the Registry of Companies upon each anniversary of the company’s registration date. The annual return includes details of the capital, the shareholders, directors and company secretary and changes which took place during the year. |
| Registration Fees | Upon incorporation, companies must pay a registration fee to the Registry of Companies which is calculated on the authorised share capital. The fee varies between €245 for an authorised share capital of up to €1,500 and a maximum of €2,250 for an authorised share capital of over €2.5 million. A registration fee is also payable annually together with the submission of the annual return. The annual registration fee varies between €100 for a company with an authorised share capital of up to €1,500 and a maximum of €1,400 for a company with an authorised share capital of over €2.5 million. |
| Exchange Control | There are no exchange controls in place. As a result, companies may have bank accounts outside Malta. |
| Taxation | Maltese incorporated companies are subject to tax at a standard rate of 35% on their worldwide income. Companies which are incorporated outside Malta but are tax resident in Malta are also subject to tax at a standard rate of 35% but on income arising in Malta and income remitted to Malta. Malta adopts the full imputation system of taxation and therefore the tax paid by companies is credited in full to the shareholders upon a distribution of profits. For more details refer to Corporate Taxation. |
| Redomiciliation | Maltese legislation allows companies to change their domicile by migrating in or out of Malta. This enables companies to move from one jurisdiction to another without the need of going through a liquidation process. |