The most common form of business entity in Malta is the limited liability company which may have the status of a public or private company.
In order for a limited liability company to be validly constituted in accordance with the Companies Act, Chapter 386 of the Laws of Malta, a memorandum of association must entered into and subscribed by at least two persons (unless it is a single-member company) and a certificate of registration is issued in respect thereof by the Registrar of Companies.
A single member company is a private limited liability company, which qualifies as an exempt company and which is incorporated with one member or whose membership is reduced to one person after incorporation. In the case of a single member company, the Memorandum of Association should indicate the main trading activity of the company.
A private company is a company which in terms of its memorandum or articles:
- restricts the right to transfer its shares;
- limits the number of members to fifty; and
- prohibits any invitation to the public to subscribe for any shares or debentures of the company.
A private company may have the status of an exempt company, and qualify for certain advantages
A private company may have the status of an exempt company, and qualify for certain advantages if the following conditions are contained in its memorandum or articles of association:
- the number of persons holding debentures of the company is not more than 50; and
- no body corporate is the holder of, or has any interest in, any shares or debentures of the company or is a director of the company, and neither the company nor any of the directors is party to an arrangement whereby the policy of the company is capable of being determined by persons other than the directors, members or debenture holders thereof.
A public company is a company which does not qualify as a private company. A public company may offer shares or debentures to the public but it may not issue any form of application for its shares or debentures unless the issue is accompanied by a prospectus.
The Memorandum of Association
The memorandum of association of every company must contain the following information:
whether the company is a public company or a private company;
- the name and residence of each of the subscribers thereto;
- the name of the company;
- the company’s registered office in Malta;
- the objects of the company;
- the amount of share capital with which the company proposes to be registered (also referred to as the authorised capital), the division thereof into shares of a fixed amount, the number of shares taken up by each of the subscribers and the amount paid up in respect of each share and, where the share capital is divided into different classes of shares, the rights attaching to the shares of each class;
- the number of the directors, the name and residence of the first directors and, where any of the directors is a body corporate, the name and registered or principal office of the body corporate; the manner in which the representation of the company is to be exercised, and the name of the first person or persons vested with such representation;
- the name and residence of the first company secretary or secretaries;
- the period, if any, fixed for the duration of the company; and
- in respect of each shareholder, director and company secretary, the number of an official identification document should also be given.
In the case of a public company, an additional document shall be annexed to the memorandum providing:
- the total amount or an estimate of all the costs payable by the company or chargeable to it by reason of its formation up to the time it is authorised to commence business, and of all the costs relating to transactions leading to such authorisation; and
- a description of any special advantage granted, prior to the time the company is authorized to commence business, to anyone who has taken part in the formation of the company or in transactions leading to such authorisation.
Articles of Association
The memorandum of association may be accompanied by the articles of association, which essentially sets the internal regulations for the management of the company. If articles of association are not registered, the model articles of association found in the First Schedule to the Companies Act will be applicable.
The minimum authorised share capital of a public company is EUR 46,587.47.
In the case of a private company, the minimum authorised share capital is EUR 1,164.69.
Where the authorised share capital is equal to the minimum stipulated by law, as aforesaid, it must be fully subscribed in the memorandum. Where it exceeds such minimum, at least that minimum shall be subscribed in the memorandum.
In the case of a public company, not less than 25%, and in the case of a private company, not less than 20%, of the nominal value of each share taken up shall be paid up on the signing of the memorandum.
Directors and Company Secretary
Every public company must have at least two directors whereas every private company must have at least one director.
Every company must have a company secretary. No company may have:
- as company secretary its sole director unless the company is a private exempt company.
- as sole director of the company a body corporate, the sole director of which is company secretary to the company.
Every company registered in Malta must have a registered office in Malta.
the company registration number may be issued within 24 hours and the Certificate of Registration and Memorandum & Articles of Association may available for collection within two to four days
If the Registrar of Companies is satisfied that all documents for the incorporation are in order (including certified copies of identification documents, references and declarations by trustees where applicable) and receives evidence of the paid up share capital in the form of a bank deposit the company registration number may be issued within 24 hours and the Certificate of Registration and Memorandum & Articles of Association may available for collection within two to four days.