More than 67,000 companies have been registered in Malta. Investors establishing corporate structures benefit from:
- a well-developed legal regime predominantly modelled on English law and all the applicable EU Directives.
- effective regulation of corporate service providers by serious, but accessible and responsive, regulators;
- cost-effective solutions delivered by legal, tax and accounting specialists;
- English-speaking professionals driven by a strong work ethic and supported by a pro-business government administration;
- industry-leading anti-money laundering and transparency protocols;
- absence of exchange control regulations;
- rich UK judicial history; and
- a double tax treaty network with over 65 states.
Malta companies have been used for a wide variety of reasons including trading and holding activities. Malta companies may take a wide variety of forms, including private and public limited liability companies, shipping organisations, S1CAVs (Societe d’Investissement a Capital Variable), protected cell companies for the carrying on of insurance business, reinsurance special purpose vehicles. Private limited liability companies are by far the most common form of company incorporated in Malta.
A private limited liability company is normally established with a minimum of two shareholders, but establishing single member companies is also possible in certain instances.
The minimum share capital required is EUR I,165 (at least 20% paid up) for incorporation purposes and at least one director and a company secretary are required. There are no local residence or nationality requirements for these offices and corporate directors are permitted, except in the case of single member companies.
The constitutive documents of a private limited liability company take the form of a memorandum of association (which contains information on the owners, the capital of the company and its legal representation) and articles of association (containing mainly procedural rules that govern its administration).
For the purposes of incorporation, the constitutive documents of a company must be registered with the Registry of Companies, and delivered along with certain due diligence documents.
Registration fees are due on submission of all incorporation documents. The fee varies depending on the amount of the authorised share capital with the lowest being EUR 245. It is not required that these documents are notarised or deposited in a court registry, thus saving on the time needed for incorporation which can usually be completed within one to two working days depending from receipt of all documents required.
Malta has enacted legislation governing the ownership of shares by fiduciaries, trustees and foundations in full respect of anti-money laundering legislation thus making it possible for licensed fiduciaries, trustees and foundations to hold shares for beneficiaries.
In relation to the transparency and anti-money laundering activities, Malta has transposed all EU anti-money laundering and prevention of financing of terrorism legislation. Corporate service providers and professional advisers assisting with company incorporations and corporate structuring are required to perform appropriate due diligence processes.
Company records held by the Registry of Companies, such as the names of shareholders and directors, share capital, pledged shares and audited financial statements, are accessible for public inspection.
Maltese companies are automatically tax resident in Malta, irrespective of their place of effective management and control. Malta operates a full imputation tax system under which companies are taxed at a flat rate of 35% on their taxable profits unless they can benefit from a participation exemption. As a result of the imputed credit for shareholders in respect of any such tax payment, and following a distribution of dividends by the company, the shareholders may be entitled to a refund of a significant part of the tax paid by the company. The amount of the refund will vary depending on the source of the company’s taxed profits from which the dividend was distributed to the shareholders.
Malta companies are required to file with the Registry of Companies on payment of the relevant fee an annual return outlining key company information. The fee payable depends on the authorised share capital and a minimum of EUR 100 applies. Annual audited accounts also need to be filed with the Registry of Companies within ten months from the end of the financial year. If a company carries on more than 90% of its activities outside Malta and files a declaration to that effect, then, it may file its annual audited accounts with the Registry of Companies within 18 months from the end of the financial year.
Non-Maltese companies may transfer their corporate registration to Malta by means of a procedure known as continuation (or redomiciliation) of companies, but notice to potential creditors must be given to allow them to preserve their rights. Companies registered in Malta may also be transferred to another jurisdiction.
Maltese law also contemplates the merger of two local companies pursuant to the provisions of the Companies Act and, following the transposition of the EU Cross-Border Mergers Directive (the CBMD), the merger of a company established in an EU country and Malta.Cross-border mergers may occur only in respect of limited liability companies and, to date, no latitude exists for cross-border mergers outside the scope of the CBMD and, in particular, no rules exist for either collective investment companies or cooperative societies.
This article was published in Offshore Investment, Issue 252, January 2015.