Companies and other forms of commercial partnerships are formed by agreement between shareholders or members. These must be registered at the Registry of Companies, which is housed at the Malta Financial Services Authority (MFSA) offices in Notabile Road, Attard.
One may choose either to conduct his/her business operation as a limited liability company, or to trade in one’s own name (as a sole trader), or alternatively to form a partnership en nom collectif or en commandite, with at least one other person. The limited liability company has an important advantage over other methods ruled above in that the liability of the shareholders is limited to unpaid amounts on calls on share capital . As in the case of other types of partnerships, a company is a legal person distinct from its shareholders, and the assets and liabilities of the company are separate from those of its shareholders. A company may be formed by one shareholder only (a single member company), who may also be the sole director of the company and its company secretary.
The deed of constitution of a company is its Memorandum . This must include:
- The name of the company
- Its status (Private or public)
- Its registered address
- The details of its shareholders
- The objects clause of the company, indicating its operating lines
- The amount of authorised and issued share capital
- The number of shares taken up by each shareholder and the amount paid on each share
- Where shares are divided into different classes, the rights attached to the shares of each class
- The details of the directors and the company secretary
- Information on the persons vested with the legal/judicial representation of the company
The memorandum must be accompanied by the Articles of Association, a document which governs the internal workings of the company. If no Articles of Association are registered, it is assumed that the model Articles of Association found in the First Schedule to the Companies Act has been adopted.
Naming your company...
One is free to choose any company name, as long as the name chosen is not the same as very similar to the name of an existing or reserved company. However, the Registrar of Companies may refuse to register a name if it is considered offensive or otherwise undesirable.
The promoters may also reserve a company name for a period of three months in the incorporation process.
Paid up capital...
The minimum share capital of a private company is of €1,165, of which at least 20% has to be paid up.
The minimum share capital of a public company is of €46,588, of which at least 25% has to be paid up.
The relevant amount must be deposited in a bank account under the name of the company in formation. The deposit slip should then be presented to the Registry of Companies as proof of the deposit of capital at incorporation stage.
Number of directors...
The minimum number of directors in a private company is one. There is no maximum number. The minimum number of directors in a public company is two. Again, there is no maximum number.
Number of shareholders...
A private company may have a minimum of one shareholder (single member company), and a maximum of fifty shareholders. On the other hand, public companies must have at least two shareholders.
There is no maximum number of shareholders in the case of public companies.
The company secretary...
Every company has to appoint a company secretary, who must be an individual. The company secretary may not be the sole director, unless the company is constituted as a private exempt company.
The role of the company secretary, among others, is to ensure that there are proper communication channels between the board, management and the company’s service providers. Being a primary interface with the board, the company secretary should be the corporate governance expert, on whom the chairman and the board can rely on for guidance on corporate matters.
Every company registered in Malta must have a registered office in this jurisdiction.
Companies must prepare an annual return in the prescribed format upon each anniversary of their registration. This return must be filed with the Registrar of Companies within 42 days after the date to which it is made up. A payment of between € 100 and € 1,400, depending on the relevant authorised capital, is to be submitted along with the return.
Companies are also required to file a copy of their annual accounts. These must be accompanied by a copy of the relative auditors' report, as well as a directors' report. The annual accounts must be filed within ten months from the end of the financial year, with a grace period of 42 days being applicable.
The format of the accounts to be submitted depends on the size of the company. Small companies may draw up abridged balance sheets and abridged layouts of profit and loss accounts.
The definition of a small company is one whereby two of the three following criteria are not exceeded on their balance sheet date:
- Balance sheet total: EUR 2,562,310.74;
- Turnover: EUR 5,124,621.48;
- Average number of employees during the accounting period: 50.
Private companies which on their balance sheet date do not exceed the limits of two of the three following criteria:
- balance sheet total: EUR 46,587.47
- turnover: EUR 93,174.94
- average number of employees during the accounting period: 2; 8
shall be exempted from the requirements concerning the auditing of accounts. Such companies may draw up balance sheets, layouts of profit and loss account, and notes to the accounts in an abridged format. One must however remember that such companies are still required to file a tax return which must be audited.