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An Outline of Maltese Company Law By: GVZH Advocates
1. Forms of Business Enterprise.
The law provides for various types of commercial partnerships including general and limited partnerships. The principal form of business organisation is, however, the private limited liability company and the information set out below refers principally to this type of corporate body.
2. Regulatory Legislation.
In 1995, the Companies Act 1995 was enacted with the object of revamping and updating the previous law and harmonising it with the European Union Directives on Company Law. Additionally, shipping companies formed in Malta before or after the coming into effect of the Companies Act 1995, may opt to be regulated by the Merchant Shipping (Shipping Organisations – Private Companies) Regulations 2004, in default of exercising the option they will be regulated by the Companies Act 1995 (the “Companies Act”).
3. Limited Liability Companies.
Limited Liability Companies can be of two types: private or public. The distinguishing features between private companies and public companies are that the former restrict the right to transfer of shares, limit the number of their members to 50 and prohibit invitations to the public to subscribe to their shares or debentures (Article 209).
A company is formed by means of a capital divided into shares held by its members. The members’ liability is limited to the amount, if any, unpaid on the shares respectively held by each of them (Article 67). Therefore, in the ordinary course of business and in the absence of any fraud, tort or similar wrongdoing on the part of the shareholder, such shareholder can only be held liable to contribute to the company the unpaid part of any shares subscribed and issued to that particular shareholder.
4. Private Exempt Companies and Single Member Companies.
A private company may have the status of an exempt company if: (i) the number of persons holding debentures in the company is not more than 50; and (ii) no body corporate is a director thereof or has a determinable influence on the management of the company. Private exempt companies are exempted from various provisions of the Act as will be indicated in the rest of these notes. (Article 211)
One of the advantages of private exempt companies is that these companies may have a single member. This may happen both upon registration or at any subsequent stage, through the acquisition of all the company shares by one person. (Article 212).
The main advantages of single member companies can be summarized as follows:
- General meetings are held exclusively by way of written resolution of the sole member;
- Single member companies may grant loans to directors;
- Single member companies may have as a company secretary the sole director of the company;
By: GVZH Advocates