Incorporating a company in Malta, or extending your existing business, provides an effective solution within the European Union. Malta’s competitive tax system, which includes a full imputation system and an extensive network of double taxation agreements, has proven to be a beneficial factor for companies deciding to form a company in Malta. Companies incorporated in Malta also benefit from a highly educated and English-speaking workforce. With an easy and straight forward company formation process, The Island has become an increasingly popular destination for starting a business. In this article, we will give you an in debt overview of the legal formats for company formation in Malta.
Want to open a company in Malta?
We have a wealth of expertise in incorporating companies and strengthening operations & international tax planning.
Private Limited Liability (Ltd./Limited)
The Private Limited Liability company is the most adopted type of business vehicle in Malta. The main reason is the legal protection it gives but also the minimum requirements for setting up this type of company. A private company must restrict the rights to transfer its shares, limited the number of members to fifty and prohibit invitation to the public to subscribe to any shares or debentures of the company.
Public Limited Liability (p.l.c.)
A public Limited Liability Company is a company which may offer shares or debentures to the public and be listed on the Malta stock exchange. The other noticeable difference from a private company is the amount of shareholders and minimum issued share capital.
Every company registered in Malta must provide a registered and physical office. This may be at your own business premises, a managed office space, the office of a firm of lawyers or accountants.
The minimum authorised share capital is EUR 1,165. This share capital must be subscribed by at least two persons and must be fully deposited into the business account. If the minimum share capital exceeds the threshold, at least 20% of the amount must be deposited upfront. A Public Limited Liability Company must have a minimum authorised share capital of EUR 46,587. If the authorised share capital exceeds the minimum, at least 25% must be paid upon signing the Memorandum. If it is equal to the minimum requirements it must be paid in full. The share capital may be divided into ordinary shares, preference shared and classes or variants thereof. However, bearer shares are not allowed. The ownership of these shares are evidenced by their entry in the company’s registrar of members, in the memorandum and articles of association and the issuance of a share certificate.
The maximum of shareholders allowed in a private limited liability company is 50. Normally, the minimum number of shareholders are two; however, a “single member company” may also be registered under the Companies’ Act. This deviation qualifies as an exempt company which would be incorporated with one member or whose membership is reduced after the incorporation. The Memorandum of Association should also reflect this ownership structure. Public Limited Liability Companies have no minimum restrictions to the number of shareholders.
Directors and Company Secretary
The company is required to have at least one director and a company secretary. No company can have its secretary as sole director except in case of a “single-member company” as described above. Public Companies must have at least 2 directors. The director(s) must ensure by law that they have taken reasonable steps to assure that the company secretary has requisite knowledge and experience to function in such position. The company secretary does not need to be a resident in Malta.
Memorandum of Association
Before a company formation can take place, a Memorandum of Association must be drafted and duly signed in original by the shareholders. Alternatively, upon presentation of powers of attorney/resolution, an authorised representative can also sign off the documents on behalf of the shareholders. It is advised to consult with an accountant or lawyer when this document is drafted. In addition, many companies also submit the Articles of Association which describes how the company will be governed.
Opening of Bank Account
Prior to incorporating the Malta company, a bank account in the name of the company must be set up. The bank will require the Memorandum and Articles of Association together with ID documents/Residence Permits. The bank will usually hold the share capital during the formation.
Evidence of Paid Share Capital
Documentary evidence that the paid-up share capital has been deposited to an account in the company’s name is required upon incorporation. The bank will provide this upon opening of the company bank account.
Furthermore, the following documents must be presented to the registry of companies upon incorporation of the company:
- Identity documents in form of ID-card/Residence Permit or passport;
- For non-EEA residents, a satisfactory bank or character reference; and
- A cheque for the registration fees (including any additional certified copies if needed).
All documents submitted in copy must be certified true copies by a notary or lawyer. Copies endorsed by an accountant or auditors may also be accepted.
A non-registered partnership is done by creating a Deed of Partnership through a notary among the persons wanting to form a partnership. This is the simplest form for registration and can be compared to being self-employed – where the two or more parties sign an official document stating general information about the partnership and how profits will be divided. In this case the persons need to register as Self-Employed with Jobsplus, and by providing the Deed of Partnership, register for VAT and to obtain an Income Tax number. Once these requirements and any further permits, such as a trade license, have been obtained the partnership can start trading.
This form of partnership has two different types of commercial partnership types it can register under.
- The Partnship EnNom Collectif; and
- The Partnership En Commandite.
The main differences between these legal formats are the legal liability of its members. Both formats operate under a partnership name and must draft a Deed of Partnership signed and delivered to the registrar before the certificate of Partnership is issued. The Partnship en nom collectif is a partnership which has it’s obligations guaranteed by a joint and several liability shared by all the partners. The Partnership en commandite is a partnership which consist of at least one general partner with unlimited liability and at least one partner with limited liability who agrees to contribute the capital of a specific sum to the partnership. This means the limited liability partner cannot be liable for a sum over and beyond what has been contributed with to the partnership.
The Deed of Partnership
The Deed of Partnership must include the following information;
- The name and residence of each of the partners;
- The partnership name (trading name);
- The registered office of the partnership;
- The objects of the partnership, meaning the whether the objects are trade in general or a specific branch of trade;
- The contribution of each partnership, specifying the value;
- The distribution of profits; and
- The period (if fixed) of the duration of the partnership.
Very similar to the non-registered partnership – self-employed (sole trader) is the easiest form of business you can register. It does not require any registration costs. This is the ideal registration for smaller and low risk undertakings – but it does mean that you will be fully liable for the obligations of the business. The following registrations are required:
- VAT number;
- Registration as self-employed with Jobsplus;
- National Insurance Number;
- A Residence Permit (ID card);
- Income Tax Registration Number; and
- A PE number if you intend to employ persons.
Cooperative enterprises are a group of people registering their activity as a co-operative society. This can be defined as an autonomous association of persons united voluntarily to meet their economic, social and cultural needs and aspirations. Consider this as a jointly-owned and democratically-controlled enterprise, a body corporate, having power to hold movable and immovable property and entering into contracts. The registration of cooperatives is handled by the Cooperatives Board by filling out and submitting the relevant application form. Together with the application form and the cooperatives’ statute, a business plan must be submitted to the Cooperatives Board for evaluation. There are three types of cooperatives:
- Primary Society – A co-operative which the majority of the members are individual persons;
- Secondary Society – A co-operative in which the majority of members are themselves primary societies; and
- Tertiary Society – A co-operative society in which the majority of members are themselves primary and, or, secondary.
The primary difference between a cooperative and a company is that a company is set up to make profits, while a cooperative is setup to achieve a common goal. Both formats afford limited liability to its members/shareholders. Another difference between a company and a cooperative are voting rights. A company shareholder will have more voting power depending on the number of shares held, while the voting power in a cooperative will always remain the same.
Following a change in Maltese Law the Continuation of Companies Regulation 2002 came into force to enable companies incorporated outside of Malta to transfer or domicile without winding up their existing business in a different jurisdiction. The regulation is divided into two parts. The first being dedicated to companies registered in jurisdictions outside Malta, and the other for companies incorporated in Malta wanting to continue their business in another jurisdiction.
It is important to note that the Registry of Companies in Malta will not accept the re-domiciliation of a company that is black listed in the Financial Action Task Force (FATF). Although an increasing number of jurisdictions allow for the continuation or re-domiciliation, the law of the foreign jurisdiction where the company is registered must allow for the company to be migrated.
In addition, one must also consider if the Memorandum and Articles of Association state that the company is able to migrate and be able to provide evidence that the company has informed the authorities within its jurisdiction together with evidence that the shareholders, debenture holders and creditors have consented to the migration.
Time required to set up a company in Malta
As long as the required applications and documents are produced and presented according to the requirements, a company formation process can take as little as 48 hours. You can consult with our company formation experts when setting up a company in Malta.