What is the main source of law authorising this entity form?

Companies Act, Chapter 386 of the Laws of Malta.

Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

A Private Limited Liability Company has legal personality which is distinct from that of its shareholders.

(Maximum) period of existence

There is no maximum period of existence, however a definite period may be set in the Company’s Memorandum of Association.

Governing document(s)

The Company is governed by its Memorandum and Articles of Association.

Liability of incorporators / shareholders

The liability of the shareholders is limited to the amount unpaid, if any, on the shares respectively held by each shareholder.

(Governing) bodies

The main governing body is the Malta Business Registry.

Other particularities

NA

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Under Maltese law, Private Limited Liability Companies are entitled to enter into domestic or cross-border mergers, demergers, divisions, amalgamations, and reorganisations.

Foreign companies may be permitted to re-domicile to Malta and Maltese companies are entitled to re-domicile outside Malta.

Can this type of entity be publicly listed or held?

It is prohibited for private companies to offer to the public, whether for cash or otherwise, any shares in or debentures of the company.

A Private Limited Liability Company may change its status to a Public Limited Liability Company by altering its Memorandum and Articles of Association.

The shares of a Public Limited Liability Company may then be listed on a regulated market and its securities may be issued to members of the public.

Can this type of entity be used for a non-profit or charitable organization?

No, Private Limited Liability Companies may not be formed for a non-profit or charitable cause. A voluntary organisation in the form of a foundation, trust or association may be registered for a non-profit or charitable cause.

Give a brief summary of the process of incorporation, formation, or organization, including

Main documents required

The main documents required are the Memorandum and the Articles of Association, KYC and due diligence documents for the beneficial owners and officers, and statutory and due diligence documents of corporate bodies involved in the structure.

Involvement of notary, company register, governmental authorities

The documents must be submitted to the Malta Business Registry. KYC and DD documents must be certified as true copies by a local professional.

Timing (estimate)

Following the submission of the required documents, a Private Limited Liability Company is typically set up within three (3) to five (5) working days.

Main costs, including registration and similar fees (excluding legal fees)

A registration fee of not less than €245 (or €100 if an online submission) and not more than €2,250 (or €1,900 if an online submission) is payable to the Malta Business Registry upon submission of documentation. The exact fee depends on the initial share capital of the Private Limited Liability Company.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

A Private Limited Liability Company must define its objects in the Memorandum of Association.

Minimum number of incorporators / shareholders and residency requirements

A minimum of one (1) director and (1) company secretary is required at the incorporation stage, and no residency requirements apply. A company may be registered with one (1) shareholder who is acting as director and secretary.

Minimum number of directors (or other applicable officers) and residency requirements

 

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum share capital of a Private Limited Liability Company is €1,164.69 or the equivalent in another currency. Not less than 20% of the share capital of the company must be paid up upon submission of the documents for incorporation. The payment can be made via deposit through a Maltese bank or by a Corporate Service Provider on behalf of the shareholder/s.

A Private Limited Liability Company is not required to open a bank account.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

No physical presence is required if a local Corporate Services Provider is involved in the incorporation process.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Following incorporation, the Private Limited Liability Company is assigned an income tax identification number automatically. In cases where the company is carrying out trading activities a separate registration for the VAT number is required.

What is the title of the applicable company registry?

The Malta Business Registry (MBR) is a governmental agency.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles , Ownership identification (direct and/or indirect ownership, 'beneficial owners') , Group structure , Share capital , Directors , Accounts , Insolvency, good-standing, liquidation , Liens and encumbrances on the shares , Liens and encumbrances on assets of the entity , Other (e.g. litigation, tax matters)

The information and documents listed below must be filed with the Malta Business Registry and are publicly available:

• Memorandum and Articles of Association, Annual Audited Financial Statements, Annual returns, notices of changes in the M&A, share capital, shareholders, ultimate beneficial owners, company officers, of appointment of liquidator, winding up resolutions, pledges of shares, court orders and notices.
• Name, registered address, company registration number, date of incorporation, value, and allocation of the share capital
• Information related to shareholders, directors, legal and judicial representatives, company secretaries , and auditor including full name, identification document number, nationality, residential address, number of shares held, registration number where applicable.
• The following information regarding the Ultimate Beneficial Owners must be filed with the MBR and is available to competent authorities and subject persons only: full name, date of birth, country of residence, nationality, country of issue of identification document, extent and nature of the beneficial ownership, and the effective date of becoming the UBO.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The Board of Directors.

The Board and its members are responsible for the general governance of the company and its proper administration and management, and the directors are bound to act honestly and in good faith in the interests of the company.

How are the members of the executive body appointed, dismissed and replaced?

The initial directors of the Private Limited Liability Company are appointed through the Memorandum of the company.

Subsequently, directors may be appointed, dismissed, and replaced through a shareholders’ resolution.

Notice of any changes must be provided to the Malta Business Registry.

Is it possible to appoint corporate directors or must all directors be natural persons?

Yes, however a single member company may not have a corporate director as its sole director.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

Maltese law does not make a distinction between executive and non-executive directors.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The responsibilities of the shareholders of a Private Limited Liability Company are mainly amending the Memorandum and Articles, appointing, and removing directors, issuing new shares, dividend distributions, and matters relating to liquidation.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Typically, decisions are taken by the shareholders with an absolute majority (50% + 1 of the votes), however the Articles of Association may amend these requirements.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

No special governance regimes apply for Private Limited Liability Companies.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Private companies must submit their Financial Statements by not later than ten months and 42-days from their financial year end. Financial Statements of public companies must be submitted by not later than seven months and 42-days from their financial year end.

Is the entity permitted to determine its own financial year?

Yes, a Private Limited Liability Company may determine its own financial year.

Is the entity subject to any statutory (external) auditor obligations?

A Private Limited Liability Company must appoint an independent external auditor at any time before the first general meeting of the company at which the annual accounts are laid.

Subsequently, during each general meeting at which the accounts are laid, the company must appoint an independent external auditor who shall hold office from the conclusion of that meeting until the conclusion of the next general meeting.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

A Private Limited Liability Company must also appoint a Company Secretary, who may be an individual or a corporate entity, whose main duties are to act as a liaison between the company and the MBR and to keep the records of the company in proper order. No residency requirements apply.

What is the title designated for ‘ownership interests' (e.g. shares, quota, interests, membership)?

Ownership interest in Private Limited Liability Companies is represented through shares.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

The Memorandum and Articles of a Private Limited Liability Company may distinguish between different classes of shares.

These may include preference shares, non-voting shares, and shares with no right to dividends.

What documentation is required for the transfer of ownership interests?

A written instrument of transfer is executed by or on behalf of the transferor and transferee and the transferor is deemed to remain a shareholder until the name of the transferee is entered in the register of members.

Notification to the MBR on a prescribed form must be made within 14-days from the effective date of the transfer.

The M&A of the Company may be updated to reflect the change, and a copy of the new M&A must be submitted to the MBR with the above-mentioned notification form.

An auditor’s report showing the provisional tax and duty payable and/or the basis for an exemption therefrom.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The internal documents of the Company, such as the register of members, the register of beneficial owners, and the share certificates must be updated to reflect the changes.

Share transfer documents must be approved by the tax authorities and Malta Business Registry.

Are there any applicable stamp duties imposed when transferring ownership interests?

A transfer of shares is, by default, subject to capital gains tax and stamp duty unless such transfer is exempt.

Applicable schedules for capital gains tax and stamp duties purposes must be accompanied by an Auditor’s report and vetted by the office of the Commissioner for Revenue.

Private Limited Liability Companies whose business activities are more than 90% outside of Malta may apply for a blanket exemption from the stamp duty.

How are shares issued? (including information on payment obligations, registration requirements)

The shareholders may increase a Private Limited Liability Company’s authorised and issued share capital through an extraordinary resolution. The directors can allot any authorised but unissued shares.

Shares may be allotted against a cash or non-cash consideration.

A notice on the prescribed form has to be submitted to the MBR within 14-days from the effective date of the increase, along with the bank statement of the company showing the transfer of funds or an expert’s report in case of an increase by non-cash consideration.

The M&A of the company must be updated in case of an increase in the issued share capital and such updated M&A must be submitted to the Malta Business Registry

The register of members has to be updated, and the new share certificates must be issued.

Further information on equity contributions, e.g. , Non-cash payments on shares; (Share premium) contributions without issuance of shares , Can partially paid shares/ownership interests permitted and what are the restrictions on them?

In cases of non-cash payment, before the shares are issued, a report has to be drawn up by an expert who is independent of the company confirming that the market value of the non-cash consideration is not less than the paid-up nominal value of the new shares, and such report must be approved by the Malta Business Registry.

A company may issue shares at a premium in which case a share premium account has to be created and a corresponding entry has to be made in the accounting records of the company.

Yes, at least 20% of the authorised and issued share capital of a private company must be paid-up. In the case of public companies, 25% must be paid-up.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

A Private Limited Liability Company may only acquire its own shares in certain limited situations as provided for in the Companies Act, and following such acquisition, the company may be required to cancel the shares if such shares are not disposed of within certain time limits.

The share capital of a Private Limited Liability Company may be reduced through a shareholders’ resolution, provided that such reduction does not take effect until three (3) months from the date of publication of a statement by the Malta Business Registry on the Government Gazette. During these three (3) months a creditor of the company may object to the reduction by filing a sworn application in front of the First Hall Civil Court.

Non-proportional increases and reductions in share capital may be subject to capital gains tax and stamp duty.

Any requirements with respect to distributions to shareholders?

During a general meeting, following a recommendation from the Board of Directors, the shareholders may decide through a resolution whether the company should declare a dividend.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, the shareholders may enter into a shareholders’ agreement which supplements the Articles of Association.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

An annual fee from €85 to €1,400, depending on the authorised share capital of the Private Limited Liability Company, applies every year on the submission of an annual return to the Malta Business Registry.

Other maintenance costs include accounting, tax & VAT compliance, and auditor fees.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The corporate rate of taxation is 35%.

Summary of any specific matters, e.g. recent or prospective major legal developments

Maltese Limited Liability Companies are very practical since there are no nationality or residency restrictions for directors and shareholders.

In addition, Maltese Limited Liability Companies only require an initial share capital of €1,200, and a company can be incorporated within three (3) to five (5) working days.

From a tax perspective:

Through a system of tax refunds, the effective rate of corporate taxation may be reduced to 5% by setting up a simple structure of a trading company and a holding company.

The trading company would pay tax at a rate of 35% on its trading income, and once a dividend is distributed to the holding company, the holding company may claim a refund equivalent to six-sevenths of the tax paid by the trading company.

The effective tax rate of 5% may also be achieved through tax consolidation, whereby the two (2) companies (trading and holding) form one fiscal unit, which is taxed at the rate of 5%. In this case the amount of profits eligible for the 5% tax rate does not depend on the dividend distribution as opposed to the tax refund system.