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 the entity form:

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 and Articles 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 (MBR).

Other particularities

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions 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, or its securities be issued to members of the public?

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 conversion of the company into a public company would be effective once the resolution approving the adjustments to the Memorandum and Articles of Association is registered by the Malta Business Registry.

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, certified true copies of all involved parties’ identification documents, the Form BO (1) (disclosure of beneficial owners of the company) and Form K1 (consent of director and confirmation that director is not disqualified), Bank or professional reference on the shareholders and 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 due diligence documents must be certified as true copies by a local professional.

Timing (estimate)

Once the Registrar has all the necessary documentation and information, the process for a Private Limited Liability Company to be incorporated may take as little as 24 hours.

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 authorised 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 shareholder is required at the incorporation stage, and no residency requirements apply. A private company may not have more than 50 shareholders.

Minimum number of directors (or other applicable officers) 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 share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum authorised share capital of a Private Limited Liability Company is €1,164.69 or the equivalent in another currency. Not less than 20% of the nominal value of each share taken up shall be paid up on the signing of the Memorandum and Articles of Association. The payment can be made via deposit through a Maltese bank or by a Corporate Service Provider on behalf of the shareholder(s). A bank deposit slip must be brought with the Memorandum and Articles of Association for a new company to be incorporated.

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

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

No physical presence is required.

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 or other formation document, Articles or other formation document, 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:

• Memorandum and Articles of Association, Annual Audited Financial Statements, Annual returns, notices of changes in the Memorandum and Articles of Association, share capital, shareholders, ultimate beneficial owners, company officers, of appointment of liquidator, winding up resolutions, pledges of shares, court orders and notices. The full versions of some of the documents are publicly available upon payment.
• Name, registered address, company registration number, date of incorporation, value, and allocation of the share capital are publicly available for free.
• 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 are also publicly available for free. Identification document number is not indicated.
• The following information regarding the Ultimate Beneficial Owners must be filed with the Malta Business Registry 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.
• Information on litigation matters before the Courts of Malta is publicly available through the Maltese Court’s online search system.

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.

The rules governing the appointment of directors other than the first directors are typically found in the articles of association. Subsequently, directors may be appointed, dismissed, and replaced through a shareholders' resolution.

Notice of any changes must be provided to the Malta Business Registry within fourteen days from the happening thereof.

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

Yes, however there are certain exceptions. For example, an exempt company shall not have a body corporate as its 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 body of owners or shareholders of a company is known as the ‘general meeting’.

Its responsibilities include approving the company’s financial statements, appointing and removing directors and auditors, amending the memorandum and articles of association, issuing new shares, dividend distributions and making decisions on significant corporate actions such as mergers or dissolution.

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

The quorum and majority requirements for a decision to be taken by shareholders at a general meeting are generally governed by the company’s memorandum and articles of association. In the absence of such specific provisions, the standard rules under the Companies Act apply.

Under Maltese law, two types of resolutions may take place in a general meeting, either an ordinary resolution or an extraordinary resolution. The former requires a simple majority of those present and voting suffices (50%+1), while the latter requires a majority of not less than 75%. The quorum is usually comprised of two members personally present or represented, however, this can vary based on what is set out in the company’s constitutive documents.

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.

Public companies having a fully paid-up capital of at least one million euro (€1,000,000) may apply to list its shares on the Malta Stock Exchange. If it wishes to list debt securities, the fully paid-up capital has to be at least two-hundred and fifty thousand Euro (€250,000). Listed companies are regulated by the Listing Rules issued by the Malta Financial Services Authority (MFSA), which is the competent authority responsible for granting Admissibility to Listing.

Furthermore, companies operating in the financial services sector require prior authorisation from the MFSA. The MFSA has also issued a corporate governance code that applies to all authorised entities under its supervision, including unlisted companies. The objective of this code is to enhance governance standards among financial services entities in Malta, which essentially promotes ethical behavior whilst safeguarding the stakeholders trust.

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

Directors are required to maintain proper accounting records. After each accounting period, companies must submit their annual accounts to the Malta Business Registry. Submissions of their annual accounts must give a true and fair view of the company’s undertakings. For private companies, accounts must be approved within ten months after the end of the accounting period, whilst public companies accounts must be approved within seven months after the accounting period ends. After approval, the company has 42 days to file the accounts with the Malta Business Registry

Is the entity permitted to determine its own financial year?

Every company is permitted to determine its own financial year. A company’s accounting period is set based on its accounting reference date. The company must notify the Malta Business Registry of this date using the prescribed form, specifying the chosen day in the calendar year as its accounting reference date. A company may subsequently alter its accounting reference period, subject to procedures and limits set out in the Companies Act.

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 whereby 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 Malta Business Registry and to keep the records of the company in proper order. No residency requirements apply.

The Memorandum and Articles of Association must also specify the representation of the company and appoint a legal representative vested with the contractual representation of the company and a judicial representative who represents the company in judicial proceedings. There are no residency requirements for these representatives.

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. Shareholders are the owners of the company, and their rights and obligations are determined by the number and class of shares they hold.

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

Yes, the Memorandum and Articles of Association of a private limited liability company may create different classes of shares.

These classes may include, for example, preference shares, which may be redeemable or non-redeemable, cumulative or participating preference shares, non-voting shares, golden shares (often carrying special control rights), convertible shares (which may be converted into other classes of shares), and shares with limited or no entitlement to dividends.

What documentation is required for the transfer of ownership interests?

A written instrument of transfer must be executed by or on behalf of the transferor and transferee. The instrument of transfer must be delivered to the company in which the shares are being transferred, which must accordingly update its register of members. The transferor is deemed to remain a shareholder until the name of the transferee is entered in the company’s register of members or register of beneficial owners, if such transfer of shares brings about a change in the beneficial ownership of the company.

The documents required in order to effect such a transfer are the following:

• Notice of transfer of shares (Statutory Form T);
• Notice of change of beneficial ownership (Statutory Form BO(2) )
• Any documentation reflecting the due diligence conducted in the case where the transfer is done to a new shareholder and not existing shareholder

Notification to the Malta Business Registry on a prescribed form must be made within 14-days after the date on which a transfer of any such shares is registered with the company. This must be accompanied by identification documents and bank reference.

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 Malta Business Registry 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.

Evidence that the said transfer has been notified to the Commissioner for Tax and Customs which must be communicated to the Malta Business Registry, confirming that the transfer has been duly reported for tax purposes.

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. Furthermore, prior to submitting the share transfer documents to the Malta Business Registry, duty on documents must be paid in accordance with the Duty on Documents and Transfer Act, and the Income Tax Act.

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 Tax and Customs.

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

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

Any increase in the issued share capital of a company shall be decided upon by an ordinary resolution of the company, unless the memorandum or articles require a higher percentage than that required for an ordinary resolution. The memorandum or articles, or an extraordinary resolution of a company may permit either the board of directors to issue shares up to a maximum specified amount or the general meeting to authorise by ordinary resolution, the board of directors to issue shares up to a maximum specified amount.

Shares can be allotted in return for cash or non-cash consideration (allotment in kind). In the case of non-cash consideration, an expert’s report must typically be prepared, confirming the value of the contribution.

To increase the issued share capital, a company needs to file with the Malta Business Registry a copy of the shareholders’ resolution and the relevant return (Form H) within 14 days after the date of the relative resolution. A bank deposit slip in the case of an allotment in cash or an expert’s report in the case of allotment in kind. If applicable, a notice of change in beneficial ownership must be submitted.

The company’s memorandum and articles of association (M&A) must be updated to reflect an increase in authorised share capital. The revised M&A must be submitted to the Malta Business Registry.

The register of members must be updated to reflect the new shareholding, and share certificates must be issued to the new or existing shareholders accordingly. If applicable, the register of beneficial owners is to be updated.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be 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 and approved by the Malta Business Registry, confirming that the market value of the non-cash consideration is not less than the paid-up nominal value of the new shares.

A company may issue shares at a premium, in which case the excess over the nominal value must be credited to a share premium account. This account must be reflected in the company’s accounting records and is treated with similar safeguards as share capital (e.g. restrictions on distributions).

In the case of a public company, not less than 25%, and in the case of a private company, not less than 20%, of the nominal value of each share taken up shall be paid up on the signing of the memorandum.

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 extraordinary resolution of the general meeting, provided that such reduction does not take effect until three (3) months from the date of publication of a notice published 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. A notice of reduction of the issued share capital shall be delivered by the company to the Malta Business Registry, for registration, within 14 days after the effective date of the reduction

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

A company may reduce its authorized share capital down to the level of the issued share capital by an extraordinary resolution.

Any requirements with respect to distributions to shareholders?

Dividends may be declared by the shareholders during a general meeting, but only upon the recommendation of the board of directors. A resolution must be passed to approve the distribution, and such distribution must be made from the distributable profits, in accordance with the Companies Act. The company may not distribute profits if doing so would result in it failing to meet its obligations or falling below capital maintenance thresholds.’

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

Yes, shareholders may enter into a shareholders’ agreement, which serves to regulate their mutual rights and obligations, however this cannot conflict with provisions of the memorandum and articles of association or Maltese company law. These agreements may cover matters such as share transfer, voting arrangements, and dispute resolution mechanisms, and are typically enforceable as private contracts among the parties.

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 ranging 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).

As a general rule, the corporate rate of taxation is 35%. Certain types of income may be taxed at different rates.

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

Maltese private limited liability companies are considered practical and flexible corporate vehicles. There are no residency or nationality requirements for shareholders or directors.

The minimum authorised share capital requirement is relatively low, at € 1,164.69 of which 20% must be paid up, and incorporation can be completed in as little as three to five working days.

From a tax structuring perspective:

• Malta operates a full imputation system and a tax refund mechanism.
• Although the corporate tax rate is 35%, shareholders may benefit from a refund of up to six-sevenths of the tax paid, reducing the effective tax rate to 5% in many scenarios.
• This refund is typically claimed through a holding company that receives dividends from a trading company, enabling the tax refund. The tax refund may be subject to further taxation depending on residency and domicile criteria of the Ultimate Beneficial Owner.
• An alternative method to achieve a 5% effective rate is through tax consolidation, where two companies (e.g. a trading and a holding company) form a fiscal unit and are taxed collectively. Unlike the refund system, the 5% rate under consolidation does not depend on dividend distributions.