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MEMORANDUM AND ARTICLES OF ASSOCIATION
The memorandum of association of every company shall contain the following information:
- Whether the company is a public company or a private company;
- The name, residence and identification number of each of the subscribers thereto, and in case of a body corporate acting as subscriber, the name, company number and registered address have to be specified;
- The name of the company;
- The company’s registered office in Malta;
- The objects of the company and in case of a single member company, the main trading activity has to also be specified;
- The amount of share capital with which the company proposes to be registered (also referred to as the authorised capital), the division thereof into shares of a fixed amount, the number of shares taken up by each of the subscribers (also referred to as the issue share capital) and the amount paid up in respect of each share and, where the share capital is divided into different classes of shares, the rights attaching to the shares of each class;
- The number of the directors, the name, identification number and residence of the first directors and, where any of the directors is a body corporate, the name and registered or principal office of the body corporate; the manner in which the representation of the company is to be exercised, and the name of the first person or persons vested with such representation;
- The name and residence of the first company secretary or secretaries;
- The period, if any, fixed for the duration of the company; and
- In respect of each shareholder, director, legal and judicial representatives and company secretary, the number and a copy of an official identification document should also be given.
In the case of a public company, additional document shall be annexed to the memorandum providing:
- The total amount or an estimate of all the costs payable by the company or chargeable to it by reason of its formation up to the time it is authorised to commence business, and of all the costs relating to transactions leading to such authorisation; and
- A description of any special advantage granted, prior to the time the company is authorized to commence business, to anyone who has taken part in the formation of the company or in transactions leading to such authorisation.
The memorandum of association may be accompanied by the articles of association, which is a document which prescribes the internal regulations of the company.
If the articles of association are not registered, it is assumed that the model articles of association found in the First Schedule to the Companies Act have been adopted.
All limited liability company is validly constituted in accordance with the Companies Act once the memorandum and articles of association and the relevant documentation for the incorporation of the said company are presented to the Registrar for registration. On the registration of the mentioned documentation, the Registrar shall issue a certificate of registration which in itself is proof that the company has come into the existence and is authorized to commence businesses as from the date of registration indicated in the certificate. Furthermore, the registration of the company by the Registrar shall be without prejudice to any other license or other authorization as may be required in respect of the activities carried on by the company under any other law.
The registration of a new company may also be made by submitting the mentioned documentation online. This, after applying and registering oneself with the Registrar as a “authorised user” in order to avail oneself of such innovative facility.
In the case of the registration of a new company, anyone of the shareholders of the proposed company or partnership is a body corporate, then a Form BO1 must be filed with the memorandum and articles of association. Generally, this Form must be filed when the body corporate shareholder holds more than 25% of the ownership either directly or indirectly. Details on the beneficial owner must include: name & surname of the beneficial owner, date of birth, nationality, country of residence, official identification number and country of issue.
Should in realty no beneficial owner holds 25% or more of the issued share capital, than as a second test one should consider who actually controls and determines the everyday running of the company.
WHO MAY INCORPORATE
A limited liability company may be registered either by the shareholders themselves or by their authorised representatives namely “subject persons” licensed to act as corporate services providers such as lawyers or accountants.
TIME REQUIRED FOR INCORPORATION
The length of time to incorporate a company depends on the type of company being incorporated and on whether all information and documentation is available and in order. Once the Registrar has all necessary documentation and information, the process may take from as little as 24 hours.
Every company registered in Malta must have a registered office in Malta. This may be at the office of a local firm of lawyers, accountants or other providers of corporate services. Any changes to the company’s registered office must always be notified to the Registrar of Companies.
The Memorandum of Association must specify the objects for which the company is set up. The objects may not be simply stated to be any lawful purpose or trade in general, unless a partnership is being incorporated
The minimum authorised share capital of a public company is EUR 46,587.47. In the case of a private company, the minimum authorised share capital is EUR 1,164.69. The authorised share capital shall be subscribed by at least two persons. Nonetheless in case of a single member company, share capital shall be prescribed by only one person, being the sole shareholder of the company.
Where the authorised share capital is equal to the minimum stipulated by law, as aforesaid, it must be fully subscribed in the memorandum. Where it exceeds such minimum, at least that minimum shall be subscribed in the memorandum.
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. To evince this, a bank deposit slip must be brought with the memorandum and articles of association for new company formation.
DIRECTORS AND COMPANY SECRETARY
Every public company must have at least two directors whereas every private company must have at least one director.
Every company must have a company secretary. No company may have:
- as company secretary its sole director unless the company is a private exempt company.
- as sole director of the company a body corporate, the sole director of which is company secretary to the company.
It shall be the duty of the directors of a company to take all reasonable steps to ensure that the company secretary is an individual who appears to them to have the requisite knowledge and experience to discharge the functions of company secretary. The law does not require that the company secretary be resident in Malta. A company secretary may also be a duly registered company service provider in terms of the Company Service Providers Act.
GENERAL DUTIES OF DIRECTORS
A director of a company is bound to act honestly and in good faith in the best interests of the company. Directors are bound by law to promote the well-being of the company and are responsible for:
- The general governance of the company and its proper administration and management; and
- The general supervision of the company’s affairs.
In particular, the directors of a company:
- Are obliged to exercise the degree of care, diligence and skill which would be exercised by a reasonably diligent person who has both the knowledge, skill and experience which may reasonably be expected of a person carrying out the same functions as are carried out by or entrusted to that director in relation to the company; and the knowledge, skill and experience that the director has;
- Must not make secret or personal profits from their position without the consent of the company, nor make personal gain from confidential company information;
- Must ensure that their personal interests do not conflict with the interests of the company;
- Are not to use any property, information or opportunity of the company for their own or anyone else’s benefit, nor obtain any kind of advantage in any other way in connection with the exercise of their powers, except with the consent of the company in general meeting or except as permitted by the company’s memorandum or articles of association;
- Must exercise the powers they have for the purposes for which the powers were conferred and shall not misuse such powers.
Furthermore, it is to be noted that the law prohibits any person to be appointed or to hold office as a director or as company secretary if –
- He/she is interdicted or incapacitated or is an undischarged bankrupt;
- He/she has been convicted of any of the crimes affecting public trust or of theft or of fraud or of knowingly receiving property obtained by theft or fraud;
- He/she is a minor who has not been emancipated; or (d) he/she is subject to a disqualification order by the Court.
Every company must hold an Annual General Meeting. Every general meeting other than the annual general meeting is called an extraordinary general meeting.
COMPANY RETURNS & ANNUAL ACCOUNTS
All companies must prepare an annual return in the prescribed format to be made up, upon each anniversary date of its registration. The return must be filed with the Registrar of Companies within 42 days after the date to which it is made up. A payment between EUR100 and EUR1,400 depending on the authorised capital is to be submitted along with the return.
Companies are also required to file a copy of the annual accounts. These must generally be accompanied by a copy of the auditors’ report thereon, and the directors’ report unless a declaration Form is submitted in which case the letter is unnecessary. The annual accounts must be approved within 10 months from the end of the financial year, with a subsequent grace period of 42 days.
Companies returns, and annual accounts can also be filed online. As stated before this can be done by registering oneself as an “authorized agent” which gives one permission to file such documents electronically without the need to submit such documentation physically at the Registry of Companies.
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. A small company, according to the companies act, is a company which on its balance sheet dates does not exceed the limits of two of the three following criteria:
- Balance sheet total: EUR 4,000,000;
- Turnover: EUR 8,000,000
- 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 46,600
- Turnover: EUR 93,000
- Average number of employees during the accounting period: 2;
shall be exempted from the requirements concerning, auditing of accounts and such companies may draw up abridged balance sheets and abridged layouts of profit and loss account and abridged notes to the accounts.
In case of accounts, with the first of financial statements there must also be filed the Form DD2. Other Forms which are to be filed are ones such as the Form DD1 with every consequent set of accounts filed. If the company qualifies as a small company the first accounts must be accompanied with the Form DD4 whereas subsequent set of accounts for small companies must be accompanied with a Form DD3.