Benefits of Company Formation in Malta
Registering your company in Malta brings with it a lot of benefits. These range from a fast process of Malta company formation to beneficial tax rates.
Primarily, Malta is a member of the European Union and its has an advantageous location at the commercial crossroads of Europe, Africa and the Middle East. Additionally, both the Malta Freeport and the Malta International Airport offer remarkable connectivity, allowing the island to connect in real-time with European and regional hubs.
Malta boasts beneficial tax rates where capped social security contributions offering a competitive labour cost base. Malta also has signed double taxation treaties with several countries, therefore, providing relief from foreign taxation. This will be issued in the form of a credit against tax which will be due to be paid Malta.
Malta also offers an attractive incentives package designed to support direct investment, which includes allocation of space, fiscal benefits and access to finance.
Types of business entities under Maltese Law
A Partnership is the basic form of business arrangement that two or more individuals may opt for. Creating a partnership is relatively quick and easy to achieve, offering the partners an element of stability and structure to their business without binding themselves to the more stringent obligations and formalities that arise from running a company.
The various types of partnerships such as the general partnership (en nom collectif), limited liability partnership (en commandite) and the civil partnership as established by the provisions of the Civil Code grant the partners the freedom to choose which structure works best for them.
2. Limited Liability Company (Ltd.)
A Limited Liability Company (LLC) requires additional formalities as opposed to a partnership, however, upon incorporation the company would attain a separate legal personality. This means that unlike a partnership, the company is solely responsible for its debt and its shareholders cannot be held personally liable for such debt. This level of security makes this form of company a very attractive option for entrepreneurs.
This company formation is widely used by small, medium and large businesses alike who wish to limit the subsequent transfer of their shares, cap the number of shareholders to 50 and do not wish to invite the public to subscribe to their shares.
3. Public Limited Company (Plc.)
This type of company carries over all of the benefits of a Limited Liability Company with the added luxury of being able to bring in a large amount of share capital by inviting the public to subscribe to their shares via a prospectus. In future, such companies may even apply to become publicly-traded companies on the Malta Stock Exchange.
Furthermore, a PLC can generate a lot more capital than an LLC and this would allow the firm to grow and expand at a much faster rate.
Due to the fact that such a company will be obtaining funds from the general public, such a company is under even more stringent legal obligations than the former formation. Consequently, such company formation is traditionally only resorted to by very large and far-reaching establishments with an extensive background in their respective fields of business.
Company Registration procedure
Company formation in Malta is a very straightforward procedure which can take as little as 48 hours for the incorporation from the moment of submission of all documents to the Malta Business Registry (MBR).
In order to open a company in Malta one is required to submit the following:
- Completed SMM client questionnaire, providing answers to all specific questions related to the company one is looking to incorporate.
- Provide the requested due diligence documents for all shareholders and directors.
Once the above-mentioned documents have been received and found to be satisfactory, SMM Corporate team will proceed with company registration, preparing the necessary documents for registration and submission of the documentation to MBR.
What does the Incorporation of a Private Company in Malta Entail?
Initially, to incorporate a company in Malta, Memorandum and Articles of Association must be drafted and delivered to the Registrar of Companies alongside a registration fee.
The Memorandum and Articles of Association must include:
- The chosen name of the company — This can not be the name of any other company which is already registered in Malta. In the case of a private company, it must also end with the words limited or ltd.
- The registered address — The registered address of the company must be an address located in Malta which is necessary for domicile purposes. If required, SMM Group can provide its clients with the services of a registered address in Malta.
- Objects of the company — The objects of the company must explain the company’s purpose and detail its main trading activity.
- Share capital — The minimum authorised share capital under Maltese law is EUR 1,164.69 which must be at least 20% paid up. The shareholder’s personal liability is limited to the amount of unpaid share capital. Thus, if shares would be 20% paid up, the shareholder would be personally liable for the remaining 80% with respect to the company. The share capital amount must be deposited in a Maltese bank account under the name of the company in formation. Also, the share capital must be denominated either in Euros or any other currency.
- Information on Shareholders — The minimum number of shareholders that a private company may have is one, which in such case would be referred to as a single-member company. In the case of more than one shareholder, details as to the amount of shares they will hold would need to be included. Furthermore, under Maltese law, there are no restrictions on the nationalities of directors or shareholders.
- Information on Directors — The minimum number of directors that a private company may have is one and there is no maximum amount. Details of directors must be given including their name, address, and ID or Passport number.
- Company Secretary — Every private company must have a company secretary. It shall be the duty of the directors to ensure that the company secretary is an individual who appears to them to have adequate knowledge and experience to discharge the functions of company secretary. The role of a company secretary is to ensure the good governance of the company by, among other things, ensuring that General Meetings and Board Meetings are held accordingly, keeping the minutes of such meetings and acting as the pivot point in communications between the company’s directors and managers and its external stakeholders.
- Legal and Juridical Representation — The Memorandum and Articles of Association must state who will be vested with the legal and juridical representation of the company. This is generally vested within the directors of the company.
Once this process is complete and the necessary documentation is delivered to the registrar. If the registrar deems that all the necessary documentation is provided, company formation in Malta may take as little as 24 hours.
What does Registration of a Public Company in Malta Entail?
In order to set up a PLC, the memorandum of association and articles of association must also be drafted. With regards to a PLC, the Memorandum of Association must include the same information as required for a LLC with the following distinctions:
- The chosen name of the company — This must not clash with the name of any other company previously registered in Malta and must end with the letters plc.
- Share capital – The minimum authorised share capital under Maltese law is EUR 46,587.47 which must be at least 25% paid up. The shareholder’s personal liability is limited to the amount of unpaid share capital. Thus, if shares would be 25% paid up, the shareholder would be personally liable for the remaining 75% with respect to the company. The share capital amount must be deposited in a Maltese bank account under the name of the company-in-formation. Also, the share capital must be denominated either in Euros or any other currency.
- Information on Directors – The minimum number of directors that a private company may have is two and there is no maximum amount. Details of directors must be given including their name, address, and ID or Passport number.
Additionally, the following requirement is a sine qua non in the formation of a PLC:
- When submitting the Memorandum and Articles of Association to the Registrar of Companies, the applicant company must annex to said documents a document which states the total costs payable by the company in lieu of its formation or an estimate thereof.
Once the company formation process has been completed, the newly formed PLC can proceed to distribute its shares. Initially, shares must be offered to the company’s current shareholder due to what’s known as pre-emptive rights. Once the pre-emptive period would have elapsed, the company may begin to build a prospectus in order to attract public investors to invest in the PLC wherein statements on the assets, liabilities, profit & losses, and financial position of the PLC would be included.
If you have further questions about company formation in Malta, you can check our Frequently Asked Questions on Corporate Law or get in touch with us directly by filling in a contact form below or by calling us on +356 2123 7167.