i. Due Diligence
AlleyBe is legally obliged, under Maltese Laws & Regulations to carry out due diligence procedures before assisting the client with the incorporation process.The due diligence will be performed on the ultimate beneficial owner, its shareholders and any directors involved in the group structure. It is also important to obtain an understanding of the Group’s & companies activities.
In the case of an individual subscriber, the memorandum and articles of association must be signed in original by the subscriber himself. Since the subscribers are often located outside Malta, and the company may have more than one subscriber, a simple but effective method to expedite the process would be for the subscriber to nominate a mandatory, by means of a power of attorney to execute the memorandum and articles of association on his behalf. Although, the institute of mandate allows the principal to give a power of attorney to the mandatory, even verbally or implicitly, the registrar of companies rightly insists that a written power of attorney is filed together with the supporting documentation.
In the case of a corporate shareholder, the same principle applies. A copy of the power of attorney authorising a mandatory to sign on behalf of the corporate shareholder must be submitted to the Registrar prior to the registration of the company. In this case, it would be necessary to furnish evidence e.g. the Memorandum and Articles or registry of directors, attesting that the person/s representing the corporate shareholder is vested with the legal representation, by virtue of his tenure as director of the company or as duly authorised by means of a bespoke resolution.
The minimum number of shareholders for a Malta company, both in case of public companies and private companies, is of two. However, a private limited liability company may be formed as a single-member company, the sole shareholder and sole director of the Maltese Company cannot be a corporate entity and the objects clause is restricted to one principal activity. A single-member company qualifies as an exempt company (Vide Section v). There is no requirement for local shareholders and corporate shareholders are permitted.
iii. Capital requirements
The minimum authorised and issued share capital of a Malta Company is as follows:
- Private Companies €1,165 – 20% of such nominal value must be paid-up
- Public Companies €46, 589 – 25% of such nominal value must be paid-up
Share capital shall be subscribed by at least two persons. The minimum share capital stipulated by law must be fully subscribed in the memorandum. Evidence of paid up share capital in the form of a bank deposit advice should be produced and delivered to the Registers of the companies. In addition to cash consideration, shares can be subscribed for a consideration in kind. In these instances, the Companies Act specifically that a report on such consideration must be drawn up before the company is registered by one or more experts who are independent of the company and approved by the Registrar. This so called Section 73 report (because of the corresponding article in the Companies Act) would be typically prepared by an independent auditor and must contain:
- a description of the assets comprising the consideration;
- the valuation methodology used by the export for the valuation of such asset;
- whether the values arrived at by the application of these methods correspond at least to the number and nominal value, and, where applicable, to the premium on the shares to be issued for them.
This Section 73 report must, on pain of nullity, be delivered to the Registrar for registration before the company is registered. Non-cash consideration could include shareholders’ loans, share for share arrangements and real estate.
The Section 73 report constitutes in se evidence of the payment of such consideration. However, the registrar of companies reserves the right to request additional information and evidence of payment.
The company’s share capital may be denominated in any currency. No exchange control restrictions are imposed hence facilitating the use of Maltese corporate vehicles for international business. Income tax is paid in the same currency of the share capital and tax refunds are given in the same currency, hence minimising currency exchange risks.
v. Memorandum and Articles
The Memorandum must contain the following information:
The memorandum and articles of association of every company shall contain the following information:
- whether the company is a public company or a private company;
- the name and residence of each of the subscribers thereto;
- the name of the company;
- the company's registered office in Malta;
- the objects of the company;
- 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 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 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 and company secretary, the number of an official identification document should also be given.
In the case of a public company, an additional document must 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 must be accompanied by the Articles of Association, which provide for the internal regulations of the company. The Memorandum and Articles of Association must be signed by all the subscribers or AlleyBe as their legal representatives. Hence, an individual can set up a company in Malta without having to be physically present here.
vi. Other Key Considerations
The incorporation of a Maltese private limited liability company typically requires from as little as 24 hours to three working days from the time the appropriate documentation was presented to the Registrar of Companies to be processed and finalised provided the documentation is available and in order;
- Shelf companies are not available in Malta;
- A Maltese Company may have different types or classes of shares;
- The personal details of a Malta Company’s shareholders together with the details of the company’s officials are available to the public, through the Registrar of Companies online portal;
- Malta Companies are not permitted to issue bearer shares;
- Registered Shares are permitted
- Name restrictions are imposed on identical names or names similar enough to create confusion or if names are offensive or otherwise undesirable;
- ‘Limited’ or ‘Ltd’ must follow company’s name;
- Possibility to reserve names which will be reserved for three months;
- The name of the company may be in any language provided the Latin alphabet is used;