Incorporation of a Company
Similarly to the UK, incorporation of a Maltese company takes place when the shareholders subscribe to two constitutional documents known as a Memorandum and Articles of Association and file these documents with the Registrar of Companies. These documents constitute a contract between the shareholders forming the company.
The Memorandum of Association outlines the nature of the company in formation and must contain the following information:
- the name of the company;
- an indication whether the company is a public or private company;
- name, address in full and passport number of each of the shareholders;
- the objects of the company;
- the registered office in Malta of the company;
- the authorized share capital and the division thereof into shares of a fixed nominal amount;
- the number of shares taken up by each of the subscribers (‘issued share capital) and the amount paid up in respect of each share (‘paid-up share capital’);
- where the share capital is divided into different classes of shares, the rights attaching to the shares of each class;
- the number of directors and their personal details the number of the directors;
- the manner in which the legal and judicial representation of the company is to be exercised and the name of the first person/s vested with such representation;
- personal details of the first company secretary; and
- the period, if any, fixed for the duration of the company.
The Articles of Association on the other hand, contain the rules by which the company shall regulate its internal affairs such as, for example, the procedure to be followed during board meetings, transfer and transmission of shares, amongst others.
If the Registrar of Companiesis satisfied that the documents presented to him for registration of the company comply with the provisions of the Act, a certificate of registration is issued.
Upon submission of all the documentation required for company incorporation, a registration number for the company is normally issued by the Registrar of Companies in 1-2 days confirming the creation of the company.
Management and Administration
- The management and administration of a company, whether public or private, is vested in the Board of Directors.
- The directors are empowered to exercise all the powers of the company, except those that have been reserved to the shareholders by the Articles of Association or by applicable law. In a private company, ownership and management are often related, such as when a person acts both as shareholder and director.
- If the company is intended to be tax resident in Malta , it is important that management and control are exercised in Malta.
- All companies must maintain proper books of accounts, from which the balance sheets and profit and loss accounts are to be prepared. In so doing, companies are bound to follow ‘generally accepted accounting principles and practices’(International Financial Reporting Standards).
Companies may therefore use IFRP’s or Malta GAPSE(General Accounting Principles for Smaller Entities), but the latter are available only for small or medium sized companies. GAPSE were enacted in 2009 in order to reduce audit and financial statement reporting requirements for these businesses, which is a more cost effective system. To benefit from these accounting principles, a Limited liability company’s assets cannot exceed a total of €17.5 million, the turnover cannot be more than €35 million a year and there should not be more than 250 employees.
- All companies must prepare individual accounts comprising the balance sheet, profit and loss account, directors report and notes to these accounts.
- A Certified Public Accountant and Auditor must audit these financial statements. In Malta, most accountants hold the ACCA, a UK accounting qualification.
- The company’s Articles of Association may stipulate that dividends are payable automatically on the ascertainment of sufficient distributable profits.
- Where this is not provided for, dividends are payable only if and when an authorized organ of the company declares them. However, provided distributable profits are available, it is normally possible for Malta companies to make payments on account of dividend.
- In fact Directors are often empowered by the Articles of Association to pay interim dividends between one general meeting and another to the extent that such dividends appear to be justified by the profits of the company.
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