Exclusive Q&A On Company Formation With Dr Priscilla Mifsud Parker


Posted: 11th January 2017 08:49

What is the procedure for foreign investors setting up a company in your jurisdiction? 
 
The Malta Registry of Companies which forms part of the MFSA is responsible for registering companies and partnerships as per the Companies Act, 1995. Maltese company law provides for a very straightforward process to register a Malta company. The formation process can be finalised within 24-48 hours from receipt of the documentation which satisfies the requirements established by Maltese law.
 
Malta company is set up through the drafting and registration of its Memorandum of Association. All shareholder/s must subscribe thereto and a certificate is issued in respect thereof. The Memorandum of Association should include the following details:

 
The procedure for the setting up of a Company by foreign investors is the same as that for local investors. A power of attorney might be required if the foreign investors are not able to sign the incorporation documents themselves and some additional documentation might be required for non-EU nationals.
 
The following is the procedure for the setting up of a company in Malta:

Have there been any recent regulatory changes or interesting developments?
 
Malta company formation is regulated by the Companies Act. This Act was promulgated in 1996 and subsequently amended throughout the years. In 2013 there were some important amendments to the Companies Act in relation to the regulations concerning single member companies. As a general rule, a company is required to have a minimum of two members for incorporation. However, it is possible for a single member to form a company where the objects of such a company specify which activity of the company shall be its main activity and the business of the company shall consist principally of that activity.
 
Moreover, a number of changes were also made in 2015 through Act XXXI of 2015, whereby new requirements were introduced regarding the format of accounts and reporting by Maltese Companies. These include the following:

Can you detail the various funding options for early stage companies?
 
Malta early stage companies have a variety of options for funding that include the traditional options of injection of share capital, loans from the shareholders, loans from third parties and some other options which are particular to Malta.
 
There are funding options for start-up companies which have a viable and innovative business concept through a grant of up to €25,000 given by Malta Enterprise. The grant is not given as one lump sum but asa series of instalments, with the first instalment of up to €10,000 beingpaid upon the project’s approval. Subsequent instalments are made quarterly following a review of the progress in line with the business plan of the company. Moreover, certain local banks also offer finance packages for start-ups and for SMEs.
 
Can you outline the strategic benefit from choosing a specific location for company formation?
 
Malta has a thriving economy and provides various benefits for the setting up of a company:

 
Are there governmental restrictions on who can be an owner of the company?

There exist no governmental restrictions in Malta as to who can own shares in a Malta company, whether directly or indirectly. Shares in a Malta company can be owned by an individual or by a body corporate.
 
Are there any other regulatory or compliance issues investors need to consider?
 
Malta is pro-foreign direct investments and therefore the jurisdiction and its regulations are modelled to promote investment.  Suffice it to say that the Government has created a number of separate sections within authorities in order to focus and specialise only in foreign direct investment including an international tax unit. 
There are then certain industries that are regulated in which case a specific authorisation/licence would be required.  Some of the regulated industries are the following:

What role do shelf companies play in your jurisdiction?
 
Malta companies are set up within 24 hours of receipt of documentation and therefore even though shelf companies are not available this has no significant impact on the industry.
 
What are the main opportunities and challenges investors need to consider before entering?
 
Malta offers a stable business environment where investors can feel safe investing their money in a variety of industries whilst at the same time controlling costs.  As an EU jurisdiction it offers the benefits afforded by the harmonisation of EU legislation and provides good opportunities such as the following:

How can a new company ensure it has all of the necessary mechanisms in place to report and pay taxes accurately and on time?
 
It is essential for a new company to appoint a professional Malta corporate services and Malta accounting firm in order to duly guide it with its statutory obligations.
What are the different methods of restoring a company?

A Malta company can be restored through an application filed by any interested person with the Civil Court. If the Court is of the opinion that the winding up and striking off were vitiated by fraud or illegality of a material nature and that the restoration of the company is the only available remedy, then it would order that the name of a company that was struck off the Register, be restored and that the winding up be reopened for the purposes and the time period specified by the Court. The company will only be restored if the Court is satisfied. The application for the restoration of a company may only be done within 5 years from when the company was struck off the Register.
What are the most common reasons for restoring a company?

A common reason why a company is restored is where the liquidator deliberately or inadvertently fails to discharge all the liabilities of the company.  Another reason why a company may be restored is due to the bona vacantia of assets. Any assets which were not distributed during the winding up of the company would be deemed as bona vacantia and would devolve onto the State. Moreover, the Court may also restore the Company if the Company’s name was struck off the Register as it was deemed to be defunct (ceased to carry out business) when the Company is in fact still operational.

Priscilla is one of the partners of Chetcuti Cauchi, a leading  Malta law firm based in Valletta, Nicosia, Zurich and London. 

Dr Mifsud Parker heads the Corporate & Trust Services arm of the firm which handles the set up and administration of the corporate structures designed by the law firm for our clients. Her practice here revolves around assisting clients in business start-up stage or with acquisitions, corporate restructurings, shareholder matters and providing day-to-day company law and tax advice to companies under the firm's administration.
Priscilla also heads the firm's Families & Wealth practice group. In this capacity, she specialises in trusts and estate planning, wealth and business structuring for high net worth and successful business families. In the structuring field her main specialty is tailor-made solutions for the optimisation and protection of high value assets. Priscilla's background and experience in corporate, trusts and tax law enables her to assist clients in overcoming their challenges when structuring their wealth.

Dr Mifsun can be contacted on +356 2205 6200 or by email at info@ccmalta.com

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