As a general rule, a company stands as the most frequently used form of a business entity. With its distinct legal personality, a company is considered a separate entity from its owners and managers. To embark on business operations through a company, the entity must be registered through a licensed corporate service provider authorised by the Malta Financial Services Authority (MFSA).
This article delves into the process and benefits of conducting business through a registered company, shedding light on the advantages and considerations for aspiring entrepreneurs and established businesses alike.
Overview of Company Formations in Malta
The formation of a company in Malta involves several steps that are to be followed strictly for the entire process to run as smoothly as possible without any delays.
A company is formed by means of a capital divided into shares held by its members, which is constituted by a memorandum of association and the issue of a certificate of registration by the Registrar of Companies. Even though it is not necessary to file the articles of association with the registry of companies at the incorporation filing stage, the model articles contained in the First Schedule to the Companies Act will ipso jure become the articles of the company.
The memorandum of each company is to include the following,
- Name of the company
- Registered address and electronic mail address
- Classification – whether private or public
- Objects
- The authorised and issued share capital
- Details of the subscribers (shareholders)
- Number and details of the company officers, directors and secretary.
- Representation for both judicial and legal matters
In the case of a public company, additional documentation is to be submitted with the memorandum.
It should be noted that a company in Malta may be registered with only one shareholder and that the same shareholder may be the sole director of the company; however, when having a single-member company, certain restrictions laid out by law will be imposed on the company, such as the prohibition of a body corporate from being a director.
Apart from the drafting of the memorandum and articles of association (M&As) and other forms required by the registry, during the company registration process a registration fee, payable to the Malta Business Registry, shall also be paid when submitting the incorporation documents to the registry.
What are the Main Advantages of Incorporating a Company in Malta?
There are several compelling advantages and benefits to be gained by choosing to incorporate a company in Malta that make it an attractive destination for entrepreneurs and businesses seeking growth, expansion, and long-term success. These advantages include:
1. Favourable Maltese tax system
While the corporate income tax rate of 35% may appear high when compared to other jurisdictions, businesses conducted through a corporate entity have the possibility to reduce the tax rate from a 35% down to an effective tax rate of 5%; hence enabling companies to minimise their tax liabilities further.
2. English native speakers
English is widely spoken in Malta, making it an ideal location for businesses seeking to operate in an English-speaking country. This linguistic proficiency, combined with the country’s strong educational system, ensures seamless communication and facilitates international business interactions.
3. Malta’s Political Climate
Malta has a long-standing tradition of political stability, with a democratic system of governance and a favourable business climate. This stability provides a solid foundation for businesses to thrive and make long-term investments. Additionally, the government of Malta is committed to creating a conducive environment for businesses, implementing pro-business policies, and fostering economic growth.
4. EU Membership
As an EU member state, Malta benefits from the EU’s single market, which ensures the free movement of goods, services, capital, and labour among member countries. This facilitates seamless trade and business activities within the EU, providing companies registered in Malta with access to a vast consumer base of over 450 million people.
5. Business Friendly Regulations
Malta offers a flexible regulatory environment and a streamlined company formation process, which makes it relatively efficient to set up a new business entity. Furthermore, Malta’s reputation as a reputable and reliable international business jurisdiction contributes to the overall credibility and trustworthiness of companies established in the country. This can be particularly advantageous when conducting business with international partners and attracting potential investors.
5 Steps for Setting up a Company in Malta
As mentioned earlier, setting up a business in Malta is not a complex process, but it requires careful attention from the beginning. In order to register a company in Malta, we simply have to follow the following steps:
Step 1: The proposed business name is to be submitted to the Malta Business Registry to undergo verification to ensure suitability and availability. The name is reserved for a maximum of 3 months.
Step 2: Drafting of the applicable forms, including the Memorandum and Articles of Association, and other supporting documentation.
Step 3: Obtain evidence of the paid-up share capital, which is to be annexed with the practitioner’s certificate.
Step 4: Submission of the documentation with the MBR
Step 5: Issuance of the Certificate of Registration which includes the company registration number, registered office and date of registration.
Incorporating a Company in Malta: Recap
On a high level, incorporating a company in Malta requires the submission of ancillary forms and evidence of the paid-up share capital. However, the key document that holds utmost importance is the Memorandum of Association.
The Memorandum of Association outlines crucial details about the company, including its name, registered office, objectives, share capital, and liability of members. It serves as a foundational document that establishes the company’s legal existence. This document plays a pivotal role in the company formation process and ensures compliance with Maltese company laws and regulations.
Now that the Entity is Setup, What’s Next?
Once your company is set up, there are several post-incorporation steps that must be taken, including:
Step 1: Acquire a Tax Identification Number
Once the company is fully registered, the details of the newly registered company will be automatically sent to the Commissioner for Revenue, and a Tax Identification Number (TIN) will be issued accordingly. Other registrations such as VAT and/or PE number registrations may occur at a later stage.
The formation of a company in itself is without prejudice to any licensing/permits required by the Malta Financial Services Authority or the Malta Gaming Authority.
Step 2 The Directors to hold an initial board meeting to address the following;
- Banking facility
- Issuance of share certificates
- Tax year-end extension, if applicable
- Appointing an accountant to prepare the accounts of the company
Step 3: Maintenance and compliance of statutory books. The company secretary is to ensure that on an annual basis, the following are to be submitted to the MBR;
- Annual return, with the applicable annual registration fee, and if applicable the annual beneficial owner confirmation
- Annual report which includes the audited financial statements
In addition to the above, the company secretary is to maintain the following;
- Annual general meeting minutes
- Board meeting minutes
- Register of members and beneficial owners
- Register of debentures
- Any other register as required by the Board of Directors
How ADVITAC Can Help You Form a Limited Company in Malta
The fact that there are different types of entities or structures to run a business from, each having its own unique features and requirements, ADVITAC will advise on the best way forward. Assisting you with every step of the process, selecting the appropriate business structure ensuring that your business is well-positioned for success.
Company Formation FAQs
What are the different types of entities in Malta?
There are mainly 4 different types of entities in Malta. These are;
- Limited Liability Company – Private & Public
- Partnership En Nom Collectif
- Partnership En Commandite
- Partnership registered under the Civil Code
Even though a multi-member (more than one shareholder) Limited Liability Company is considered as a partnership, a Limited Liability Company can still be registered as a single-member company.
The Private Limited Liability Company and the Public Limited Liability Company are the two types of companies in Malta, the most common in Malta is the former.
For a private company in Malta, the minimum authorised capital amounts to €1,164.69 and for a public company, the minimum authorised capital is €46,587.47. While for a private company at least 20% of the issued share capital must be paid-up, for a public company, this is increased to 25%.
What are the company formation fees in Malta?
Apart from ADVITAC’s incorporation servicing fee, the applicable fees vary according to the value of the authorised share capital and the type of submission, either in paper or electronic format. Further information may be found through the following link – Registration and Fee Structure – Malta Business Registry (mbr.mt)
What is the LLC equivalent in Malta?
In Malta, the equivalent of an LLC is known as a Private Limited Company.
How long does it take to set up an entity in Malta?
Upon successful onboarding and in receipt of the signed applicable forms required, the company can be established within 1-3 weeks.
Can amendments to the memorandum and articles of association be done subsequent to the company formation?
Yes. Any alterations are made by way of an extraordinary shareholders resolution, except for a change in registered address and a conversion or re-conversion of stock into paid-up shares, which shall require a resolution signed by directors. The company secretary shall notify and deliver to the registry within 14 days of the amendment.
What is the difference between the memorandum and the articles of association?
The memorandum refers to the character of the company, which mainly includes the key detail of the company, an outward-looking document, while the articles of association include the internal rules/ instructions of the company, and an inward-looking document.
