Corporate

Corporate

Companies and Partnerships

The principal legislative framework regulating companies and partnerships in Malta is the Companies Act. The main types of entities that may be set up under the Companies Act can be broadly classified as a Partnership (en nom collectif or en commandite) or a limited liability company. The provisions relating to a Limited Liability Company (which is the main focus of the Companies Act) are largely based on UK Company law. Limited Liability Companies are clearly the most common form adopted whereby the capital is divided into shares with the shareholders’ liability being limited to the amount, if any, unpaid on the shares respectively held by each of them. Besides the main distinction between public and private companies, other forms of limited liability companies may be formed under the Companies Act, such as investment companies with variable share capital (SICAV) or investment companies with fixed share capital (INVCO).

Other innovative vehicles introduced by regulations enacted under the Companies Act also provide for the incorporation of cell companies carrying on the business of insurance. By virtue of such legislation, and subject to the satisfaction of certain conditions, companies licensed by the MFSA involved in the business of insurance (including insurance managers and insurance brokers) may be formed or constituted as cell companies, allowing for the creation of separate cells each having their own separate assets and liabilities although not being separate legal persons from the cell company itself.

Branches

The Companies Act also allows oversea companies to establish a branch in Malta and conduct their business in Malta through such branch. Overseas companies establishing a branch or place of business in Malta would be required to submit certain information to the Registry of Companies for its registration, which is to take place within one month from the establishment of the branch or place of business in Malta. An oversea company would also be required to submit accounts to the Registry of Companies on an annual basis. On the basis that such company is a foreign company trading in Malta through the branch, such a company would not be considered to be resident in Malta for tax purposes however the branch would still be entitled to many benefits of the Malta tax system applicable to Maltese companies.

Redomiciliation of companies

The Companies Act and regulations provided thereunder allow foreign companies which are similar to companies as known under the laws of Malta to register under the Companies Act as companies being continued under the Companies Act subject to certain conditions.

This allows foreign companies seeking to cease operations in their jurisdiction of incorporation and looking to set up a company incorporated in Malta to continue in Malta without having to wind-up the foreign company and incorporate a new entity in Malta. Redomiciliation of companies to Malta as aforesaid is only allowed if the foreign company seeking continuation in Malta is from an approved jurisdiction. The list of approved jurisdictions includes all EU Member States and EEA and OECD countries.

Trusts and Foundations

Malta is a civil law jurisdiction however it has successfully embraced and implemented the legal framework for trusts, which is traditionally a common law concept. The civil law basis of the Maltese legislative framework also means that Malta is one of the few countries that also offers the possibility foundations in addition to trusts.

The principal legislative framework for trusts in Malta is the Trusts and Trustees Act which was enacted in 2004. It is largely based on the Jersey Trust law and allows Maltese and foreign residents to establish trusts governed either by Maltese law or by a foreign law. This flexibility together with the tried and tested legal basis of Malta’s trusts law provides an attractive proposition for succession planning and wealth management.

The legal provisions governing foundations were enhanced by Act XIII of 2007 which clarified the legal structure of foundations, even though foundations had already been adopted as a civil law concept under the Maltese legal system. Foundations can only be created by virtue of a public deed inter vivos or a will and can be either purpose foundations or private foundations. Purpose foundations are established exclusively for a charitable, philanthropic or other social purpose or other social purpose or as a non-profit organisation or for any other lawful purpose. On the other hand, private foundations are set up for the benefit of predefined beneficiaries.

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