A short guide to the rules and regulations applicable to Companies' reconstruction, restructuring & winding up in COVID 19 pandemic times.
On 12 May 2020, Malta published regulations entitled Legal Notice 192 of 2020, Companies Act (Company Reconstructions Fund) Regulations with the aim of creating and regulating the administration of a fund intended to facilitate Company Recovery Procedures (“CRP”) instituted in accordance with article 329B of the Companies Act.
On 15 September 2020 Malta enacted Legal Notice 373 of 2020 ‘The Companies Act (Suspension of Filing for Dissolution and Winding Up) Regulations’. These rules related to company insolvency are aimed at alleviating corporations of insolvency consequences and problems in relation to Covid 19 aftermaths.
Malta's legal regime for Company Recovery Procedure (“CRP”) provides means for struggling companies to resort to a procedure that aims at assisting enterprises recuperate from their current economic quandaries whilst simultaneously maintaining other stakeholders’ interests in mind.
In the case of insolvency, during these pandemic months, in September 2020, changes to company officer responsibilities have been implemented to address the biggest concern of directors of companies that may be imputed with personal liability in the case of alleged wrongful trading and insolvency scenarios. The main change was the introduction of clauses that protect such directors who would otherwise be reluctant to endure in their management of the enterprise in such COVID-19 periods of extraordinary hardship.
Such changes were a welcome revision of the law in that they seek to strike a balance between the rights of the diverse stakeholders in a company and the rights of management that is seeking to plough on even during these unprecedented, negative times.
For a detailed publication on this matter please refer to Malta Company Reconstruction, Restructuring and Insolvency - COVID 19 applicable rules.
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