Updates to the Malta Companies Act – Act XVIII of 2025

The Amendment Act introduced several modifications to the original Companies Act. At present, only certain amendments have been implemented. The dates for the commencement of the remaining provisions will be published in the Government Gazette in due course.

The Amendment Act:  

·       Updates company classifications

·       Updates compliance standards for entities in the financial sector

·       Strengthens electronic communication protocols between commercial partnerships and the Malta Business Registry (“MBR”).

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The following changes are to date not yet in force:

1.      Increase in Partnership Contributions

·       Changes to Article 19 of the Act allow increases in partnership contributions or new partner contributions to take effect immediately upon receipt, without needing to amend and register the Partnership Deed.

·       Partners responsible for the representation or administration of the partnership must notify the Registrar within three (3) months after the end of the year in which the contribution was made.

·       Notification is done by submitting a resolution confirming the contributions.

·       If a contribution increase and an assignment of interests occur in the same year, confirmation of the contribution must be submitted before the assignment.

·       These amendments are intended to eliminate delays in the formal recognition of new or increased contributions to partnerships.

2.      Assignment of Interests

·       Written consent from all partners is now only needed for inter vivos (during lifetime) assignments, not for causa mortis (after death) assignments.

·       This amendment clarifies the rules and reduces potential disputes regarding assignments.

·       A notice about any change in partners must be delivered to MBR within 1 month of the change.

·       Assignments of partnership interests now take effect immediately, rather than after a 3-month creditor-protection period.

·       Creditors still have 3 months to file an objection with the court after the notice is published.

·       The court may reverse the assignment (except in cases of death) or allow it if adequate security is provided by the partnership.

For Partnerships en Commandite:

·       Creditor protections do not apply to changes in limited partners.

·       Only changes involving general partners with unlimited liability require notice to be published.

·       This aligns with the higher liability of general partners and simplifies disclosure requirements.

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1.    Updates to Company Email Address Procedures

·       The Amendment Act imposes new responsibilities on directors and company secretaries regarding management of the company’s official email address.

·       Directors and secretaries must ensure the registered company email with MBR is checked regularly.

·       Amendments to Article 79(1)(i)simplify the process for updating the company’s registered email address.

·       Companies may now update their email address via a Board resolution and submission of a return to the MBR.

·       This change removes the need to amend the memorandum of association for minor administrative updates.

Status of Changes: Not yet in force

Why this matters:

This change is crucial because all official communications—including compliance deadlines and regulatory updates—will be sent to this address. Failure to monitor the email could result in missed deadlines, penalties, or even legal action. Companies should review their internal processes and assign clear responsibility for managing the registered email to avoid these risks.

2.    Increase in Share Capital for Non-Cash Consideration

·       The new proviso to Article73(4) of the Act eliminates the need for an expert’s report when a company increases its share capital for non-cash consideration if the consideration does not exceed fifty thousand euro (€50,000).

·       In these cases, the company must instead prepare and submit a director’s declaration.

Status of Changes: Entered into force on 7 August, 2025

Why this matters:

This change streamlines the process, lowers expenses, and makes directors responsible for accurately valuing non-cash contributions. It’s especially useful for start-ups or companies accepting assets like intellectual property or equipment instead of cash, without needing an expert’s report.

3.    Amendments to Investment Companies

The Amendment Act introduces regulatory updates for investment companies. It authorises both:

·       The establishment of cell companies

·       The conversion of existing companies into cell companies

The Act broadens the range of flexible fund structures available to:

·       Certain schemes

·       Retirement funds within Maltese law

Status of Changes: Entered into force on 7 August, 2025.

Why this matters:

This amendment modernises Malta’s investment company framework, making it more attractive to international investors and fund managers. For businesses, it means access to innovative structures that can improve risk management, facilitate asset segregation, and support bespoke investment strategies.

4.    New Rules on Usufructuary of Shares

The Amendment Act adds Article 117A to regulate shareholder rights for shares held in usufruct, an area not previously covered by the Companies Act and formerly governed by civil law and agreements.

According to the new article, a usufructuary shareholder is entitled to:

• Attend any general meetings of the company; and
• Receive dividends.

The right to vote at company meetings is granted to the usufructuary only if it is expressly provided for in either:

• The public deed establishing the right of usufruct; or
• The memorandum and articles of association of the company.

Status of Changes: Entered into force on 7 August, 2025.

Why this matters:

This change clarifies the rights and obligations of those holding the right to use and benefit from shares owned by another party. It enhances transparency in shareholding structures and helps prevent disputes between shareholders and usufructuaries. For businesses, it means greater certainty in the exercise of voting rights and entitlement to dividends, which is crucial for effective corporate governance and investor confidence.

5.    Pledging of Securities

·       Article 122(2) now requires the pledgor or pledgee to submit a document with details of the pledge contract to the MBR within 14 days of granting a pledge on shares; however, the specific required details are not specified. This provision is not yet in force.

·       A new sub-article (17) permits the pledgee or their representative to enforce rights as mandatary of the pledgor, with proper authorization under Article 1887 of the Civil Code. This amendment formalizes the common mandate practice in pledge agreements and is in effect as of August 7, 2025.

Why this matters:

The new requirements provide greater legal certainty and protection for both pledgors and pledgees. This is crucial for companies using shares as collateral in financing arrangements, as it clarifies enforcement rights and reduces the risk of disputes.

6.    Court Appointed Administrators, Legal and/or Judicial Representatives

·       Court-appointed administrators are required to notify the MBR of their appointment or removal within 14 days.

·       Officers who make false statements to auditors, either in writing or orally, may be subject to fines or imprisonment.

Status of Changes: Entered into force on 7 August, 2025.

Why this matters:

This amendment ensures that company records accurately reflect who is authorised to act on behalf of the company at any given time. For businesses, it means greater certainty in legal proceedings and transactions, as well as improved compliance with regulatory obligations.

7.    Company Reserves

·       A new "revaluation reserve" has been established by the amendment.

·       This reserve is undistributable; it cannot be paid out as dividends.

·       Only unrealized gains from asset revaluations are included in the reserve.

·       The purpose is to protect company capital by restricting distribution of these gains.

Status of Changes: Entered into force on 7 August, 2025.

Why this matters:

The addition of the “Revaluation Reserve” concept aligns Maltese company law with international accounting standards. It allows companies to reflect the increased value of assets in their financial statements, improving the accuracy of balance sheets. This is particularly important for companies seeking investment or financing, as it provides a clearer picture of the company’s true financial position and asset base.

8.    Removal of Exempt Definition

·       The Amendment Act eliminates the "exempt" classification for certain private companies, but these companies keep their previous benefits and exemptions.

·       The removal of the term aims to simplify regulations for foreign investors.

·       For director’s declarations under Article 213(8), only one director’s signature is now required, reducing administrative steps.

Status of Changes: Not yet in force

Why this matters:

By removing the “exempt” definition, the law eliminates ambiguity around which companies qualify for certain exemptions. This change promotes a level playing field and ensures that all companies are subject to the same regulatory standards unless specifically provided for by law. For businesses, this means greater legal certainty and reduced risk of inadvertent non-compliance.

9.    New Simplified Dissolution Procedure

Article 214A introduces a simplified dissolution procedure for eligible private companies.

Aim: streamlining the voluntary winding-up process for eligible private companies:

·       Procedure applies only to private companies registered for at least 6 months; excluding public limited companies and regulated entities.

·       A company is ineligible if, within 6 months, the company changed name, traded, employed non-officers, failed documentation/penalty obligations, or held pledged shares.

·       The application must be submitted to MBR using the prescribed form and must be accompanied by various documents.

·       Upon compliance, MBR publishes a Government Gazette notice and the company name is removed from the register after 3 months.

·       Directors and members remain liable after dissolution; company name restoration is possible through courts.

·       False director declarations may result in fines or imprisonment.

Status of Changes: Not yet in force.

Why this matters:

The simplified dissolution procedure streamlines the process for winding up a company, reducing administrative burdens and associated costs. This makes it easier and more cost-effective for businesses to exit the market when necessary, enhancing Malta’s attractiveness as a jurisdiction for company formation and operations. It also reduces the risk of companies remaining dormant or non-compliant due to procedural hurdles.

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At Chetcuti Cauchi, we seek to apply a pragmatic business approach to each client’s needs. Our lawyers strive to keep abreast with the latest legal developments to ensure that our clients are informed and enabled. Get in touch to find out how we can assist.

We will continue to track all relevant announcements and provide updates promptly as soon as the Government Gazette publishes the official entry-into-force date(s) for the amendments not yet in force.

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