Commercial Partnerships in Malta

Malta Partnerships, Private Companies, LLCs, PLCs

Dr Michela Pirotta | Published on 11 Feb 2020

Malta Commercial Partnerships in Different Forms

 

The Companies Act provides for different types of commercial partnerships, mainly:

  1. Partnership en nom collectif;
  2. Partnership en nom commandite;
  3. Company: ( Article 4(1), Malta Companies Act Chapter 386 of the Laws of Malta)
    1. Public company; or
    2.  Private Company (Article 4(3), Malta Companies Act Chapter 386 of the Laws of Malta)

All of the above-mentioned commercial partnerships have a legal personality which is distinct and separate from that of its members. The separate and distinct legal personality continues until the name of the commercial partnership is struck off the Register and ceases to exist. (Article 4(4), Malta Companies Act Chapter 386 of the Laws of Malta)

1.1      Partnership en nom collectif

A partnership en nom collectif is set up by two or more partners. The partnership’s obligations are guaranteed by the joint and several unlimited liability of the partners themselves. At least one of the partners must be either an individual or a body corporate which has its obligations guaranteed by the unlimited and joint and several liability of one of its members, known as general partners and by the limited liability of membds known aslimited partners.

1.2      Partnership en nom commandite

 The partnership en nom commandite, also known as the limited partnership and has its obligations guaranteed by the joint and several which has its obligations guaranteed by the unlimited and joint and several liability of one of its members, known as general partners and by the limited liability of members known as limited partners.

1.3      Public Company

Many of the formalities of a public company are similar to those of a private company. Both types of companies are formed through the settlement of capital which is divided into shares and held by its members. (Article 67, Malta Companies Act Chapter 386 of the Laws of Malta) Members are protected by the notion of limited liability, meaning that their liability is limited to the shares contributed to the company. However the companies mainly differ in the following characteristics:

·         The name should end with the words public limited company or in their abbreviation p.l.c; (Article 70(1), Malta Companies Act Chapter 386 of the Laws of Malta)

·         The authorised share capital shall amount to €46,587.47 subscribed by a minimum of two persons; (Article 72(1), Malta Companies Act Chapter 386 of the Laws of Malta)

·         At least 25% of the share capital must be paid up; (Article 72(3), Malta Companies Act Chapter 386 of the Laws of Malta)

·         A minimum of two directors must be nominated; (Article 137(1), Malta Companies Act Chapter 386 of the Laws of Malta) and

·         Shares may be offered to the general public.

1.4      Private Company

As already mentioned a company is formed through capital and divided into shares. Its constitution shall be evidenced by the registration of the Memorandum and Articles of Association which shall be subscribed by at least 2 members. Members of the private limited company are also protected by the notion of limited liability. The constitutive document shall indicate whether the company is a private limited company as shall be shown in its name either by using private limed company or its abbreviation ltd. (Article 70(2), Malta Companies Act Chapter 386 of the Laws of Malta)

The private limited company is not restricted as to the number of objects it may have provided that its object excludes trading general and that all of its activities are legal and lawful.

The private company’s authorised minimum share capital shall not be less than €1,164.69 (Article 72(1), Malta Companies Act Chapter 386 of the Laws of Malta) which must be at least 20% paid up. (Article 72(3), Malta Companies Act Chapter 386 of the Laws of Malta)

 A private company is required to have one director (Article 137(2), Malta Companies Act Chapter 386 of the Laws of Malta) who shall manage the business of the company and one company secretary who shall manage the administrative affairs of the company.  

1.5      Single Member Company

A single member company may be formed either upon incorporation of the company itself or through the acquisition of all of its shares by one person.

A company may qualify as a single member company provided that it complies with the rules of a private exempt company.

A private exempt company is any private limited company whose memorandum and articles of association are limited by the following clauses:

a.    The persons holding debentures in a company must not be more than fifty;

b.    No body corporate shall be the holder or have any interest in any shares or debentures and shall be a director of that same company;  and

c.    Neither the company nor any of the directors may be a party to an arrangement whereby the policy of the company is capable of being determined by persons other than the directors, members or debenture holders thereof. (Article 211(2), Malta Companies Act Chapter 386 of the Laws of Malta)

Apart from the above criteria a single member company must specify the objects of its activity which shall maintain a trading activity. The business of this company must principally consist of this activity. (Article 212(1), Malta Companies Act Chapter 386 of the Laws of Malta)

 

 

 


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