An Overview of the Revised Malta Companies Act 2021

Amendments to Qualifications of Officers and Transposition of Digitization Directive

Dr. Priscilla Mifsud Parker | 01 Mar 2022

Malta Companies Act 2021

On the 26th of October 2021, An Act to Amend the Companies Act, Cap. 386 (“Companies Amendment Act”) was published. 

This Companies Amendment Act is based on the previously issued Bill No. 233 of 6th July 2021 (the “Bill”), the primary changes relate to revised provisions in the Malta Companies Act (the “Act” or “CA” or “Principal Act”) dealing with the use of digital tools and processes as well as particularities related to appointment and the holding of the office of directors and other officers. 

Through Legal Notice 417 of 2021[1] some of the amendments came into force[2] as of 30 October 2021, whilst others have still not come into effect. 

Bill No 233 (2021) 

The Companies Amendment Actcrystallised the provisions of the above captioned Bill into law, with minimal differences between the previous Bill and the new provisions (as finalised). Below are some comments on such modifications. 

Service Address

Registration of documents with the Registrar of Companies (the “Registrar”) that are required to have the name and address of a person, may now have either the residence or service address of such individual. Such documents shall also hold the date of birth in the case of a natural person or the company registration number, in the case of a body corporate.[3]

A notable adjustment in the new law, from the provisions of the Bill, is that the above rules shall apply not only to directors, but also to shareholders, and the company secretary. 

Disqualification of Directors

This change relates to the obligation of directors to declare to the Registrar of any circumstances which they are cognisant of, which could lead to their disqualification triggers upon their being appointed directors, rather than prior to such appointment.

14-Day Notification Period 

The Companies Amendment Act makes it clear that the period of 14 days for a company to advise on the removal of an officer (at the Registrar’s request)[4] is triggered from the date of removal of such director and not earlier as seemed to be the case under the original text.

Legal Notice 417 of 30th October 2021

Article 1(2) of the Companies Amendment Act stipulates that its provisions shall come into force on any date as specified by the Minister responsible for the registration of commercial partnerships. 

As from October 2021, and by virtue of LN 417 of 2021, articles 2(a), 3(b), 5, 6, 7 and 9 of the Companies Amendment Act came into force. These mainly cover:

  • the transposition of ‘Digitalisation Directive’[5] regarding the use of digital tools and processes into company law
  • requirements relating to the appointment, qualification, and the holding of office and disqualification of a director of a company
  • added duties and powers to the Registrar.

Company’s Electronic Email Address

Changes to Malta companies’ Memorandum and Articles of Association (“M&As”) have been rolled out. Every Malta corporation must now specify its electronic mail address in the company’s constitutive document. Such an address is to be used for all official electronic correspondence and notifications to be sent by the Registrar to the company and will be used in conjunction with the physical registered office address. Therefore, it is crucial that such electronic mail address is valid, in good working order and regularly accessed by the company’s officers on a regular basis. [6]

Appointment, Qualification, Disqualification of Directors

For persons being appointed to act as directors, in both private and public companies, a new requirement was introduced to personally sign the M&As and grant consent to such an appointment or otherwise execute and present to the Registrar an express consent letter for entry in the register.[7]

Also, another novel requirement was introduced for newly appointed directors to declare to the Registrar, in the appropriate form, whether they are aware of any situations which could lead to a disqualification from appointment or to hold office as a director of a company under the Companies Act or in another EU Member State.[8]

In the case of a disqualified officer or an officer who does not hold the appropriate licence under the Company Service Providers Act (the “CSP Act”) to act as such, the Registrar has the obligation to require the company to remove such officer. It is the company’s duty to comply with such request and submit the necessary statutory form within 14 days from such a removal. In case the company does not comply, the Registrar has the obligation to file a court application requesting such removal. [9]

The Amendment Act also introduces a new disqualification in those cases where a director would be acting and providing the services of a company service provider without the necessary authorization from the Malta Financial Services Authority.[10] The second amendment is related to the consideration which is to be taken by the Registrar when a person applies for the position of director. Apart from the disqualifications under the Act, the Registrar may consider any disqualifications that already bar the respective person from being appointed to or from holding the office of director in another Member State.[11]

Extended Powers & Responsibilities of the Malta Registrar 

Further responsibilities and powers were granted to the Registrar including: 

  • taking any steps and necessitating such information or documentation as deemed necessary to determine individuals’ identification and correctness of the information submitted to him before registering new companies or returns,
  • providing competent authorities and subject persons (as defined in the Prevention of Money Laundering and Funding of Terrorism Regulations (the “PMLFTR”)), with full access to the website maintained by the Registrar, including, but not limited to, access by an application programming interface (in the spirit of having all tools required in the fight against money laundering and funding of terrorism),
  • processing personal data, in the Registrar’s capacity as data controller, and be bound by the principles relating to processing of personal data under Article 5 of Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing the General Data Protection Regulation (Directive 95/46/EC), and shall accordingly apply such measures and safeguards as are appropriate and necessary to ensure the protection of the rights and freedoms of data subjects in processing any such personal data;
  • dealing with any aspect of online formation of companies, online registration of branches and online filing of documents and information; and
  • issuing, if deemed fit, procedures and guidance, after consultation with the Minister, to companies and, or their officers as may be required for the carrying into effect of the provisions of the Act and any subsidiary legislation made thereunder, and which shall be binding on companies and their officers.[12]

Register of Officers’ and Shareholders’ Residential Addresses

The Companies Amendment Act also presents the addition of a new article to the Principal Act to be placed immediately after article 123 of the Principal Act. It is now obligatory for every company to keep a register of the residential addresses of its officers and shareholders and shall in such register: 

  • the names of each of the company’s officers and shareholders,
  • the usual residential address of each of the company’s officers and shareholders:
  • the electronic mail address of each of the company’s officers and shareholders.

The duty to deliver a copy of such register and changes thereto, accompanied by the relevant statutory form, to the Registrar, shall rest upon the directors and the company secretary of the company. The Registrar shall store and keep the records as contained in the register of residential addresses of the company’s officers and shareholders to be used for regulatory purposes only and shall not be open for public inspection.[13]

In case of default to carry out the above, every officer of the defaulting company shall be liable to a penalty unless such default is remedied within one month from the receipt of notice of such default. The Registrar shall also refuse to register the change in officers or shareholders if the information required by this article was not submitted or if he is not satisfied that the company has provided accurate and up to date information of its officers and shareholders as required by the provisions of the Act.[14]

Revised MBR Notice - Form K and Form K1[15]

The Malta Business Registry (“MBR”) has issued two statutory forms to facilitate the foregoing requirements, namely a revision to an existing form and a publication to a new one. 

The previous form K is being substituted with an amended version. The improved form K is now divided into sections A and B. 

Section B provides a part to be used for newly appointed directors following a change in the company’s directorship, to indicate their consent and confirm their declaration as required by the respective provision in article 139 of the Principal Act. For electronic filing, Section B of the amended Form K is required to be submitted separately and should be uploaded under Private Documents. 

Section A is generated through the online system. 

Every scanned copy of Section B will need to be signed in wet ink or using a qualified digital signature by the respective director/s. 

A new Form K (1) is being introduced in order to facilitate the same reporting requirements under article 139 of the Principal Act by those proposed directors upon the formation of companies. Form K (1) would then need to be uploaded under Private Documents as a scanned copy when filing a company registration through the online system. Every scanned copy of the Form K (1) will need to be signed in wet ink or using a qualified digital signature by the respective director/s.

As from 1st February 2022 only the above cited forms will be accepted. If any other documents or declarations are used, the proposed companies or documents will be refused.

Until now it is still uncertain when the rest of the Act will come into force, but corporate service providers and officers should be on the alert to make sure total conformity with the remainder of the provisions as preparation once these come into effect.

Clearly, the revisions brought about by Act LX of 2021 necessitate enhanced obligations on the Malta Registrar, directors, officers and CSPs of such Malta Companies. Such duties, incumbent on the Authority and these individuals, necessitate that the level of competence of such licensed entities and their officers is augmented. Through these amendments, emphasis is being placed on increased competence and knowledge required from Malta company officers as well as better standards and procedures being implemented in the governance of Maltese enterprises. 


 

[1] L.N. 417 of 2021, Companies (Amendment) Act Commencement Notice.

[2] As of 30 October 2021, the provisions of Articles 2(a), 3(b), 5, 6, 7 and 9 came into force.

[3] ACT No. LX of 2021, AN ACT to amend the Companies Act, Cap. 386, Article 2 amending Article 2 (5), CA.

[4] Due to disqualification or lack of a licence under the Company Service Providers Act.

[5] Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132

[6] ACT No. LX of 2021, AN ACT to amend the Companies Act, Cap. 386, Article 3 amending Article 69, CA

[7]ibid, Article 5 amending Article 139, CA

[8]ibid, Article 5 (5) adding new sub-article to after Article 139 (4), CA

[9]ibid, Article 6 amending Article 140, CA

[10]ibid, Article 7 amending article 142(1)(e) CA

[11]ibid, Article 7 adding new sub-article to after Article 142 (5), CA

[12]ibid, Article 9 amending Article 401, CA

[13] ACT No. LX of 2021, AN ACT to amend the Companies Act, Cap. 386, Article 4 adding Article 123A, CA

[14]Ibid, Article 4 (3)

[15] Revised Form K, Declaration of Director/s in Terms of Law, published on 29 January 2022.


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Dr Charlene Mifsud

Partner, Corporate & Commercial

+356 2205 6298
ccmifsud@ccmalta.com

Dr Maria Chetcuti Cauchi

Senior Partner, Property & Projects

+356 22056112
mcc@ccmalta.com

Dr Priscilla Mifsud Parker

Senior Partner, Corporate, Tax & Immigration

+356 22056122
pmp@ccmalta.com