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Malta Company Formation: A Step-By-Step Guide For Entrepreneurs

Establishing a company in Malta offers a strategic advantage due to the country’s robust legal framework, favorable tax system, and its position within the European Union. The process of forming a company in Malta is streamlined and can be completed in a short time frame, making it an attractive prospect for entrepreneurs and investors looking to expand their business horizons. Serving as a gateway to the European market, Malta provides a stable environment with a multilingual workforce and a pro-business government which has laid down various incentives to attract foreign investment.

The types of companies one can set up in Malta vary, with private and public limited liability companies being the most common forms. A private company requires a minimum authorized share capital of €1,164.69, while a public company must have at least €46,587.47. The capital requirements and corporate governance structures highlight the distinction between private and public entities, each catering to different business needs and scales of operation. To set up a company, an individual must adhere to the legal and statutory requirements set by the Malta Business Registry, including the drafting of the memorandum and articles of association, and for some entities, the need for a Form BO1 if a corporate shareholder holds more than 25% ownership.

Aside from corporate structural decisions, potential business owners must consider taxation and the various financial incentives offered by the Maltese government. While the initial company registration fees range between EUR 245.00 and EUR 1,750.00 based on the authorized share capital, the long-term financial benefits, including effective tax rates and double taxation treaties, contribute significantly to Malta's allure as a business-friendly jurisdiction.

Key Takeaways

  • Malta's strategic location and favorable business environment make it an appealing destination for company formation.
  • Legal and capital requirements must be met during the company registration process, with distinctions between private and public companies.
  • Entrepreneurs benefit from Malta's efficient taxation system and financial incentives post-company formation.

Types of Maltese Companies

When incorporating a business in Malta, an investor may choose from several company structures, each with specific regulatory and capital requirements.

Private Limited Liability Company

A Private Limited Liability Company in Malta is characterized by its shares not being available to the general public and a restriction on the number of shareholders, which cannot exceed fifty. The minimum authorized capital for such a company is €1,164.69, with at least 20% of the issued share capital being paid up upon signing the Memorandum of Association.

Public Limited Company

Conversely, a Public Limited Company has the ability to offer shares to the public and is required to have a minimum authorized capital of €46,587.47. For this company type, a minimum of 25% of the issued share capital must be paid up at the inception of the company.

General Partnership

A General Partnership in Malta involves partners who are jointly and severally responsible for the obligations of the partnership without any limitation. This entity does not have a stipulated minimum capital requirement and partners are typically individuals or corporate bodies.

The Registration Process

The process of registering a company in Malta involves several key steps that must be adhered to strictly to comply with the regulatory framework. These steps are designed to ensure transparency and establish the legal framework within which the company will operate.

Choosing a Company Name

Before initiating the registration process, one must select a unique company name. The Registry of Companies must approve the chosen name to ensure that it is not identical or deceptively similar to any existing company name. It is recommended to provide a few alternatives to avoid any potential conflicts or delays in the process.

Memorandum and Articles of Association

A critical step in the registration process is the preparation of the Memorandum of Association and Articles of Association. These documents formalize the company's structure, purpose, and the regulations governing its operations. Key information within the Memorandum includes:

  • Company Name
  • Registered Office in Malta
  • Objects of the company
  • Details of shareholders
  • Amount of share capital

The Articles of Association detail the rules for the internal management of the company.

Registrar of Companies Submission

Submission to the Registrar of Companies is the final phase. The registration documents, including the Memorandum and Articles of Association, are filed with the appropriate fee. Depending on the capital, the fee ranges from €245 to €1,750. Upon successful submission and approval, the company is issued a Certificate of Registration, which is conclusive evidence of the company's existence. Electronic filing may offer reduced fees and expedited processing.

Legal and Statutory Requirements

In Malta, the formation of a company entails meticulous compliance with the Companies Act. The law sets clear stipulations for company directors, shareholders, the company secretary, as well as the registered office. Each entity must adhere to defined roles and responsibilities to meet legal expectations.

Director and Shareholder Obligations

Directors are responsible for the governance and proper administration of the company. They must ensure that the company adheres to all legal and statutory requirements. Shareholders are required to provide a minimum share capital, €1,165 for private companies, which may be contributed in cash or kind.

  • Minimum Share Capital:
    • Private Company: €1,165
    • Public Company: Minimum 25% paid-up on signing the Memorandum of Association

Registered Office and Company Secretary

Every company must have a registered office in Malta, which serves as the legal address for correspondence and regulatory documentation. A company secretary must be appointed to oversee compliance with statutory requirements. The secretary's duties include maintaining company records and ensuring the company adheres to its legal obligations.

  • Registered Office: Must be situated in Malta
  • Company Secretary Duties: Ensure compliance and maintain records

Compliance and Annual Returns

Companies are obligated to file an annual return with the Malta Business Registry. This document should detail the company's capital structure and list the shareholders, directors, and the company secretary. It must also disclose the details of the beneficial owner, if any shareholder owns more than 25% of the company's shares.

  • Annual Return: Includes capital structure, details of directors, shareholders, company secretary
  • Beneficial Owner Disclosure: Required if ownership exceeds 25%

Share Capital Considerations

When forming a company in Malta, careful attention must be given to the share capital structure, as it determines the financial foundation upon which the company operates. This section examines the important aspects of share capital, specifically focusing on authorised versus issued share capital, minimum capital requirements, and shareholder contributions.

Authorised vs Issued Capital

Authorised share capital refers to the maximum amount of share capital that a company is allowed to issue to its shareholders. It is a ceiling that cannot be exceeded without shareholders' approval. In contrast, issued share capital constitutes the share capital that has actually been subscribed and allotted to shareholders and for which payment has been received by the company. This figure is often lower than the authorised capital and can be increased up to the authorised limit as required.

Minimum Capital Requirements

For company formation in Malta, the minimum authorised share capital is set by law. Private companies require a minimum of €1,164.69, and public companies have a higher threshold of €46,587.47. It is essential to note that at least 20% of the issued share capital must be paid-up on the signing of the Memorandum of Association for a private company, while a public company must have at least 25% paid-up.

  • Private Company Minimum Capital: €1,164.69
  • Public Company Minimum Capital: €46,587.47

Shareholder Contributions

Shareholders are required to contribute towards the company's capital based on their proportion of ownership. In Malta, shareholder contributions are strictly regulated, and the necessary amounts must be deposited in a bank account in the company's name during the formation stage. The deposited sum needs to be verified with a deposit slip presented to the Registry of Companies as part of the incorporation process.

  • Private Company: Minimum 20% paid-up required
  • Public Company: Minimum 25% paid-up required

These capital contributions represent the shareholders' commitment to the company, underpinning its financial stability and credibility.

Taxation and Incentives

Malta's taxation system provides a compelling incentive structure for businesses, with a focus on offering competitive corporate tax rates, relief from double taxation, and significant tax refund opportunities for shareholders.

Corporate Tax Rates

Maltese corporate tax lies at a flat rate of 35%. However, this rate can effectively be reduced for international shareholders through Malta's unique tax refund system. Upon the distribution of dividends, non-resident shareholders are often entitled to significant tax refunds, effectively lowering the tax burden.

Double Taxation Treaties

Malta has an extensive network of double taxation treaties with over 70 countries. This framework aids in preventing the same income from being taxed in more than one country, offering relief that can take the form of a tax credit or an exemption, thus favoring cross-border trade and investment.

CountryType of Relief Offered
United States Tax Credit
United Kingdom Tax Exemption
Germany Tax Credit

Tax Refunds for Shareholders

Shareholders in Maltese companies are entitled to claim a refund on the tax paid by the company on distributed profits. The actual refund amount varies, but typically shareholder can receive a 6/7ths refund on the tax paid by the company. Dividends received by shareholders are not taxed further in Malta.

Dividend IncomeRefund Amount
€100,000 Up to €85,714

It is crucial for companies seeking to form an entity in Malta to understand these taxation and incentive structures, as they could have a sizable impact on business decisions and profitability within the European Union.

Banking and Finance

In the context of Malta company formation, managing financial matters such as setting up corporate bank accounts and adhering to financial reporting and auditing requirements is crucial. Entities must navigate the regulatory framework and meet specific financial prerequisites to ensure compliance and operational efficiency.

Opening a Corporate Bank Account

When a company is incorporated in Malta, opening a corporate bank account is not mandatory, but it is highly recommended to facilitate business transactions. To open a bank account, the directors must provide due diligence documentation, including:

  • A completed application form
  • Proof of identity for all directors and shareholders
  • Evidence of the company’s registration
  • The Memorandum and Articles of Association

Once an account is opened, companies benefit from the robust banking infrastructure in Malta. Entities may hold assets in these accounts both domestically and internationally, underscoring Malta’s capability to cater to global business needs.

Financial Reporting and Auditing

For companies in Malta, financial reporting and auditing are integral parts of corporate governance. They must maintain accurate records that reflect their financial position. The requirements for financial reporting and auditing vary based on the size and type of company.

Private companies are typically subject to annual audits if they meet two of the following criteria:

  • Balance sheet total exceeds €46,000
  • Turnover surpasses €100,000
  • The company employs more than 2 individuals

Public companies are obligated to have their accounts audited annually, regardless of their size. These audits must be conducted by a warranted accountant or an auditing firm.

Entities are expected to present their annual accounts to the Malta Financial Services Authority (MFSA) and, where applicable, to their shareholders. This practice ensures transparency, financial integrity, and contributes to the trust stakeholders have in the Maltese financial system.

Corporate Governance

Corporate governance within Malta's jurisdiction encapsulates the protocols and practices that govern the direction and control of companies. It emphasizes the importance of well-defined responsibilities and balanced power structures within an organisation.

Board of Directors

Maltese corporate law mandates that every registered company possess a Board of Directors responsible for the overall direction and administration. Directors play a pivotal role in both setting and upholding the company's strategic objectives and ensuring that operations align with established laws and ethical standards. A key aspect of their role involves the representation of the company’s interests, balancing the needs of shareholders, employees, and stakeholders.

  • Composition: A balance between executive and non-executive directors is recommended. This helps in maintaining objectivity in board decisions.
  • Oversight: They must oversee corporate control and the company's management. This includes monitoring financial practices and ensuring transparent reporting.

Corporate Control and Management

At the helm of corporate control and management are company directors, who are charged with the day-to-day operations and decision-making processes that drive the organisation forward. They must balance control with effective management, embodying a dual role that combines operational oversight with strategic planning.

  • Control Mechanisms: To safeguard against potential conflicts of interest and promote operational integrity, control mechanisms include both internal policies and regulatory compliance requirements.
  • Operational Responsibilities: Directors are tasked with the implementation of board-approved strategies and are accountable for the performance and conduct of the company.

Distinguishing Private vs Public Companies

In Malta, the fundamental differences between private and public companies revolve around structure, ownership, and regulatory requirements. Understanding these distinctions is crucial for entrepreneurs and investors considering company incorporation on the island.

Structure and Ownership Differences

Private Limited Companies in Malta are typically characterized by a closer, more controlled ownership structure. The Maltese Companies Act stipulates that private companies must adhere to the following:

  • The minimum authorized capital for a private limited company is €1,164.69.
  • At least 20% of the issued share capital must be paid-up upon signing the Memorandum of Association.
  • A private company is restricted from having more than 50 shareholders.
  • Restrictions on transfer of shares are often in place to maintain control within a small group of individuals.

Public Companies, on the other hand, are designed for broader ownership and are subject to different requirements:

  • The minimum authorized capital for a public limited company is significantly higher at €46,587.47.
  • They must have a minimum of 25% paid-up capital.
  • They are allowed an unlimited number of shareholders.
  • Public companies offer shares to the general public and can be traded on a stock exchange, which requires adherence to additional transparency and reporting standards.

Listing and Regulatory Differences

Resident companies in Malta, whether private or public, must be registered with the Malta Business Registry. Here is a comparative look at the regulatory landscape:

Private Limited Companies:

  • Are not permitted to offer their shares or debentures to the public.
  • Face fewer disclosure and regulatory requirements, simplifying governance.
  • A body corporate shareholder with more than 25% ownership must file a Form BO1.

Public Companies:

  • Must comply with stringent regulations set by the Malta Financial Services Authority (MFSA) and the listing rules of the Malta Stock Exchange.
  • Subject to extensive disclosure requirements to protect public investors, including regular financial reporting and the dissemination of any information that can impact share prices.
  • Encouraged to uphold the highest standards of corporate governance, given their increased public accountability.

Limited Liability applies to both private and public companies in Malta. It means that the liability of the shareholders is limited to the capital they have invested in the company. This promotes investment as it reduces the personal risk to owners should the company face financial distress.

Each type of company serves different business purposes and investor needs, and the choice between them relies on the intended scale, investment goals, and desired level of regulatory compliance.

Setting Up Operations

Once a company has been formed in Malta, setting up operations involves securing the right premises, recruiting suitable employees, conducting trading activities, and ensuring ongoing administration tasks are efficiently managed.

Premises and Employees

Selecting an appropriate location for business operations is crucial. Companies should consider factors like size, location, and infrastructure compatibility with their business needs. After securing premises, the next step is hiring employees. Malta offers a skilled workforce, and businesses must comply with local labor laws regarding contracts, wages, and working conditions.

  • Premises: Must align with business size and type.
  • Employees: Recruiting from the local talent pool, adhering to Maltese employment laws.

Conducting Trading Activities

Trading companies in Malta need to be mindful of compliance with national and EU regulations. They should also establish a robust supply chain and logistics network to facilitate smooth trading operations. Setting up these operations entails understanding and applying the right tax structures and trade agreements that Malta is a party to.

  • Trade Compliance: Adherence to local and EU trade laws, policies.
  • Supply Chain Management: Establishment of a reliable network for goods and services.

Ongoing Administration

Efficient administration is vital for maintaining operational integrity. Administrative tasks include regular filings with the Malta Business Registry, ensuring the company remains in good standing and adheres to reporting requirements. Moreover, companies must manage their financial accounts in compliance with Maltese accounting standards.

  • Regulatory Filings: Accurate and timely submissions to remain compliant.
  • Financial Management: Adhering to accounting standards for reporting and audits.

Support and Resources

When forming a company in Malta, entities have access to a range of support mechanisms and resources designed to facilitate the process. From the Malta Business Registry's services to expert legal and financial consultation, businesses can tap into a well-structured support system.

Malta Business Registry Services

The Malta Business Registry (MBR) serves as a central authority for the registration of new companies in Malta. They offer a variety of services that streamline the setup process for businesses, including:

  • Registration and Incorporation: The MBR handles the incorporation of companies, ensuring compliance with Maltese law. They require a minimum authorized share capital for private and public companies, which must be partially paid-up upon signing the Memorandum of Association.
  • Ongoing Compliance: Companies must adhere to annual filing requirements and maintain good standing with the MBR. This ensures that businesses are compliant with legal obligations post-incorporation.
  • Information Management: They maintain a repository of company-related data that is accessible to the public. This transparency supports due diligence activities and promotes trust in the Maltese business environment.

The Malta Financial Services Authority (MFSA) oversees financial services, offering resources and support to ensure compliance with financial regulations.

Legal and Financial Consultation

Malta offers a wealth of legal and financial consultation services to assist in company formation. Professional firms, often with multi-disciplinary teams, provide tailored support across various stages of business setup:

  • Legal Advisory: Expert legal advice ensures that companies navigate Maltese law effectively, from incorporation to ongoing corporate governance. Firms often offer free initial consultation to address preliminary inquiries.
  • Financial Consulting: Experienced financial advisors aid in understanding tax incentives, accounting requirements, and optimizing financial operations under Malta's favorable tax regime.
  • Custom Solutions: Consultation services are often custom-designed to meet the unique needs of businesses across different industries, whether it’s a start-up or an international corporation expanding into Malta.

Support services and resources by these entities are integral for businesses to successfully establish and operate in Malta's business-friendly environment.

Frequently Asked Questions

In this section, readers will find detailed information related to company formation in Malta, addressing key procedural and regulatory questions.

What are the requirements to form a company in Malta?

The formation of a company in Malta requires a minimum of one shareholder and one director, a registered office address within the country, and compliance with the minimum share capital requirement of €1,165 for private companies.

What are the steps involved in opening a company in Malta online?

To open a company in Malta online, promoters must complete the registration process through the Maltese Business Registry’s online system. This involves the submission of the Memorandum and Articles of Association, providing details of directors and shareholders, and payment of the registration fee.

How can one start a business in Malta as a non-resident?

A non-resident can start a business in Malta by appointing a local director and securing a registered office in Malta. They will also need to adhere to the same registration and capital requirements as resident company founders.

What is the minimum share capital needed to set up a Maltese company?

For a private limited company in Malta, the minimum share capital is €1,165, with at least 20% paid-up upon signing the Memorandum of Association. In the case of a public limited company, the minimum is €46,587.47, with at least 25% paid-up.

How can I open a Malta company with a bank account?

To open a Malta company with a bank account, one must first register the company with the Malta Business Registry and then approach a bank in Malta to complete the bank account setup process, presenting all necessary business documentation and information.

What are the different types of companies that can be formed in Malta?

In Malta, one can form various company types, including private and public limited liability companies, general partnerships, limited partnerships, and sole proprietorships. Each company type has specific conditions and suitability depending on the business objectives.

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***Please Note: If you are a resident of a country that is a signatory of the Common Reporting Standard (CRS) (or a US citizen) your tax reduction possibilities are limited. Due FATCA, CRS, and CFC laws you may not be able to completely eliminate your taxes without moving your residence (or US citizenship.) While opening an offshore company can increase privacy and asset protection, your tax obligations remans tied to your ownership of overseas entities. Offshore company's are often not taxed in the country where they are incorporated, rather you as the owner are obligated to pay taxes in the country where you reside. Please make sure you know your tax obligations, as we are not tax advisors. Please seek a local tax professional for help regarding your situation. 

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