Corporate and Mergers & Acquisitions (M&A)
Amendment to Article 211 of the Companies Act – Private Exempt Companies
Amendment to Article 211 of the Companies Act – Private Exempt Companies
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By virtue of Act 3 of 2013 Article 211 of the Companies Act was amended such that, the words “is holder of, or has any interest in, any shares or debentures of the company or” in paragraph (b) of sub-article (2) thereof have been deleted.
Pursuant to the above-mentioned amendment, the previous condition that a private limited liability company could not be private exempt, if it had a corporate entity as a shareholder (unless such corporate entity was also private exempt) has been removed.
Moreover in terms of Article 212(1) a company having a corporate entity, whether resident or non-resident, as a shareholder, may be registered as a single-member company and the provisions of the Companies Act requiring a private limited liability company to have at least two shareholders are not applicable where the objects of such a company specify which activity of the company shall be its main trading activity and the business of the company shall consist principally of that activity.
The only conditions that subsist in order for a company with a corporate shareholder/s to be registered as private exempt, whether as a single-member or otherwise, are the following:
(a) that no body corporate is a director of the company, and neither the company nor any of the directors is 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; and
(b) that the number of persons holding debentures of the company is not more than fifty.
Accordingly, the introduction of the amendment to Article 211 of the Companies Act has enhanced Malta’s legal framework such that a wider range of corporate structures may be accommodated by effectively allowing private exempt companies to be composed of only one corporate shareholder, whether resident or non-resident.
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