27.3 C
Valletta
Thursday, 16 September 2021
HomeEconomyNew amendments to the Companies Act proposed

New amendments to the Companies Act proposed

Bill 233 presents several proposed amendments to the Companies Act, Malta’s law on companies. The amendments mainly concern an increase in the transparency related to the persons called upon to act as directors of Maltese companies (including specifically the inclusion as a disqualification of the lack of a corporate service provider licence – called CSP – in cases where it is required) and the introduction of new address requirements for companies and their representatives.

Although at first glance the changes may not appear to be far-reaching, if the bill is enacted in its current form, CSPs supplying multiple companies may need to adequately reorganise their systems to ensure effective compliance with the new requirements, a process that takes time.

In terms of additional requirements introduced by the draft law, the following stand out:

1. documents to be delivered to the Malta Business Registry (MBR) for registration that contain a person’s name and residence must now include the date of birth (or registration number in the case of a company);

2. the M&A of a company – i.e. the process underlying the transfer of ownership – will now have to contain the company’s e-mail address and this will also have to be included in the company’s annual statement each year;

3. the annual declaration will also have to indicate the company’s principal business activity;

4. the directors of the company may choose to indicate a “service address” in the company’s memorandum of association rather than their “residential address”;

5. Companies will be required to maintain a register containing the names, residential addresses and e-mail addresses of all its directors and shareholders, notifying the MBR of any changes within 14 days of registering such changes accompanied by the relevant statutory form (penalties for non-compliance have been introduced in this regard and the MBR will use this register for regulatory purposes without making it available for public inspection)

6. future directors of private companies will now have to sign their consent to act as directors by signing the articles of association or a consent form (as is currently the case for public companies)

7. all prospective directors will now be required to submit a signed declaration to the MBR stating that they are not aware of any circumstances that would render them ineligible to act as directors under the law or in another member state.

As far as registration requirements are concerned, it is likely that all CSPs will have the data described above available in one form or another. However, for most, if not all, CSPs, it is unlikely that such data will already be organised in a way that allows for quick and easy extraction in accordance with these new rules.

With company records now predominantly being kept digitally through special software programs, it is likely that CSPs will need to commission software changes to ensure that the new requirements are captured by their automated record-keeping functionality, particularly when ensuring that the company’s annual return includes the new details.

A reasonable transitional period to accompany these legislative amendments would, therefore, be welcome as it would allow for a smoother collection and organisation of this data even through any software changes that might be required for this purpose.

Along with imposing these new requirements on companies, the Bill also grants some additional powers to the Companies Registry, including:

  • the power not to register changes in directors or shareholders if the information required by law regarding the address register has not been submitted or if it is not satisfied that the company has provided accurate and up-to-date information about its directors and shareholders;
  • before registering any statement notifying a change of director, secretary or legal representative, the power to require such information as it considers necessary to ascertain the correctness of such statements or to ascertain that the requirements of the Act have been complied with;
  • the power to inform a company of any circumstance which prevents a person from acting as its director, including, where appropriate, the lack of a CSP licence, thereby requiring the company to submit removal to the MBR within 14 days of the initial notification and, failing that, the duty to make a judicial application for removal;
  • the power to refuse the appointment of a director where that person would be disqualified to act in any other member state;
  • before registering a new company or returning it, the duty and power to take all necessary steps to ascertain the identity of a person and the correctness of the information submitted
  • the duty to provide competent authorities and interested persons, as defined in the Money Laundering Prevention and Terrorist Financing Regulations, with full access to the MBR website, including through an application programming interface;
  • the duty to deal with all aspects of online formation of companies, online registration of branches and online filing of documents and information.

The bill also grants the MBR the power to issue, after consultation with the minister, binding procedures and guidelines for companies and their officers.

We are partners ofspot_img
spot_img
spot_img

Related articles

Okcoin secures regulatory approval in Malta

Cryptocurrency exchange Okcoin may soon be opening its doors wider to crypto traders in Malta and the Netherlands following approval from key regulators. In a...

EU Commission: new proposals to strengthen the anti-money laundering

The European Commission has presented an ambitious package of legislative proposals to strengthen the EU's anti-money laundering and countering terrorism financing (AML/CFT) rules. The...

Malta’s National AI Strategy ranked 10th best amongst 54 countries

A Global AI Index carried out by Tortoise Media has ranked Malta’s National Artificial Intelligence Strategy in 10th place out of 54 countries, significantly surpassing...

Funding focus
Discover the news in the dedicated section