Malta has recently implemented amendments to the Companies Act
3 August 2020 - In Malta, an Act No. XXXI of 2020 has recently been adopted, which amends certain articles of the Companies Act, Chapter 386 of the Laws of Malta (the "Companies Act"). The key amendments to be taken into account by the Maltese companies are briefly specified hereunder.
New grounds for ineligibility to hold office as director or secretary:
As it presently stands, a person is precluded from being qualified for appointment or from holding office as director of a company or company secretary if:
- He is interdicted or incapacitated or is an undischarged bankrupt;
- He has been convicted of any of the crimes affecting public trust, of theft or fraud, or knowingly receiving property obtained by theft or fraud;
- He is a minor who has not been emancipated; or
- He is subject to a disqualification order under article 320.
Under the recent amendment of article 142, the Registrar may also restrict the director or secretary from being appointed, if they breach the provisions of the Companies Act three times in a period of two years. The period shall be reckoned from the first breach, and the concerned officer must still be in default as to one or more of such breaches.
It is not yet clear how the Registrar’s discretion will be exercised, as there are no guidelines or explanations on the severity of breaches. However, the bar for the officers of the Maltese companies has been raised, and therefore, it is crucial that they have a substantial knowledge of the Companies Act in order to ensure compliance.
In any case, the aggrieved director or secretary will have the right to bring an application before the court for the removal of any restriction pursuant to the newly added article 142 (5) of the Companies Act.
Additional provisions on disqualification orders under the article 320:
First, it should be noted, that now the Official Receiver also has the right to apply for the disqualification order by the Court. Whereas under the previous law, this was only the power of the Registrar of Companies or the Attorney General.
Moreover, additional grounds for a disqualification order have been implemented. This relates to instances when a person, during the time they have been a director of a company, have been in breach of the provisions of the Companies Act for the third time in a period of two years, that shall be reckoned from the date of the first breach.
Electronic means and extension of AGM deadlines:
In response to the global pandemic, article 425 also establishes new rights for the Minister for the Economy, Investment and Small Businesses, notably:
- To prescribe the regulations for electronic filing, electronic signatures, issuing of electronic certificates;
- To extend the term for the holding of the annual general meeting and for the laying and approval of accounts;
- To provide for suspension of any periods for the holding of general meetings, whether ordinary or extraordinary, and to the holding of virtual annual general meetings and other meetings.