Commercial Law in Malta

Topics: Types of companies, Corporation, Legal entities Pages: 35 (13348 words) Published: June 18, 2013
Formation of Companies Introduction Associations of persons can take numerous forms. When discussing associations set up for the purpose of conducting trade, one considers three principle forms of partnership; partnership en nom collectiff; partnership en commandite and limited liability companies, with the latter being the most popular choice. A company is formed by the registration of certain documents with the Register of Companies as per article 76 (1). In instances of public or private companies, the documentation may vary depending on the particular circumstances of the company. To further complicate the matter, certain tax law requirements may sometimes impact company registration. Formation formalities:

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Memorandum of association Article of association Registration of memorandum and articles Alteration and addition to memorandum and articles

Memorandum of Association Article 68 states that: ‘A company shall not be validly constituted under this Act unless a memorandum of association is entered into and subscribed by at least two persons, and a certificate of registration is issued in respect thereof. Article 69 (1) stipulates that the memorandum of every company shall state whether the company is public or private; i. the details of each member (legal or natural person); ii. the name of the company; iii. the registered office of the company; the objects of the company; iv. the amount of share capital which the company proposes to register; v. the number of directors (and their details); vi. the name and details of the company’s secretary; and vii. the period of duration of the company (where and if applicable). Sub-article 2 thereafter stipulates that instances whereby the company is a public company, annexed to the memorandum there shall be a document stating, the total amount (or an estimate) of the costs payable for the reason of the formation up to the time it is authorised to commence business. Moreover, this document is to depict any special advantage, if any, granted prior to the time the company is authorised to commence business. The name clause, is as stated, an important element to be included within the memorandum. The name given to the company may be of any type however, general limitations are imposed,

especially in instances whereby they may create confusion with any other lawfully constituted and registered name. It is important to note that, a name may be pre-registered and such registration shall be valid for 3 months. Henceforth, if a company is not registered within 3 months from such pre-registration, it shall not remain valid. Article 70 (1) thereafter suggests that a public company may be designated by any name, but such name is to include the words; ‘Public Limited Company’ or its abbreviation ‘p.l.c.’. Subarticle 3(b) thereafter holds that when the public company is an investment company with fixed share capital, the name shall end with ‘INVCO’. In the case of an investment company with variable share capital, it shall end with SICAV. Article 70 (2) suggests that a private company may be designated by any name, but such name shall end with the words ‘Private Limited Company’ or the word ‘Limited’ or its abbreviation ‘Ltd.’. In the case of a private company as an investment company with variable share capital, the name shall end with SICAV followed by Ltd. With regards to the objects clause, the purpose of the company is to be indicated in the Memorandum of Association. There is no restriction on the type of objects and quantity of objects, as long as these are lawful. Generally, the objects consist of a series of paragraphs under 3 headings: i. Main and subsidiary objects of the company ii. Powers which are consequential on the company’s objects iii. Powers to the company to do all such other things which are consequential to the company’s objects in order to attain the company’s objects Although some claim that the object clause is beneficial to third parties, really...
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