The Maltese jurisdiction offers quite a wide variety of choice when it comes to the legal structures you can use to set up your business. Whichever legal entity you choose, Malta has set in place laws and regulations that are more accommodating to foreign investors. This explains why Malta is one of the most favorable investment destinations in the world. Below are the legal structures by which businesses can exist in Malta:
Limited Liability Companies
Under the Companies Act of 1995, Companies can exist as either a private company or a public company. In the case of limited liability companies, the liability is extended to all shareholders and limited to the amount they invested into the company.
Private Limited Company
The Private Limited Company is the most popular type of business structure among investors. The number of shareholders can range from two to a maximum of fifty. Shares can be held through a licensed Trustee and Fiduciary and at least one director should be licensed as the corporate director. The position of the secretary should be held by at least one natural person.
A private limited company can be classified as a “Single Member Company” when it has only one shareholder. In the case that the company also qualifies as a private exempt company, it is possible for the sole director to also be the secretary. Private exempt companies are required to present abridged balance sheets and profit and loss accounts but can forego audited accounts and reports.
A public company holds the right to trade its shares or bonds to members of the public. The articles of the company shall set out the rights to unrestricted transfer shares and share purchasing conditions members of the public are to abide by. Public companies must have a minimum of two directors and a company secretary, who is a natural person.
Holding Companies and Trading Companies
Private limited and public limited companies can further be classified into holding and trading companies.
A holding company’s activities consist of holding shares in other companies or other assets such as immovable property, moveable property, cash, securities or intellectual property anywhere. A Maltese resident holding company can be used for an assortment of fiscal and non-fiscal objectives such as distributing income generated to the shareholders at a tax effective rate. Separation of specific assets from the trading operations of a group, implementation of repatriation strategies, tax grouping, and minimization of risk to double taxation can also be done through these holding companies. The business structure can also allow the business to take advantage of incentives such as the participation exemption.
A Trading Company
A trading company may carry out business in Malta as well as outside. Activities that fall under this business structure include buying and selling of commodities, acting as representatives and providing consultancy services. Some trading activities such as financial services and investment services require licensing from regulatory authorities.
Malta recognizes two forms of partnerships. These are a partnership en nom collectif (general partnership) and a partnership en commandite (limited partnership)
- General Partnership
An en nom collectif (general) partnership is made up of two or more partners. These can be individuals or corporate bodies. All general partners have general obligations assured by their unlimited liability. In the event that none of the general partners is an individual or a limited liability company, the obligations of general partners need not be assured by unlimited liability.
- Limited Partnership
An en commandite (limited) partnership is constructed of general partners and limited partners. The limited liability for limited partners is restricted to their contribution. Liability for general partners is deemed as unlimited. In the event where a corporate body is a general partner, at least one shareholder must guarantee, with unlimited liability, all obligations of that general partner with regard to the activities of the partnership.
To gain more insight into the Maltese partnership system, reach out to SIGTAX. Our team of accountants, lawyers, and consultants stay au courant with the latest business trends and regulations in Malta. They can also help with legal counsel on how to set up a company in Malta including giving a profound understanding of the nations’ tax system. Thus, you can be confident that you will get relevant info which guides you to do everything the right way and in your favor.
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