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[ESTABLISHING A BUSINESS ENTITY IN MALTA]
2. Matters to be considered when choosing a particular type of business entity The decision as to which one of the business entities should be opted for depends largely on the circumstances. Maltese law does not prescribe that a certain type of business entity needs to be set up if circumstances subsist, although in the case of limited liability companies, certain variances will apply, if for instance, the company is a single member company. In making such a decision, certain considerations should always be made, most prominently, taxation, employment law, whether the entity is intended to provide a service and contractual requirements applicable under Maltese law. 3. Steps and timing to incorporate a company As the limited liability company is the most common form of business entity used as a vehicle for entry in the Maltese market, main focus will be placed on the requirements that need to be fulfilled and timing involved in incorporating and registering a limited liability company. The process for registration of a company starts with the registration of the Memorandum and Articles of Association (M&A) with the Malta Business Registry (MBR). The subscribers or the original shareholders of a company are responsible for the Articles of Association adhering to the law. The M&A must also be accompanied by proof of payment of the original subscribed share capital which takes the form of a bank slip, together with the payment of the registration fee due to the MBR and simple due diligence conducted on the first directors and shareholders, if these are not already known to the MBR. The company is deemed to come into existence and is authorised to commence business as from the date of registration indicated on the stamp placed by the MBR on the M&A. This date is also indicated on the certificate of
incorporation issued by the MBR and which is kept at the company’s registered office. In practice, if all documents submitted are in order, the name of the company is available and the fees are paid, registration will take place with effect from the date of filing and will be registered on the MBR’s online records, one to two days later. The registration number allocated to the company is usually available within hours. 4. Governance, Regulation & Maintenance 4.1 Corporate Governance The aim of good corporate governance is to encourage the business structure to create value, such as through innovation or development, and provide accountability and control systems commensurate with the risks involved. Whilst Maltese law does not include a specific list of rules which should be followed, the Malta Financial Services Authority has issued guidelines for licensed entities, which can be used as guiding principles for limited liability companies. The Companies Act sets out the obligations which partnerships en nom collectif, partnerships en commandite, and limited liability companies (both public and private) must fulfil. SICAVs and INVCOs must adhere to the obligations as set out in the Companies Act, as well as the Investment Services Act and any other Maltese/EU law which governs investment services. The governance of companies is conducted by their directors, who have duties of loyalty, care, diligence and skill towards the entities they manage. Amongst the obligations they must fulfil are the duty to keep accounting records and submit accounts which are independently audited, an auditor’s report and a directors’ report annually. The annual accounts must be filed within 10 months from the end of the
ILN Corporate Group – Establishing a Business Entity Series
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