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[ESTABLISHING A BUSINESS ENTITY IN MALTA]
financial year. The format of the accounts varies according to the size of the company. Companies which have subsidiaries must draw up consolidated financial statements for the group of companies. Another statutory obligation is the submission of an annual return to the MBR, which sets out the registered address, a summary of the changes in the share capital, a list of shareholders and the particulars of the directors and the company secretary. 4.2 Majority Rule and Minority Rights and Protection In Malta, the principle of majority rule has been recognised as an essential feature of a limited liability company. The minority must, as a matter of necessity, accept the decisions of the majority or else attempt to reverse them through lobbying or other means. At the same time, this rule places the majority shareholder in a position of power which can give rise to abuse and in such instances, lobbying might not be an effective remedy for the minority shareholder. The Companies Act 1995 provides a remedy in cases where the affairs of the company or any act or omission of the company has been or is likely to be oppressive, unfairly discriminatory or unfairly prejudicial to a member. Whilst the wording of the law does not limit the application of this remedy to minority shareholders, it is generally held that the intention of the legislator was to include this section in the law for the protection of the minority shareholder as the position of power allowed to majority shareholders already places the latter in an advantageous position. The Maltese courts then have wide discretionary powers as to the kind of remedies that may be granted. 4.3 Maintenance and Regulation The officers of companies must also inform the Malta Business Registry about changes
occurring within the company, which is done by submitting statutory forms to the Malta Business Registry. These changes include the appointments and resignations of directors and company secretaries, share transfers, amendments to the constitutional documents of the company, a change in registered address, or issue of shares. An annual return must also be submitted to the MBR, providing a summary of the structure of the company at a particular point in time. The director or company secretary must sign the annual return. As of the 30 th of June 2018, the annual return must also be accompanied by a ‘Beneficial Ownership Form’, which provides information about the company’s ultimate beneficial owners. Issues relating to money laundering and the funding of terrorism are of utmost importance to the existence of a business entity, both at incorporation stage and also as an ongoing obligation. In Malta, money laundering is criminalised primarily through the Prevention of Money Laundering Act which is supported by the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR). This Act also establishes the Financial Intelligence Analysis Unit (FIAU), which is the regulator when it comes to Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) issues. The FIAU has also issued implementing procedures which are meant to assist subject persons in fulfilling their obligations under the PMLFTR. These procedures are binding on all those subject to them. Persons incorporating a company in Malta are screened for anti-money laundering and the countering of funding of terrorism purposes. It is common that a person interested in setting up a Maltese company contacts a company services provider (CSP), which agrees with the original subscribers of the company to set up the company for them. The services conducted by CSPs fall under the
ILN Corporate Group – Establishing a Business Entity Series
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