Corporate and Mergers & Acquisitions (M&A)
Act LX of 2021: Amendments to the Companies Act
Act LX of 2021: Amendments to the Companies Act
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Act LX of 2021 was enacted on 26th October 2021, introducing certain amendments to the Companies Act, Chapter 386 of the Laws of Malta (Act). While Act LX is only partially in force to date, below is a summary of the amendments brought about by the said Act LX.
The Service Address
One of the more salient amendments brought about by the enactment of Act LX is the introduction of the notion of a service address, which is to be distinguished from a residential address and may be used as an alternative to a residential address.
Act LX provides that where a document required to be delivered to the Registrar for registration is required to state the name and residence of a person, a service address may be provided instead of the person’s residence. Furthermore, such documents shall be deemed to require the date of birth in the case of a natural person, or the company registration number where an officer or shareholder is a body corporate.
It is to be noted that the provisions on the service address are not yet in force.
Amendments to the contents of the Memorandum of Association
Certain amendments have also been made to Article 69 of the Act, which lists the contents of the memorandum of association. As in the case of documents required to be delivered to the Registrar for registration, even within the memorandum, subscribers, directors and/or the company secretary may provide either their residential address or their service address.
Furthermore, it is now mandatory for companies to include their electronic mail address in the memorandum.
Register of Residential Addresses
In terms of Act LX, every company shall eventually be required to keep a register of residential addresses of its officers and shareholders, which register is to include the following details:
1. The names of each of the company’s officers and shareholders;
2. The usual residential address of each of the company’s officers and shareholders; and
3. The electronic mail address of each of the company’s officers and shareholders.
The register of residential addresses of the company’s officers and shareholders and any changes thereto shall be required to be delivered to the Registrar within 14 days after the date on which the change is recorded with the company, together with the relevant statutory form. The register will not be registered on the Malta Business Registry (MBR) website and will not be open for public inspection.
If default is made in complying with the submission of the said register, every officer in default shall be liable to a daily penalty.
In addition to these new requirements, every company shall eventually be required to send to the Registrar for registration a return of any change among its directors, or company secretary or in the representation of the company, specifying the date of the change, together with the name and residence or service address, or name, registered office and registration number, of any new director or company secretary, within 14 days from the happening thereof.
It is to be noted that the provisions on the requirement to keep a register of residential addresses of officers and shareholders are not yet in force.
Appointment of Directors
As the law stood prior to the enactment of Act LX, a person was not capable of being appointed as a director of a public company unless he personally signed the memorandum indicating his consent to act as a director, or otherwise delivered to the Registrar for registration a consent in writing to act as such director. Act LX has now extended this requirement to persons desirous of being appointed directors of all companies, irrespective of whether such company is public or private.
Furthermore, where a director is required to hold a specified share qualification, he shall either sign the memorandum for a number of shares not less than his qualification or sign and deliver to the Registrar for registration a confirmation in writing to take his qualification shares from the company and pay for the said shares. In default of obtaining the specified share qualification (where such specified share qualification is required), the said director shall be required to vacate his office within 2 months from appointment and shall be incapable of being re-appointed until he has obtained the required qualification.
Upon appointment as director of a company, such person shall be required to declare to the Registrar, in the prescribed form, whether such person is aware of any circumstances which could lead to a disqualification from appointment as director, or to hold office as a director of the company.
Disqualification of Officers
Where the Registrar becomes aware that an officer of a company is disqualified or does not hold a licence issued under the Company Service Providers Act, Chapter 529 of the Laws of Malta (where such licence is required), the Registrar shall inform the company and the company shall be required to remove the director in accordance with the provisions of Article 140 of the Act. If the company fails to remove such officer, the Registrar shall file an application in court requesting the removal of such officer from office.
Where a person holds the office of director or of company secretary as a company service provider in terms of the Company Service Providers Act without having obtained the necessary authorisation by the Malta Financial Services Authority, such person shall be disqualified from appointment and from holding office.
The Registrar may also refuse the appointment of a person as a director of a company where, at the time of such appointment, a disqualification (or similar information) is in force in another Member State.
Additional Powers and Duties of the Registrar
Also as a result of the amendments brought about by Act LX, the Registrar is now vested with additional powers and duties, some of which include the following:
1. Prior to the registration of a new company or return, the Registrar may take such steps and require such information as it may deem necessary in order to ascertain the individuals’ identification and correctness of the information submitted;
2. To provide competent authorities and subject persons, as defined in the Prevention of Money Laundering and Funding of Terrorism Regulations, with full access to the website maintained by the Registrar;
3. To deal with any aspect of online formation of companies, online registration of branches and online filing of documents and information; and
4. To issue, if deemed fit, procedures and guidance to companies and/or their officers as may be required for the carrying into effect of the provisions of the Act and any subsidiary legislation made thereunder.
Updating of Statutory Forms
As a result of the amendments to the appointment and disqualification of directors brought about by Act LX, the MBR has updated the statutory Form K used to appoint directors. The updated Form K is now divided into two sections (Section A and B). Section A informs the MBR of changes in directors, officers, or company secretary (similar to the previous format of the Form K), while Section B is the directors’ consent and declaration for appointment, to be signed by the incoming director in accordance with the provisions of Article 139(5) of the Act.
A new Form K(1) has also been introduced, replicating the director’s consent declaration in Section B of the updated Form K. The Form K(1) applies specifically to a person applying to become a director of a company which is still in formation.
All Form Ks submitted to the MBR after 1st February 2022 are to be submitted in the updated format.