Continuation of Companies Into and Out of Malta

The Continuation of Companies Regulations 2002 (Subsidiary Legislation 386.05) provides for the possibility of what is commonly referred to as the “flight” of companies into and out of Malta. These regulations are divided into two parts. Part I is devoted to the continuation in Malta of foreign companies whereas Part II deals with the opposite scenario of Maltese companies continuing outside Malta.

Part I – Continuation of Foreign Companies into Malta

Eligibility

In order to be registered as being continued in Malta a foreign company must satisfy all the following requirements:

• It must be a body corporate similar in nature to a company as known under the laws of Malta;
• it must have been formed and incorporated or registered under laws of an approved country or jurisdiction as listed below;
• there must be a provision in the law of that country or jurisdiction authorizing the company to continue in Malta;
• it must also be authorized to do so by its charter, statutes or memorandum and articles or other instrument constituting or defining the company; and
• the foreign company must be registered for at least one year in a jurisdiction which is not blacklisted by the FATF (Financial Action Task Force).

Request for Registration

A request by a foreign company for registration as being continued in Malta shall be made to the Registrar of Companies in the manner and form required by him. A request must be accompanied by:

• a resolution/equivalent document of the foreign company authorising registration. This instrument must be equivalent to an extraordinary resolution under Maltese law;
• a copy of the foreign company’s revised Constitutive Document, satisfying all the requirements established by the Companies Act for the registration of a company in Malta;
• a certificate of good standing (or equivalent) in respect of the foreign company issued by the competent authority in which the company is incorporated or registered or other evidence to the satisfaction of the Registrar that the company is in compliance with registration requirements of that authority.
• a declaration signed by at least two (2) directors or, where the number of Directors is less than two, by the director holding office for the time being. Where the company does not have directors such declaration must be signed by at least two persons vested with administration or representation of the company. This declaration must serve to confirm:
  • the name of foreign company and name under which it is being continued;
  • the jurisdiction under which it is incorporated;
  • the date of incorporation;
  • the decision to have the foreign company registered as continuing in Malta;
  • that the foreign company has given formal notice to the relevant authority in its country or jurisdiction of incorporation or registration of its decision to be registered as continuing in Malta, in accordance with the procedure laid down by the laws applicable therein, together with documentary evidence  of such notification;
  • that no proceedings for breach of the laws of the country or jurisdiction of incorporation have been commenced against such company, unless proceedings arise out of offence which on date of occurrence did not constitute a breach.
  • a declaration signed by those persons indicated in (iv) above confirming the solvency of the company and that the persons signing such declaration are not aware of any circumstances which could negatively affect the solvency of the company in a material manner within a period of twelve months. Any person making such declaration without having reasonable grounds on which to make it shall be guilty of an offence and liable on conviction to a fine of up to Lm 20,000
  • a list of directors and company secretary of the company, if any, or, failing which, the persons vested with the administration and representation of the company;
  • any material the Registrar may require to satisfy himself that such request is permitted by the laws of
  • the foreign country or jurisdiction of incorporation or registration of the company and that the consent of
  • the appropriate majority of shareholders, debenture-holders and creditors has been obtained;
  • the registration fees prescribed in the Companies Act (Fees) Regulations, 1997.

If any documents submitted to the Registrar are not in the English language, a certified English translation must also accompany any such document.

Non-permissible Registrations

No request for registration may be granted if:

• dissolution or winding up of the foreign company has commenced or insolvency proceedings, arrangements, compositions, recovery proceedings or any other analogous proceedings have been commenced by or against the foreign company;
• a liquidator or administrator of the foreign company or receiver of its property has been appointed;
• there is any scheme or order in relation thereto whereby the rights of creditors are suspended or restricted;
• any proceedings for breach of laws of the country or jurisdiction of incorporation have commenced against such foreign company, not being proceedings arising out of an event which on the date of occurrence thereof did not constitute a breach.

Registration

If the Registrar is satisfied that all the documents submitted in relation to the continuation of a foreign company in Malta comply with the provisions of these regulations and the Companies Act, he shall provisionally register and certify such company as being continued in Malta, as from the date of registration. Upon the issue of a Provisional Certificate of Continuation the company shall be deemed thereafter to be a company provisionally registered under the Companies Act.

Within six months of the date of issue of the Provisional Certificate of Continuation, the company must submit documentary evidence to the Registrar showing that it has ceased to be a company registered in the country or jurisdiction where it had been initially formed and incorporated or registered.

If proof is presented to the Registrar that the company has ceased to be a company registered in that country or jurisdiction where it had been initially formed and incorporated or registered and upon the surrender of the Provisional Certificate of Continuation to the Registrar, a Certificate of Continuation shall be issued confirming that the company has been registered as continuing in Malta.

In the event that the company fails to furnish the Registrar with such documentary evidence, the Registrar shall be granted the discretion to do either of the following: (i) strike the name of the company off the register and inform the relevant authority in the country or jurisdiction concerned that the company is not registered in Malta; or (ii) upon reasonable cause being shown, allow a further period of three months prior to the striking of the company off the register.

Effects of Registration

With effect from the date of issue of the Provisional Certificate of Continuation the company shall (i) continue to be a body corporate, with its chosen designation incorporated under the Act and deemed as provisionally registered in Malta for all purposes of law and (ii) be subject to all the obligations and capable of exercising all the powers of a company registered under the Act.

the constitutive document of the foreign company, as revised, is considered as the Memorandum and Articles of Association of the company
registration of a foreign company shall not operate to:

• create a new legal entity;
• prejudice or affect the continuity of the company;
• affect the property of the company and such company shall retain all its assets, rights, liabilities and obligations;
• render defective any legal or other proceedings instituted or to be instituted, by or against the company
• release or impair any conviction, judgement, ruling, order, debt, liability or obligation due or to become due or any cause existing against the company or against any member, director, officer or persons vested with the administration or the representation of the company.

Licensed Companies

Where a foreign company carries on a business that, if registered in Malta, would require to be licensed or authorised under any of the applicable laws and regulations  and the company is licensed or authorised by a competent authority in that country or jurisdiction it must provide evidence of the consent of the competent authority of that country or jurisdiction that the company can be registered as being continued in Malta.

If the instrument is not written in English a certified translation is to be provided.

Where the activities of the foreign company do not constitute a licenseable activity in terms of the laws of the country or jurisdiction of its incorporation or registration which, however, amounts to a licenseable activity carried out in or from Malta, such company shall require a license or other authorisation from the competent authority in Malta before commencing operations.

Public Companies

Where the foreign company is a public company, the regulations provide that the following additional requirements shall apply:

1. if the foreign company has offered its shares or debentures to the public, it must provide the most recent prospectus or equivalent document complying as nearly as may be with the requirements of the Companies Act.
2. If the foreign company is quoted on a recognized stock exchange , evidence must be provided to the satisfaction of the Registrar of the consent of the relevant authorities of that exchange to such foreign company being registered as continued in Malta.
3. Evidence of the current membership of the company must be provided, or the method and form of recording membership, authenticated in such a manner as the Registrar may require for compliance with the requirements of this registration in respect of a list of members of that foreign company.

Part II – Continuation outside Malta of companies incorporated in Malta

Eligibility

A company registered in Malta may be eligible to be registered as being continued outside Malta where:

• it is registered under the Act;
• the laws of an approved country or jurisdiction allow such continuation; and
• it obtains the consent of the Registrar.

In such circumstances, the company may apply to the proper authority of the selected approved country or jurisdiction to have the company continue under the laws of that other country or jurisdiction.

On the date of the instrument of continuation of the company shall become a company under the laws of that country or jurisdiction and shall be subject to such laws as permitted or required by that other country or jurisdiction.
Request to Registrar for consent to continue company outside Malta
A Maltese company seeking continuation outside Malta shall make a request to that effect to the Registrar in the manner and form prescribed by him and shall be accompanied by a declaration of at least two of the directors of the company or, where the number of Directors is less than two, by the director holding office for the time being, and containing:

• the name of the company and, if different, the name under which registration in the approved country or jurisdiction is being sought;
• the place of proposed registration of the company and the name and address of the competent authority in that approved country or jurisdiction;
• the date on which it is proposed to establish domicile in the relevant approved country or jurisdiction.

Requirements

No company may send a request to the Registrar unless:

• an extraordinary resolution of the shareholders of the company, approved in accordance with the M&A of the company authorising the request, is delivered to the Registrar for registration;
• a declaration signed by those persons indicated above is submitted to the registrar confirming the solvency of the company and confirming that the directors are not aware of any circumstances which could negatively effect in a material manner the solvency provision of the company within a period of twelve months. Any person making such declaration without having reasonable grounds to make it shall be guilty of an offence and liable on conviction to a fine of up to Lm 20,000;
• where the company carries on in or from Malta, any licensable activity, the company provides to the Registrar evidence of the consent of the competent authority in Malta to the company continuing in another country or jurisdiction.
• where the company is a public company quoted on a recognised investment exchange, the company provides to the Registrar evidence of the consent of the said exchange and of the listing authority in Malta to the company continuing in another country or jurisdiction.
• payment has been made of all penalties and fees due under the Companies Act.
  the prescribed fee has been paid.

In addition, the Registrar shall not give his consent to a company requesting to be continued in another country or jurisdiction unless he is satisfied that:

• the requirements for eligibility have been complied with;
• no proceedings for dissolution, insolvency, arrangements, compositions or recovery or any other analogous proceedings have been commenced by or against the company in Malta or elsewhere;
• any pledgee of shares in accordance with the Companies Act has given his consent in writing to the intended continuation of the company in another country or jurisdiction;
• the company at the time of such application is not in breach of any of its duties or obligations under the Companies Act.

Rights of Creditors to oppose continuation

The Registrar, additionally, shall not give his consent for the continuation of a company in another approved country or jurisdiction, until the lapse of three months from the date of publication in the Government Gazette and in a daily paper having national circulation, of a notice relating to the extraordinary resolution of the shareholders regarding continuance outside of Malta.

During such three-month period, any creditor whose debt existed prior to the publication of the above notice may, by writ of summons object to such continuation and, if he shows good cause why it should not take effect, the Court shall either uphold the objection or allow the continuation of the company on sufficient security being given.

Removal from the Register

When the relevant authority in the continuing country or jurisdiction issues an instrument of continuation the company shall forthwith deliver a copy of such instrument to the Registrar and the company shall be deemed to have ceased to be a company incorporated in Malta from the date when its continuation in that other country or jurisdiction takes effect, and the Registrar shall strike the name of the company off the register.

However certain rights are still reserved, and nothing in this section shall:

• take away or affect the jurisdiction of any court in Malta to hear and determine any proceedings commenced therein by or against the company before it ceased to be a company in Malta;
• affect the property of the company;
• render defective any legal or other proceedings instituted or to be instituted, by or against the company; or
  release or impair any conviction, judgement, ruling, order, debt, liability or obligation due or to become due or any cause existing against the company or any other person.

Register of Companies continued outside Malta

The regulations oblige the Registrar to keep a register of all companies that obtained his consent to register as being continued in another approved country or jurisdiction. The register is intended to record the name in which the company is registered as being continued as well as all the relevant details.