Public Limited Liability Company

General

The Companies Act, Chapter 386 of the laws of Malta (the ‘Act’), regulates all public companies homogenously such that there are no differing sub-species of public companies.

The Memorandum and Articles of Association of a public company would not typically:

restrict the right to transfer its shares;
limit the number of its members; or
prohibit any invitation to the public to subscribe for any shares or debentures of the company.

A public company may therefore offer to the public, any shares in or debentures of the company whether for cash or otherwise.

The Act defines an “offer made to the public” as:

an offer made to the public generally; and
an offer made to offerees exceeding 50 in number[1]

Memorandum of Association

The provisions required in the Memorandum of Association of a standard private company (described in the left column) are likewise required in the Memorandum of Association of a public company with the following limited exceptions:

Name of the company

The name of a public company must end with the words ‘public limited company’ or ‘p.l.c.’

Authorised and issued share capital of the company, divided into shares of a fixed nominal value

The authorised and issued share capital of a public company must not be less than €46,588. Accordingly, where the authorised share capital is equal to the minimum €46,588, then it is to be fully issued and allotted by at least two persons upon incorporation. Where the authorised share capital exceeds the said minimum amount, at least €46,588 must be issued and allotted upon incorporation. Issued share capital need not be fully paid up on allotment although not less than 25% of the nominal value of each share taken up must be paid up. The share capital of a public company may be denominated in Euro or in any foreign convertible currency.

The number of directors and their personal details

Public companies must have a minimum of two directors and the directors must, personally or through an agent, sign the Memorandum and Articles of Association indicating their consent to act as directors.

Additionally, annexed to the Memorandum of Association, a document must be submitted to the Registrar of Companies confirming the total amount or estimate of all the costs payable by the company or chargeable to it by reason of its formation up to the time it is authorised to commence business, and of all the costs relating to transactions leading to such authorisation; and a description of any special advantage granted prior to the time the company is authorized to commence business to anyone who has taken part in the formation of the company or in transactions leading.

Capital Issues

Should a public company propose to allot shares for consideration, those shares must first be offered on a pre-emptive basis to its existing members in proportion to the share capital held by them.

A copy of any offer for shares on a pre-emptive basis, indicating the period within which this right may be exercised, must be delivered to the Registrar of Companies for registration. However, should the company not have issued share warrants such registration is not required and notification of the shareholders in writing suffices in lieu thereof.

Pre-emption rights in a public company in respect of a particular allotment may only be excluded by an extraordinary resolution of the members in general meeting. However, the Memorandum or Articles of Association or a members’ resolution authorising the Board of Directors to issue shares may additionally authorise the Board of Directors to withdraw or restrict pre-emption rights.

In addition to the aforesaid, any form of application for shares and debentures issued by a public company must be accompanied by a prospectus unless the application is issued, inter alia:

in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures;
in relation to securities which do not constitute an ‘offer of securities to the public’;
an offer for shares against no consideration made exclusively to existing shareholders, and dividends paid out in the form of shares of the same class as the shares in respect of which such dividends are paid;
an offer made in connection with a take-over bid; or
an offer made in connection with or pursuant to a proposed merger.

Essentially, a prospectus is required to contain information (in an easily analysable and comprehensible form) which, according to the particular nature of the issuer and of the securities offered to the public is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities. As such, therefore, the prospectus would contain inter alia:

details of the persons responsible therefor;
details of the offer itself such as the nature of the securities being offered, the amount of the issue, the period during which the offer is open, income
tax withheld at source, methods of payment etc.;
details of the issuing company;
details as to the purpose of the offer and costs already incurred;
other significant information such as information which would be expected to have a significant impact on any assessment that might be made of the company, recent developments in its business and prospects.

No prospectus may be issued unless a copy thereof together with certain specified ancillary documentation is delivered to the Registrar of Companies for registration on or before the date of publication.

Furthermore, no shares or debentures may be allotted by a public company in pursuance of a prospectus until the time for the opening of the so-called subscription lists, that is, at least the beginning of the sixth working day (or such later time specified in the prospectus) after the publication in a daily newspaper of a notice stating that the prospectus has been issued and indicating where the issuer or offeror has made available, free of charge, a paper copy of the full prospectus.

The directors of a public company are obliged to register any transfer of shares in the company in favour of any person who has acquired those shares as a result of a judicial sale thereof.

If authorised by its Memorandum or Articles of Association, a public company may issue warrants to bearer with respect to any fully paid up shares. The warrant would confirm that the bearer is entitled to the shares therein specified and may provide, by coupons or otherwise, for the payment of the future dividends on the shares included in the warrant. The shares specified in a share warrant may then be transferred by the delivery of the warrant.

Where there is a serious loss of capital (the company’s net assets are half or less of its called up share capital), the directors of a public company would be required, not later than 30 days from the earliest day on which any director knew that the company suffered a loss of capital, to convene a general meeting for the purpose of considering whether any, and if so, what steps should be taken to deal with the situation, including consideration as to whether the company should be dissolved.

A public company may only make a dividend distribution at any time if at that time the amount of its net assets is not less than the aggregate of its called-up issued share capital and undistributable reserves and if, and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate.

Resolutions

An extraordinary resolution of the members of a public company would be taken at a general meeting:

of which notice specifying the intention to propose the text of the resolution as an extraordinary resolution and the principal purpose thereof would have been duly given; and
which would have been passed by members having the right to attend and vote at the said meeting holding in the aggregate not less than 75% in nominal value of the shares represented and entitled to vote at the meeting and at least 51% or such other higher percentage as the Memorandum or Articles of Association may prescribe, in nominal value of all the shares entitled to vote at the meeting.

If one of the majorities required in terms of (ii) immediately above is obtained but not both, another meeting must be convened within 30 days to take a fresh vote on the proposed resolution. At the second meeting, the resolution may be passed by:

not less than 75% in nominal value of the shares represented and entitled to vote a5t the meeting; or
a simple majority (more than 50%) in nominal value of such shares represented at the meeting, provided that more than 50% in nominal value of all the shares having the right to vote at the meeting is represented at the meeting.

Ordinary resolutions are approved in manner identical to that applicable in the contect of private comopanies.

Resolutions in writing are not permitted.

Accounts

A public company must likewise prepare individual accounts (comprising a balance sheet, profit and loss account notes to the accounts, directors’ report and auditors’ report) giving a true and fair view of the company’s assets, liabilities, financial position and profit and loss. Once audited, such accounts are to be laid before the members in general meeting for approval within 7 months after the end of the relevant accounting period and must then be submitted to the Registrar of Companies for registration.

A ‘small’ public company would also be entitled to draw up and deliver abridged audited accounts to the Registrar of Companies.