On the 11th July 2025, Act XVIII of 2025 (the “Act”) was promulgated, which introduced several amendments to the Companies Act (Chapter 386 of the laws of Malta) (the “Companies Act”), offering key clarifications worth noting. While such amendments touch upon both the legal framework regulating companies and commercial partnerships, this article will focus solely on the company regime, outlining the main proposed substantive changes, their implications and potential scope for clarifications. The changes set out in the Act are not yet in force – they will come into force as and when the relevant notices are published and registered in the Government Gazette.
Exempt Companies
An important change to be introduced by the Act is the removal of the distinct category of “exempt companies.” In essence, the reforms will change the applicable nomenclature, outlining that companies satisfying specific statutory criteria are no longer referred to as “exempt companies” but rather as “private companies in terms of Article 211”. Importantly, such companies retain the entitlement to certain compliance exceptions previously afforded to exempt companies, but only so long as the company remains fully compliant with the conditions outlined under Article 211, otherwise the full set of standard compliance obligations becomes immediately applicable.
Registered Email Address
In addition to the existing obligation for companies to include an email address in their M&As, which requirement was introduced somewhat recently by virtue of Act LX of 2021, the Act now imposes a corollary duty upon the directors and company secretary to ensure this address is continuously monitored. While this has presumably always been the legislator’s intention, the duty to ensure this address is actively monitored is now expressly stated to ensure effective and reliable communication between company officers and the Registrar. This amendment elevates what was previously mere good practice to a statutory obligation, likely adding to the growing list of administrative duties imposed on officers under the Companies Act.
This raises important considerations as it appears that any penalties for general breaches of duties imposed by the Companies Act on officers, particularly directors and company secretaries, would become equally applicable for a failure to monitor the company’s email. Given the potential ramifications of a breach, it would be wise for companies to ensure that the email address provided to the Registrar is, in fact, an actively monitored email address.
Non-Cash Consideration & the Introduction of a €50,000 Threshold
Under the previous framework, any allotment of shares for non-cash consideration required the issuance of an independent expert’s report, regardless of the value of the consideration. The recent amendments will introduce a notable exception by virtue of a proviso to Article 73(4), by enabling a director’s declaration to replace an independent expert’s report for any transactions under the threshold of €50,000. This represents a seemingly pragmatic and cost-saving measure for lower-value transactions.
However, the reform raises a number of important considerations for practitioners and directors alike. As a starting point, there exists no prescribed or standard form as to what such director’s declaration is to include, nor are there any requirements outlined at law. This could create room for inconsistency until further guidance is offered by the Malta Business Registry (MBR) to standardise such. It is likely that the director’s declaration will require certain declarations to be made by the director/s themselves in connection with the value of the consideration, as is the case currently with the independent expert’s report, thus shifting the burden onto the directors themselves when making such declaration. For this reason, it may very well be the case that certain companies or directors may wish to continue proceeding down the route of submitting an independent expert’s report to the MBR for an issuance of shares for a non-cash consideration which falls below the €50,000 threshold, in lieu of the directors’ declaration. It is unclear whether this will be permitted by the MBR or not. If not, then it may be the case that companies and / or directors may still wish to commission the issuance of an underlying independent expert’s report which would buttress the issuance of their own director’s declaration. This would, naturally, negate the reduced administrative costs and documentary formalities brought about through this new exemption.
In addition, there exist no explicit prohibitions on structuring or splitting transactions to remain below the €50,000 threshold. It is therefore unclear whether this threshold is to be viewed on a standalone basis, or if it is to be aggregated with a series of other transactions over a certain specific period of time.
Expanded Regime for Cell Companies
The amendments will also bring with them a broadened regime for the formation, constitution, authorisation and regulation of cell companies. While historically this was limited to those companies who were engaged in the shipping and aviation sectors, changes to the Companies Act now empower the Minister to make regulations for all companies to adopt a cell structure and convert into a cell company, regardless of their business activity, enhancing corporate flexibility.
Usufruct Over Shares
A significant amendment that will be introduced by virtue of this Act is clarification on the rights of a person holding shares under title of usufruct. The amendments make clear that the usufructuary of a share will have the default right to attend general meetings and the right to receive dividends, but that voting rights are not presumed and must be expressly granted, either through the deed establishing the usufruct or within the company’s memorandum and articles of association.
This clarity introduces several implications. Whereas previously, more often than not, usufructuaries enjoyed full rights associated with the shares in question, including dividends, participation in general meetings and voting rights, this position has now shifted somewhat, with voting rights needing to be explicitly granted on a case-by-case basis. From a practical perspective, if the voting rights on the shares subject to usufruct are granted in terms of the relevant public deed (as opposed to the M&As which are easily accessible from the website of the Malta Business Registry), it may not always be evident, at face value, in whose favour the voting rights within a particular company are vested, and further enquiries may need to be made. These new provisions may also impact who may be deemed to be a beneficial owner of the relevant company, which is determined on the basis of both ownership and / or control. The granting of usufruct over shares may, in turn, trigger the need for beneficial ownership filings and records to be updated.
Tougher Rules for Registering Pledges
The amendments will also bring more onerous requirements for the registration of pledges over company shares. In addition to submitting a notice of pledge to the Registrar, companies are now required to include a document containing the particulars of the pledge agreement and the essential terms thereof within fourteen days of the pledge being made to ensure legal certainty and transparency as to the burdens affecting the company. At this stage, it is unclear whether a statutory form or notice will be published by the Registry so as to standardise the particulars which need to be disclosed to the Registrar, aside from the current statutory Form T(2).
The amendments also contemplate the introduction of a new enforcement mechanism for pledges to streamline the enforcement process through direct action, allowing a pledgee (creditor) to act as the mandatary of the pledgor (debtor) to enforce the pledge. This is permissible provided the mandate is irrevocable, granted by way of security, and is executed in accordance with Article 1887 of the Civil Code.
Director’s Reports
By virtue of this Act, the Companies Act will be amended to clarify that the requirement for consolidated directors’ reports applies only with respect to companies which prepare consolidated financial statements.
This article aims to provide an overview of some of the main amendments to the Companies Act brought about as a result of the Act and should not be considered as legal advice. For any questions on the latest round of changes to the Companies Act or how these changes apply to your business, please reach out to our team for further information.
