Malta M&A Watch – Malta’s Companies Act proposed amendments: How the new regulations could impact foreign direct investment & mergers and acquisitions

The Companies (Amendment) Bill (Bill No. 136) to Parliament on June 18, 2025 published in the Malta Government Gazette on June 24, 2025 (Proposed Bill) brings about some crucial changes to the various longstanding provisions as set out in the Maltese Companies Act. These amendments will not only impact the formation and ongoing governance of specialized entities but will also impact how businesses operate and how mergers and acquisitions, are approached in Malta.

The Proposed Bill sets out that a usufructuary of shares in a company will be entitled to attend general meetings of the company and receive dividends but will not be entitled to vote unless the right to vote is specifically mentioned and provided for in the public deed creating the right of usufruct or memorandum and articles of association of a company. When encountered, practitioners would need to consider this explicit definition in the context of the control structure of the target particularly when assessing shareholder power and decision-making authority. One may also need to carry out specific additional due diligence on the usufructuary given that such rights may also emanate from a public deed.

Another issue which might crop up in a due diligence exercise is the review of a pledge arrangement. Should the Proposed Bill be adopted, the notice of the pledge will now need to be delivered together with a document containing the particulars of the contract.

The Proposed Bill also provides for the creation of new cell company structures (not necessarily linked to aviation and shipping). Whilst this very welcomed proposal could have far-reaching effects in terms of its usage in commercial structures, certain types of M&A deals including those involving investment vehicles only wishing to acquire certain ring-fenced assets may benefit by having a swifter and more flexible means of closing deals.
Additionally certain proposals aiming at enhancing transparency and reporting standards as well as more robust corporate governance obligations were introduced. By virtue of the proposals, directors and company secretaries are now required to monitor registered email addresses such that any e-mails sent by the Registrar are brought to the attention of an officer.

Whilst not as common as transactions involving limited liability companies, the Proposed Bill may also impact the functioning of other types of commercial partnerships. Should it come into full effect, any contributions by a new partner shall take effect immediately upon the receipt by the partnership of the contribution and without the need of an amendment to the partnership deed.

By clarifying nuanced aspects such as the voting rights of usufructuaries of shares and streamlining processes for registering and enforcing pledges on securities, the Proposed Bill aims to inject greater certainty and transparency into company structures – qualities highly valued during M&A due diligence. Furthermore, the enhanced powers to regulate specific company types suggest a more agile and specialized corporate environment, potentially facilitating the structuring and execution of complex deals. Coupled with efforts to improve overall corporate governance and reporting through stricter penalties and a push towards electronic formats, these changes collectively contribute to a more robust, efficient, and investor-friendly landscape, positioning Malta as an even more attractive jurisdiction for both domestic and cross-border M&A activities.