Insights

Bill No. 233 proposes various amendments to the Companies Act (chapter 386 of the Laws of Malta). The amendments primarily relate to clarifying the qualifications for persons to act as directors of Maltese companies (including specifically inserting as a disqualification the lack of a company service provider’s (CSP) licence in cases where one is required) and introducing new address requirements for companies and their officers.

Although at a glance the changes may not seem extensive, if the bill is enacted in its current form, CSPs servicing multiple companies may need to appropriately rejig their systems to ensure effective compliance with the new requirements – a process that needs its due time.

In terms of additional requirements introduced by the bill, we now see that, among other things:

1. documents required to be delivered to the Malta Business Registry (MBR) for registration which contain the name and residence of a person now must include that person’s date of birth (or registration number in case of a body corporate) rather than an identification number;
2. a company’s M&A will now need to contain the company’s own e-mail address and this will also need to be included in the company’s annual return each year;
3. the annual return will also need to indicate the principal trading activity of the company;
4. company directors may choose to indicate a ‘service address’ in the company’s memorandum of association rather than their ‘residential address’ but the latter would still need to be given to the company in light of the new register that is to be kept;
5. Companies will need to keep a register containing the names, residential addresses and e-mail address of all its officers and shareholders and to notify any changes therein to the MBR within 14 days of recording such changes accompanied by the relevant statutory form – (penalties have been introduced for default in this regard and the MBR will use this register for regulatory purposes and will not open it up for public inspection);
6. prospective directors of private companies will now need to signify their consent to acting as directors by signing the memorandum of association or a consent form (as is currently the case with public companies);
7. all prospective directors will now also be required to submit a signed declaration to the MBR, stating that they are unaware of any circumstances which would disqualify them from acting as directors in terms of the act or in another member state.

CSPs likely need to commission software amendments
As regards record-keeping obligations, it is likely that all CSPs would have the above-described data available to them in some form or other. However, for most CSPs, if not all, it is unlikely that such data is already organised in a way that allows for easy and quick extraction in compliance with these new rules. With company records now being predominantly kept in digital form through apposite software programmes, it is likely that CSPs will need to commission software amendments to ensure that the new requirements are caught by their automated record-keeping functionalities particularly when ensuring that the company annual return will include the new details.

A reasonable transitory period that accompanies these legislative amendments would, therefore, be most welcome as it would allow for smoother collation and organisation of this data including through any software tweaks that may be required for the purpose.

Coupled with the imposition on companies of these new requirements, the bill also grants certain additional powers to (and in some cases duties of) the registrar including:

• the power to not register changes in officers or shareholders if the information required by the act with regards to the register of addresses was not submitted or he is not satisfied that the company has provided accurate and up-to-date information on its officers and shareholders;
• before registering any returns notifying a change in director, secretary or legal representative, the power to require such information as he deems necessary to ascertain the correctness of such returns or to ascertain that the requirements of the act have been complied with;
• the power to inform a company of any circumstances disqualifying a person from acting as its director, including where relevant the lack of a CSP license, thereby requiring the company to submit the removal to the MBR within 14 days of the initial notification and failing that, the duty to file a court application for the removal;
• the power to refuse the appointment of a director where such person would be disqualified from acting in any other member state;
• before registering a new company or return, the duty and power to take all necessary measures to ascertain an individual’s identity and the correctness of the information submitted to him;
• the duty 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 MBR website including by an application programming interface; and
• the duty to deal with any aspects of online formation of companies, online registration of branches and online filing of documents and information.

The bill also grants the MBR the authority to issue, following consultation with the minister, binding procedures and guidance to companies and their officers.

This article was first published in the Times of Malta.