Malta, a small island country located in the central Mediterranean Sea, has a booming economy and a well-established business environment. Over the years, it has become a favorable destination for entrepreneurs and businessmen due to its well-structured tax laws, strong financial services, and robust IT infrastructure. Malta is a member of the European Union, and as a result, the legal system for company formation is based on the EU legislation. In Malta, there are several types of companies that can be formed, each with its own set of advantages and features. Below is a detailed breakdown of these company types.
Limited Liability Companies
The most popular type of company in Malta is the Limited Liability Company (LLC). The LLC is preferred by many since it provides the owners with limited liability to the extent of their shares in the business. This type of company can be either private or public.
Private Limited Companies
Private Limited Companies are characterized by the restriction on the right to transfer shares, limitation to not more than 50 shareholders, and the prohibition of the public from subscribing to any shares or debentures. The liability of members is limited to the amount, if any, unpaid on the shares held by them. The minimum share capital required for a private limited company is €1,165, out of which at least 20% must be paid up.
Public Limited Companies
A public limited company, on the other hand, can offer shares to the public through a stock exchange. For such a company, the minimum share capital is €46,600, with at least 25% paid up, and the number of shareholders can exceed 50. Unlike the private limited companies, there are no restrictions on share transfer.
Partnerships
Within the Maltese jurisdiction, two forms of partnerships exist — partnerships en nom collectif (general partnerships) and partnerships en commandite (limited partnerships). In a general partnership, the partners have full liability, while in a limited partnership, certain partners (limited partners) have their liability limited to their capital contribution, while at least one partner (general partner) has unlimited liability.
Sole Proprietorships
A sole proprietorship is a type of business entity that is owned and run by one individual and where there is no legal distinction between the owner and the business. It is the simplest and cheapest form of business to establish in Malta, however, the proprietor is personally liable for all the debts of the business.
Branches of Foreign Companies
Foreign companies can establish a branch in Malta by registering it with the Malta Business Registry. The foreign company must appoint at least one individual who resides in Malta to represent the branch.
Lastly, Malta also recognizes the concept of trusts and foundations. This structure, mainly used for estate planning and philanthropic activities, also serves as a great tool for managing assets.
Malta boasts a strategic location, a multilingual workforce, stable political climate, and a robust and growing economy. This, coupled with an attractive tax regime, makes the island an ideal hub for doing business. Whether you are a local or foreign entrepreneur, understanding the different types of companies in Malta can help you make an informed decision about the suitable legal form for your business venture.
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