The Continuation of Companies Regulations (the “Regulations”) prescribed under the Companies Act, 1995 were introduced into law in 2002 and since then company continuation has been a favoured and regularly utilised method for transferring domicile. In fact, the Regulations have attracted substantial interest from foreign companies seeking to migrate their seat of incorporation to Malta and GANADO Advocates have assisted with the continuation of a considerable number of companies in Malta from several jurisdictions. Continuation offers a practical and potentially advantageous alternative to cross-border mergers, especially where the other jurisdiction involved is non-EU.
Legal Effects of Continuation
Continuation seeks to ensure the continued existence of the same legal person. Upon issuance of a Provisional Certificate, the company is deemed to be validly registered as a Malta company for all purposes of law and is subject to all the obligations and capable of exercising all of the powers of a company otherwise registered in Malta. The effects of provisional registration, therefore, arise immediately upon the issuance of the Provisional Certificate and there is no difference at law between the effects of a provisional registration and a final or definitive one. Accordingly, the company retains all the assets, rights, liabilities and obligations previously held or due by it and any legal or other proceedings instituted or to be instituted by or against the company are not prejudiced in any manner by the continuance.
Foreign Entities Capable of Being Continued
The Regulations govern both (i) the continuation into Malta of a foreign corporate entity as well as (ii) the continuation (or exit) of a Malta company into a country or jurisdiction outside Malta. In this brief, we will only describe the process of continuation into Malta.
The foreign entity requiring to be continued into Malta must be a body corporate registered or incorporated in an “approved country or jurisdiction” the law of which permits the continuation of the corporate entity in third countries. Furthermore, the Memorandum and Articles of Association or the constitutive documents of the foreign entity must permit its continuation in another jurisdiction.
The procedure for continuation of foreign companies in Malta is designed to dove-tail with the procedures for termination of registration in the foreign jurisdiction in order to ensure the continued existence of the corporate entity through the migration process.
A request for continuance in Malta must be submitted to the Registry of Companies (the “Registry”) on the appropriate statutory form to which must be attached various documents required by the Regulations. These documents are principally intended to furnish the Registry with confirmation of the existence of the entity in the foreign jurisdiction and of corporate intent to be continued in Malta as well as to safeguard creditors’ interests. They include ‘inter alia’ appropriate corporate action authorising continuance, directors’ declarations (including one on the entity’s solvency), a good-standing certificate and legal opinions of legal counsel in the foreign jurisdiction on certain aspects of applicable law (primarily, that the foreign entity is a body corporate; that the law applicable to it permits continuation in another jurisdiction; that its creditors have been notified of the decision to be registered as continuing in Malta and that the consent of such creditors as may be required by the law applicable to it has been duly procured). The entity’s constitutive documents must also be revised in line with the requirements for registration of a Malta company. In addition, the foreign entity must provide evidence to show that it has informed the competent authority in the foreign jurisdiction of its intent to terminate its registration in that jurisdiction and to be continued in Malta. This will sometimes take the form of a written confirmation by the foreign competent authority that it has been notified of the entity’s intentions and that all the procedural and other legal requirements in such jurisdiction have been observed by the entity. A continuance request will not be acceded to by the Registry in the case of company dissolution, liquidation, insolvency and recovery proceedings.
Provisional and Final Registration
The Registrar of Companies in Malta issues a Provisional Certificate of Continuation when he is satisfied that the documents submitted to him comply with the Regulations and after his having provisionally registered the required documents. At that point, the company is deemed provisionally registered. Provisional registration is necessary largely for practical purposes since the Provisional Certificate of Continuation must be submitted to the competent authority in the foreign jurisdiction in order to serve as notice of the fact that the entity has now been (provisionally) registered as continuing in Malta as a Maltese company. Submission is generally accompanied by a request to have the entity struck off the foreign register but this will depend entirely on the procedures required by the laws of the foreign jurisdiction.
Once evidence is produced within 6 months from the issuance of a Provisional Certificate that the foreign entity has ceased to be registered in the foreign jurisdiction, a final Certificate of Continuation is issued confirming that the company has been registered as continuing in Malta.
Disclaimer: The information provided on this page is not intended to impart advice and readers are asked to seek verification of statements made before acting on them.