Following publication of the Companies Act (Register of Beneficial Owners) Regulations, 2017 (the “Regulations”) on the 20th December, 2017, Maltese companies will now be required, as more amply described below, to identify and maintain a register of their ultimate beneficial owners as well as to provide information on their beneficial owners to the Malta Registry of Companies which will be keeping its own beneficial owners register.
For the purposes of the Regulations, the term “beneficial owners” shall refer to any natural persons having ownership or control of the company through:
i. the direct or indirect ownership of 25% plus one or more of the shares in the Company or more than 25% of the voting rights of the Company; or
ii. having other ownership interests (including through control with other means such as exercise of a dominant influence or the power to appoint and remove the majority of the board of directors) of more than twenty-five 25% in the Company.
In the eventuality that no individuals satisfy the above criteria, then the law sets out other criteria to determine the beneficial owner(s).
The 2017 enactment, brought into force by L.N. 374 of 2017, seeks to implement Directive 2015/849/EU, commonly referred to as the Fourth Money Laundering Directive, which in turn imposes an obligation on Member States of the EU to ensure that corporate and other legal entities incorporated within their territory be required to obtain and hold adequate, accurate and current information on their beneficial ownership.
2. Notification Requirements
With effect from 1 January 2018, companies seeking to be registered or re-domiciled in Malta must submit, along with the Memorandum and Articles of Association of the Company, a statutory form to be signed by at least two of the company’s proposed directors (unless the company is to have only one director) identifying each ultimate beneficial owner of the company and clearly indicating the nature and extent of the beneficial interest held by each ultimate beneficial owner. The Registrar of Companies shall not proceed with the registration of a new Company unless he is satisfied that the declaration required in terms of the Regulations has been complied with.
A similar statutory form will also need to be submitted by all companies seeking to register any change in shareholding occurring through a transfer, transmission, increase, or reduction of shares or other restructuring of share capital or changes of voting rights which form will indicate whether the change in question has brought about any change in ultimate beneficial ownership of the company. Any changes in the beneficial ownership of a company, even if not resulting in any of the above-mentioned notifiable changes, must also be notified to the Malta Registry of Companies within 14 days from the date on which the change is recorded with the Company. Once again, the Registrar shall in terms of the Regulations not proceed to register any notice of transfer, transmission or allotment of shares unless the above notification requirement has been complied with.
3. Obligation on Existing Companies
In addition to the notification requirements, as mentioned earlier above, all companies will now also be required to keep their own internal register of beneficial owners. While this requirement applies as from 1 January, 2018 to any new companies registered on or after that date, existing companies have been allowed a six month grace period, expiring on 30 June, 2018, within which they are to comply with this obligation.
4. Which companies are affected?
The regime shall apply to all commercial partnerships, including limited liability companies and private limited liability shipping companies formed and registered under the Merchant Shipping (Shipping Organisations – Private Companies) Regulations. The 2017 Regulations do not apply to:-
- companies listed on a regulated market being subject to disclosure requirements consistent with EU law; and,
- companies the registered shareholders of which are natural persons disclosed in the public records maintained at the Registry of Companies.
5. Access to the Register of Beneficial Owners
All information concerning the identity of the beneficial owners will be maintained by the Registry of Companies on its own register of beneficial owners, which register shall be limitedly accessible as from the 1st April, 2018 by the persons indicated in the Regulations being:-
- relevant competent authorities;
- persons subject to obligations relating to the prevention, combating and detection of money laundering and combating of financing of terrorism;
- other persons and organisations who submit a written request and show a legitimate interest in the information they seek to access.
6. Offences and Penalties
Failure to abide by any of the obligations set out above may attract joint and several liability of the Company and its officers, and in certain cases also its shareholders and beneficial owners, for lump sum penalties for default coupled with daily penalties which shall continue to accrue until such time as the default continues. The Second Schedule to the Regulations envisages the following violations:
i. failure to keep record of beneficial owners;
ii. failure to provide information to the Registrar about a change in the beneficial ownership of a company;
iii. failure to obtain and at all times hold adequate, accurate and up to date information in respect of all beneficial owners within six months from the coming into force of the Regulations; and
iv. failure to provide the Registrar with a declaration containing information on the beneficial owners of the company.
Additionally, any officer, shareholder or beneficial owner of a company who knowingly or recklessly makes a statement, declaration or otherwise provides to the Register misleading, false or deceptive information shall be liable to a criminal offence punishable by a fine of up to €5,000, by imprisonment of up to six months or both.
Officers of a company that has failed to maintain records of its ultimate beneficial owners may be nonetheless exempt from liability if they are able to prove that in complying with the provisions of the Regulations, they had carried out due diligence and if they are able to prove that the default was not attributable to any act, omission or negligence on their part.
7. Prescribed Forms
The requirements to submit notifications to the Registry of Companies are satisfied through the submission of duly completed statutory forms:-
- Form B01, contains a declaration relating to the identity of the beneficial owners and is to be filed upon the registration or continuance of any company in Malta;
- Form BO2 is to be submitted to the Registry of Companies by companies wishing to register any change in shareholding occurring through a transfer, transmission, increase, or reduction of shares or through any other restructuring of share capital or change of voting rights. This form is to be utilised also by existing companies in order to identify their beneficial owners by the 1st July, 2018.