The Companies (Amendment) Bill, 2025, Part 2: Key Amendments Affecting Limited Liability Companies

On the 18th June 2025, Bill no. 136, the Companies (Amendment) Bill (the “Bill”), was presented to Parliament by the Minister for the Economy, Enterprise and Strategic Projects for its first reading and was published in the Government Gazette on the 24th June 2025. The Bill proposes a number of amendments to the Companies Act (Chapter 386 of the laws of Malta) (the “Act”). This article is the second of a two-part series which provides an overview the main amendments to the Act relating to limited liability companies. The first part of this series may be accessed here. 

Changes relating to a company’s electronic mail address 

The Bill imposes new obligations on the directors and company secretary by requiring them to ensure that the registered electronic mail address of the company as indicated in the memorandum of association and registered with the Registrar of Companies (the “Registrar”) is regularly monitored such that any electronic mail sent to it by the Registrar is brought to the attention of an officer of the company. This provision reflects a continued shift toward digital communication, aligning with the Malta Business Registry’s recent efforts to promote paperless interaction. 

The Bill also introduces an amendment to Article 79(1)(i) of the Act, allowing a company to change its registered email address through a board resolution and the filing of a corresponding return. This is a much-desired amendment since currently a company may only change its email address by altering its memorandum of association, which creates an unnecessary burden on the company’s shareholders for such a minor administrative update.  

Issuance of Shares for a Non-Cash Consideration   

Article 73 of the Act currently requires that when shares are issued for a consideration other than in cash, a report on such consideration shall be drawn up by one or more experts who are independent of the company and approved by the Registrar. The Bill introduces a threshold for the requirement of such experts’ report in that when the non-cash consideration does not exceed the equivalent monetary value of €50,000, a director’s declaration shall suffice, and such report shall not be required. The aforesaid director’s declaration shall likewise be delivered to the Registrar of Companies prior to the date of the issue and allotment of the shares. The Bill does not currently specify the requisite contents of the director’s declaration and while it may be argued that the report would need to include the same details as those in the experts’ report, this is not clear. 

While this simplification increases efficiency and reduces costs by eliminating the need to engage external auditors or valuation experts, it also shifts greater responsibility onto the company’s directors, who must now ensure they possess the requisite expertise and judgment to accurately assess the value of non-cash contributions. 

Usufructuary of Shares 

The Bill introduces a new Article 117A which outlines the rights of a usufructuary of shares in a company, which are currently unregulated and dependent upon civil law principles and the agreement between the parties. The rights afforded to the usufructuary are the following: 

• the right to attend any general meeting of the company 
• the right to receive dividends. 

The proposed Article 117A specifically states that a usufructuary shall not have the right to vote at meetings unless this is specifically authorised by the public deed creating the right of usufruct or the memorandum and articles of association of the company.  

Pledging of Shares 

The Bill introduces a new provision which requires, upon a pledge of shares, a document containing the particulars of the contract of pledge be delivered by the pledgor or the pledgee to the Registrar together with the notice of pledge of shares (Form T(2)).  The current text of the Bill does not include any guidance as to  what constitutes the “particulars of the contract”, which could lead to a degree of uncertainty.  One possible manner in which this could be addressed is the introduction of a standard form or template to accompany Form T(2).  

The Bill also introduces a new sub-article (17) which specifically allows a pledgee or a person acting on its behalf to exercise any enforcement rights by acting on behalf of the pledgor as its mandatary provided that the pledgee is authorised to do so by way of security in accordance with Article 1887 of the Civil Code (Chapter 16 of the laws of Malta). In practice, pledge agreements typically include provisions allowing for such a mandate. The legislator appears to be eliminating any perceived doubts by formally acknowledging this commercial reality and  expressly incorporating it into the Act. 

Undistributable Reserves 

The Bill proposes a new undistributable reserve, being the “revaluation reserve”. Reserves which represent a gain which is actually realised (e.g. through a sale of the asset) do not constitute a “revaluation reserve”. The exclusion of realised gains aligns with the definition of “profits available for distribution” currently existing under the Act. By classifying the revaluation reserve as an undistributable reserve, the Bill ensures that unrealised gains arising from asset revaluations are not distributed as dividends, thereby protecting the company’s capital base and the interests of creditors. 

The recent amendments to Article 83 of the Act would still appear to offer a possible solution for the extraction of any amounts standing to the credit of the revaluation reserve in certain circumstances.   

Removal of the “Exempt” Classification  

The Bill proposes the removal of the classification of private companies which satisfy the criteria listed in Article 211 of the Act as “exempt” companies. While the substantive benefits and exemptions afforded to qualifying private companies remain unchanged, the Bill proposes to eliminate the use of the term “exempt”. Such amendment may promote clarity, particularly for foreign investors unfamiliar with the local nomenclature. 

The amendments proposed with respect to “exempt” companies also include a clarification with respect to the director’s declaration which is required to be submitted in terms of Article 211(8) of the Act as the Bill specifically states that a declaration made by any one director is sufficient, which eases the administrative burden of having such declaration signed by each director of a company.  

Simplified Dissolution Procedure 

The most significant amendment proposed by the Bill is the proposed new Article 214A which provides for a simplified dissolution procedure with respect to dormant companies. The current legal framework leaves it to the Registrar’s discretion to strike off a company which she has reason to believe is not in operation, as a “defunct” company. The proposed amendments provide for a mechanism for unregulated private limited liability companies to apply (by means of a prescribed form to be signed by all of the directors) for such simplified dissolution and striking off procedure. Such procedure may not be availed of if at any time in the six months preceding the date of the application the company would have: 

1. carried out any changes in its name; or 
2. traded or otherwise carried out business; or 
3. employed employees other than any person who is an officer of the company; 
4. outstanding documents or penalties with the Registrar which remain outstanding as at the date of the application; or  
5. any of its shares pledged. 

The following criteria must also be satisfied in order for the company to be eligible for the procedure: 

1. the company is not a regulated entity; 
2. the company has discharged in full any liabilities towards its creditors, other than any outstanding fees to the company’s current officers or current corporate service providers and, or any loans payable to the company’s shareholders;  
3. the company has no pending court proceedings in or outside of Malta; 
4. the company does not have any assets in excess of €5,000; 
5. the company has not entered into any deeds or contracts in the previous six months, other than with service providers to the company; 
6. the company has no outstanding amounts due to any government authority or body; 
7. a shareholders’ resolution has been duly adopted to approve the simplified voluntary dissolution  procedure; 
8. all bank accounts of the company must have been closed; 
9. the company has no employees other than any person who is an officer of the company.  

Unlike the traditional voluntary dissolution and winding up procedure under Maltese law, this new procedure allows directors to dissolve a dormant company with little to no assets on its balance sheet without appointing a liquidator. It therefore follows that the directors and company secretary of the company retain all their powers under the Act until the company’s name is struck off from the register.  Nonetheless, the three-month creditor protection period which applies to the dissolution and winding up process under Article 214 of the Act is retained for the simplified dissolution procedure. 

This simplified procedure presents a logical and practical method in closing down dormant companies having minimal assets. The absence of the requirement to appoint a liquidator and to draw up an account of winding up reduces the administrative burden, cost and avoids the delays which may result under the traditional dissolution methods. Directors of companies intending to use this process should note that  this procedure places full responsibility on directors to ensure all requisite conditions are met. The introduction of such procedure may have been influenced by the UK’s voluntary strike off procedure through the Form DS01, which is a similar procedure available to UK companies which have not traded in the preceding three months. 

Concluding Remarks 

The Companies (Amendment) Bill, 2025 aims to address both procedural inefficiencies and substantive legal gaps and thus such amendments are expected to facilitate smoother corporate operations ultimately contributing to a more robust and adaptable corporate legal framework. 

While these are welcomed changes, we have noted the absence of any amendments intended to clarify the uncertainty with respect to certain amendments that were made to Article 83 of the Act by Act No. XVIII of 2024. A commentary on aforesaid amendments may be accessed here.