Legal aspects of companies

A bank will normally ask for various documents and information when a company opens a bank account.

Although each bank has its own procedures for opening an account, the following list of documents can be used as a guideline:

1. “Know Your Client -KYC” form, properly completed;
2. A request to open an account stating the kind of account, currency and preferred method for paying taxes;
3. A copy of the Memorandum of Association and Articles of Association, along with a certified copy of the Registration Certificate issued by the respective Companies’ Register, as soon as the company is registered. The Bank may also require a description of the company’s activities, its past turnover and business forecast;
4. Confirmation of the permanent address of Managers or Directors on a completed identification statement, certified by a “prime” bank or the Maltese embassy in the country of residence. The bank may also require authenticated identification documents for all representative Managers or Directors, final beneficiaries and secretaries. An original and copy of a utility bill may also be necessary;
5. Bank reference letters for all foreign Managers or Directors, foreign representatives and final beneficiaries. The references should be issued in a personal capacity and be addressed to the bank, otherwise the bank may reserve the right to verify references with the respective institutions;
6. If the shareholders are trustees, the bank will require the names of final beneficiaries along with an authenticated copy of their passports;
7. If a final beneficiary is a listed company, the bank will require a statement to that effect from the company secretary;
8. A form filled out and signed by the Managers or Directors appointing the bank.

All company documents, including the internet page must state the share capital and the paid-up amount, if that is different. It must also include the company name and registered offices.

Any partnership en nom colletif or partnership en commandite must also include the names of any shareholders with unlimited liability.

There are 3 forms of dissolution: Partners' voluntary winding up, dissolution at the request of the creditors or by order of the Courts.

If we limit ourselves to Partners' voluntary winding up, a sequence of legal facts/acts must be followed.

Firstly, the company’s accounts at the Inland Revenue Department (IRD) and VAT Department must be settled, if the company has a Maltese VAT number. Therefore, the managers/administrators shall ensure that they have prepared and submitted the following:

To the Malta Business Registry (MBR):

1. Audited accounts for each year from the date of incorporation until the date of dissolution;
2. Annual returns and fees for each year;
3. Payment of all outstanding fines owed due to any non-compliance.

To the Inland Revenue Department (IRD):

1. Audited accounts for each year from the date of incorporation until the date of dissolution;
2. Payment of all applicable taxes;
3. Payment of all outstanding fines owed due to any non-compliance.

To the VAT Department:

1. VAT returns for all the relevant periods;
2. Summary returns for all the relevant periods;
3. Payment of all applicable taxes (VAT);
4. Payment of all outstanding fines owed due to any non-compliance.

Management/administration shall decide on the voluntary winding up of the company, deciding on the date of winding up, which shall be on the last day of the month, a date which must take into consideration the time necessary to settle the company accounts, including payment of dividends, transfer of assets, payments to creditors, sale of stocks, etc.

The management/administration shall prepare the audited accounts of the company dissolution date (Dissolution Date Accounts).

On the basis of these accounts, management/administration shall issue a Declaration of Solvency, stating that the company shall pay all its creditors within one year and issue a Notice of Dissolution and an Appointment of Liquidator. These documents shall be submitted to the Malta Business Registry (MBR) within 14 days after the Dissolution Date, failing this a penalty shall be applied.

Once the company has been dissolved, the appointed Liquidator (physical person residing in Malta) shall administer the company in replacement of the managers/administrators, as of the date of appointment.

If the company has a Maltese VAT number, the Liquidator shall inform the VAT Department that the company will begin liquidation in 30 days, which shall lead to cancellation of the VAT registration if the company’s accounts have been settled. If the company’s accounts have not been settled, VAT registration shall remain in effect until its accounts are settled.

It is common and considered good practice that any Liquidator in Malta must advertise in two local daily newspapers that the company is undergoing liquidation, thereby inviting all persons to claim credits owed to them within a period of 2 months. Because the Liquidator is responsible for all acts practiced during this phase and one of his/her main responsibilities is to ensure that all matters have been diligently taken care of and investigated (e.g. all creditors have been paid), an additional period of 2 months is usually granted, making a total of 4 months after the dissolution date (assuming no credits are claimed).

During this phase, the company’s Final Accounts shall be prepared and audited.

The company’s shareholders shall then approve these accounts, along with the Scheme of Distribution. Next, the Liquidator shall submit the Final Accounts, the Scheme of Distribution to Shareholders and the Liquidator Declaration to the Malta Business Registry (MBR).

In this declaration the Liquidator informs the Registry that the process has been completed and requests that the company be removed from the Registry.

After the shareholders approve the Final Accounts and they are submitted to the Registry, the Liquidator will prepare and submit the company’s Final Tax Return. The Liquidator shall also submit the company’s Audited Final Accounts to the Commissioner of Inland Revenue, requesting cancellation of the company’s tax number and ensuring the cancellation has taken place.

If during this phase the company is still registered for VAT because its accounts have not been settled, the Liquidator shall make all efforts to settle the situation and request respective cancellation, ensuring the cancellation takes place (the VAT Department notifies the company that this has taken place).

Once these steps have been taken, the Malta Business Registry (MBR) is responsible for finalizing this process:

• If errors are found, the Auditing of Accounts and Scheme of Distribution shall be returned to the Liquidator to make any necessary corrections; 
• Registration of the Final Accounts, Scheme of Distribution and Liquidator Declaration, and publication on the website; 
• Publication of a notice of conclusion of the dissolution of the company, allowing a period of 3 months for any interested party to challenge cancellation of the registration via the civil courts; 

Once the 3 month period has passed without any complaints or challenges, the Registry will cancel the registration.