RE-DOMICILIATION OF COMPANIES – A MALTESE LAW PERSPECTIVE
Re-domiciliation is a process whereby a company registered in a particular jurisdiction is continued in another jurisdiction. Therefore the essence of re-domiciliation lies in continuation. An increasing number of jurisdictions allow for the re-domiciliation of companies and a number of foreign companies wish to re-domicile to Malta in order to avail themselves of Malta’s fiscal system. Maltese law regulates re-domiciliation in terms of the Continuation of Companies Regulations.
The re-domiciliaton of a company can be both inward and outward. Inward re-domiciliation is the re-domiciliation of a foreign company into Malta. On the other hand outward re-domiciliation consists in the migration of a Maltese incorporated company into a foreign jurisdiction. It is also crucial to note that both the ‘old’ and ‘new’ jurisdictions have to mutually recognize the possibility of re-domiciliation, otherwise it would not be possible to re-domicile a company. This element of mutual recognition is normally set out in the applicable regulations of both jurisdictions.
The Companies Act allows for a foreign company to continue in Malta by undergoing a process of transferring the company’s seat into Malta. The process is initiated by a request to the Malta Business Registry accompanied by supporting documentation which includes:
- an extraordinary resolution approving the migration of the company to Malta;
- a copy of the constitutive documents of the company, revised in order to comply with Maltese legislation;
- a certificate of good standing, or equivalent from the original jurisdiction;
- a declaration signed by at least two directors of the company confirming the migration into Malta;
- a declaration by the directors confirming that the company is solvent;
- a list of directors and company secretaries of the foreign company;
- evidence of similar laws, allowing for company migration in the original country;
- evidence of consent from creditors reflected in a legal opinion or consent letters; and
- a registration fee payable to the Malta Business Registry.
As soon as the said request is vetted and approved by the Malta Business Registry, a provisional certificate of continuation is issued. 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 the powers of a company registered in Malta.
Within 6 months of the issuance of the provisional certificate, the foreign company should provide proof to the Malta Business Registry that the company has ceased to be registered in the home country. Furthermore, in order for the final certificate of continuation to be issued to the company, the company should surrender the provisional certificate of continuation.
A Maltese company may opt for outward re-domiciliation as long as consent is obtained from the Malta Business Registry and the laws of the foreign country it wishes to continue in permits re-domiciliation. Consent is obtained from the Maltese jurisdiction subsequent to the submission of a number of supporting documentation. It is important to note that the Registry will only grant its consent if the company is up to date with the payment of official fees and outstanding penalties. Consent for the outward re-domiciliation is not given until the lapse of 3 months from the date of the publication in the government gazette and in a daily newspaper circulating wholly or mainly in Malta, of a notice relating to the outward re-domiciliation.
The advantages of re-domiciliation of companies are subjective and often involve the balancing of the additional costs of re-domiciliation against the inconvenience and costs of not re-domiciling one’s company. However, it must be noted that re-domiciliation allows for the continuation of the company without any interruption of the business operations of the company. Existing companies would otherwise need to be liquidated or dissolved and new companies set up in a new jurisdiction, disrupting existing business and contractual relations, with associated costs and possible loss of business.