Malta introduces simplified voluntary company dissolution procedure

Malta has just unveiled a new 'Simplified Voluntary Dissolution' process, as outlined in the newly added article 214A of the Companies Act.

This innovative alternative procedure is set to transform the business landscape, offering a streamlined, rapid, and cost-effective solution for companies in specific situations. 

Understanding your options

In a normal company lifecycle, directors and shareholders of Maltese companies may need to consider liquidation when a company is no longer required or has become insolvent. This complex process involves winding up the company’s affairs, distributing its assets, and ultimately dissolving its legal existence. Proper execution of liquidation is crucial to protect all stakeholders’ interests and this process concludes with the company’s closure and removal from the Malta Business Registry, ending its corporate life.

A company registered in Malta can be liquidated in the following four ways:

1. Members’ Voluntary Liquidation
2. Creditors’ Voluntary Liquidation
3. Court liquidation
4. (New) Simplified Voluntary Dissolution 

Below, the Citco group of companies (Citco) looks at the details of each approach and analyses the new simplified voluntary dissolution.

• Members’ Voluntary Winding Up

  + + -

  When shareholders of a limited liability company determine that the entity is no longer required for any reason (e.g. when the company has fulfilled its business objectives or as part of a group restructuring) and the company is in a solvent position, they may resolve to initiate a voluntary liquidation. This is the most common form of liquidation.

  The Directors will have to ensure that the company is in a position to settle its liabilities within twelve months from the date the company is placed in dissolution. 

  The decision to place the company into liquidation is taken by the shareholders passing a resolution at an extraordinary general meeting (or alternatively by a resolution in writing) whereby it is resolved to wind up the affairs of the company and to appoint an independent liquidator. Upon the appointment, the Directors will relinquish their rights as representatives of the company and the liquidator will assume this role in their stead. The liquidator shall be responsible to ensure that: (a) any liabilities are settled accordingly, (b) any assets are distributed and (c) all the necessary filings are done with the Malta Business Registry up to the date when the company is struck off.    

• Creditors’ Voluntary Liquidation

  + + -

  When shareholders of a limited liability company determine that the entity is no longer required for any reason (e.g. when the company has fulfilled its business objectives or as part of a group restructuring) and the company is in a solvent position, they may resolve to initiate a voluntary liquidation. This is the most common form of liquidation.

  The Directors will have to ensure that the company is in a position to settle its liabilities within twelve months from the date the company is placed in dissolution. 

  The decision to place the company into liquidation is taken by the shareholders passing a resolution at an extraordinary general meeting (or alternatively by a resolution in writing) whereby it is resolved to wind up the affairs of the company and to appoint an independent liquidator. Upon the appointment, the Directors will relinquish their rights as representatives of the company and the liquidator will assume this role in their stead. The liquidator shall be responsible to ensure that: (a) any liabilities are settled accordingly, (b) any assets are distributed and (c) all the necessary filings are done with the Malta Business Registry up to the date when the company is struck off. 

• Court Winding up

  + + -

  A company can also be compulsory liquidated by way of a Court Order following an application for its dissolution by the shareholders, the directors, the Registrar of Companies, the official Receiver, or (most commonly) the creditors of the company. A court winding up process in Malta is typically adopted when a company is unable to pay its debts; or when the business of the company is suspended for an uninterrupted period of 24 months; or when there are grounds of sufficient gravity.

  In such situations, the Maltese Court will appoint an official receiver who will carry out the required investigations and report to the court on the financial position of the company, the causes leading to the winding up and weather any additional investigations are required.    

• Simplified Voluntary Dissolution

  + + -

  The simplified procedure is available to non-listed and non-regulated companies that have been registered for at least six months and meet specific criteria outlined in the Companies Act. To be eligible, within the previous six months, a company must not have: 

  • traded;
  • entered into any contracts (except with service providers);
  • hired employees (other than company officers);
  • changed its name; or
  • pledged any shares. 

  These requirements ensure that only companies with minimal recent activity can benefit from this streamlined dissolution process, effectively simplifying the closure procedure for qualifying businesses.

  The process involves the following steps:

  1. Directors must submit a statutory form and a declaration, which include confirmations that:

  • all the company’s liabilities have been discharged or written off;
  • the company has no pending litigation;
  • the company does not have assets in excess of €5,000; and
  • all bank accounts have been closed. 

  The Directors are also required to confirm to the Registrar, as the last appointed officers of the company, that they shall be retaining the details of the beneficial owners and financial records as mandated by law or duly inform the Registrar as to who is the designated person to retain such information.

  1. The Registrar will review the submission to ensure all required conditions are met.
  2. If satisfied, the Registrar will publish a notice, initiating a three-month notice period, after which the company shall be struck off. 

  It is important to note that unlike in a voluntary liquidation, where a liquidator is appointed, in this simplified procedure the directors and secretary of the company retain all their powers and duties (including legal representation) until the company is officially struck off the register.

  This new procedure is thus a welcome addition to the current options and will facilitate doing business in Malta by providing a simpler and less expensive exit option. 

How can Citco assist?

Citco (Malta) Limited has an experienced team (consisting of experienced professionals) offering comprehensive liquidation solutions. Our services include:

• End-to-end management of the Members’ and Simplified Voluntary Liquidation processes
• Expert guidance on regulatory compliance
• Preparation and filing of all required documentation
• Coordination with the Malta Business Registry
• Strategic advisory services throughout the dissolution process