By means of Subsidiary Legislation 386.27, the Government of Malta has published the above-mentioned rules, the scope of which is to transpose into Maltese legislation the European Union Directive 2019/2121/EU amending the EU Directive 2017/1132 as regards cross border conversions, mergers and divisions. This EU directive, also referred to as ‘The Mobility Directive’ is part of the major efforts being undertaken by the EU in order to enhance cross-border mobility and freedom of establishment with a view to sustain the development of the Single Market.
In this article, we shall be describing the duty of the board of directors of a Maltese limited liability company in Malta (hereinafter referred to as ‘the converting company’) which resolves to be converted into a company which is formed and registered in another EU member state to prepare and draw up a declaration of solvency.
The directors of a Maltese registered converting company, or in the case of a company having more than two (2) directors, the majority of the directors, must draw up and submit to the Malta Business Registry, a written declaration of solvency. The director/s must declare that, on the basis of the information available to the Board of Directors at the date of the declaration, and after having made reasonable enquiries, the Board of Directors is unaware of any reason why the company may, after the cross-border conversion takes effect, not be in a position to meet its liabilities when those liabilities fall due. The declaration of solvency need not be prepared where the Maltese registered converting company is a company which is subject to preventive restructuring frameworks or is the subject of crisis prevention measures as defined in point 101 of Article 2(1) of the EU Directive 2014/59.
The above-mentioned declaration shall have no effect unless
- it is made within the month immediately preceding the preparation of the draft terms of the cross-border conversion and
- it contains a statement of the Maltese registered converting company’s assets and liabilities made up to a date not earlier than one (1) month prior to the preparation of the draft terms of the cross-border conversion.
In terms of the above, and provided that all formalities in terms of the Regulations as well as under the Laws of the destination jurisdiction are satisfied, the Company shall, by virtue of the Cross-border Conversion, be converted into the Converted Company without being dissolved, wound up or going into liquidation and shall, with effect from the effective date of the Cross-border conversion, be struck off the company register in Malta in accordance with the provisions of regulation 20 of the Regulations.
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