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 procedures and formalities which need to be applied in Malta when a limited liability company in Malta decides to be converted into a company which is formed and registered in another EU member state. By means of this procedure, the Maltese company will no longer be regulated by the Companies Act (Chapter 386 of the Laws of Malta), but will from the effective date be regulated by the applicable laws of the jurisdiction to which the Malta company will be converted to (hereinafter referred to as ‘the destination jurisdiction’), without being dissolved or wound up or going into liquidation.
- The Company shall prepare and file with the Registrar of Companies in Malta (hereinafter referred to as the ‘Registrar’) a draft terms of cross-border conversion together with all other relevant documentation as set out in regulation 10(1)(b) and 10(1)(c) of the Regulations within fourteen (14) days from the date thereof, who, upon being satisfied that the requirements of regulation 6 of the Regulations have been complied with, will proceed to register such documentation and cause without delay a statement to be published in accordance with regulation 10(2) and regulation 10(6) of the Regulations.
- Upon the lapse of one (1) month from the publication of the documentation referred to above, the shareholders of the Company shall, by means of an extraordinary resolution, decide whether to approve the draft terms of cross-border conversion and whether to adopt the Instrument of Constitution.
- In the event that the draft terms of cross-border conversion are approved and the Instrument of Constitution, the extraordinary resolutions approving and adopting the same as aforesaid shall, within fourteen (14) days from the date thereof be delivered for registration to the Registrar who, upon being satisfied that the requirements of Regulation 11 of the Regulations have been complied with, shall register the said resolution and cause without delay a statement to be published in accordance with the provisions of regulation 14 of the Regulations.
- Upon the lapse of one (1) month from the above-mentioned publication and assuming that no contestation by any interested party is made in terms of regulation 15 of the Regulations, the Company shall submit to the Registrar a written application in the prescribed form to obtain a pre-conversion certificate, together with such other documentation referred to in regulation 17(2) of the Regulations.
- Upon receipt of the above-mentioned application, the Registrar shall proceed to examine such documentation in accordance with the provisions of regulation 18 of the Regulations and shall, saving the exceptions set out in the same regulation 18 of the Regulations, complete such review within three (3) months from the date of receipt of such application and consequently proceed to issue the pre-conversion certificate, provided that no such certificate shall be issued prior to the lapse of three (3) months from the date of publication referred to above.
- Following the issue of the pre-conversion certificate referred to above, the Company, shall within six (6) weeks from the date of issue of the said certificate, satisfy all formalities required under the Laws of the destination jurisdiction for the registration of the Company in such jurisdiction.
- Immediately upon the Company being registered in the destination jurisdiction, the Registrar shall be notified by the Registry in the destination jurisdiction of the effective date of the Cross-border Conversion and shall cause without delay a notice to be published in accordance with regulation 20 of the Regulations indicating that the Cross-border Conversion has been completed and the Company shall be struck off the register in Malta.
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.
The effective date of the Cross-border Conversion shall be such date which will be duly notified to the Registrar by the competent commercial register in the destination jurisdiction.
The director of the Converted Company shall, upon the completed of the Cross-border Conversion, ensure that all necessary actions and formalities in the relevant jurisdictions in which the subsidiaries of the Converted Company are situated (of any) are satisfied.
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