Act No. XVIII of 2025, was recently published, providing for the introduction of a “simplified dissolution procedure” (hereinafter referred to as ‘SDP’) for limited liability companies. The provisions of this Act are not yet in force. This has been done through the proposed addition of a new Article 214A into the Companies Act (Chapter 386 of the Laws of Malta).
The amendments envisages a SDP for certain companies to avoid long-winded liquidation procedures and proceed with a more efficient striking off. The requirement to appoint a liquidator in a SDP has been done away with. This should result in reduced liquidation costs.
The rationale behind this new procedure is to extend some flexibility to limited liability companies that have been inactive for some time and which are not public limited companies and regulated entities.
Through the SDP, directors of an inactive private limited liability company may apply to the Registrar to have the company struck off the company register, provided the following conditions are met. In the six months prior to the application, the company must:
- Not have changed its name
- Not have carried on any business or trading activity
- Not have employed any individuals
- Not have any outstanding filings, documents, or penalties due to the Registrar
- Not have any of its shares pledged.
The application shall be accompanied by a declaration by the directors confirming that all the following conditions have been satisfied:
- The company is not a regulated entity.
- The company has discharged or written off any liabilities in full.
- The company has no ongoing court proceedings.
- The value of the company’s assets are not more than Eur5,000
- No deeds or contracts have been entered into in the last six months prior to the application for a SDP other than contracts with service providers to the company.
- The company does not have any outstanding amounts due to any Government authority.
The directors must also confirm in writing that a shareholder resolution has been passed approving the company’s entry into the SDP procedure and that the company’s bank accounts are closed, nobody is employed with the company other than the officers and where applicable, an application to deregister the company for VAT purposes has been filed.
If these conditions are satisfied, the company may be struck off without undergoing the standard liquidation procedure in terms of the Companies Act and therefore, with the exclusion of certain requirements including the requirement to appoint a liquidator.
Directors are also obliged to retain records of the company’s beneficial owners and maintain all financial records as required by law. They, along with the company secretary as an officer of the company, remain responsible for the company until it is officially struck off the register.
The existing three-month notice period from the date of publication will be maintained, during which objections to the dissolution may be submitted mirroring the current procedure.
Disclaimer
The above does not constitute tax or legal advice and is up to date on the date it was published. Please ensure that you take appropriate advice from tax or legal professionals before making any decisions based on the above.
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