COMPANIES [ CAP. 386.        1
CHAPTER 386
COMPANIES ACT
To regulate, in place of the Commercial Partnerships Ordinance, limited liability
companies and other commercial partnerships.
1st January, 1996
ACT XXV of 1995 as amended by Acts XXIV of 1995, IX and XXX of 1997, XVII of 1998,
XXII of 2000, XVII of 2002, and IV and IX of 2003.
ARRANGEMENT OF ACT
Articles
Short Title 1
PART I. Preliminary Provisions  2-3
PART II. General Provisions 4-6
PART III.  Partnership  En Nom Collectif  7-50
PART IV.  Partnership  En Commandite 51-66
PART V.  Limited Liability Company 67-326
Title I  Formation and Functioning of Companies  67-213
Chapter I.  Formation of a company and matters incidental thereto  67-82
Chapter II.  Changes to a company’s share capital  83-88
Chapter III.  Capital issues by public companies 89-96
Chapter IV.  Allotment of shares and debentures of companies  97-103
Chapter V.  Maintenance of share capital and protection of class rights  104-116
Chapter VI.  Miscellaneous provisions about shares and debentures 117-127
Chapter VII.  Meetings and resolutions  128-135
Chapter VIII. Management and administration 136-150
Chapter IX.  Auditors  151-162
Chapter X.  Accounts, audit and annual return  163-191
Chapter XI.  Distribution of profits and assets  192-208
Chapter XII.  Private company  209-213
Title II.  Dissolution and Consequential Winding up of Companies  214-326
Sub-title I.  Winding up by the court  218-264
Chapter I.  General provisions 218-224
Chapter II.  Official receiver  225-227
Chapter III.  Liquidators in a winding up by the court  228-244
Chapter IV.  Liquidation committees in a winding up by the court  245-247
Chapter V.  General powers of the court in a winding up by the court  248-264
Sub-title II.  Voluntary winding up  265-294
Chapter I . General provisions 265-268
Chapter II.  Provisions applicable to a member’s voluntary winding
up 269-276
Chapter III.   Provisions applicable to a creditor’s voluntary winding up  277-285
Chapter IV.   Provisions applicable to every voluntary winding up  286-294
Sub-title III.  Provisions applicable to every mode of winding up 295-326
  2      CAP. 386. ]                   COMPANIES
Chapter I.   Effect of appointment of liquidator and convening of
meetings  295-300
Chapter II.   Proof and ranking of claims  301-302
Chapter III.   Effects of winding up on antecedent transactions  303-304
Chapter IV.   Qualification of liquidators and prohibition of certain
transfers by liquidators 305-306
Chapter V.   Offences antecedent to dissolution or in course of winding
up  307-321
Chapter VI.   Supplementary Provisions  322-326
PART VI.  Company Reconstructions  327-329
PART VII.  Conversion Of Commercial Partnerships  330-335
PART VIII.   Amalgamation Of Commercial Partnerships 336-359
Title I.   Amalgamation Of Partnerships  En Nom Collectif  And  En
Commandite 336-342
Title II .  Amalgamation Of Companies 343-359
Chapter I   Merger by acquisition  344-356
Chapter II.   Merger by formation of a new company 357
Chapter III.   Acquisition of one company by another which holds
ninety per cent or more of its shares 358-359
PART IX.   Division of Companies 360-375
Chapter I.   Division by acquisition 361-373
Chapter II.   Division by the formation of new companies 374
Chapter III.   Division under the supervision of the court 375
PART X.   Association  En Participation  376-383
PART XI.   Bodies Corporate Constituted Outside Malta  384-399
Chapter I.   Provisions as to establishment of place of business in
Malta  384-389
Chapter II .  Issues by companies constituted or incorporated or to be
constituted or incorporated outside Malta 390-398
Chapter III.   Provisions as to the winding up of the affairs in Malta of
an oversea company 399
PART XII.   General 400-427
PART XIII.   Transitional and Final Provisions  428-431
SCHEDULES 
First Schedule  Model regulations for a limited liability company
Second Schedule  Matters to be specified in a prospectus and reports to be set out
therein
Third Schedule  Form and content of individual accounts 
Fourth Schedule  Form and content of consolidated accounts
Fifth Schedule  Individual accounts and directors’ report of an investment company
with variable share capital
Sixth Schedule  Contents of directors’ report 
Seventh Schedule  Contents and form of annual return
Eighth Schedule  Conversion rules applicable on a change in the currency in which the
share capital of a company is expressed and the corresponding
reporting currency
Articles
COMPANIES [ CAP. 386.        3
Ninth Schedule  Explanation of expressions used in subarticle  ( 2 ) of article  2 and
provisions supplementary thereto
Tenth Schedule  Penalties
Eleventh Schedule  Table of Concordance
  4      CAP. 386. ]                   COMPANIES
Short title. 1. The short title of this Act is Companies Act.
PART I - PRELIMINARY PROVISIONS
Interpretation.
Amended by:
XXIV.1995.362;
IV. 2003.26.
2. (1) In this Act, unless the context otherwise requires, the
following expressions have the meaning hereby assigned to them - 
"annual accounts" means the individual accounts required by
article 167 and, where applicable, also the consolidated accounts
required by article 170;
"appointed day" means the date appointed by the Minister for the
coming into force of this Act;
Cap. 281.
"auditor" means a person who is an individual who holds a
warrant to act as auditor issued under the Accountancy Profession
Act or is a partnership of auditors duly registered under the said
Act;
"body corporate" means any entity having a legal personality
distinct from that of its members, and includes a foreign
corporation;
"certificate of registration" when used in relation to a company
means a certificate of registration issued under this Act or under the
Ordinance and the words "registration", "registered" and their
derivatives shall be construed accordingly;
"commercial partnership" means a company or other commercial
partnership formed and registered under this Act or formed and
registered under the Ordinance where applicable;
"company" means a company formed and registered under Part V
of this Act or the Ordinance;
"company secretary" means a person being an individual who
holds the office of a company secretary in terms of article 138;
"consolidated accounts" means the accounts required by article
170;
"contributory" shall, unless otherwise stated, have the meaning
assigned to it by articles 215 to 217; 
"court" means the Civil Court, First Hall;
"debenture" includes debenture stock, bonds and any other debt
securities of a company;
"director" includes any person occupying the position of director
of a company by whatever name he may be called carrying out
substantially the same functions in relation to the direction of the
company as those carried out by a director;
"directors’ report" in relation to a company, means the directors’
report required by article 177;
"euro" refers to the currency unit of the participating states in the
European Monetary Union;
"exempt company" means a company satisfying the conditions
laid down in subarticle  ( 2 ) of article  211; 
COMPANIES [ CAP. 386.        5
"expert", except where otherwise specifically defined in this Act,
means an auditor whether or not assisted by a specialist valuer;
"extraordinary resolution" has the meaning given to it by article
135;
"financial holding company" shall mean a company the sole
purpose of which is to acquire holdings in other undertakings, and
to manage such holdings and turn them to profits, without
involving itself directly or indirectly in the management of those
undertakings, and this without prejudice to its rights as
shareholder;
"group company", in relation to any company, means any body
corporate which is that company’s subsidiary or parent company, or
a subsidiary of that company’s parent company, and the term
"group" shall be construed accordingly;
"individual accounts" means the accounts required by article
167;
"investment company with fixed share capital" means a public
company falling within the terms of article 194;
"investment company with variable share capital" means a
company falling within the terms of article 84; 
"liri" means Maltese liri; 
Cap. 345.
"recognised stock exchange" means a recognised stock exchange
established under the Financial Markets Act;
"member", except where otherwise specifically defined, means a
shareholder of a company and a partner in any other commercial
partnership;
"Minister" means, unless otherwise stated, the Minister
responsible for the registration of commercial partnerships;
"name" in relation to an individual means that individual’s first
name or names and surname;
"notice" shall mean a notice in writing of any kind;
"officer" in relation to a company, includes a director, manager
or company secretary, but does not include an auditor;
Cap. 168.* ;
"ordinary resolution" has the meaning given to it by article 135;
"oversea company" means a body corporate constituted or
incorporated outside Malta;
"participating interest" shall mean rights in the capital of other
undertakings, whether or not represented by certificates, which, by
creating a durable link with those undertakings, are intended to
contribute to those undertakings’ activities. The holding of twenty
per cent of the capital of another undertaking shall be presumed to
constitute a participating interest unless the contrary is shown. An
interest in shares includes an interest which is convertible into an
*Repealed by this Act.
  6      CAP. 386. ]                   COMPANIES
interest in shares and an option to acquire an interest in shares.
Interests in shares held by subsidiary undertakings or held by third
parties on behalf of the company or its subsidiary undertakings
shall be deemed to be held by the company;
"prescribed" means prescribed by regulations made or deemed to
have been made under this Act, and where no regulation is in force
in respect of a matter which may or is to be prescribed, means
determined, approved or allowed by the Minister;
"principal office" means, in relation to an undertaking not having
a registered office, the office which, for the purposes of that
undertaking serves the same or a similar purpose as the registered
office of a commercial partnership under this Act;
"private company" means a private company as defined in article
209;
"prospectus" means any prospectus, notice, circular,
advertisement or other invitation, offering to the public for
subscription any shares or debentures of a company or other
commercial partnership;
"public company" means a company which is not a private
company;
Cap. 345.
"recognised investment exchange" means a recognised
investment exchange within the provisions of the Financial Markets
Act;
"Registrar" means the person appointed by the Minister pursuant
to article 400;
"resident", for the purposes of this Act, means -
( a ) any natural person regardless of nationality who is
ordinarily resident in Malta;
( b ) any body corporate established under the law of Malta;
"security" includes a share, debenture or any other similar
instrument issued by a company or other commercial partnership;
"share" includes stock except where a distinction between stock
and shares is expressed or implied;
"shareholder" means a person entered in the register of members
of a company pursuant to article 123 or the  bona fide  holder of a
share warrant referred to in article 121;
"true and fair view" refers - 
( a ) in the case of individual accounts, to the requirements
of article 167, and
( b ) in the case of consolidated accounts, to the
requirements of article 171;
"undertaking" means a body corporate or unincorporate which
carries on a trade or business.
( 2 ) ( a ) For the purposes of this Act "parent company" is a
company which - 
COMPANIES [ CAP. 386.        7
( i ) has a majority of the members’ voting rights in
another undertaking  ( a subsidiary undertaking ) ;
or
( ii ) has the right to appoint or remove a majority of
the members of the board of directors or persons
entrusted with the administration of another
undertaking  ( a subsidiary undertaking )  and is at
the same time a member of that undertaking; or
( iii ) has the right to exercise a dominant influence
over an undertaking  ( a subsidiary undertaking )
of which it is a member, pursuant to a contract
entered into with that undertaking or to a
provision in that undertaking’s memorandum or
articles of association; or
( iv ) is a member of an undertaking and controls
alone, pursuant to an agreement with other
members of that undertaking  ( a subsidiary
undertaking ) , a majority of members’ voting
rights in that undertaking; or 
( v ) holds a participating interest in another
undertaking and actually exercises a dominant
influence over that undertaking  ( a subsidiary
undertaking )  or it manages the subsidiary
undertaking on a unified basis together with it;
and "parent undertaking" shall be construed
accordingly.
( b ) For the purposes of the definition in paragraph  ( a ),  the
provisions of the Ninth Schedule shall apply. 
( c ) The term "subsidiary undertakings" shall be construed
in accordance with paragraph  ( a )  and shall include a
subsidiary undertaking or undertakings of a subsidiary
undertaking.
( d ) References to shares of undertakings in this Act shall
include references to beneficial interests in
undertakings where the capital of such undertakings is
not divided into shares; and references to "relevant
shares", "the issue of equity shares", "the issued share
capital" and "the nominal value of the equity shares"
shall be construed accordingly.
( e ) Other terms appropriate to companies shall be
construed, in relation to an undertaking which is not a
company, as references to the corresponding persons,
officers, documents or organs, as the case may be,
appropriate to undertakings of that description.
(3) ( a ) For the purposes of this Act, the following shall
constitute offers made to the public:
(i) an offer made to the public generally;
(ii) an offer made to offerees exceeding fifty in
number, subject to the provisions of paragraph
( b ).
  8      CAP. 386. ]                   COMPANIES
( b ) The following shall not constitute offers made to the
public notwithstanding that the number of offerees
may exceed fifty in number:
(i) an offer where the shares are offered as fully
paid up shares for no consideration; or
(ii) an offer where the total consideration payable
for the shares being offered does not exceed ten
thousand liri and the maximum consideration
payable by an individual offeree does not exceed
one hundred liri; or
(iii) an offer where the minimum consideration
which may be paid by any person for shares
acquired pursuant to the offer is at least fifty
thousand liri; or
(iv) an offer made exclusively to existing members
or debenture holders of the company; or
(v) an offer made to an underwriter; or
(vi) an offer made in connection with or pursuant to
a proposed merger of the offering company with
another company; or
(vii) an offer made in connection with a take-over
bid; or
(viii) an offer made exclusively to a restricted circle of
persons, the number of which is below two
hundred and fifty, acting for their own account
in the context of their trade or profession; or
(ix) an offer made exclusively to a select and clearly
identifiable section of the community or group
of persons known to the offeror and acting for
their own account, not exceeding in aggregate
two hundred and fifty in number, sharing with
the offeror some clear common interest, goal or
objective, including members of the same family
and membership of a club or association:
Provided that in respect of offers made by virtue
of sub-paragraphs (ii), (viii) and (ix) and where the
number of offerees exceeds fifty, the prior approval in
writing of the Registrar shall be required for such
offers not to constitute an offer to the public;
( c ) In the event of any reasonable doubt arising as to
whether or not a particular offer of shares amounts to
an offer made to the public, the matter shall be
determined by the Registrar whose decision shall be
final.
( d ) In this article, the term "shares" includes other
securities that may be issued by a company.
( e ) Where the offer is made by a commercial partnership,
not being a company and whether formed or registered
under this Act or any other Act, the provisions of this
article shall apply to such offer  mutatis mutandis .
COMPANIES [ CAP. 386.        9
( f ) The Minister may by Order published in the Gazette
revise or amend any of the figures or amounts referred
to in this article.
Cap. 281.
( 4 ) For the purposes of this Act, compliance with "generally
accepted accounting principles and practice" shall require
adherence to International Accounting Standards as may be issued
from time to time by the International Accounting Standards Board,
or any other body succeeding it by whatever name it may be
known, and to any accounting standards as may be made applicable
from time to time in terms of the Accountancy Profession Act.
In this subarticle, the International Accounting Standards
Board refers to the Board, established by deed of constitution on
the 28th June, 1973 which comprises the professional accountancy
bodies which are members of the International Federation of
Accountants, established at the International Congress of
Accountants in Munich in 1977.
( 5 ) For the purposes of this Act, where a document required to
be delivered to the Registrar for registration is required to state the
name and residence or address of a person, it shall be deemed to
require further the official identification, by number or otherwise
of such person, as may be applicable.
(6) For the purposes of this Act, where any document, which is
required to be delivered or given to or served on the Registrar, is to
be signed by an expert and such expert is a company, partnership or
other body corporate, such document shall carry the signature of an
individual who is a director, partner or equivalent officer, as the
case may be, duly authorised to sign on its behalf.
( 7 ) In this Act and in any regulations made thereunder, if there
is any conflict between the English and Maltese texts, the English
text shall prevail.
References in other 
Acts.
Amended by:
IV. 2003.27.
3. (1) References in any other law to the Ordinance shall be
construed as a reference to this Act and references in any other law
to a provision of the Ordinance shall be construed, insofar as
applicable, as a reference to the corresponding provision of this
Act; and references in any other law to a partnership formed and
registered under the Ordinance shall be construed as a reference, or
as including a reference, to a commercial partnership formed and
registered under this Act.
( 2 ) The table of concordance set out in the Twelfth Schedule to
this Act may be used, insofar as applicable, in determining the
corresponding provisions in accordance with subarticle (1).
  10      CAP. 386. ]                   COMPANIES
PART II - GENERAL PROVISIONS
Formation of 
commercial 
partnerships and 
different kinds of 
commercial 
partnerships.
Amended by:
IV. 2003.28.
4. (1) A commercial partnership may be of the following
kinds: 
( a ) a partnership  en nom collectif ; or 
( b ) a partnership  en commandite  or limited partnership; or 
( c ) a company.
( 2 ) A commercial partnership other than a company may be
formed for the exercise of one or more acts of trade.
( 3 ) A company may be formed for any lawful purpose and shall
have the status of -
( a ) a public company; or 
( b ) a private company.
( 4 ) A commercial partnership has a legal personality distinct
from that of its member or members, and such legal personality
shall continue until the name of the commercial partnership is
struck off the register, whereupon the commercial partnership shall
cease to exist.
Law governing 
commercial 
partnerships.
5. A commercial partnership formed and registered under this
Act or under the Ordinance shall be governed by this Act
irrespective of the place where the management and control of the
commercial partnership is exercised.
Indication of 
particulars in 
business letters, 
etc.
Amended by:
IV. 2003.29.
6. (1) In all its business letters and order forms a commercial
partnership shall mention in legible characters its name, kind of
commercial partnership, registered office and registration number.
( 2 ) In all its business letters and order forms a body corporate
registered under Part XI of this Act shall mention in legible
characters its name, the country of its constitution or incorporation,
its registration number and registered office in its country of
constitution or incorporation, kind of commercial partnership, the
address of the branch or place of business in Malta, its registration
number under Part XI of this Act and, where applicable, the fact
that the oversea company is being wound up.
( 3 ) In all its business letters and order forms a partnership  en
nom collectif  shall also state in legible characters the names of its
partners in addition to the requirements of subarticle (1).
( 4 ) In all its business letters and order forms a partnership  en
commandite  or limited partnership shall also state in legible
characters the names of the partners having unlimited liability in
addition to the requirements of subarticle (1).
( 5 ) Every commercial partnership and every body corporate
registered under Part XI of this Act shall mention its name in
legible characters in all its notices and other official publications,
bills of exchange, promissory notes, cheques and orders for money
or goods purporting to be signed on its behalf and in all its bills of
parcels, invoices, receipts and letters of credit.
( 6 ) An officer signing a document on behalf of a commercial
COMPANIES [ CAP. 386.        11
partnership or on behalf of a body corporate registered under Part
XI of this Act shall state the capacity in which he is signing.
( 7 ) Where a commercial partnership is being wound up, every
letter, invoice or other document issued by or on behalf of the
commercial partnership, being a document on or in which the name
of the commercial partnership appears, shall, in addition to the
requirements of the preceding subarticles of this article, contain a
statement that the commercial partnership is being wound up and,
in respect of a company it shall also contain the names of the
liquidators.
( 8 ) If default is made in complying with the provisions of
subarticles (1) to  ( 6 )  every officer of the commercial partnership
who is in default shall be liable to a penalty.
( 9 ) If default is made in complying with the provisions of
subarticle  ( 7 )  every liquidator or partner, as the case may be, who is
in default shall be liable to a penalty.
PART III - PARTNERSHIP  EN NOM COLLECTIF
Definition.
Amended by:
IV. 2003.30.
7. A partnership  en nom collectif   ( referred to as a
"partnership" in the following provisions of this Part )  may be
formed by two or more partners and operates under a partnership
name and has its obligations guaranteed by the unlimited and joint
and several liability of all the partners:
Provided that no action shall lie against the individual
partners unless the property of the partnership has first been
discussed:
Provided furthermore that at least one of the partners shall
be either an individual or a body corporate which has its
obligations guaranteed by the unlimited and joint and several
liability of one or more of its members.
Agreement to pay 
share of profits.
8. An agreement to pay a share of the profits of a partnership
to a person in total or partial remuneration for his services shall
not, of itself, make him a partner.
Partnership name.
partnership may be designated by any name.
( 2 ) A partnership shall not be registered by a name which -
( a ) is the same as the name of another commercial
partnership or so nearly similar as in the opinion of the
Registrar it could create confusion; or
( b ) is in the opinion of the Registrar offensive or
otherwise undesirable; or
( c ) has been reserved for registration for another
commercial partnership by notice in writing to the
Registrar given not more than three months before the
date of the second request:
  12      CAP. 386. ]                   COMPANIES
Provided that the Registrar shall notify any refusal under
this subarticle without delay to the person requesting the
registration.
( 3 ) For the purposes of subarticle  ( 2 )( b ),  the Registrar shall
have regard to the names of the partners, the business or proposed
business of the partnership and to the protection of the names of
individuals who are not connected in any way with the partnership.
Penalties. 10. Any person who knowingly makes use of a name falsely
implying the existence of a partnership shall be liable to a penalty.
Contributions 
deemed to be made 
in ownership.
11. Unless specifically provided in the deed of partnership,
things contributed to the partnership shall be deemed to have been
transferred in full ownership:
Provided that, where any of the partners has contributed his
own services only, the contributions made by the other partners
shall, unless specifically provided in the deed of partnership, be
deemed to have been made in usufruct.
Contribution of a 
debt owing to a 
partner.
12. Where a partner has contributed to the partnership a debt
owing to him, he shall not be discharged until the partnership
obtains payment of the amount for which the debt was contributed
and, in case of non-payment at the due date, he shall be liable,
jointly and severally with the debtor, for the said amount with
interest from the date the debt contributed fell due.
How a partnership 
is constituted.
13. A partnership shall not be validly constituted unless a deed
of partnership is entered into and signed and a certificate of
registration is issued under this Act in respect thereof.
Contents of deed of 
partnership.
14. (1) The deed of partnership shall state: 
( a ) the name and residence of each of the partners; 
( b ) the partnership-name;
( c ) the registered office in Malta of the partnership;
( d ) the objects of the partnership, that is to say, whether
the objects are trade in general or a particular branch
of trade, and in the latter case, the nature of the trade;
( e ) the contribution of each of the partners, specifying the
value of the respective contribution of every partner;
( f ) the period if any fixed for the duration of the
partnership. 
( 2 ) The exclusion or omission of any matter from the objects
stated in the deed of partnership may not be set up against third
parties.
Registration of 
deed of 
partnership.
15. (1) The deed of partnership shall be delivered for
registration to the Registrar who, being satisfied that it complies
with the requirements of article 14 and of subarticle  ( 2 ),  shall
register it.
( 2 ) Where the deed of partnership is a public deed or a private
writing enrolled in the records of a notary public, an authentic copy
thereof shall be delivered in lieu of the original.
COMPANIES [ CAP. 386.        13
( 3 ) The aforesaid delivery shall be made by any one of the
partners or his authorised agent.
Duty of Registrar 
and effects of 
registration.
16. (1) On the registration of the deed of partnership the
Registrar shall certify under his hand that the partnership is
registered and the partnership shall come into existence and shall
be authorised to commence business under the partnership name as
from the date of the certificate:
Provided that, if registration is obtained before the date
fixed in the deed of partnership for the commencement of the
partnership, the certificate shall indicate such date, and the
partnership shall come into existence and shall be authorised to
commence business as from such later date.
( 2 ) A certificate of registration given in respect of a partnership
is conclusive evidence that the requirements of this Act in respect
of registration and of matters precedent and incidental to it have
been complied with and that the partnership is duly registered,
under this Act.
Where certificate 
of registration is 
not issued.
17. Unless and until a certificate of registration is issued under
this Act in respect of a partnership or until the date indicated in a
certificate of registration as the date on which a partnership shall
come into existence -
( a ) any two or more persons carrying on business under a
name falsely implying the existence of a partnership
shall have, as against one another and limitedly to
property acquired from such business, such rights only
as are by law conferred on joint owners;
( b ) any obligation contracted in favour of third parties in
good faith under a name falsely implying the existence
of a partnership shall be jointly and severally binding
on those persons, who, if a certificate of registration
had been issued, would have been partners carrying on
business under that name.
Person holding 
himself out to be a 
partner.
18. (1) A person who holds himself out as being a partner
shall be held liable unlimitedly and jointly and severally with the
partners for all the obligations contracted by the partnership.
( 2 ) The inclusion in the partnership-name of the name of a
person who is not a partner shall be taken into account by the court
in determining whether such person is holding himself out as being
a partner.
Changes in deed of 
partnership.
19. (1) Every change relating to the administration or the
representation of a partnership, the dissolution of a partnership
before the period, if any, fixed for its duration, any extension of the
said period not expressly provided for in the deed of partnership
and generally any alteration or addition to the deed of partnership
shall be made in writing and duly signed by the partners authorised
to make that change and, subject to the provisions of article 21,
shall not take effect unless and until the relative instrument or,
where such instrument is a public deed or a private writing enrolled
  14      CAP. 386. ]                   COMPANIES
in the records of a notary public, an authentic copy thereof is
delivered to the Registrar for registration and is registered by him.
In the case of a change relating to the administration or the
representation of a partnership, the relative instrument shall specify
the name and residence of the person or persons entrusted with the
said administration or representation.
( 2 ) Where the extension of the period, if any, fixed for the
duration of a partnership is expressly provided for in the deed of
partnership, the partner or partners having the administration or
representation of the partnership shall, notwithstanding that
provision in the deed, deliver a notice of extension of the period of
duration to the Registrar for registration and such extension shall
not take effect unless and until the said notice is delivered to the
Registrar and is registered by him.
( 3 ) Where a partner ceases to be a partner or where a person
whose name does not appear in the deed of partnership or in any
alteration or addition thereto becomes a partner of an already
existing partnership, a notice to that effect, specifying the name and
residence of any new partner, shall, within one month, be delivered
to the Registrar for registration by the partner or partners having
the administration or the representation of the partnership:
Provided that any assignment of interest in whole or in part
of any partner shall, unless otherwise provided in the deed of
partnership, require the prior consent in writing of all the other
partners.
( 4 ) If default is made in complying with the provisions of
subarticle  ( 3 ),  the partner or partners having the administration or
representation of the partnership shall be liable to a penalty, and,
for every day during which the default continues, to a further
penalty.
Where alteration 
consists in change 
of partnership-
name.
20. Where the alteration to the deed of partnership consists in a
change of the partnership-name, the Registrar shall enter the new
name on the register in place of the former name and shall issue a
certificate of registration altered to meet the circumstances of the
case:
Provided that the provisions of article 9 shall apply to the
registration of such new name.
Reduction in 
contribution of a 
partner and 
dissolution of a 
partnership before 
period fixed for its 
duration.
Amended by:
IV. 2003.31.
21. (1) Any reduction in the contribution of a partner, other
than a contribution consisting in personal services, any dissolution
of the partnership on the grounds mentioned in article 35( b ) or ( f ),
any reduction of the term of duration, if any, of the partnership or
any assignment by a partner of all his interest in the partnership
shall not be operative until three months from the date of
publication of the statement in accordance with article 401(1) ( e )
relating to the instrument effecting such reduction, dissolution or
assignment.
( 2 ) Any creditor of the partnership whose debt existed prior to
the publication referred to in subarticle (1) may object thereto by
writ of summons, within the period of three months as aforesaid
COMPANIES [ CAP. 386.        15
and, if he shows good cause why it should not take effect, the court
shall either uphold the objection or allow the reduction of the
contribution or the dissolution of the partnership or a reduction of
the term of duration, if any, or the assignment of the interest of the
partner, as the case may be, on sufficient security being given by
the partnership.
Right of creditors 
of a partner to 
oppose extension 
of duration of a 
partnership.
22. (1) Where the duration of a partnership is extended
beyond the period, if any, in the deed of partnership, the separate
creditor of a partner may object to such extension by writ of
summons filed within three months from the date of the publication
of the statement in accordance with article 401(1) ( e )  relating to the
instrument effecting such extension and, upon good cause being
shown, the court shall direct the partnership to liquidate such
partner’s interest in the partnership within three months of the
judgment.
( 2 ) The provisions of subarticle (1) shall apply whether any
extension of the period fixed for the duration of the partnership is
or is not expressly provided for in the deed of partnership.
( 3 ) A separate creditor of a partner may only object in
pursuance of this article if his debt existed prior to the publication
of the statement referred to in subarticle (1).
Duties of Registrar 
of Courts.
Amended by: 
XXIV.1995.362.
23. The Registrar of Courts shall, without delay, cause a copy
of any writ of summons filed under articles 21 and 22 and of any
judgment given thereon to be served on the Registrar for
registration.
How deed of 
partnership may be 
altered.
24. Unless otherwise provided in the deed of partnership, any
alteration or addition thereto may only be made with the unanimous
consent of the partners.
Administration and 
representation of a 
partnership and 
how partnership 
may be bound.
25. (1) In so far as the deed of partnership does not otherwise
provide, the administration and representation of the partnership
shall vest in each of the partners severally.
( 2 ) A partnership may not be bound in favour of third parties
except by a partner acting under the partnership-name and having
the representation of the partnership either by virtue of the deed of
partnership or by operation of law.
( 3 ) Where any such partner has acted as aforesaid, the
partnership shall be bound even though it derives no benefit.
Keeping of 
accounting 
records.
Cap. 13.
26. (1) Notwithstanding the provisions of article 26 of the
Commercial Code, the accounting records of the partnership shall
be kept for a period of ten years:
Provided that where the accounting records are kept in a
bound or unified form, the ten years shall commence to run from
the date of the last entry made therein.
( 2 ) If default is made in complying with the requirements of
subarticle (1), every partner who is in default shall be liable to a
penalty.
New partners.
  16      CAP. 386. ]                   COMPANIES
existing partnership, he shall thereby become liable for all the
obligations of the partnership, even if incurred before the date at
which he becomes a partner.
( 2 ) Any agreement to the contrary shall be of no effect with
regard to third parties.
Distribution of 
profits.
28. A partnership shall not distribute profits until it has made
good all losses. 
Rights of creditors 
of a partner.
29. The separate creditors of a partner may enforce their rights,
during the continuance of the partnership, on the share of the
profits if due to their debtor and, on the dissolution of the
partnership, on such portion of the assets of the partnership as is
due to their debtor on the partnership being wound up.
Partner may not 
compete with 
partnership.
30. (1) A partner shall not, in competition with the partnership
and without the express consent of the other partners, carry on
business on his own account or on account of others or be a partner
with unlimited liability in another partnership.
( 2 ) If a partner acts in contravention of the provisions of
subarticle (1), the partnership may, at its option, either take action
for damages and interest against the offending partner or demand
payment of any profit made by him in violation of the aforesaid
prohibition.
( 3 ) The exercise of the rights conferred by subarticle  ( 2 )  shall
be barred by the lapse of two years from the date of the
contravention.
Death of a partner. 31. (1) Saving any provision to the contrary in the deed of
partnership, in the event of death of one of the partners the
surviving partners shall liquidate the deceased partner’s interest in
the partnership in favour of his heirs, unless the surviving partners
unanimously elect either to dissolve the partnership or to continue
the partnership with the heirs, if, in the latter case, such heirs
accept:
Provided that where not all the heirs are in agreement, the
partnership may continue with those who so elect as long as the
dissenting heirs’ interest in the partnership is liquidated in their
favour.
( 2 ) Where the deceased partner has bequeathed his interest by
legacy, the provisions of subarticle (1) shall apply as though
references to heirs were references to the legatees of such interest.
Expulsion of a 
partner.
32. (1) A partner may be expelled from the partnership by a
decision of the majority in number of the other partners unless a
higher majority is required by the partnership deed - 
( a ) if he does not make his contribution in accordance
with the partnership deed;
( b ) if he commits a serious breach of duty as a partner;
( c ) if he contravenes the provisions of article 30(1);
( d ) if he is interdicted or incapacitated;
COMPANIES [ CAP. 386.        17
( e ) in such other cases for which provision is made in the
deed of partnership.
( 2 ) Any decision taken as aforesaid shall be notified, together
with the reasons therefor, by judicial act served on the expelled
partner, and shall not take effect until the lapse of fourteen days
from such notification.
( 3 ) The expelled partner may, by writ of summons filed within
fourteen days from the notification as aforesaid, object to the
decision and the court shall have power to stay the execution of the
said decision pending its judgment.
( 4 ) Where the partnership consists of two partners only, the
expulsion of a partner may only be ordered by the court at the suit
of the other partner.
Discontinuation of 
membership.
33. A partner shall not be entitled to continue as a partner if -
( a ) he is adjudged bankrupt; or
( b ) his interest in the partnership has been liquidated
under the provisions of article 22.
Rights of persons 
ceasing to be 
partners.
34. (1) A partner who is expelled or who by virtue of the
immediately preceding article is not entitled to continue as partner
shall have the right to have his interest in the partnership
liquidated.
( 2 ) There shall be included in the liquidation of the interest of a
partner who is expelled, or who by virtue of the immediately
preceding article is not entitled to continue as a partner, a  pro rata
share of the profits or losses on all work in progress up to the date
of the expulsion.
Dissolution of 
partnerships  en 
nom collectif.
Amended by:
IV. 2003.32.
35. A partnership  en nom collectif  is dissolved - 
( a ) where the period, if any, fixed for its duration expires; 
( b ) if, subject to the provisions of article 21, all the
partners so agree;
( c ) if the partnership is adjudged bankrupt;
( d ) if in the opinion of the Court there exist grounds of
sufficient gravity to warrant dissolution;
( e ) if the number of partners is reduced below two and
remains so reduced for more than six months;
( f ) subject to the provisions of article 21, in such other
cases for which provision is made in the deed of
partnership.
Notice of 
dissolution.
Amended by: 
XXIV.1995.362.
36. (1) On the dissolution of a partnership, and in no case later
than fourteen days after such dissolution, the partners having the
administration or the representation thereof shall deliver to the
Registrar for registration a notice of the dissolution:
Provided that, where a partnership is adjudged bankrupt or
dissolved by order of the court, notice of the dissolution shall be
given as aforesaid by the Registrar of Courts.
  18      CAP. 386. ]                   COMPANIES
Cap. 13.
( 2 ) The following provisions of this Part shall apply to the
dissolution of a partnership except where the partnership is
adjudged bankrupt, in which case the provisions of the Commercial
Code relating to bankruptcy shall apply.
How a partnership 
en nom collectif 
may be wound up.
37. (1) Where the manner in which the partnership is to be
wound up is not provided for in the deed of partnership or is not
determined by agreement between the partners, the partnership
shall be wound up by one or more liquidators.
( 2 ) If the partners do not agree as to the person who is to be
appointed liquidator, the appointment shall be made by the court,
on the application of any partner, creditor of the partnership or the
Registrar.
( 3 ) The liquidator shall, within fourteen days after his
appointment, deliver to the Registrar for registration a notice of his
appointment stating his name and residence.
Power to remove 
liquidator.
Amended by:
IV. 2003.33.
38. (1) A liquidator, whether appointed by the partners or by
the court, may be removed from office either by the partners, if
they so agree, or by order of the court, on a demand by writ of
summons made by any of the partners, if the court is satisfied that
there exist sufficient grounds to warrant his removal.
(2) Where the office of a liquidator becomes vacant, the
provisions of article 37(2) shall apply.
Remuneration of 
liquidator.
39. The remuneration of the liquidator may be fixed by
agreement between the partners and the liquidator, failing which it
shall be fixed by the court.
Costs of winding 
up payable in 
priority to all other 
claims.
40. All costs, charges and expenses properly incurred in the
winding up, including the remuneration of the liquidator, shall be
payable out of the assets of the partnership in priority to all other
claims.
Penalty. 41. If default is made in complying with any of the
requirements of article 36 and of  article  37 ( 3 ) , every partner or
liquidator, as the case may be, who is in default, shall be liable to a
penalty and, for every day during which the default continues, to a
further penalty.
Powers until 
provision is made 
for winding up.
42. Until such time as provision is made for the winding up of
the partnership, only such acts as are of ordinary administration
may be performed.
Duties of partners 
vested with 
administration.
43. (1) Where a liquidator is appointed, the partners vested
with the administration of the partnership shall - 
( a ) deliver to the liquidator all the assets and all the
accounting records and other documents of the
partnership and shall draw up accounts relating to their
administration for the period since the preceding
accounts; and
( b ) together with the liquidator, draw up a balance sheet
showing the state of affairs of the partnership as at the
date of the dissolution.
COMPANIES [ CAP. 386.        19
( 2 ) Subject to the provisions of subarticle (1), on the
appointment of a liquidator all the powers of administration or
representation of the partnership vested in any of the partners shall
cease.
Powers of 
liquidators.
44. (1) The liquidator shall represent the partnership and shall
have power to perform all acts conducive and ancillary to the
winding up of the affairs of the partnership:
Provided that he shall not refer any matter to arbitration or
make any compromise unless so authorised in writing by the
partners.
( 2 ) The liquidator shall not undertake any new transaction. 
( 3 ) Where more than one liquidator is appointed, they shall act
jointly and shall be jointly and severally liable for their acts, unless
the partners have otherwise provided.
Liquidator not to 
distribute assets 
before paying 
debts.
45. (1) The liquidator shall not distribute any assets of the
partnership among the partners unless either the debts and
liabilities of the partnership have been paid or sufficient funds have
been set aside for the payment thereof.
( 2 ) Where the assets of the partnership are insufficient to meet
its liabilities, the liquidator may demand from the partners payment
of the contribution, if any, due by them, irrespective of the date
when it falls due, and, if necessary, the sums required for the
payment of the aforesaid liabilities in the proportion in which the
liabilities of the partnership are to be borne by the partners.
( 3 ) The liquidator may furthermore demand from the partners
payment of the contribution, if any, due by them or any part of it,
irrespective of the date when it falls due, for the purpose of
adjusting the rights of the partners among themselves.
Duty of liquidator 
to give 
information, to 
render account and 
prepare scheme of 
distribution.
46. (1) The liquidator shall, at the request of any of the
partners, inform the partners as to the state and progress of the
liquidation.
( 2 ) As soon as the affairs of the partnership are wound up, the
liquidator shall render an account of the winding up and of his
receipts and payments and draw up a scheme of distribution.
Rules applicable to 
distribution of 
assets.
47. In the distribution of the assets of a partnership the
following provisions shall apply, unless otherwise provided in the
deed of partnership, that is to say - 
( a ) where a thing has been contributed in usufruct or
enjoyment, it shall be restored to the partner
contributing it and the partnership shall be held liable
in damages if the thing has perished or deteriorated for
any cause attributable to any of the partners, saving the
right of the partnership to the reimbursement of any
sums so paid against the partner who is at fault;
( b ) the assets of the partnership shall first be applied in
repayment of the contributions of the partners and any
balance shall be distributed among the partners in
  20      CAP. 386. ]                   COMPANIES
proportion to their share in the profits of the
partnership;
( c ) where it has been agreed that the distribution of the
assets shall be made in kind, the provisions governing
partition of common property shall apply.
Approval of 
accounts and 
scheme of 
distribution.
48. (1) The liquidator shall by judicial act serve on each of the
partners a copy of the accounts and of the scheme of distribution
mentioned in  article  46 ( 2 ) .
( 2 ) The accounts and the scheme of distribution shall be
deemed to have been approved by all the partners if no objection
thereto is lodged by writ of summons by any of the partners within
three months of the service of the judicial act referred to in
subarticle (1).
Striking of name of 
partnership off 
register.
Amended by:
IV. 2003.34.
49. (1) On the approval of the accounts, the liquidator shall
deliver to the Registrar for registration a notice of such approval
and the Registrar shall thereupon register it and strike the name of
the partnership off the register. The Registrar shall forthwith
publish a notice of the completion of the winding up and of such
striking off.
(2) Where the manner in which the partnership is to be wound
up is provided for in the deed of partnership or is determined by
agreement between the partners, it shall be the duty of the partners
to deliver to the Registrar for registration a notice, signed by all of
them, that the winding up has been completed and the Registrar
shall thereupon register it and strike the name of the partnership off
the register. The Registrar shall forthwith publish a notice of the
completion of the winding up and of such striking off.
Preservation of 
accounting records 
and documents 
after dissolution.
50. (1) The accounting records and the documents of the
partnership shall be kept by the liquidator, if any, or by the person
elected for that purpose by the majority of the partners and shall be
so kept for a period of ten years from the date at which the name of
the partnership was struck off the register. The election of such
person shall take place within fourteen days from the registration of
the notice referred to in article 49 and shall not be effected until
such person has signified his acceptance in writing to the partners
within fourteen days from his election:
Provided that where there is no liquidator and the partners
fail to elect such person or where such person refuses to accept his
election, the accounting records and documents shall be delivered
to the Registrar within fourteen days of the non-acceptance or
failure to elect as the case may be, and the Registrar shall keep such
records for the said period of ten years.
( 2 ) Where a person has been elected to keep the accounting
records and the documents of the partnership, or where the partners
have failed to elect such a person, the partners shall inform the
Registrar accordingly within fourteen days of the date when the
election becomes effective or from the failure to elect within the
prescribed period, as the case may be, and in default, the partners
shall be liable to a penalty.
COMPANIES [ CAP. 386.        21
( 3 ) If the liquidator or the person elected by the partners to
keep the accounting records and documents of the partnership fails
to keep them for the period prescribed by subarticle (1), he shall be
liable to a penalty.
( 4 ) If the liquidator or the person elected by the partners to
keep the accounting records and documents of the partnership dies,
his heirs shall be obliged to deliver the said accounting records and
documents to the Registrar within six months and the Registrar
shall keep them for the remainder of the period prescribed by
subarticle (1).
( 5 ) The heirs referred to in subarticle  ( 4 )  shall be liable to a
penalty if they do not comply with the provisions of that subarticle. 
Amended by:
IV. 2003.35.
PART IV - PARTNERSHIP  EN COMMANDITE
OR LIMITED PARTNERSHIP
Definition.
Amended by:
IV. 2003.35, 36.
51. A partnership  en commandite  or limited partnership
operates under a partnership-name and has its obligations
guaranteed by the unlimited and joint and several liability of one or
more partners, called general partners, and by the liability, limited
to the amount, if any, unpaid on the contribution, of one or more
partners, called limited partners:
Provided that at least one of the general partners shall be
either an individual or a body corporate which has its obligations
guaranteed by the unlimited and joint and several liability of one or
more of its members.
Applicability of 
provisions 
governing 
partnerships  en 
nom collectif.
Amended by:
IV. 2003.35.
52. The provisions governing partnerships  en nom collectif
shall apply to partnerships  en commandite  or limited partnership
except insofar as they are inconsistent with the provisions of this
Part.
Partnership-name.
Amended by:
IV. 2003.37.
53. (1) A person, including a limited partner, who holds
himself out as being a general partner shall be held liable
unlimitedly and jointly and severally with the general partners for
all the obligations contracted by the partnership.
( 2 ) The inclusion in the partnership-name of the name of a
person who is not a general partner shall be taken into account by
the court in determining whether such person is holding himself out
as being a general partner.
Contribution of 
limited partner not 
to include personal 
services.
54. The contribution of a limited partner shall not include
personal services.
Contents of deed of 
partnership.
Amended by:
IV. 2003.35.
55. The deed of partnership of a partnership  en commandite  or
limited partnership, in addition to the particulars prescribed by
article 14, shall specify which of the partners are general partners
and which of them are limited partners, and in default the
partnership shall resolve itself into a partnership  en nom collectif.
  22      CAP. 386. ]                   COMPANIES
Rights and duties 
of partners.
56. (1) Unless otherwise provided in the other provisions of
this Part the rights and duties of the general partners shall be the
same as those of partners in a partnership  en nom collectif .
( 2 ) Unless otherwise provided in the deed of partnership but
subject to the provisions of this Part, limited partners shall have
only the rights and duties provided by this Part.
Administration and 
representation.
Amended by:
IV. 2003.35.
57. The administration and representation of the partnership  en
commandite  or limited partnership shall vest in the general
partners, and unless the deed of partnership otherwise provides,
such administration and representation shall vest in each of the
general partners severally.
Appointment of 
partners to 
administer and 
represent 
partnerships  en 
commandite  or 
limited 
partnership .
Amended by:
IV. 2003.35, 38.
58. The general partners shall by unanimous decision have the
right to appoint the partners from amongst themselves who are to
administer and represent the partnership  en commandite  or limited
partnership and to dismiss from office the partners so appointed:
Provided that the deed of partnership may provide that the
limited partners shall have the right to participate in the
appointment of general partners to, or the dismissal of general
partners from the office of administration and representation of the
partnership.
Limited partner 
cannot take part in 
management of 
partnership  en 
commandite  or 
limited 
partnership .
Amended by:
IV. 2003.35.
59. (1) A limited partner shall not perform any act of
administration nor transact business on behalf of the partnership  en
commandite  or limited partnership except by virtue of a power of
attorney given for specified acts or transactions.
( 2 ) If a limited partner acts in contravention of the aforesaid
prohibition, he shall be bound, in regard to third parties,
unlimitedly and jointly and severally with the general partners for
all the obligations of the partnership  en commandite  or limited
partnership and shall moreover be liable to be expelled from the
partnership in accordance with the provisions of article 32: 
Provided that a limited partner acting in contravention of
the prohibition contained in subarticle (1) shall not be expelled
from the partnership if he proves that he had been acting on the
instructions of the general partners.
Communication of 
yearly accounts to 
limited partners.
Amended by:
IV. 2003.35.
60. At the end of each accounting period the balance sheet and
profit and loss account of the partnership  en commandite  or limited
partnership shall be communicated to the limited partners, who, for
the purpose of ascertaining their correctness, shall have a right of
access to the accounting records and other documents of the
partnership.
Non-applicability 
of certain articles 
to limited partners.
61. The provisions of article 30 and of article 32(1)( c ) shall not
apply to a limited partner.
Limited partner not 
bound to restore 
profits received in 
good faith.
62. Notwithstanding the provisions of article 28, a limited
partner shall in no case be bound to restore profits received in good
faith.
COMPANIES [ CAP. 386.        23
Assignment of 
interest by limited 
partner and rights 
of limited partners.
Amended by:
IV. 2003.35.
63. (1) Unless the deed of partnership otherwise provides, a
limited partner may assign his interest in the partnership  en
commandite  or limited partnership: 
Provided that, if the contribution of a limited partner is not
fully paid up, any assignment of his interest in the partnership shall
not have effect, with regard to the partnership, unless it is made
with the consent of all the general partners.
( 2 ) Unless the deed of partnership otherwise provides, any
changes in the deed of partnership which deprive limited partners
of any of their rights shall require the unanimous consent of all the
general partners and of all the limited partners.
Death or expulsion 
of limited partner.
Amended by:
IV. 2003.35.
64. (1) Unless the deed of partnership otherwise provides, in
the event of death of a limited partner, the partnership  en
commandite  or limited partnership shall continue with his heirs.
( 2 ) Notwithstanding the provisions of article 32, interdiction or
incapacitation shall not be grounds for expulsion of a limited
partner.
Dissolution of 
partnership  en 
commandite  or 
limited 
partnership .
Amended by:
IV. 2003.35.
65. (1) A partnership  en commandite  or limited partnership,
besides being determinable for any of the causes mentioned in
article 35, shall be dissolved if no general partner or no limited
partner remains, unless, within six months, the partner who has
ceased to be a partner shall have been substituted.
( 2 ) Where no general partner remains, the limited partners may,
for the said period of six months, appoint one of their number for
the performance of acts of ordinary administration.
( 3 ) A limited partner appointed as aforesaid shall not be subject
to the provisions of article 59.
Division of capital 
into shares.
Amended by:
IV. 2003.35, 39.
66. (1) Without prejudice to the foregoing provisions of this
Part, the capital of a partnership  en commandite  or limited
partnership may be divided into shares.
( 2 ) The provisions of this Act relating to shares in a company
other than the provisions of article 72 shall apply to the shares in a
partnership  en commandite  or limited partnership in so far as they
are not inconsistent with the foregoing provisions of this Part.
( 3 ) The provisions of Chapters IX and X of Part V of this Act,
other than for the provisions of article 184, shall apply to a
partnership  en commandite  or limited partnership, the capital of
which is divided into shares.
( 4 ) It shall be the duty of the partner vested with the
administration or representation of a partnership  en commandite  or
limited partnership, the capital of which is divided into shares, to
deliver to the Registrar for registration the instrument or a copy
thereof as required by article 19 altering or adding to the deed of
partnership within fourteen days from the date of the said alteration
or addition, together with a printed copy of the deed of partnership,
as amended; and any previous amended text of the deed of
partnership may be discarded by the Registrar when a subsequent
amended text is delivered to him for registration:
  24      CAP. 386. ]                   COMPANIES
Provided that in the event of a discrepancy between the text
of any amended deed of partnership and the text of the original
deed of partnership registered in accordance with the provisions of
article 16, the latter text together with any instruments registered in
accordance with the provisions of subarticle  ( 4 ),  shall prevail.
( 5 ) The provisions of article 78, of  article  137(4), (5) and (6)
and of  article  142(2) shall apply to a partnership  en commandite  or
limited partnership, the capital of which is divided into shares, with
the substitution of references to partners vested with administration
or representation for references to directors, officials or the Board
of directors; with the substitution of references to partnership  en
commandite  or limited partnership, the capital of which is divided
into shares, for references to company; with the substitution of
references to deed of partnership for references to memorandum or
memorandum and articles; with the substitution of partners for
references to shareholders; and, with regard to  article  137(5), with
the substitution of the term "a decision of the partners" for the term
"any resolution of the general meeting or from a decision of the
Board of directors".
( 6 ) If default is made in complying with the provisions of
subarticle  ( 4 ),  every partner vested with the administration or
representation of a partnership  en commandite  or limited
partnership the capital of which is divided into shares who is in
default shall be liable to a penalty, and for every day during which
the default continues, to a further penalty.
( 7 ) A partnership  en commandite  or limited partnership, the
capital of which is not divided into shares, may change its status to
a partnership  en commandite  or limited partnership, the capital of
which is divided into shares, by a decision taken in accordance with
the provisions of the deed of partnership, or, in the absence of any
such provision, with the consent of all the partners, both general
and limited:
Provided that where one or more limited partners, holding
in the aggregate not more than one-fourth of the total contribution
of the limited partners, have not given their consent the partnership
en commandite  or limited partnership may nevertheless proceed
with the change of its status, but it shall be required, for the
purpose of such change, to liquidate and re-imburse to every
partner who has not given his consent, if he so requests, his interest
in the partnership  en commandite  or limited partnership on such
terms as may be agreed, or as the court, on a demand of either the
partnership or the limited partner, may deem fit to order.
( 8 ) A partnership  en commandite  or limited partnership, the
capital of which is divided into shares, may change its status to a
partnership  en commandite  or limited partnership, the capital of
which is not divided into shares, by a decision taken in accordance
with the provisions of the deed of partnership or, in the absence of
any such provision, with the consent of all the partners, both
general and limited:
Provided that where one or more limited partners, holding
in the aggregate not more than one-tenth of the share capital of the
COMPANIES [ CAP. 386.        25
partnership, have not given their consent, the partnership  en
commandite  or limited partnership may nevertheless proceed with
the change of its status, but it shall be required, for the purpose of
such change, to redeem the shares held by every partner in the
partnership  en commandite  or limited partnership who has not
given his consent, if he so requests, on such terms as may be agreed
or as the court on a demand of either the partnership or of the
limited partner may deem fit to order.
( 9 ) It shall be the duty of the partner vested with the
administration or representation of a partnership  en commandite  or
limited partnership, which has decided to change its status in
accordance with subarticle  ( 7 ),  to deliver to the Registrar for
registration the instrument or a copy thereof as required by article
19, altering or adding to the deed of partnership together with a
printed copy of the deed of partnership as amended, and the
provisions of subarticle  ( 4 )  shall thereafter apply to the partnership.
( 10 ) It shall be the duty of the partner vested with the
administration or representation of a partnership  en commandite  or
limited partnership which has decided to change its status in
accordance with subarticle  ( 8 ),  to deliver to the Registrar for
registration, the instrument or a copy thereof as required by article
19, altering or adding to the deed of partnership together with a
printed copy of the deed of partnership as amended, and the
provisions of subarticle  ( 4 )  shall thereafter no longer apply to the
partnership.
( 11 ) The change of status referred to in subarticle  ( 7 )  or in
subarticle  ( 8 )  shall not take effect unless and until it is registered as
required by subarticle  ( 9 )  or by subarticle  ( 10 )  respectively, of this
article.
(12) ( a ) Where a partnership  en commandite  or limited
partnership, the capital of which is divided into shares,
is dissolved and a liquidator has been appointed, as
soon as the affairs of the partnership are fully wound
up, the liquidator shall make an account of the winding
up, showing how the winding up has been conducted
and how the property of the partnership  en commandite
or limited partnership has been disposed of, and shall
draw up a scheme of distribution and he shall cause the
account to be audited by one or more auditors
appointed by a decision of the partners. The liquidator
shall by judicial act serve on each of the partners a
copy of the accounts and of the scheme of distribution,
if any, together with the auditors’ report and giving any
explanation thereof.
( b ) The accounts and the scheme of distribution shall be
deemed to have been approved by all the partners if no
objection thereto is lodged by writ of summons by any
of the partners within three months of the service of
the judicial act referred to in paragraph ( a ).
( c ) The provisions of article 153 shall apply to an auditor
appointed in terms of paragraph ( a ), and the words "the
  26      CAP. 386. ]                   COMPANIES
previous three years" in the said article 153 shall be
construed as referring to the last three years
immediately preceding the date of dissolution. Such
auditor shall not be a person who has held the office of
auditor of the partnership  en commandite  or limited
partnership at any time during the last three years
immediately preceding the date of dissolution.
Partnership  en 
commandite  or 
limited 
partnership.
Added by:
IV. 2003.40.
Cap. 370.
66A. (1) This article shall apply to a partnership  en
commandite  or limited partnership which in the deed of partnership
expressly limits its objects to the collective investment of its funds
in securities and in other movable and immovable property, or in
any of them, with the aim of spreading investment risk and giving
the partners the benefit of the results of the management of its
funds, and to matters ancillary or incidental thereto, and which
qualifies as a collective investment scheme and is duly licensed in
terms of the Investment Services Act, or for any other purpose as
the Minister may from time to time prescribe by regulations.
(2) A partnership  en commandite  or limited partnership within
the meaning of subarticle (1) shall be regulated by the provisions
contained in the Tenth Schedule and, unless otherwise provided in
the said Schedule, by the provisions of Part IV of this Act but only
in so far as such provisions are not inconsistent with the said
Schedule:
Provided that where any particular matter arises in relation
to a partnership  en commandite  or limited partnership within the
meaning of subarticle (1) which is not specifically regulated by any
provision of the Tenth Schedule or Part IV of this Act, reference
shall be made, where applicable and to the extent possible, to any
relevant provision of this Act, including any regulations made
thereunder.
(3) The Minister may make regulations for the better carrying
out of any of the provisions of the Tenth Schedule and of Part IV of
this Act as applicable to partnerships  en commandite  or limited
partnerships within the meaning of subarticle (1), and may, without
prejudice to the generality of the foregoing, by such regulations
make provisions as to any of the following matters -
( a ) the forms to be used for the purposes of this Act in
respect of such partnerships  en commandite  or limited
partnerships;
( b ) the registration of such partnerships  en commandite  or
limited partnerships under this Act and any matters
incidental thereto;
( c ) any matter to be prescribed under this Act in respect of
partnerships  en commandite  or limited partnerships
within the meaning of subarticle (1);
( d ) the amendment of any provision -
(i) relating to matters to be filed with the Registrar
in connection with registration of such
partnerships  en commandite  or limited
partnerships;
COMPANIES [ CAP. 386.        27
(ii) relating to the records to be kept by such
partnerships  en commandite  or limited
partnerships;
( e ) to prescribe fees payable under this Act in respect of
such partnerships  en commandite  or limited
partnerships;
( f ) the exemption of partnerships  en commandite  or
limited partnerships within the meaning of subarticle
(1) or any category thereof from any of the provisions
of the Tenth Schedule or of this Act, as the case may
be, subject to such modifications, variations and
conditions as may be specified.
(4) Regulations made under this article may make different
provisions for different cases or classes of cases.
PART V - LIMITED LIABILITY COMPANY 
TITLE I - FORMATION AND FUNCTIONING OF 
COMPANIES
Chapter I - Formation of a company and matters incidental 
thereto
Definition.
shares held by its members. The members’ liability is limited to the
amount, if any, unpaid on the shares respectively held by each of
them.
How a company is 
constituted.
68. A company shall not be validly constituted under this Act
unless a memorandum of association is entered into and subscribed
by at least two persons, and a certificate of registration is issued in
respect thereof. Companies formed and registered under the
Ordinance shall comply with this Act in accordance with the
provisions of article 428.
Contents of 
memorandum.
Amended by:
IV. 2003.41.
69. (1) The memorandum of every company shall state:
( a ) whether the company is a public company or a private
company;
( b ) the name and residence of each of the subscribers
thereto;
( c ) the name of the company;
( d ) the registered office in Malta of the company; 
( e ) the objects of the company;
( f ) the amount of share capital with which the company
proposes to be registered  ( hereinafter referred to as
"the authorised capital" ) , the division thereof into
shares of a fixed amount, the number of shares taken
up by each of the subscribers and the amount paid up
in respect of each share and, where the share capital is
  28      CAP. 386. ]                   COMPANIES
divided into different classes of shares, the rights
attaching to the shares of each class;
( g ) the number of the directors, the name and residence of
the first directors and, where any of the directors is a
body corporate, the name and registered or principal
office of the body corporate, the manner in which the
representation of the company is to be exercised, and
the name of the first person or persons vested with
such representation;
( h ) the name and residence of the first company secretary
or secretaries;
( i ) the period, if any, fixed for the duration of the
company. 
( 2 ) In the case of a public company, there shall be annexed to
the memorandum a document providing:
( a ) the total amount or an estimate of all the costs payable
by the company or chargeable to it by reason of its
formation up to the time it is authorised to commence
business, and of all the costs relating to transactions
leading to such authorisation; and
( b ) a description of any special advantage granted prior to
the time the company is authorized to commence
business to anyone who has taken part in the formation
of the company or in transactions leading to such
authorisation:
Provided that, where in accordance with the proviso to
article 77(1), a company is authorised to commence business at a
date later than the date of its registration, the said document shall
be delivered to the Registrar for registration within fourteen days
from the date the company is authorised to commence business.
(3) Companies formed and registered before the coming into
force of this subarticle shall comply with the provisions of
subarticle (1)( f ) on the disclosure, in the memorandum of
association of the company, of the rights attaching to the shares of
each different class, within twelve months from the coming into
force of this subarticle:
Provided that companies formed and registered before the
coming into force of this subarticle shall be deemed to satisfy the
requirements of subarticle (1)( f ) on the disclosure, in the
memorandum of association, of the rights attaching to the shares of
each different class, if such provision or equivalent thereof is
already incorporated in the articles of association of the company.
Name of company.
Amended by:
IV. 2003.42.
70. (1) Subject to the provisions of subarticles  ( 3 )  to  ( 6 ),  a
public company may be designated by any name, but such name
must end with the words "public limited company" or their
abbreviation "p.l.c.".
( 2 ) Subject to the provisions of subarticles  ( 3 )  to  ( 6 ),  a private
company may be designated by any name, but such name shall end
with the words "private limited company" or the word "limited" or
COMPANIES [ CAP. 386.        29
its abbreviation "ltd.".
( 3 ) ( a ) Where a private company is an investment company
with variable share capital, the name of the company
shall be followed by the words "investment company
with variable share capital" or by "SICAV", followed
by the words "private limited company", "limited" or
its abbreviation.
( b ) Where a public company is an investment company
with fixed share capital or an investment company
with variable share capital, the name of the company
shall be followed by the words "investment company
with fixed share capital" or "investment company with
variable share capital", as the case may be, followed
by the words "public limited company", or its
abbreviation. The words "investment company with
fixed share capital" may be replaced with the words
"investment company" or with "INVCO" and the
words "investment company with variable share
capital" may be replaced with "SICAV".
( 4 ) A company shall not be registered by a name which -
( a ) is the same as a name of another commercial
partnership or so nearly similar as in the opinion of the
Registrar it could create confusion; or
( b ) is in the opinion of the Registrar offensive or
otherwise undesirable; or
( c ) has been reserved for registration for another
commercial partnership by a notice in writing to the
Registrar given not more than three months before the
date of the second request:
Provided that the Registrar shall notify any refusal under
this subarticle without delay to the person requesting the
registration: 
Provided further that in applying paragraph  ( b ),  the
Registrar shall have regard to the business or proposed business of
the company, to the protection of the names of individuals who are
not connected in any way with the company, and, in the case of a
private company, to the names of the members.
Cap. 330. 
Cap. 331.
( 5 ) A company shall not be registered by a name which
includes the word "nominee" unless it is a company qualified to be
registered as a nominee company under the Malta Financial
Services Authority Act or the Trusts Act.
( 6 ) A person or persons trading or carrying on business or other
activity - 
( a ) under a name or title which ends with the words
"public limited company" or "p.l.c." or "private limited
company" or "limited" or "ltd." or a contraction or
imitation thereof and which is not the name of a duly
registered company; or
  30      CAP. 386. ]                   COMPANIES
Cap. 330. 
Cap. 331.
( b ) under a name or title which contains the word
"nominee", or a contraction or imitation thereof, and
which is not the name of a company in possession of a
warrant, currently in force, issued under the Malta
Financial Services Authority Act, or the Trusts Act,
authorising such company to act as a nominee
company for the purpose of those Acts; or
( c ) under a name or title which ends with the words
"investment company with fixed share capital",
"investment company" or "INVCO" or a contraction or
imitation thereof when the person or persons are not a
public company which is an investment company with
fixed share capital; or
( d ) under a name or title which ends with the words
"investment company with variable share capital" or
"SICAV" or a contraction or imitation thereof when the
person or persons are not an investment company with
variable share capital,
shall be liable to a penalty, and, for every day during which the
default continues, to a further penalty.
Objects of 
company.
71. The objects of a company may not be simply stated to be
any lawful purpose or trade in general.
Minimum share 
capital.
72. (1) The authorised share capital of a company shall be -
not less than twenty thousand liri subscribed by at
least two persons in the case of a public company; or 
not less than five hundred liri subscribed by at least
two persons in the case of a private company.
( 2 ) Where the authorised share capital is equal to the minimum
aforesaid, it shall be fully subscribed in the memorandum, and
where it exceeds such minimum, at least that minimum shall be
subscribed in the memorandum.
( 3 ) In the case of a public company, not less than twenty-five
per cent, and in the case of a private company, not less than twenty
per cent, of the nominal value of each share taken up shall be paid
up on the signing of the memorandum.
( 4 ) The bearer of a share warrant issued in accordance with
article 121 shall not be taken into account for the purpose of
determining the number of persons specified in subarticle (1).
( 5 ) The ordinary shares of a company shall not be redeemable,
and every company shall at all times have ordinary shares. 
Consideration for 
acquisition of 
shares.
73. (1) The consideration for the acquisition of shares in a
company whether on the original subscription or a subsequent
issue, may only consist of assets capable of economic assessment,
and furthermore, future personal services and in general any
undertakings to perform work or supply services may not be given
by way of consideration.
( 2 ) Where, on original subscription, the shares are issued for a
consideration other than in cash, the full consideration shall be
COMPANIES [ CAP. 386.        31
transferred to the company within five years from the date the
company is authorised to commence business.
( 3 ) Where shares are issued other than on original subscription
for a consideration other than in cash, the full consideration shall
be transferred within five years from the date of the decision to
issue the shares.
( 4 ) A report on any consideration other than in cash shall be
drawn up before the company is registered or before the shares are
issued, as the case may be, by one or more experts who are
independent of the company and approved by the Registrar.
( 5 ) The expert’s report shall contain at least a description of
each of the assets comprising the consideration as well as the
methods of valuation which have been used and shall state whether
the values arrived at by the application of these methods
correspond at least to the number and nominal value, and, where
applicable, to the premium on the shares to be issued for them.
( 6 ) The report shall be delivered to the Registrar for
registration before the company is registered or before the shares
are issued, as the case may be; and, in default, the Registrar shall
accordingly refuse to register the company or the return of the
allotments of the shares so issued, and, in the latter case, the issue
shall be considered null and void.
( 7 ) Where an amount standing to the credit of any of a
company’s reserve accounts or of its profit and loss account is
applied in paying up to any extent any shares allotted to members
of the company or any premiums on shares so allotted, the amount
applied shall not be considered as consideration other than in cash
for the purposes of this article.
Transfer to 
company of non- 
cash asset in first 
two years.
Amended by:
IV. 2003.43.
74. (1) A company shall not acquire, within two years of its
authorisation to commence business, any asset belonging to a
person who subscribed the company’s memorandum or who is a
member of the company for a consideration which is equivalent to
at least one tenth of the issued capital of the company unless the
following conditions are satisfied:
( a ) the asset to be received by the company, and any
consideration other than cash to be given by the
company, shall have been valued by one or more
experts who are independent of the company and
approved by the Registrar;
( b ) a report with respect to the matters specified in
paragraph  ( a )  shall have been made to the company
during the six months immediately preceding the date
of the agreement;
( c ) the terms of the agreement shall have been approved
by ordinary resolution; and
( d ) not later than the giving of notice of the meeting at
which the resolution is proposed, copies of the
resolution and of the report shall have been circulated
to the members of the company entitled to receive
  32      CAP. 386. ]                   COMPANIES
notice of the meeting and, if the person with whom the
agreement in question is proposed to be made is not
then a member of the company so entitled, to that
person.
( 2 ) The report referred to in subarticle (1) ( b )  shall be delivered
to the Registrar for registration at the same time as it is circulated
in accordance with subarticle (1) ( d ) . If the company fails to comply
with this subarticle, every officer of the company who is in default
shall be liable to a penalty.
( 3 ) If a company enters into an agreement in contravention of
this article and either - 
( a ) the person with whom the company made the
agreement has not received the expert’s report required
for compliance with the conditions of this article; or
( b ) there has been some other contravention of this article
which that person knew or ought to have known
amounted to a contravention,
the company shall be entitled to recover from that person any
consideration given by it under the agreement, or an amount equal
to the value of the consideration at the time of the agreement, and
the agreement, so far as not carried out, shall be void.
( 4 ) The provisions of this article shall not apply -
( a ) where it is part of the company’s ordinary business to
acquire, or arrange for other persons to acquire, assets
of a particular description, to an agreement entered
into by the company in the ordinary course of its
business for the transfer of an asset of that description
to it or to such person, as the case may be; or
( b ) to acquisitions made by the company at the instance or
under the supervision of the court; or
( c ) to stock exchange acquisitions.
Articles of 
association.
75. (1) There may be registered with the memorandum,
articles of association  ( hereinafter referred to as "articles" )  which
shall be signed by the subscribers to the memorandum and
prescribing regulations for the company.
( 2 ) If articles are not registered, or, if articles are registered, in
so far as the articles do not exclude or modify the regulations
contained in the First Schedule, such regulations shall be the
regulations of the company in the same manner and to the same
extent as if they were contained in duly registered articles.
Registration of 
memorandum and 
articles.
Amended by:
IV. 2003.44.
76. (1) The memorandum and articles, if any, shall be
delivered for registration to the Registrar who, being satisfied that
all the requirements of articles 68 to 73 and of articles 75 and 139
have been complied with, shall register them.
( 2 ) Where the memorandum or the articles are drawn up in a
public deed or in a private writing enrolled in the records of a
notary public, an authentic copy thereof shall be delivered in lieu of
COMPANIES [ CAP. 386.        33
the original.
( 3 ) The aforesaid delivery shall be made by any one of the
subscribers to the memorandum, or the authorised agent of such
subscriber.
(4) Notwithstanding the provisions of subarticle (1), and
without prejudice to the provisions of article 77(2), the
responsibility for ensuring that the articles of association, if any, of
a company, are correct, complete and in full compliance with this
Act and any other applicable law shall lie with the persons who
have entered into and subscribed to the memorandum of
association.
Duty of Registrar 
and effects of 
registration.
77. (1) On the registration of the memorandum and articles, if
any, of a company, the Registrar shall certify under his hand that
the company is registered, and the company shall come into
existence and shall be authorised to commence business as from the
date of registration which date shall be indicated in the certificate:
Provided that if registration is obtained before the date, if
any, fixed in the memorandum for the commencement of the
company, the certificate shall indicate such date and the company
shall come into existence and shall be authorised to commence
business as from such later date.
( 2 ) A certificate of registration given in respect of a company
is conclusive evidence that the requirements of this Act in respect
of registration and of matters precedent and incidental to it have
been complied with and that the company is duly registered as a
public or private company under this Act.
Where certificate 
of registration is 
not issued.
78. (1) All persons carrying on business or entering into
agreements in the name of or on behalf of a company in respect of
which a certificate of registration has not been issued under this
Act, or before the date indicated in the certificate of registration as
the date on which the company shall come into existence, shall,
unless otherwise agreed, be personally and jointly and severally
liable for their dealings with third parties entered into by them in
the aforementioned capacity.
( 2 ) Failing agreement to the contrary, the persons referred to in
subarticle (1) shall have, as against one another and in respect of
the assets and liabilities arising out of the business carried on in the
company’s name or on its behalf, the rights and obligations of joint
owners.
( 3 ) Notwithstanding the provisions of subarticle (1), the
dealings referred to in that subarticle shall, with respect to a third
party who has dealt in good faith with persons purporting to act in
the name of or on behalf of a company in respect of which a
certificate of registration has not been issued under this Act or
which has not yet come into existence, with effect from the date on
which the company shall come into existence, be treated as having
been undertaken by the company; provided that in such an event the
provisions of subarticle (1) shall not apply. The company shall be
entitled to be indemnified by the persons who had acted in its name
  34      CAP. 386. ]                   COMPANIES
or on its behalf in respect of its liability under this subarticle
towards the said third party.
Alterations and 
additions to 
memorandum and 
articles.
Amended by:
IV. 2003.45.
79. (1) A company may by extraordinary resolution alter or
add to its memorandum or articles:
Provided that - 
( i ) where the alteration consists in a change of the
registered office in Malta of the company such
alteration may be effected by a resolution of the
directors; and
( ii ) where the alteration consists in the conversion of
any shares into stock or in the reconversion of
that stock into shares, such alteration may only
be made if the shares to be converted are paid up
shares and if the stock is reconverted into paid
up shares, but, if the company is so authorised
by its memorandum or articles, it may by
ordinary resolution convert any paid up shares
into stock and reconvert that stock into paid up
shares of any denomination.
( 2 ) It shall be the duty of the directors and of the company
secretary to deliver to the Registrar for registration a printed copy
of any resolution as aforesaid within fourteen days after the date of
the resolution, together with a revised and updated copy of the
memorandum, and of the articles, if any, as amended by the said
resolution and incorporating all the changes effected to date
relating to the directors, company secretary, the representation of
the company, change in registered office of the company, or any
transfer or transmission of shares or any allotment of shares. Any
previous amended text of the memorandum and articles, if any, may
be discarded by the Registrar when a subsequent amended text is
delivered to him for registration:
Provided that in the event of a discrepancy between the text
of any amended memorandum and articles, if any, and the text of
the original memorandum and articles, if any, registered in
accordance with the provisions of article 76, the latter text together
with resolutions registered in accordance with the provisions of
subarticle (2) shall prevail.
Notwithstanding the provisions of subarticle (2), where the
alteration consists in a change in the registered office in Malta of
the company, the directors or company secretary shall send to the
Registrar for registration a return of any change in the registered
office, specifying the date of the change, together with the new
registered office, within fourteen days from the happening thereof.
( 3 ) Any alteration or addition to the memorandum or articles of
a company shall not take effect, unless and until it is registered as
provided in subarticle  ( 2 ) .
(4) The responsibility for ensuring that any proposed
amendments to the articles of association, if any, of a company, are
correct, complete and in full compliance with this Act and any
COMPANIES [ CAP. 386.        35
other applicable law shall lie with the directors of the said company
( 5 ) If default is made in complying with the provisions of
subarticle  ( 2 ),  every officer of the company who is in default shall
be liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Change of name of 
company.
80. Where a company changes its name under the provisions of
article 79, the Registrar shall enter the new name on the register in
place of the former name and shall issue a certificate of registration
altered to meet the circumstances of the case.
Alteration in 
memorandum or 
articles increasing 
liability to 
contribute to share 
capital not to bind 
existing members 
without consent.
81. Notwithstanding anything in the memorandum or articles
of a company no member shall be bound by any alteration made in
the memorandum or articles after the date on which he became a
member if and so far as the alteration requires him to subscribe for
more shares than the number held by him at the date on which the
alteration is made, or in any way increases his liability as at that
date to contribute to the share capital of, or otherwise pay money
to, the company:
Provided that this article shall not apply in any case where
the member agrees in writing, either before or after the alteration is
made, to be bound thereby.
Authentication of 
documents.
82. (1) A document or proceeding requiring authentication by
a company may be signed by a director, the company secretary or
other authorised officer of the company.
( 2 ) All documents supplied to the Registrar shall be
authenticated in accordance with this article.
Chapter II - Changes to a company’s share capital
Reduction of 
issued share 
capital.
Amended by:
XXIV. 1995.362;
IV. 2003.46.
83. (1) Notwithstanding the provisions of  article  79 ( 3 ) , where
the alteration consists in the reduction of the issued share capital,
any such reduction shall not take effect until three months from the
date of the publication of the statement referred to in article
401(1) ( e )  relating to the resolution effecting such alteration:
Provided that if a creditor of the company whose debt
existed prior to the publication of the statement mentioned in this
subarticle objects thereto by writ of summons filed within the
period of three months reckoned as aforesaid and shows good cause
why it should not take effect, the court shall either uphold the
objection or allow the reduction on sufficient security being given:
Provided further that a reduction in share capital shall be
void to the extent that it reduces the capital to less than the
minimum prescribed by article 72.
( 2 ) The Registrar of Courts shall without delay cause a copy of
any writ of summons filed under subarticle (1) and of any judgment
given thereon to be served on the Registrar for registration.
( 3 ) The total or partial waiving of the unpaid part of the issued
  36      CAP. 386. ]                   COMPANIES
shares and the release of the holders of those shares from their
obligation to pay up that unpaid part shall, notwithstanding
anything contained in the memorandum or articles of a company, in
all cases be considered as a reduction in share capital.
( 4 ) Where there are different classes of shares the decision by
the general meeting concerning a reduction in the issued share
capital shall be subject to a separate vote for each class of
shareholders whose rights are affected by the reduction, and for
every separate vote taken the same majority shall be required as
where the shares are not divided into different classes.
( 5 ) An alteration consisting in the reduction of the issued share
capital whose purpose is to offset losses incurred or to include
sums of money in a reserve shall take effect immediately on the
registration of the resolution concerning such a reduction and the
provisions of subarticle (1) relating to the rights granted to
creditors of the company shall not apply:
Provided that, following this operation, the amount of such
reserve is not more than ten per cent of the reduced issued share
capital: 
Provided further that any such reserve shall be used only
for offsetting losses incurred or for increasing the issued share
capital by the capitalisation of such reserve.
( 6 ) In the cases referred to in subarticle  ( 5 )  the amounts
deriving from the reduction of the issued share capital may not be
used for making payments or distributions to shareholders or to
discharge shareholders from the obligation to pay calls on their
shares:
Provided that if the provisions of subarticles (1) and (2)
relating to the rights granted to the creditors of the company are
followed for the purpose of reducing any sum of money contained
in any such reserve, as is referred to in subarticle (5), the amounts
deriving therefrom may be used for making payments or
distributions to shareholders.
( 7 ) The notice convening the general meeting at which the
extraordinary resolution for the reduction of issued share capital is
to be taken, shall, in addition to the requirements laid down in
article 135(1) ( a ) , also specify the purpose of the reduction and the
way in which it is to be carried out.
Investment 
companies with 
variable share 
capital.
Amended by:
IV. 2003.47;
IX. 2003.84.
84. (1) A company may, by complying with the provisions of
this article, be formed as an investment company with variable
share capital.
( 2 ) ( a ) The memorandum of an investment company with
variable share capital shall, in respect of the share
capital of the company, state in lieu of the matters
specified in  article  69 ( f )  that - 
( i ) the share capital of the company shall be equal
to the value for the time being of the issued
share capital of the company; and
( ii ) such share capital shall be divided into a
COMPANIES [ CAP. 386.        37
specified number of shares without assigning
any nominal value thereto; and
( b ) furthermore, the memorandum of the company shall
limit the object of the company to either one of the
following -
(i) the collective investment of its funds in
securities and in other movable and immovable
property, or in any of them, with the aim of
spreading investment risk; and giving
shareholders of the company the benefit of the
results of the management of its funds, and in
the fulfilment of that object, it shall be entitled
to perform any act which is connected with or
ancillary thereto; or
Cap. 450.
(ii) to act and operate as a Retirement Fund within
the meaning of articles 2 and 4 of the Special
Funds (Regulation) Act; and
( c ) the memorandum or articles of the company shall
provide - 
( i ) that the actual value of the paid up share capital
of the company shall be at all times equal to the
value of the assets of any kind of the company
after the deduction of its liabilities; and
( ii ) that the shares of the company shall be
purchased by the company directly or indirectly
out of the assets of the company, at the request
of any of the holders thereof or as otherwise
provided by the memorandum or articles of the
company.
( 3 ) Action taken by a company to ensure that the stock
exchange value of its shares does not deviate from its net asset
value by more than a percentage specified in its articles, which
deviation shall not be greater than five per cent, shall be regarded
as action taken for the purposes of subarticle  ( 2 )( c )( ii ) .
( 4 ) An investment company with variable share capital shall
not issue partly paid up shares.
( 5 ) The purchase by an investment company with variable
share capital of its own shares shall be on such terms and in such
manner as may be provided by its articles.
( 6 ) Shares of an investment company with variable share
capital which have been purchased by the company itself shall be
cancelled and the amount of the company’s issued share capital
shall be reduced by the amount of the consideration paid by the
company for the purchase of the shares, and nothing in this Act
shall require an investment company with variable share capital to
create any reserve.
( 7 ) Without prejudice to any requirements that may be imposed
on an investment company with variable share capital pursuant to
any other enactment, the provisions of  article  70(1) and  ( 2 ) , articles
  38      CAP. 386. ]                   COMPANIES
72, 83, 85 to 88, 97, 103, 105 to 113, 115 and Chapter XI of Part V
of this Act, shall not apply to such a company.
( 8 ) Notwithstanding any other provision of this Act, an
investment company with variable share capital shall not be
obliged to give any of the details in Parts 2 and 3 of the form of
annual return set out in the Seventh Schedule, other than the share
capital of the company and the number of shares issued.
( 9 ) Any reference in this Act to the nominal value of an issued
or allotted share in, or of the issued or allotted share capital of, a
company shall be construed, in the case of an investment company
with variable share capital, as a reference to the net asset value.
Cap. 370.
( 10 ) The Minister, in consultation with the Minister responsible
under the Investment Services Act, acting on the advice of the
competent authority under the said Act, may make regulations for
the better carrying out of any of the provisions of this article; and
without prejudice to the generality of the foregoing may, by such
regulations, in particular:
( a ) make further provision regarding the contents of the
memorandum and articles of the company, including
provision for the issue of fractional shares;
( b ) exempt or provide for the exemption of such company,
or any category thereof, from any of the provisions of
this Act or of any other law in force, subject to such
modifications, variations and conditions as may be
specified;
( c ) provide for the constitution and regulation of
investment companies with variable share capital as
umbrella or multi-class companies, and provide for the
constitution of sub-funds, and the different classes of
shares that may be issued by such companies; provide
for the possibility of apportioning and allocating assets
and liabilities between the different sub-funds or
classes, for considering individual sub-funds or classes
as separate and distinct entities for such purposes as
may be established, and provide for the currency or
currencies in which such sub-funds or different classes
of shares may be designated;
Cap. 370.
( d ) apply and extend  mutatis mutandis  the provisions of
this article to other forms of commercial partnerships
which constitute collective investment schemes for the
purposes of the Investment Services Act and subject to
such variations or modifications as may be prescribed;
( e ) provide for any matter incidental to or connected with
the above.
Cap. 450.
(11) The Minister, in consultation with the Minister responsible
under the Special Funds (Regulation) Act, acting on the advice of
the Malta Financial Services Authority, may make regulations to
apply and extend  mutatis mutandis  the provisions of this article to
investment companies with variable share capital established for
the purpose of acting and operating as a Retirement Fund within the
COMPANIES [ CAP. 386.        39
meaning of articles 2 and 4 of the Special Funds (Regulation) Act;
and without prejudice to the generality of the foregoing may, by
such regulations, provide for any matter referred to in the
immediatley preceding subarticle.
Power to make 
regulations 
regarding cell 
companies.
Added by:
XVII. 1998.70.
Amended by:
IV. 2003.48.
Cap. 403.
84A. (1) The Minister, in consultation with the Minister
responsible for finance and acting on the advice of the   competent
authority under the Insurance Business Act, may make regulations
which provide for the formation, constitution, authorisation and
regulation of cell companies, make it possible for a company
authorised under the Insurance Business Act, to carry on business
of insurance, or any other business as may be prescribed, to convert
into a cell company, and for all matters that may arise in connection
therewith; and for the better carrying out of the provisions of this
article, and without prejudice to the generality of the foregoing,
may, by such regulations, in particular -
( a ) make provision regarding the contents of the
memorandum and articles of association of a cell
company, including provision for the creation by the
cell company of any one or more cells, and for
segregating and protecting the cellular and other assets
of the company, and establish reporting and other
disclosure requirements;
( b ) exempt or provide for the exemption of such company
from any of the provisions of this Act or of any other
law in force, subject to such modifications, variations
and conditions as may be specified;
( c ) make provision for the manner and the form whereby a
cell company may create and issue cell shares and to
make any provision relating to the assets of the cell
company, including the requirement that the assets of a
cell company should be of a specified class or
description, or any other requirements in respect of the
quality, nature or extent of such assets;
( d ) make provision allowing cells or the cellular assets
attributable to any cell of a cell company to be
transferable to any other person;
( e ) make provision for considering individual cells as
separate and distinct entities for such purposes as may
be established;
( f ) provide for any matter consequential, incidental to or
connected with any of the above matters.
(2) For the purpose of this article -
Cap. 404.
( a ) "business of insurance" shall include the business of
insurance manager, as well as the business of
insurance broking under the Insurance Brokers and
other Intermediaries Act; and reference to "company"
shall include reference to a partnership  en commandite
or similar or equivalent body corporate the capital of
which is divided into shares;
  40      CAP. 386. ]                   COMPANIES
( b ) "cell" means a cell created by a cell company for the
purpose of segregating and protecting the cellular
assets of the company in such manner as may be
prescribed and includes a reference to segregated
accounts, compartments or units within a company
having multiple accounts, compartments or units, by
whatever name designated, and the word "cellular"
shall be interpreted and applied accordingly;
( c ) "cellular assets" of a cell company means the assets of
the company attributable to any cell of the company as
may be prescribed; and
( d ) "cell company" is a company formed or constituted as
such or converted into a cell company and creating
within itself one or more cells for the purpose of
segregating and protecting the cellular assets of the
company in such manner as may be prescribed.
Application of 
article 84(10)( c ) to 
collective 
investment 
schemes.
Added by:
IV. 2003.49.
Cap. 370.
84B.  Nothing in article 84 shall be deemed to prohibit a
company, which is not a company with variable share capital but
which qualifies as a collective investment scheme and is duly
licensed under the Investment Services Act, from being constituted
as an umbrella or multi-class company and the provisions of article
84(10)( c ) shall apply  mutatis mutandis  to such company.
Increase in issued 
share capital and 
directors’ authority 
to issue shares.
Amended by:
IV. 2003.50.
85. (1) Any increase in the issued share capital of a company
shall be decided upon by an ordinary resolution of the company,
unless the memorandum or articles require a higher percentage than
that required for an ordinary resolution by  article  135 ( 2 ) .
( 2 ) The memorandum or articles of a company may permit the
general meeting to authorise by ordinary resolution the Board of
directors to issue shares up to a maximum amount as may be
specified in the same memorandum and articles, which
authorisation shall be for a maximum period of five years,
renewable for further periods of five years each; and where that
permission is not contained in the company’s memorandum or
articles, the same authority may be given to the Board of directors
by an extraordinary resolution.
( 3 ) Where there are several classes of shares, the resolution of
the general meeting concerning the increase in the issued share
capital referred to in subarticle (1) or the authorisation referred to
in subarticle  ( 2 )  shall be subject to a separate vote for each class of
shareholders whose rights are affected by that resolution or
authorisation, and the provisions relating to the majority required
for the resolution by virtue of subarticle (1) and  ( 2 )  shall apply for
each class.
( 4 ) A copy of any such ordinary or extraordinary resolution
referred to in subarticles (1),  ( 2 )  and  ( 3 )  shall be delivered to the
Registrar for registration, within fourteen days after the date of the
relative resolution, failing which every officer of the company who
is in default shall be liable to a penalty, and for every day during
which the default continues, to a further penalty.
( 5 ) The provisions of subarticles (1) to  ( 4 )  shall apply to the
COMPANIES [ CAP. 386.        41
issue of all securities which are convertible into shares or which
carry the right to subscribe for shares, but not to the conversion of
such securities, nor to the exercise of the right to subscribe.
( 6 ) Where an increase in the issued share capital is not fully
taken up, the issued share capital shall be increased by the amount
of subscriptions received only if the conditions of the issue so
provide.
Amount paid up on 
allotment of shares 
in a public 
company.
86. Shares shall be paid up on allotment to at least twenty-five
per cent of their nominal value in the case of a public company.
Amount paid up on 
allotment of shares 
in a private 
company.
87. Shares shall be paid up on allotment to at least twenty per
cent of their nominal value in the case of a private company.
Offering of shares 
on a pre-emptive 
basis on issue.
Amended by:
IV. 2003.51.
88. (1) Whenever shares of a public company are proposed to
be allotted for consideration in cash, those shares shall be offered
on a pre-emptive basis to shareholders in proportion to the share
capital held by them:
Provided that shares in a company, whether public or
private, shall not be offered on a pre-emptive basis to the company
itself, notwithstanding any other provision of this Act empowering
the company to hold its own shares.
( 2 ) Where the issued share capital of a company as referred to
in subarticle (1) having several classes of shares carrying different
rights with regard to voting, or participation in distributions, or
sharing in assets in the event of a winding up, is increased by
issuing new shares for allotment in only one of these classes, the
right of pre-emption of shareholders of the other classes is to be
exercised only after the exercise of this right by the shareholders of
the class in which the new shares issued are to be allotted.
( 3 ) A copy of any offer of subscription on a pre-emptive basis
indicating the period within which this right shall be exercised
shall be delivered to the Registrar for registration:
Provided that where the public company has not issued
share warrants, such registration shall not be required as long as all
the shareholders of the company are informed in writing of the
offer of subscription on a pre-emptive basis and of the period
within which this right shall be exercised.
( 4 ) The right of pre-emption referred to in subarticle  ( 3 )  shall
be exercised within a period of not less than fourteen days from the
date of publication of the offer in the Gazette in accordance with
article 401(1) ( e ) , or from the date of dispatch of the letters to the
shareholders referred to in the same subarticle.
( 5 ) The right of pre-emption shall not be restricted or
withdrawn by the memorandum or articles:
Provided that, for a particular allotment as referred to in
this article, the right of pre-emption may be restricted or withdrawn
by extraordinary resolution of the general meeting. In such case the
Board of directors shall be required to present to that general
  42      CAP. 386. ]                   COMPANIES
meeting a written report indicating the reasons for restriction or
withdrawal of the right of pre-emption and justifying the proposed
issue price.
( 6 ) A copy of the resolution referred to in subarticle  ( 5 ),  shall
be delivered by the directors or by the company secretary to the
Registrar for registration.
( 7 ) The memorandum or articles or an extraordinary resolution
of the general meeting may authorise the Board of directors to
restrict or withdraw the right of pre-emption if the Board is
authorised to issue shares in accordance with article 85 and for as
long as the Board remains so authorised.
( 8 ) A copy of the resolution referred to in subarticle  ( 7 )  shall be
delivered to the Registrar for registration.
( 9 ) The provisions of subarticles (1) to  ( 8 )  shall apply to the
issue of all securities which are convertible into shares or which
carry the right to subscribe for shares, but not to the conversion of
such securities, nor to the exercise of the right to subscribe.
( 10 ) The right of pre-emption shall not be excluded for the
purposes of subarticles  ( 5 )  to  ( 8 )  where, in accordance with the
decision to allot shares, shares are issued to banks or financial
institutions with a view to their being offered to shareholders of the
company in accordance with subarticle (1).
( 11 ) If default is made in complying with subarticles  ( 6 )  or  ( 8 ),
every officer of the company who is in default shall be liable to a
penalty, and, for every day during which the default continues, to a
further penalty.
Chapter III - Capital issues by public companies
Issue of 
applications for 
shares in or 
debentures of a 
public company to 
be made with a 
prospectus.
Amended by:
IV. 2003.52.
89. (1) It shall not be lawful for a public company to issue any
form of application for its shares or debentures unless the company
is registered and the form is issued with a prospectus which
complies with the requirements of article 90:
Provided that the provisions of this Chapter shall not apply
to a form of application issued either - 
( a ) in connection with a  bona fide  invitation to a person to
enter into an underwriting agreement with respect to
the shares or debentures; or
( b ) in relation to shares or debentures which are not
offered to the public; or
Cap. 370.
( c ) by a holder of a collective investment scheme licence
within the meaning of the Investment Services Act
provided such issue is made in accordance with rules
or regulations made under that Act.
( 2 ) The issue of a prospectus or of a form of application for
shares in or debentures of a company to existing members or
debenture holders of the company shall not be deemed to be an
COMPANIES [ CAP. 386.        43
offer to the public whether an applicant will or will not have the
right to renounce in favour of other persons.
Dating of 
prospectus and 
matters to be stated 
therein.
90. (1) Every prospectus shall be dated and shall state the
matters specified in Part I of the Second Schedule and set out the
reports specified in Part II of that Schedule.
( 2 ) A condition requiring or binding an applicant for shares or
debentures to waive compliance with any requirement of this
article or purporting to effect him with notice of any contract,
document or matter not specifically referred to in the prospectus
shall be void.
Penalty.
distribution of a prospectus or for the issue of a form of application
for shares or debentures, in contravention of any of the provisions
of article 89 or of article 90(1) shall be liable to a penalty:
Provided that a director or other person responsible for the
prospectus shall not incur liability if - 
( a ) as regards any matter not disclosed he proves that he
was not cognizant thereof; or
( b ) he proves that the contravention arose from an honest
mistake of fact on his part; or
( c ) the contravention was in respect of matters which, in
the opinion of the court, were immaterial or otherwise
such as ought, having regard to all the circumstances
of the case, reasonably to be excused:
Provided further that in the event of failure to include in a
prospectus a statement with respect to matters specified in
paragraph 24 of the Second Schedule, no director or other person
shall incur any liability in respect of the failure unless it be proved
that he had knowledge of the matters not disclosed.
Prospectus 
including a 
statement by 
experts.
92. (1) A prospectus including a statement purporting to be
made by an expert shall not be issued unless - 
( a ) the expert has given and has not, before delivery of a
copy of the prospectus for registration, withdrawn his
written consent to the issue thereof; and
( b ) a statement that he has given and has not withdrawn
his consent as aforesaid appears in the prospectus.
( 2 ) If any prospectus is issued in contravention of the
provisions of this article, every person who is knowingly a party to
the issue thereof shall be liable to a penalty.
Registration of 
prospectus.
93. (1) No prospectus shall be issued unless, on or before the
date of its publication as specified in article 99, there has been
delivered to the Registrar for registration a copy thereof signed by
every person who is named therein as a director of the company, or
by his agent authorised in writing, and having endorsed thereon or
attached thereto - 
( a ) any consent to the issue of the prospectus required by
  44      CAP. 386. ]                   COMPANIES
the last preceding article from any person as an expert;
and
( b ) a copy of any contract required by paragraph 23 of the
Second Schedule to be stated in a prospectus or, in the
case of a contract not reduced in writing, a
memorandum giving full particulars thereof.
( 2 ) If a prospectus is issued in contravention of this article,
every person who is knowingly a party to the issue of the
prospectus shall be liable to a penalty, and, for every day from the
date of the issue of the prospectus until a copy thereof is delivered
as aforesaid with the required documents endorsed thereon or
attached thereto, to a further penalty.
Civil liability for 
misstatements in 
prospectus.
94. (1) The persons who are responsible for or who have
authorised the issue of a prospectus shall be jointly and severally
liable for any damage sustained by a person subscribing for shares
or debentures on the faith of that prospectus, by reason of any
untrue statement included therein:
Provided that a person who has given the consent required
by article 92 shall not be liable as a person who has authorised the
issue of a prospectus except in respect of an untrue statement made
by him as an expert.
( 2 ) No person shall be liable under this article if - 
( a ) he proves that he had reasonable grounds to believe
and did, up to the time of the allotment of the shares or
debentures believe, that the statement was true; or
( b ) he proves, as regards an untrue statement made by an
expert, that he had reasonable grounds to believe and
did, up to the time of the allotment of the shares or
debentures believe, that the person making the
statement was competent to make it; or
( c ) on becoming aware of the untrue statement before any
allotment is made under the prospectus, he gave
reasonable public notice of the untruthfulness of the
statement.
Document 
containing offer of 
shares or 
debentures for sale 
to be deemed 
prospectus.
Amended by:
IV. 2003.53.
95. (1) Where a company allots or agrees to allot any shares in
or debentures of the company with a view to all or any of those
shares or debentures being offered for sale to the public, any
document by which the offer for sale to the public is made shall for
all purposes be deemed to be a prospectus and all the rules relating
to prospectuses shall apply and have effect accordingly.
( 2 ) It shall be presumed, unless the contrary is proved, that the
allotment or agreement to allot was made with a view to the shares
or debentures being offered for sale to the public if it is shown - 
( a ) that an offer for sale to the public was made within six
months after the allotment; or agreement to allot; or
( b ) that at the date when the offer was made the whole
consideration to be received by the public company in
respect of the shares or debentures had not been so
COMPANIES [ CAP. 386.        45
received.
( 3 ) The provisions of article 93 as applied by this article shall
have effect - 
( a ) as if that article further required a prospectus to have
attached thereto a copy of any contract under which
the said shares or debentures have been or are to be
allotted or, in the case of a contract not reduced in
writing, a memorandum giving full particulars thereof;
and
( b ) as though the persons making the offer were persons
named in the prospectus as directors of a company.
Interpretation of 
provisions relating 
to prospectus.
96. (1) For the purposes of the provisions of articles 89 to 95 - 
( a ) a statement included in a prospectus shall be deemed
to be untrue if it is misleading in the form and context
in which it is included; and
( b ) a statement shall be deemed to be included in a
prospectus if it is contained therein or in any document
appearing on the face thereof or by reference
incorporated therein or issued therewith.
( 2 ) In this Chapter the term "expert" includes engineer, valuer,
accountant and any other person whose profession gives authority
to a statement made by him.
Chapter IV -Allotment of shares and debentures of companies
No allotment 
unless minimum 
subscription 
received.
97. (1) No allotment shall be made of any share capital of a
public company offered to the public for subscription - 
( a ) unless there has been subscribed and paid in cash the
amount stated in the prospectus as the minimum
amount which, in the opinion of the directors, shall be
raised by the issue of share capital in order to provide
for the preliminary expenses, purchase of property and
working capital as specified in the prospectus; and
( b ) unless the capital is subscribed in full, whether or not
in cash, or the conditions stated in the offer for
allotment, where the offer is not fully subscribed, are
satisfied.
( 2 ) If the conditions referred to in subarticle (1) have not been
complied with on the expiration of forty days after the issue of the
prospectus, all money received from applicants for shares shall be
forthwith repaid to them without interest.
( 3 ) If any of the money is not repaid within forty-eight days
after the issue of the prospectus, the directors of the company shall
be jointly and severally liable to repay it with annual interest at the
rate of two percentage points over the Central Bank of Malta
minimum discount rate from the expiration of the fortieth day;
except that a director shall not be so liable if he proves that the
  46      CAP. 386. ]                   COMPANIES
default in the repayment of the money was not due to any
misconduct or negligence on his part.
( 4 ) Any condition requiring or binding an applicant for shares
to waive compliance with any requirement of this article shall be
void.
( 5 ) All money received from applicants in pursuance of the
prospectus shall remain the property of the applicants until such
time as the allotment is made in an irrevocable manner and shall
not be available for the satisfaction of any debts of the company.
Such money shall be kept in a separate bank account so long as the
company may become liable to repay it under subarticle  ( 2 );  and if
default is made in complying with this subarticle, the company and
every officer of it who is in default shall be liable to a penalty, and,
for every day during which the default continues, to a further
penalty.
Effect of irregular 
allotment.
98. (1) An allotment made by a company in contravention of
article 97 shall be voidable at the instance of the applicant for
shares referred to in the same article by writ of summons filed
within one month after the date of the allotment:
Provided that the proceedings may be commenced even if
the company has been dissolved and is being wound up.
( 2 ) If a director knowingly contravenes or permits or authorises
the contravention of article 97, he shall be liable to compensate the
company and the allottee respectively for any loss, damages or
costs which the company or the allottee may have sustained or
incurred by the contravention:
Provided that proceedings to recover any such loss,
damages or costs shall only be commenced by writ of summons
within two years from the date of allotment.
Time of the 
opening of the 
subscription lists.
99. (1) No allotment shall be made of any shares in or
debentures of a public company in pursuance of a prospectus and
no proceedings shall be taken on applications made in pursuance of
a prospectus until at least the beginning of the third working day or
such later time, if any, as may be specified in the prospectus, after
the publication in a daily newspaper circulating wholly or mainly in
Malta of a notice stating that a prospectus has been issued.
( 2 ) The beginning of the said third working day or such later
time as aforesaid is hereinafter in this Act referred to as "the time
for the opening of the subscription lists".
( 3 ) In the application of this article to a prospectus offering
shares or debentures for sale, subarticles (1) and  ( 2 )  shall have
effect with the substitution of references to sale for references to
allotment.
Revocability of 
application for 
shares or 
debentures.
100.   An application for shares in or debentures of a public
company which is in pursuance of a prospectus shall not be
revocable until after the expiration of the third working day after
the time of the opening of the subscription lists, or the giving,
before the expiration of the said third working day, by some person
COMPANIES [ CAP. 386.        47
responsible under article 94 for the prospectus, of a public notice
having the effect under that article of excluding the responsibility
of the person giving it.
Allotment of 
shares, etc., to be 
dealt in on stock 
exchange.
Amended by:
IV. 2003.54.
101. (1) The following provisions of this article shall apply
where a prospectus issued by or on behalf of a public company
states that application has been or will be made for permission for
the shares or debentures offered by it to be listed on a recognised
investment exchange in or outside Malta.
( 2 ) An allotment made on an application in pursuance of the
prospectus shall, whenever made, be void if the permission has not
been applied for before the third working day after the first issue of
the prospectus or if the permission has been refused before the
expiration of twenty-one days from the date of the closing of the
subscription lists or such longer period, not exceeding forty-two
days, as may be notified to the applicant, within those twenty-one
days, for permission by or on behalf of the stock exchange.
( 3 ) Where permission has not been applied for as required by
subarticles (1) and  ( 2 ),  or has been refused, the company shall
forthwith repay, without interest, all money received from
applicants in pursuance of the prospectus.
( 4 ) If any of the money is not repaid within eight days after the
company becomes liable to repay it, the directors of the company
shall be jointly and severally liable to repay the money with annual
interest at the rate of two percentage points over the Central Bank
of Malta minimum discount rate from the day the company
becomes liable to repay it, except that a director shall not be liable
if he proves that the default in the repayment of the money was not
due to any misconduct or negligence on his part.
( 5 ) All money received from applicants in pursuance of the
prospectus shall remain the property of the applicants until such
time as the allotment is made in an irrevocable manner and shall
not be available for the satisfaction of any debts of the company.
Such money shall be kept in a separate bank account so long as the
company may become liable to repay it under subarticle  (3):  and if
default is made in complying with this subarticle, the company and
every officer of it who is in default shall be liable to a penalty, and,
for every day during which the default continues, to a further
penalty.
( 6 ) Any condition requiring or binding an applicant for shares
or debentures to waive compliance with any requirement of this
article shall be void.
( 7 ) For the purposes of this article, permission shall not be
deemed to be refused if it is intimated that the application for it,
though not at present granted, will be given further consideration.
( 8 ) The provisions of this article shall have effect in relation to
shares or debentures agreed to be taken by a person underwriting an
offer of them by a prospectus as if he had applied for them in
pursuance of the prospectus.
  48      CAP. 386. ]                   COMPANIES
Operation of article 
101 where 
prospectus offers 
shares for sale.
102. (1) The provisions of article 101, other than subarticle  ( 4 )
thereof, shall apply to a prospectus offering shares for sale,
otherwise than by allotment, subject to the following provisions of
this article.
( 2 ) Subarticles (1) and  ( 2 ) of article  101 shall apply, as though
the reference in the said subarticle  ( 2 ) of article  101 to allotment
were a reference to sale.
( 3 ) Subarticle  ( 3 )  of article 101 shall apply as though the
reference therein to company were a reference to the offeror. 
( 4 ) If any of the money is not repaid within eight days after the
offeror becomes liable to repay it, he shall become liable to pay
annual interest on the money due, at the rate of two percentage
points over the Central Bank of Malta minimum discount rate from
the end of the eighth day.
( 5 ) Subarticles  ( 5 )  to  ( 8 ) of article  101 shall apply, except that in
subarticle  ( 5 )  thereof -
( a ) the first reference to the company shall be construed as
a reference to the offeror; and
( b ) the reference to the company and every officer of the
company who is in default shall be construed as a
reference to any person by or through whom the offer
is made and who knowingly and wilfully authorises or
permits the default.
Return as to 
allotments.
103. (1) Whenever a company makes any allotment of its
shares, the company shall, within one month thereafter, deliver to
the Registrar for registration -
( a ) a return of the allotments stating the number and the
nominal amount of the shares comprised in the
allotment, the names and addresses of the allottees and
the amount paid and that due, and payable, on each
share, whether on account of the nominal value of the
share or by way of premiums; and
( b ) in the case of shares allotted as fully or partly paid up
otherwise than in cash, a contract in writing or, where
the contract is not reduced to writing, a document
containing the particulars of the contract, constituting
the title of the allottee to the allotment, together with
any contract of sale, or for services rendered or other
consideration in respect of which the allotment was
made, and a return stating the number and nominal
value of shares so allotted, the extent to which they are
to be treated as paid up, and the consideration for
which they have been allotted; and
( c ) where applicable, a declaration that the requirements
of article 97 have been complied with.
( 2 ) If default is made in complying with the provisions of this
article, every officer of the company who is in default shall be
liable to a penalty, and, for every day during which the default
continues, to a further penalty.
COMPANIES [ CAP. 386.        49
Chapter V - Maintenance of share capital and protection of 
class rights
Duty of directors 
on serious loss of 
capital.
104. (1) Where the net assets of a public company are half or
less of its called-up issued share capital, the directors shall, not
later than thirty days from the earliest day on which that fact is
known to any director of the company, duly convene a general
meeting of the company by means of a notice to that effect for a
date not later than forty days from the date of the notice for the
purpose of considering whether any, and if so, what steps should be
taken to deal with the situation, including consideration as to
whether the company should be dissolved.
In this subarticle, "net assets" shall have the same meaning
assigned to it under  article  193 ( 2 ) .
( 2 ) In a meeting convened in pursuance of subarticle (1), only
the steps mentioned in the said subarticle may be considered.
( 3 ) If a general meeting as required by subarticle (1) is not
convened, each of the directors of the company in default shall be
liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Company may not 
subscribe for its 
own shares.
105. (1) A company shall not subscribe for any of its own
shares, whether on original subscription or on any subsequent
subscription, and if any of its shares have been subscribed for by a
person acting in his own name but on behalf of the company the
subscriber shall be deemed to have subscribed for them for his own
account.
( 2 ) On the registration of a company, the subscribers to the
memorandum shall be jointly and severally liable to pay for the
shares subscribed in contravention of subarticle (1).
( 3 ) In the case of an increase in the issued share capital, the
members and directors shall be liable jointly and severally to pay
for the shares subscribed in contravention of subarticle (1)
provided that any member or director may be released from such
liability if he proves that the breach occurred through no fault of
his own.
Conditions in 
which a company 
may acquire its 
own shares.
106. (1) A company may acquire any of its own shares
otherwise than by subscription, provided all the following
conditions are respected -
( a ) provision is made by the memorandum or articles of
the company for authorising the acquisition by the
company of its own shares;
( b ) authorisation is given by an extraordinary resolution,
which resolution shall determine the terms and
conditions of such acquisitions and in particular the
maximum number of shares to be acquired, the
duration of the period for which the authorisation is
given and which may not exceed eighteen months and,
in the case of acquisition for valuable consideration,
the maximum and minimum consideration;
  50      CAP. 386. ]                   COMPANIES
( c ) the provisions of article 135 shall apply in respect of
the extraordinary resolution referred to in paragraph
( b )  above subject however to the condition that shares
already held by the company itself shall be treated as
carrying no voting rights;
( d ) the nominal value of the acquired shares, including
shares previously acquired by the company and held
by it shall not exceed ten per cent of the issued share
capital;
( e ) no acquisitions by a company of its own shares shall
be made when on the closing date of the last
accounting period the net assets as set out in the
company’s annual accounts are, or following such
distribution, would become lower than the amount of
issued share capital plus those reserves which may not
be distributed under the provisions of this Act or the
company’s memorandum or articles; and in any case it
shall not be possible for the company to acquire any of
its own shares except out of the proceeds of a fresh
issue of shares made specifically for the purpose, or
out of profits available for distribution;
( f ) the shares acquired shall be fully paid up shares; and 
( g ) a company may not as a result of the acquisition of any
of its shares become the only holder of its ordinary
shares.
( 2 ) The company shall deliver to the Registrar for registration a
copy of the resolution mentioned in subarticle (1). If default is
made in complying with the provisions of this subarticle, every
officer of the company who is in default shall be liable to a penalty,
and, for every day during which the default continues, to a further
penalty.
( 3 ) The provisions of subarticle (1) ( b )  shall not apply where the
acquisition of a company’s own shares is necessary to prevent
serious and imminent harm to the company.
( 4 ) The provisions of subarticle (1) ( b )  shall furthermore not
apply to shares acquired either by the company itself or by a person
acting in his own name but on the company’s behalf for distribution
to that company’s employees or to the employees of its parent
company or of any of its subsidiary undertakings. Such shares shall
be distributed within one year of their acquisition.
( 5 ) References in this article and in articles 107 to 110 to a
company holding, acquiring or otherwise dealing in its own shares
shall be deemed to include references to the company so doing
either itself or through a person acting in his own name but on the
company’s behalf.
COMPANIES [ CAP. 386.        51
Acquisition of own 
shares by a 
company without 
application of 
article 106.
Amended by:
IV. 2003.55.
107. (1) A company may acquire any of its own shares
otherwise than by subscription without complying with the
provisions of article 106, other than subarticle (1) ( g )  thereof, where
the shares are -
( a ) acquired by the company in the course of a reduction
of the issued share capital made in accordance with
article 83; or
( b ) the subject of an application which is revoked in
accordance with the provisions of article 100; or
( c ) forfeited or surrendered in accordance with the
provisions of article 112; or
( d ) acquired in any procedure for the conversion, the
amalgamation or the division of companies pursuant to
the provisions contained in Part VII, Part VIII and Part
IX, respectively, of this Act; or
( e ) acquired in any procedure for the change of status of a
company pursuant to the provisions of article 213; or 
( f ) acquired by the company pursuant to an order of the
court made under the provisions of this Act for the re-
purchase of shares held by dissenting shareholders,
including any order made in terms of  article  402 ( 3 )( d ) ;
or
( g ) fully paid up and acquired by an investment company
with fixed share capital or by another company
forming part of the same group at the member’s
request provided that such acquisitions shall not have
the effect of reducing the company’s net assets below
the amount of the issued share capital plus any
reserves the distribution of which is forbidden by law;
( h ) acquired by the company during a redemption of
preference shares in accordance with article 115.
( 2 ) Where shares acquired pursuant to subarticle (1) ( b )  to  ( f )
are retained by the company and are not disposed of within thirty
months of their acquisition the company shall by extraordinary
resolution cancel such shares within six months of the expiry of the
said thirty months.
( 3 ) The provisions of article 83 dealing with the reduction of
issued share capital shall apply where shares are cancelled pursuant
to subarticle  ( 2 ) :
Provided that the court may not disallow the cancellation
but, if good cause is shown, it shall only order that sufficient
security be given to the creditor who had objected to the
cancellation, and if sufficient security is not immediately available,
the court shall order the provision of such security immediately it
becomes available to the company and no distribution of dividend
may be effected by the company in the meantime.
( 4 ) If the company fails to comply with subarticle  ( 2 )  within the
time limit prescribed, any member or director of the company may
apply to the court for an order that such shares be cancelled.
  52      CAP. 386. ]                   COMPANIES
( 5 ) Where the nominal value of the shares held by the company
in pursuance of any of the provisions of subarticle (1), including
shares which the company may have acquired through a person
acting in his own name but on behalf of the company, does not
exceed ten per cent of the issued share capital thereof, the
provisions of subarticles  ( 2 )  to  ( 4 )  shall not apply.
Shares acquired or 
held in 
contravention of 
articles 106 and 
107.
108. (1) If shares acquired or held in contravention of article
106 and of article 107(1) are not disposed of within one year of
their acquisition, the company shall cancel such shares within six
months of the expiry of the said year.
( 2 ) Where shares are cancelled pursuant to subarticle (1) the
provisions of article 83 shall apply subject to the proviso to  article
107 ( 3 ) .
( 3 ) If the company fails to comply with subarticle (1) within
the time limit prescribed, any member or director of the company
may apply to the court for an order that such shares be cancelled.
Conditions for 
acquisition by a 
company of its 
own shares where 
permitted by law.
Amended by:
IV. 2003.56.
109. During the time that a company holds any of its own
shares-
( a ) they shall carry no voting rights notwithstanding any
provisions to the contrary in the company’s
memorandum or articles; and
( b ) if the shares are included among the assets of the
company shown in the balance sheet, a reserve of the
same amount, unavailable for distribution, shall be
included among the reserves. 
Undertaking may 
not subscribe for or 
acquire shares in 
its parent company 
or provide 
financial assistance 
for the purchase of, 
or subscription for, 
its own or its 
parent company’s 
shares.
Amended by:
IV. 2003.57.
110. (1) It shall not be lawful for an undertaking -
( a ) to subscribe for, hold, acquire or otherwise deal in
shares in a company which is its parent company; or
( b ) to give, whether directly or indirectly, and whether by
means of a loan, guarantee, the provision of security or
otherwise, any financial assistance for the purpose of
an acquisition or subscription made or to be made by
any person of or for any shares in the company or its
parent company.
( 2 ) The provisions of subarticle (1) shall not apply to
transactions effected with a view to the acquisition of shares by or
for the company’s employees or the employees of a group
company:
Provided that such transactions shall not have the effect of
reducing the net assets of the company below the amount specified
in article 106(1) ( e ) .
( 3 ) Subarticle (1) shall not apply to the provision of financial
assistance by an investment company with fixed share capital for
the purpose of or in connection with the acquisition of its fully paid
up shares by another undertaking:
Provided that such provision of financial assistance may
not have the effect of reducing the net assets of the company below
COMPANIES [ CAP. 386.        53
the amount specified in article 106(1) ( e ) .
Effect of 
acceptance of a 
company’s own 
shares as security.
111.   The acceptance of a company’s own shares by way of
pledge or other form of security shall be treated as an acquisition
by the company of such shares for the purposes of articles 106, 107
and 109.
Forfeiture or 
surrender of 
shares.
112. (1) Any share in a company may be forfeited from any
shareholder in favour of the company and any shareholder may
surrender any or all of his shares in a company in favour of that
company if the shareholder fails to pay any call or instalment of a
call on the day appointed for payment thereof and as long as
provision to that effect is contained in the memorandum or articles
of the company.
( 2 ) The provisions of article 109 shall apply to a forfeiture or
surrender of shares until such time as the company disposes of or
otherwise cancels them.
Conditions for 
payment of 
commissions, 
discounts, etc.
Amended by:
IV. 2003.58
113. (1) It shall be lawful for a company to pay a commission
or make a discount or allowance to any person in consideration for
his subscribing or agreeing to subscribe, whether absolutely or
conditionally for any shares in the company, or procuring or
agreeing to procure subscriptions, whether absolute or conditional,
for any shares in the company, provided that -
( a ) authority therefor is given by the memorandum or
articles; and
( b ) the commission, discount or allowance does not
exceed ten per cent of the price at which the shares are
issued or the amount authorised by the memorandum
or articles, whichever is the less; and
( c ) the amount or rate per cent of the commission,
discount or allowance and the number of shares which
persons have agreed in consideration thereof to
subscribe absolutely shall be disclosed in the manner
required by subarticle  (3):  and
( d ) in no event may the value of such shares be reduced to
below their nominal value as a result of the payment of
such commission, discount or allowance.
( 2 ) If shares are issued in contravention of the provisions of
this article the holder thereof shall be bound to pay the company an
amount equal to the amount of the commission, discount or
allowance given in excess of that permitted by this article, with
annual interest at the rate of two percentage points over the Central
Bank of Malta minimum discount rate.
( 3 ) The conditions specified in subarticle (1) shall, in the case
of shares offered to the public for subscription, be disclosed in the
prospectus and in the case of shares not so offered -
( a ) they shall be disclosed in a statement signed by every
director of the company or by any other person in
representation of any director so authorised in writing
and delivered to the Registrar for registration before
  54      CAP. 386. ]                   COMPANIES
the actual payment of the commission, discount or
allowance; and
( b ) where a circular or notice, not being a prospectus,
giving subscription for the shares is issued, they shall
also be disclosed in such circular or notice.
( 4 ) If default is made in complying with subarticle  ( 3 )( a ),  every
officer of the company who is in default shall be liable to a penalty.
Application of 
premium received 
on issue of shares.
114. (1) Where a company issues shares at a premium whether
for cash or otherwise, a sum equal to the aggregate amount or value
of the premiums on those shares shall be immediately paid in full
and transferred to an account, to be called "the share premium
account", and the provisions of this Act relating to the reduction of
the issued share capital of a company shall, except as provided in
this article, apply as if the share premium account were paid up
share capital of the company.
( 2 ) The share premium account may, notwithstanding anything
contained in the foregoing subarticle, be applied by the company -
( a ) in paying up unissued shares of the company to be
issued to members of the company as fully paid bonus
shares; or
( b ) in writing off the preliminary expenses of the company
or the expenses of or the commission paid or discount
allowed on, any issue of shares or debentures of the
company; or
( c ) in providing for the premium payable on redemption
of any redeemable preference shares or of any
debentures of the company.
Redeemable 
preference shares.
Amended by:
IV. 2003.59.
115. (1) Where a company, duly authorised by its
memorandum or articles, issues preference shares which are to be
redeemed or are liable to be redeemed at the option of the company
or the shareholder -
( a ) no such shares shall be redeemed except out of the
profits of the company which would otherwise be
available for dividend or, in accordance with subarticle
( 4 ),  out of the proceeds of a fresh issue of shares made
for the purpose of the redemption;
( b ) no such shares shall be issued after 1st June 2003
unless the following conditions are satisfied as regards
the terms and manner of redemption -
(i) the date on or by which, or dates between which,
the shares are to be or may be redeemed must be
specified in the company’s memorandum or
articles or, if the memorandum or articles so
provide, fixed by the directors, and in the latter
case the date or dates must be fixed before the
shares are issued;
(ii) any other circumstances in which the shares are
to be or may be redeemed must be specified in
COMPANIES [ CAP. 386.        55
the company’s memorandum or articles;
(iii) the amount payable on redemption must be
specified in, or determined in accordance with,
the company’s memorandum or articles, and in
the latter case the memorandum or articles must
not provide for the amount to be determined by
reference to any person’s discretion or opinion;
and
(iv) any other terms and conditions of redemption
shall be specified in the company’s
memorandum or articles;
( c ) no such shares shall be redeemed unless they are fully
paid up and the terms of redemption shall require full
payment on redemption;
( d ) the premium, if any, payable on redemption shall have
been provided for out of the profits of the company or
out of the company’s share premium account before
the shares are redeemed;
( e ) where any such shares are redeemed otherwise than
out of the proceeds of a fresh issue, there shall, out of
profits, which would otherwise have been available for
distribution as dividend, be transferred to a reserve to
be called "the capital redemption reserve", a sum equal
to the nominal amount of the shares redeemed, and the
provisions of this Act relating to the reduction of the
issued share capital of a company shall, except as
provided in this article, apply as if the capital
redemption reserve were paid up share capital of the
company.
( 2 ) The capital redemption reserve may, notwithstanding
anything contained in this article, be applied by the company in
paying up unissued shares of the company to be issued to members
of the company as fully paid bonus shares.
( 3 ) Preference shares redeemed under this article shall be
treated as cancelled on redemption, and the amount of the
company’s issued share capital shall be diminished by the nominal
value of those shares accordingly:
Provided that a redemption of preference shares by a
company shall not to be taken as reducing the amount of the
company’s authorised share capital.
( 4 ) Without prejudice to the provisions of subarticle  ( 3 ),  where
a company is about to redeem preference shares, it shall have the
power to issue shares up to the nominal value of the preference
shares to be redeemed as if those preference shares had never been
issued.
( 5 ) A notice of the redemption of preference shares referred to
in the preceding subarticles of this article shall be delivered by the
company to the Registrar for registration, within fourteen days after
the date of redemption.
  56      CAP. 386. ]                   COMPANIES
( 6 ) If default is made in complying with the provisions of
subarticle  ( 5 )  every officer of the company who is in default shall
be liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Rights of holders 
of special classes 
of shares and 
changes or 
variations thereof.
Amended by: 
XXIV.1995.362.
116. (1) If, in the case of a company the share capital of which
is divided into different classes of shares, provision is made by the
memorandum or articles for authorising the change of any shares in
the company from one class into another or for the variation of the
rights attached to any class of shares in the company, subject to the
consent of any specified proportion of the holders of the issued
shares of that class and of any other class affected thereby or the
sanction of a resolution passed at a separate meeting of the holders
of those shares and of the holders of any other shares affected
thereby, and in pursuance of the said provision the shares are
changed from one class into another or the rights attached to any
such class of shares are at any time varied, the holders of not less in
the aggregate than fifteen per cent either of the issued shares of that
class or of any other class affected thereby, being persons who did
not consent to or vote in favour of the resolution for the change or
variation, may by writ of summons filed within twenty-one days of
the consent or the resolution, demand that the change or variation
shall not have effect.
( 2 ) On any such demand the court, if it is satisfied, having
regard to all circumstances of the case, that the change or variation
would unfairly prejudice the holders of shares, the class of which is
being changed or the rights of which are being varied, or the
holders of any other class of shares affected thereby, shall disallow
the change or variation.
( 3 ) The Registrar of Courts shall without delay cause a copy of
any writ of summons filed under subarticle (1) and of any judgment
given thereon to be served on the Registrar for registration, and the
said writ of summons shall, on pain of nullity, include a demand to
that effect.
( 4 ) A rticle  79 ( 2 )  and  ( 4 )  shall apply in respect of any consent or
resolution given or taken in terms of subarticle (1).
( 5 ) Where no provision is made by the memorandum or articles
for authorising the change or variation referred to in subarticle (1),
no such change or variation may be made.
Chapter VI - Miscellaneous provisions about shares and 
debentures 
Numbering of 
shares.
117.   Each share in a company shall be distinguished by its
appropriate number:
Provided that, if at any time all the issued shares in a
company, or all the issued shares therein of a particular class, are
fully paid up and rank  pari passu  for all purposes, none of those
shares need thereafter have a distinguishing number so long as they
remain fully paid up and rank  pari passu  for all purposes with all
COMPANIES [ CAP. 386.        57
shares of the same class for the time being issued and fully paid up.
Transfer of shares 
or debentures.
118. (1) Notwithstanding any provisions contained in any
other law, a transfer of shares in or debentures of a company may
be made by private writing.
( 2 ) It shall not be lawful for a company to register a transfer of
shares in or debentures of the company unless a proper instrument
of transfer or an authentic copy thereof has been delivered to the
company:
Cap. 364.
Provided that, without prejudice to any obligation arising
under the provisions of the Duty on Documents and Transfers Act,
nothing in this article shall prejudice any power of the company to
register as shareholder or debenture holder any person to whom the
right to any shares in or debentures of the company has been
transmitted  causa mortis .
Registration of 
transfer or 
transmission of 
shares or 
debentures.
119. (1) On the application of the transferor or of the
transferee of any share in or debenture of a company, the company
shall enter in its register of members or of debentures, as the case
may be, the name and address of the transferee and where the
application is made by the transferor the entry shall be made in the
same manner and subject to the same conditions as if the
application for the entry were made by the transferee.
( 2 ) If a company refuses to register a transfer of shares or
debentures, it shall, within two months after the date on which the
transfer was lodged, send to the transferee notice of the refusal.
( 3 ) Notwithstanding the provisions of the regulations contained
in Part I of the First Schedule and notwithstanding anything
contained in a public company’s memorandum or articles, the
directors of a public company shall be obliged to register the
transfer of any shares in the company in favour of any person who
has acquired those shares as a result of a judicial sale thereof.
( 4 ) On the application of the person to whom the right to any
shares in or debentures of a company has been transmitted  causa
mortis , the company shall register in its register of members or
debentures, as the case may be, the name and address of such
person.
( 5 ) If a company refuses to register a transmission as is
referred to in subarticle  ( 4 ),  it shall, within two months after the
date on which the transmission is lodged, send to the person to
whom the right to any shares or debentures of a company has been
transmitted  causa mortis , notice of the refusal.
( 6 ) If default is made in complying with the provisions of
subarticles  ( 2 )  or  ( 5 ),  every officer of the company who is in
default, shall be liable to a penalty, and, for every day during which
the default continues, to a further penalty.
Issue of 
certificates.
 120. (1) Every company shall, within two months after the
allotment of any of its shares or debentures and within two months
after the date on which a transfer of any such shares or debentures
is registered with the company, and within one month from the date
  58      CAP. 386. ]                   COMPANIES
on which any such shares or debentures transmitted  causa mortis
have been registered in the name of the person entitled to be
registered as the holder thereof, deliver the certificates of all
shares, debentures or debenture stock allotted, transferred or
transmitted  causa mortis  to the persons entitled thereto, unless the
conditions of issue of the shares or debentures otherwise provide.
( 2 ) The expression "transfer" for the purposes of this article
means a transfer on which the relevant duty, if any, has been paid
and is otherwise valid, and does not include such a transfer as the
company is for any reason entitled to refuse to register and does not
register.
( 3 ) In the case of a transfer or of a transmission  causa mortis  of
shares the company shall within fourteen days after the date on
which a transfer of any such shares is registered with the company,
and within one month from the date on which any such shares
transmitted  causa mortis  have been registered in the name of the
person entitled to be registered as the holder thereof, deliver to the
Registrar for registration a notice of the transfer or the transmission
causa mortis  stating the names and addresses of the transferees or
the names and addresses of the persons entitled to the shares
transmitted  causa mortis , as the case may be.
( 4 ) If default is made in complying with any of the provisions
of this article, every officer of the company who is in default shall
be liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Share warrants. 121. (1) A public company, if so authorised by its
memorandum or articles, may, with respect to any fully paid up
shares, issue a warrant to bearer, in this Act referred to as a "share
warrant", stating that the bearer of the warrant is entitled to the
shares therein specified and may provide, by coupons or otherwise,
for the payment of the future dividends on shares included in the
warrant.
( 2 ) The shares specified in a share warrant may be transferred
by the delivery of the warrant.
Pledging of 
securities.
Amended by: 
XXIV.1995.362;
IX. 1997.7;
IV. 2003.60.
122. (1) Securities may, unless otherwise provided in the
memorandum or articles of the company or under the conditions of
issue of those securities, be pledged by their holder in favour of any
person as security for any obligation. The pledge of securities shall
be constituted by means of an instrument in writing entered into
between the pledgor and the pledgee:
Provided that the pledge of share warrants or debenture
warrants shall be constituted by delivery of the warrant to the
pledgee, and the provisions of subarticles  ( 2 )  to  ( 5 ) ,  ( 10 )  to  ( 12 ) ,
( 14 )  and  ( 15 )  shall not apply thereto:
Provided further that in the case of a private company,
securities may not be pledged unless the memorandum or articles of
the company specifically so provide; and in relation to transfers of
shares by members of the company any restriction resulting from
the memorandum or articles of the company shall, subject to the
COMPANIES [ CAP. 386.        59
provisions of subarticle  ( 10 ),  be deemed not to apply to transfers by
the pledgee in terms of subarticle  ( 6 )  or resulting from any judicial
sale.
( 2 ) Notice of the pledge shall be delivered by the pledgor or the
pledgee to the Registrar for registration within fourteen days of the
granting of the pledge. The company whose securities have been
pledged, shall also be notified of the pledge in writing within the
said period and the company shall record that fact in the register of
holders of the respective securities.
( 3 ) The pledge of securities shall be effective in relation to a
third party only after the registration by the Registrar of the notice
referred to in subarticle  ( 2 ) .
( 4 ) Saving the provisions of subarticle  ( 3 ),  during the existence
of a pledge of securities, any transfer or other assignment, made by
the pledgor, whether by onerous or gratuitous title, of the pledged
securities shall be null and void.
( 5 ) Notwithstanding the provisions of subarticle  ( 4 ),  any
transfer or other assignment of securities made with the consent of
the pledgee shall be valid and the securities to be transferred shall
continue to be subject to the pledge.
Cap. 16.
( 6 ) Without prejudice to the right of the pledgee to apply for
the judicial sale of the securities and notwithstanding the
provisions of the Civil Code or of the memorandum or articles of
the company, in the event of a default under the agreement of
pledge and upon giving notice by judicial act to the pledgor and the
company, the pledgee shall be entitled to -
( i ) dispose of the securities which are pledged in his
favour; or
( ii ) appropriate and acquire the securities himself, in
settlement of the debt due to him or of part
thereof.
( 7 ) For the purposes of subarticle  ( 6 )  the value of the securities
may be established by agreement between the pledgor and the
pledgee after notice of default has been given by the pledgee to the
pledgor in terms of the said subarticle  ( 6 ) , and no prior agreement
thereon shall be valid:
Provided that, in case of disagreement, the fair value for the
sale or appropriation of the securities shall be determined by a
certified public accountant or a certified public accountant and
auditor appointed by the Civil Court, First Hall, on the application
of the pledgee.
( 8 ) For the purposes of subarticle  ( 7 ),  the fair value of the
securities shall be that obtaining on the date of the notice referred
to in subarticle  ( 6 ) .
( 9 ) The pledgee shall, in selling the securities in accordance
with the provisions of subarticle  ( 6 ),  be obliged to seek the best
price being not less than their fair value as determined in
accordance with subarticle  ( 7 ) . In the event that a buyer cannot be
found for the securities at their fair value, the pledgee shall apply to
  60      CAP. 386. ]                   COMPANIES
the court for the securities to be sold at less than their fair value as
aforesaid subject to such conditions as the court may deem fit.
( 10 ) In the case of a pledge of shares in a private company, the
pledgee shall be obliged, prior to the exercise of the right granted
by subarticle  ( 6 ),  to offer the shares to other shareholders of the
company in accordance with any pre-emption rights relating to the
transfer of shares as laid down in the memorandum or articles of
that company, and, failing such pre-emption rights, to all the other
shareholders of the company in proportion to their holdings. In
either case the shareholders shall be entitled to purchase the shares
at the price determined in accordance with subarticle  ( 7 ) . Such
offer shall be kept open for at least ten working days.
( 11 ) In the case of a pledge of shares in a public company the
memorandum or articles of which require any shareholder wishing
to transfer shares in the company to offer them on a pre-emptive
basis to other shareholders of the company, the pledgee shall
accordingly be obliged, prior to the exercise of the right granted by
subarticle  ( 6 ),  to offer the shares to those shareholders, who shall
be entitled to purchase the shares at the price determined in
accordance with subarticle  ( 7 ) . Such offer shall be kept open for at
least ten working days.
( 12 ) ( a ) In the case of a pledge of securities in a public
company which are quoted on the recognised
investment exchange and in respect of which securities
arrangements have been made for the maintenance by
the recognised investment exchange of the relevant
register of holders thereof, the provisions of
subarticles  ( 2 )  to  ( 11 )  and  ( 15 )  shall not apply for such
quoted securities. The following provisions shall apply
instead:
( i ) the pledgor or the pledgee shall deliver within
fourteen days of the granting of the pledge of a
quoted security a certified copy of the signed
pledge agreement to the recognised investment
exchange, which shall also be served with a
notice of termination of the pledge by the
pledgee within fourteen days of the termination
of the pledge;
( ii ) the company whose quoted securities have been
pledged shall also be notified of the pledge or of
its termination within the said periods and the
company shall record that fact in the register of
holders of the respective securities;
( iii ) such pledge of securities shall be effective in
relation to a third party only from the date of
delivery of the signed pledge agreement to the
recognised investment exchange and any
transfer or other assignment made therefrom by
the pledgor, whether by onerous or gratuitous
title, of the pledged securities shall be null and
void; and
COMPANIES [ CAP. 386.        61
( iv ) the pledgee shall, in the event of a default under
the agreement of pledge and upon giving notice
by judicial act to the pledgor, the recognised
investment exchange and the company, have the
securities sold through a licensed stockbroker.
( b ) In the case of a pledge of securities in a public
company which are quoted on a prescribed foreign
Stock Exchange, the provisions of subarticles  ( 7 )  to
( 11 )  shall not apply and in the event of a default under
the agreement of pledge, the pledgee shall, upon notice
to the pledgor and the company in accordance with
subarticle  ( 6 )  have the shares sold through a licensed
stockbroker.
( 13 ) In the exercise of his rights under this article, the pledgee
shall only sell or appropriate such number of securities as are
needed to raise sufficient proceeds to repay the debt due. All
remaining shares shall be released to the pledgor.
( 14 ) It shall be lawful for the parties to an agreement of pledge
of securities to agree on the person or persons who shall exercise
all the rights belonging to the holder of securities including voting
rights and the right to receive dividends and interest payments:
Provided that, should the agreement between the parties not
make provision for such matters, all rights pertaining to a holder of
securities shall, for the duration of the pledge, be exercised by the
pledgor until such time as he defaults under the agreement of
pledge or until the pledgee enforces his security; and in any such
case, upon giving notice by a judicial act to the pledgor and the
company, all the rights belonging to the pledgor shall immediately
become exercisable by the pledgee:
Provided further that, unless the pledgor and the pledgee
have otherwise agreed in the pledge agreement and notice thereof
has been given to the company, dividends or interests payments due
on securities which are pledged shall, during such time as the
pledge is registered in the register of holders of the respective
securities, be paid by the company to the pledgee who shall
appropriate any such amounts received to the interest due on the
debt secured by the pledge, and, if there is an excess, to the capital.
( 15 ) Notice of termination of the pledge shall be delivered by
the pledgee to the Registrar for registration within fourteen days of
the termination of the pledge. The company, securities in which
have been pledged, shall also be notified in writing of the
termination of the pledge within the said period and the company
shall record that fact in the register of holders of the respective
securities.
( 16 ) Subject to the provisions of subarticles  ( 6 )  to  ( 9 )  and  ( 13 ),
the terms and conditions of the pledge of a share warrant or of a
debenture warrant shall be determined by agreement between the
pledgor and the pledgee. The pledge of a share warrant or of a
debenture warrant shall be effective in relation to a third party from
the date of delivery of the share warrant or debenture warrant to the
pledgee.
  62      CAP. 386. ]                   COMPANIES
Register of 
members.
123. (1) Every company shall keep a register of its members
and shall enter therein the following particulars:
( a ) the names and addresses of the members and a
statement of the shares held by each member,
distinguishing each share by its number, so long as the
share has a number, and of the amount paid or agreed
to be considered as paid on the shares of each member;
( b ) the date at which each person was entered in the
register as a member; and
( c ) the date at which any person ceased to be a member: 
Provided that on the issue of a share warrant the company
shall strike out of its register of members the name of the member
then entered therein as holding the shares specified in the warrant
and shall enter in place of the aforesaid requirements the following
particulars: 
( i ) the fact of the issue of the warrant;
( ii ) a statement of the shares included in the warrant,
distinguishing each share by its number so long
as the share has a number; and
( iii ) the date of the issue of the warrant:
Provided further that where the company has converted any
of its shares into stock and has registered the conversion with the
Registrar, the register shall show the amount of stock held by each
member instead of the amount of shares and the particulars relating
to shares specified in paragraph  ( a ) .
( 2 ) Where two or more persons hold one or more shares in a
company jointly, they shall, for the purposes of this Act, be treated
as a single member; and, unless otherwise provided in the
memorandum or articles, the name of only one of such persons
shall be entered in the register of members. Such person shall be
elected by the joint holders and shall for all intents and purposes be
deemed  vis-à-vis  the company to be the member of the company in
respect of all the shares so held.
( 3 ) The register of members shall be kept at the registered
office of the company or at such other place as may be specified in
the memorandum or articles.
( 4 ) If default is made in complying with any requirement of
this article, every officer of the company who is in default shall be
liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Register of 
debentures.
124. (1) Every company shall keep a register of debentures
and shall enter therein the names and addresses of the registered
holders and particulars of the debentures held by them respectively.
( 2 ) The register of debentures shall be kept at the registered
office of the company or at such other place as may be specified in
the memorandum or articles.
( 3 ) Where two or more persons hold one or more debentures
jointly, they shall for the purposes of this Act be treated as a single
COMPANIES [ CAP. 386.        63
debenture holder; and, unless otherwise provided in the
memorandum or articles, the name of only one of such persons
shall be entered in the register of debentures. Such person shall be
elected by the joint holders and shall for all intents and purposes be
deemed  vis-à-vis  the company to be the holder of all the debentures
so held.
( 4 ) If default is made in complying with any requirement of
this article, every officer of the company who is in default shall be
liable to a penalty and, for every day during which the default
continues, to a further penalty.
Inspection of 
registers.
125.   Except when duly closed in accordance with the
provisions of article 126, and subject to such reasonable
restrictions as the company in general meeting may impose -
( a ) the register of members shall be open to the inspection
of any member of the company without charge; and
( b ) the register of debentures shall be open to the
inspection of any person without charge.
Power to close 
registers.
126. (1) A company may, on giving notice by advertisement in
a daily newspaper circulating wholly or mainly in Malta, close the
register of members to inspection for any period or periods not
exceeding in the whole thirty days in each year.
( 2 ) The register of debentures may be closed to inspection in
accordance with provisions contained in the memorandum or
articles or in the debentures or, in the case of debenture stock, in
the stock certificates, during such period or periods, not exceeding
in the whole thirty days in any one year, as may be therein
specified.
( 3 ) The memorandum or articles may provide that, during such
time as the register of members or the register of debentures is
closed in accordance with the provisions of subarticles (1) and  ( 2 ),
no new particulars may be entered therein.
Trustees and 
nominees.
127. (1) Unless otherwise provided in its articles, a company
formed and registered in Malta shall not recognise any nominee
relationship or trust in respect of any security issued by it, and the
company shall not recognise, even when having notice thereof, any
interest or other right in such security, but shall only recognise the
registered holder thereof.
Cap. 330.
( 2 ) Any court proceedings against a registered holder of a
security by the persons beneficially entitled to the security shall be
heard  in camera  if the registered holder is a licensed nominee
within the meaning of the Malta Financial Services Authority Act,
unless the person beneficially entitled to the security requests that
proceedings be heard in public.
Where the proceedings are held  in camera , all the records
connected therewith shall be secret and shall not be accessible to
any person except by authorisation of the court, which may also
determine the manner in which a judgement, decree or decision
relating to the proceedings may be made accessible, if at all, to
  64      CAP. 386. ]                   COMPANIES
third parties.
( 3 ) Notwithstanding anything contained in this article, the
persons beneficially entitled to a security shall be taken into
account, and any nominee relationship shall be disregarded, for
determining the status of the company for the purpose of Chapter
XII of this Title.
( 4 ) A licensed nominee shall not -
( a ) on its own behalf and in its own interest as beneficial
owner hold shares in any company except for such
number of shares not exceeding in the aggregate one
lira in nominal value and which do not have any
special voting rights;
Cap. 330.
( b ) hold shares in any company on behalf and in the
interest of a company falling within the meaning of
article 22 of the Malta Financial Services Authority
Act;
Cap. 330.
( c ) hold shares in any company falling within the meaning
of article 22 of the Malta Financial Services Authority
Act.
( 5 ) The creditors of a licensed nominee shall have no claim or
right of action on or against shares in a company held by the said
licensed nominee in the licensed nominee’s own name but on
behalf and in the interest of a beneficial owner entitled thereto.
( 6 ) Where a licensed nominee holds in its name a number of the
issued shares or all the issued shares in a company on behalf and in
the interest of one or more beneficial owners, including such shares
which it may hold on its own behalf and interest to the extent
permitted by subarticle  ( 4 )( a )  -
( a ) the memorandum of association and articles of
association, if any, shall be deemed to be validly
entered into for the purposes of articles 68 and 75 if:
( i ) in respect of the number of shares held in the
name of the licensed nominee and irrespective
of the number of beneficial owners entitled
thereto, they are only subscribed and signed by
the licensed nominee, and
( ii ) where the licensed nominee holds all the issued
shares in the company, they are only subscribed
and signed by the licensed nominee;
( b ) the memorandum of association shall specify the
amount of shares held by the licensed nominee on its
own behalf and interest if any, and the amount of
shares held by the licensed nominee on behalf and in
the interest of the beneficial owner or each such
beneficial owner if more than one;
( c ) the register of members shall specify the amount of
shares held by the licensed nominee on its own behalf
and interest if any, and the amount of shares held by
the licensed nominee on behalf and in the interest of
COMPANIES [ CAP. 386.        65
the beneficial owner or each such beneficial owner if
more than one, and the provisions of article 123(1) ( a ) ,
( b )  and  ( c )  shall be construed accordingly;
( d ) a resolution in writing pursuant to article 210 shall be
deemed to be valid and effective if:
( i ) in respect of the number of shares held in the
name of the licensed nominee and irrespective
of the number of beneficial owners entitled
thereto, it is only signed by the licensed
nominee, and
( ii ) where the licensed nominee holds all the issued
shares in the company, it is only signed by the
licensed nominee;
( e ) the share certificates, the return of allotments and the
annual return of the company shall be drawn up and
completed in accordance with the register of members
as provided for in paragraph   ( c ) .
Cap. 364.
Cap. 123.
( 7 ) ( a ) Where a beneficial owner of shares in a company
which are held by a licensed nominee in the licensed
nominee’s own name, transfers or otherwise disposes
of the beneficial ownership of such shares  inter vivos
to a third party, such a transaction shall be deemed to
constitute a transfer of shares for the purposes of the
Duty on Documents and Transfers Act, and for the
purposes of article 5(1) of the Income Tax Act, and
shall be noted in the register of members,
notwithstanding that the shares in question may
continue to be held in the name of the same licensed
nominee.
Cap. 364.
Cap. 123.
( b ) Where a change in the registered holder of shares in a
company does not involve a change in the beneficial
ownership thereof, such change shall not be deemed to
constitute a transfer of shares for the purposes of the
Duty on Documents and Transfers Act, and for the
purposes of article 5(1) of the Income Tax Act, but
shall nevertheless be noted in the register of members.
Cap. 364.
Documents and Transfers Act, "transferor" and
"transferee" in a transfer of shares  inter vivos  shall be
deemed to include a licensed nominee acting on behalf
of either the transferor or the transferee of the
beneficial ownership of such shares, or of both such
transferor and transferee.
( 8 ) In this article:
"beneficial owner" means a person who is the real owner of, or
who is otherwise beneficially entitled to, the shares which are
subscribed or held on his behalf and in his interest by a licensed
nominee; and "beneficial ownership" shall be construed
accordingly;
  66      CAP. 386. ]                   COMPANIES
Cap. 330.
"licensed nominee" means a private company in possession of a
licence in terms of article 51A of the Malta Financial Services
Authority Act.
( 9 ) Except where expressly permitted under article 212,
nothing in this article shall be deemed to imply that a company may
have less than two members.
( 10 ) No person shall hold shares in a company in his name, on
behalf and in the interest of other persons entitled to the beneficial
ownership thereof, unless such person is a licensed nominee or
otherwise licensed or authorised to act as nominee or trustee under
any other law in force in Malta.
Chapter VII - Meetings and Resolutions
Holding of annual 
general meeting.
128. (1) Every company shall in each year hold a general
meeting as its annual general meeting in addition to any other
meetings in that year, and shall specify the meeting as such in the
notices calling it, and not more than fifteen months shall elapse
between the date of one annual general meeting of the company and
that of the next:
Provided that so long as a company holds its first annual
general meeting within eighteen months of its registration it need
not hold it in the year of its registration or in the following year.
( 2 ) Every general meeting other than an annual general meeting
shall be an extraordinary general meeting.
( 3 ) If default is made in complying with the provisions of
subarticle (1), every officer of the company who is in default shall
be liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Convening of 
extraordinary 
general meeting on 
requisition.
129. (1) The directors of a company shall, on the requisition of
a member or members of the company holding at the date of the
deposit of the requisition not less than one-tenth of such of the paid
up share capital of the company as at the date of the deposit carried
the right of voting at general meetings of the company, forthwith
proceed duly to convene an extraordinary general meeting of the
company.
( 2 ) The requisition shall state the objects of the meeting and
shall be signed by the requisitionist or requisitionists and deposited
at the registered office of the company and may consist of several
documents in like form each signed by the requisitionist, or if there
is more than one requisitionist in any one document by all of them.
( 3 ) If the directors do not within twenty-one days from the date
of the deposit of the requisition proceed duly to convene a meeting,
the requisitionist or requisitionists may convene a meeting in the
same manner, as nearly as possible, as that in which meetings are to
be convened by the directors, but a meeting so convened shall not
be held after the expiration of three months from the date of the
deposit of the requisition.
COMPANIES [ CAP. 386.        67
( 4 ) Any reasonable expense incurred by the requisitionist or
requisitionists by reason of the failure of the directors duly to
convene a meeting shall be repaid to the requisitionist or
requisitionists by the company, and any sum so paid shall be due
personally by the directors who were in default and may be retained
by the company out of any sums due or to become due from the
company by way of fees or other remuneration in respect of their
services to such of the directors as were in default.
Length of notice 
for calling general 
meetings.
130.   A general meeting of a company shall be deemed not to
have been duly convened unless at least fourteen days’ notice has
been given in writing, and any provision in the company’s
memorandum or articles shall be construed as requiring fourteen
days’ notice in writing in so far as it provides for the calling of a
meeting of a company, other than an adjourned meeting, by a
shorter notice:
Provided that a meeting of the company shall
notwithstanding that it is called by a shorter notice, be deemed to
have been duly convened if it is so agreed by all the members
entitled to attend and vote thereat.
General provisions 
as to meetings and 
votes.
131.   The following provisions shall have effect in so far as the
articles of a company do not contain other provisions in that behalf-
( a ) notice of any general meeting of a company shall be
given to every member of the company and shall be
served in the manner in which notices are required to
be served by the First Schedule;
( b ) two members personally present shall be a quorum; 
( c ) any member elected by the members present at a
meeting may be chairman thereof;
( d ) every member shall have one vote in respect of each
share or each lira of stock held by him unless
otherwise provided in the terms of issue of such shares
or stock.
Powers of court to 
order meeting.
132. (1) If for any reason it is impracticable to call a meeting
of a company in any manner in which meetings of the company
may be called, or to conduct the meetings of that company in the
manner prescribed by the articles or this Act, the court may, either
on its own motion or on the demand of either of the parties to the
proceedings during the course of such proceedings or, in the
absence of any proceedings, on the application of any director of
the company or of any member of the company who would be
entitled to vote at the meeting, order a meeting of the company to
be called, held and conducted in such manner as the court thinks fit,
and where any such order is made, may give such ancillary or
consequential directions as it thinks expedient, including a
direction that one member of the company present in person or by
proxy shall be deemed to constitute a meeting.
( 2 ) The provisions of subarticle (1) shall also apply to the
calling of meetings of the board of directors of a company, if the
court considers that the circumstances justify such course of action.
  68      CAP. 386. ]                   COMPANIES
Proxies. 133. (1) Notwithstanding anything contained in the
memorandum or articles of a company, any member entitled to
attend and vote at a meeting of the company or at a meeting of any
class of members of the company shall be entitled to appoint
another person, whether a member or not, as his proxy to attend and
vote instead of him, and a proxy so appointed shall have the same
right as the member to speak at the meeting and to demand a poll.
( 2 ) The appointment of a proxy shall be in writing.
( 3 ) In every notice calling a meeting of a company there shall
appear with reasonable prominence a statement that a member
entitled to attend and vote is entitled to appoint a proxy and that a
proxy need not also be a member. If default is made in complying
with this subarticle, every officer of the company who is in default
shall be liable to a penalty.
( 4 ) A provision in a company’s memorandum or articles shall
be void in so far as it would have the effect of requiring an
instrument appointing a proxy, or any other document necessary to
show the validity of, or otherwise relating to, the appointment of a
proxy, to be received by the company or any other person more
than forty-eight hours before a meeting or adjourned meeting for
that appointment to be effective.
( 5 ) A company shall not issue at its own expense to some only
of the members entitled to be sent a notice of a meeting and to vote
thereat by proxy, invitations to appoint as proxy a person or one of
a number of persons specified in the invitations. If default is made
in complying with this subarticle, every officer of the company
who is in default shall be liable to a penalty:
Provided that an officer shall not be liable to a penalty by
reason only of the issue to a member at his request in writing of a
form of appointment naming the proxy, or of a list of persons
willing to act as proxy, if the form or list is available on request in
writing to every member entitled to vote at the meeting by proxy.
( 6 ) The provisions of this article shall apply to meetings of any
class of members of a company as they apply to general meetings
of the company.
Right to demand a 
poll.
134. (1) Any provision contained in the memorandum or
articles of a company shall be void in so far as it would have the
effect either- 
( a ) of excluding the right to demand a poll at a general
meeting on any question other than the election of the
chairman of the meeting or the adjournment of the
meeting; or
( b ) of making ineffective a demand for a poll on any such
question which is made either -
( i ) by not less than five members having the right to
vote at the meeting; or
( ii ) by a member or members representing not less
than one-tenth of the total voting rights of all the
members having the right to vote at the meeting;
COMPANIES [ CAP. 386.        69
or
( iii ) by a member or members holding shares in the
company conferring a right to vote at the
meeting being shares on which an aggregate sum
has been paid up equal to not less than one-tenth
of the total sum paid up on all the shares
conferring that right.
( 2 ) The instrument appointing a proxy to vote at a meeting of
the company shall be deemed to confer authority to demand or join
in demanding a poll; and for the purposes of subarticle (1) a
demand by a person as proxy for a member shall be the same as a
demand by the member.
( 3 ) On a poll taken at a meeting of a company or a meeting of
any class of members of that company, a member entitled to more
than one vote need not, if he votes, use all his votes or cast all the
votes he uses in the same way.
Extraordinary and 
ordinary 
resolutions.
Amended by:
IV. 2003.61.
135. (1) A resolution shall be an extraordinary resolution
where-
( a ) it has been taken at a general meeting of which notice
specifying the intention to propose the text of the
resolution as an extraordinary resolution and the
principal purpose thereof has been duly given; and
( b ) it has been passed by a member or members having the
right to attend and vote at the meeting holding in the
aggregate not less than seventy-five per cent in
nominal value of the shares represented and entitled to
vote at the meeting and at least fifty-one per cent, or
such other higher percentage as the memorandum or
articles may prescribe, in nominal value of all the
shares entitled to vote at the meeting:
Provided that, if one of the aforesaid majorities is
obtained, but not both, another meeting shall be
convened within thirty days in accordance with the
provisions for the calling of meetings to take a fresh
vote on the proposed resolution. At the second meeting
the resolution may be passed by a member or members
having the right to attend and vote at the meeting
holding in the aggregate not less than seventy-five per
cent in nominal value of the shares represented and
entitled to vote at the meeting. However, if more than
half in nominal value of all the shares having the right
to vote at the meeting is represented at that meeting, a
simple majority in nominal value of such shares so
represented shall suffice.
( 2 ) An ordinary resolution shall be passed by a member or
members having the right to attend and vote holding in the
aggregate shares entitling the holder or holders thereof to more
than fifty per cent of the voting rights attached to shares
represented and entitled to vote at the meeting, or such other higher
percentage as the memorandum or articles may prescribe.
  70      CAP. 386. ]                   COMPANIES
( 3 ) In the case of a private company a resolution shall be an
extraordinary resolution where -
( a ) the provisions of subarticle (1) ( a )  are complied with;
and
( b ) it has been passed by a number of members having the
right to attend and vote at any such meeting holding in
the aggregate not less than fifty-one per cent in
nominal value of the shares conferring that right or
such other higher percentage as the memorandum or
articles may prescribe.
Chapter VIII - Management and Administration
Power of company 
to borrow money, 
hypothecate or 
charge its 
undertaking, etc.
Amended by:
IV. 2003.62.
136.   A company shall, unless otherwise provided in its
memorandum or articles, have the power to borrow money and to
guarantee the obligations of any third party and, for such purpose,
to hypothecate or charge its undertakings, property and uncalled
capital or any part thereof including as security for its obligations
or for those of any third party, and to issue debentures, debenture
stock and other securities whether outright or as security for its
liabilities or obligations or for those of any third party.
General duties of 
directors.
Added by:
IV. 2003.63.
136A.  (1) A director of a company shall be bound to act
honestly and in good faith in the best interests of the company.
(2) The directors of a company shall promote the well-being of
the company and shall be responsible for:
( a ) the general governance of the company and its proper
administration and management; and
( b ) the general supervision of its affairs.
(3) In particular, but without prejudice to any other duty
assigned to the directors of a company, or to any one of them, by
the memorandum or articles of association or by this Act or any
other law, the directors of a company shall:
( a ) be obliged to exercise the degree of care, diligence and
skill which would be exercised by a reasonably
diligent person having both -
(i) the knowledge, skill and experience that may
reasonably be expected of a person carrying out
the same functions as are carried out by or
entrusted to that director in relation to the
company; and
(ii) the knowledge, skill and experience that the
director has;
( b ) not make secret or personal profits from their position
without the consent of the company, nor make personal
gain from confidential company information;
( c ) ensure that their personal interests do not conflict with
the interests of the company;
COMPANIES [ CAP. 386.        71
( d ) not use any property, information or opportunity of the
company for their own or anyone else’s benefit, nor
obtain benefit in any other way in connection with the
exercise of their powers, except with the consent of the
company in general meeting or except as permitted by
the company’s memorandum or articles of association;
( e ) exercise the powers they have for the purposes for
which the powers were conferred and shall not misuse
such powers.
Directors.
Amended by:
IV. 2003.64.
137. (1) Every public company shall have at least two
directors.
( 2 ) Every private company shall have at least one director, and
where a private company has one director, all references in this Act
to two or more directors shall be construed as references to such
one director.
( 3 ) The business of a company shall be managed by the
directors who may exercise all such powers of the company,
including those specified in article 136, as are not by this Act or by
the memorandum or articles of the company, required to be
exercised by the company in general meeting.
( 4 ) Notwithstanding anything contained in the memorandum
and articles of association relating to the manner in which the
representation of the company is to be exercised, anything done by
the board of directors of a company which exceeds the limits of
their authority or by any director which is beyond his powers, shall
be binding on the company unless that act exceeds the powers
granted to the board of directors or to a director, as the case may be,
by virtue of this Act.
( 5 ) Any limitation on the powers of the board of directors or of
any director of the company shall not be relied on as against third
parties independently of whether that limitation, published or not,
arises from the memorandum or articles or from any resolution of
the general meeting or from a decision of the board of directors of
the company.
( 6 ) Where an act of the company falls outside the company’s
objects, the company shall not be bound if it proves that, when the
act was done, the third party knew that it was outside the
company’s objects or the third party could not in view of the
circumstances have been unaware thereof:
Provided that the publication of the memorandum and
articles of the company shall not in itself be sufficient to prove that
the third party knew, or could not have been unaware, that the act
was outside the company’s objects.
( 7 ) If the number of directors of a company is reduced below
two any member of the company may at any time after the lapse of
thirty days therefrom, make an application to the court for the court
to appoint a director or directors for the company in accordance
with its memorandum and this without prejudice to the right of the
continuing director to fill any vacancy so created in accordance
  72      CAP. 386. ]                   COMPANIES
with the provisions of  article  140 ( 6 )  within the thirty days specified
herein or at any time thereafter for as long as a director is not
appointed by the court.
( 8 ) A person appointed by the court in accordance with the
provisions of subarticle  ( 7 )  shall hold office until the next annual
general meeting although he shall be eligible for re-election.
( 9 ) The provisions of subarticle  ( 7 )  shall furthermore be
without prejudice to the provisions of  article  140(1) to  ( 5 )  and of
article  214 ( 2 )( b )( ii )  and to the right of the company to fill any such
vacancy in general meeting.
Company 
secretary.
Amended by:
IV. 2003.65.
138. (1) Every company shall have a company secretary.
( 2 ) No company shall:
( a ) have as company secretary its sole director;
( b ) have as sole director of the company a body corporate
the sole director of which is company secretary to the
company.
( 3 ) It shall be the duty of the directors of a company to take all
reasonable steps to ensure that the company secretary is an
individual who appears to them to have the requisite knowledge
and experience to discharge the functions of company secretary.
( 4 ) In the event that the post of company secretary becomes
vacant, the directors of the company shall, within fourteen days
from the date when the post becomes vacant, appoint another
individual to fill the post.
( 5 ) The directors of a company shall have the power to remove
the company secretary and they shall appoint another individual in
his stead within fourteen days from the date of his removal.
( 6 ) Anything required or authorised to be done by or to the
company secretary may, if the office is vacant or if there is for any
other reason no company secretary capable of acting, be done by or
to any officer of the company authorised generally or specifically
in that behalf by the directors.
( 7 ) A provision authorising a thing to be done by or to a
director and the company secretary is not satisfied by its being
done by or to the same person acting both as director and as, or in
place of, the company secretary.
(8) If default is made in complying with the provisions of
subarticle (4) every director of the company who is in default shall
be liable to a penalty, and for every day during which the default
continues, to a further penalty.
Appointment of 
directors.
139. (1) A person shall not be capable of being appointed
director of a public company unless he has personally, or by his
agent authorised in writing, signed the memorandum indicating his
consent to act as a director or has otherwise signed and delivered to
the Registrar for registration a consent in writing to act as such
director.
( 2 ) Without prejudice to the provisions of subarticle (1), where
COMPANIES [ CAP. 386.        73
a director is by the memorandum or articles of a private or of a
public company required to hold a specified share qualification, he
shall either sign the memorandum for a number of shares not less
than his qualification or sign and deliver to the Registrar for
registration an undertaking in writing to take from the company and
pay for his qualification shares:
Provided that he shall vacate his office if he fails to obtain
his qualification within two months after his appointment, or such
shorter time as may be fixed by the memorandum or articles, or if
at any time thereafter he ceases to hold his qualification; and he
shall be incapable of being reappointed director of the company
until he has obtained his qualification.
( 3 ) For the purposes of any provision in the memorandum or
articles of a public company requiring a director or manager to hold
a specified share qualification, the bearer of a share warrant shall
not be deemed to be the holder of the shares specified in the
warrant.
( 4 ) Unless otherwise provided in the memorandum or articles
of a company, a director of a company other than the first directors
shall be appointed by ordinary resolution of the company in general
meeting.
( 5 ) Where the holders of a particular class of shares have the
right to appoint one or more directors, in terms of the memorandum
and articles of the company, such appointment shall be made by a
member or members holding in the aggregate more than fifty per
cent in nominal value of the shares represented and entitled to vote
at the meeting of the holders of the shares of that class.
Removal of 
directors and 
casual vacancies.
Amended by:
IV. 2003.66.
140. (1) A company may remove a director before the
expiration of his period of office by a resolution taken at a general
meeting of the company and passed by a member or members
having the right to attend and vote, holding in the aggregate shares
entitling the holder or holders thereof to more than fifty per cent of
the voting rights attached to shares represented and entitled to vote
at the meeting.
( 2 ) The provisions of subarticle (1) shall apply notwithstanding
anything in the company’s memorandum or articles or in any
agreement between it and the director.
( 3 ) On receipt of a notice of an intended resolution to remove a
director under this article the company shall forthwith send a copy
thereof to the director concerned and the director, whether or not he
is a member of the company, shall be entitled to be heard on the
resolution at the meeting.
( 4 ) A vacancy created by the removal of a director under this
article, if not filled at the meeting at which he is removed, may be
filled as a casual vacancy.
( 5 ) Nothing in this article shall be taken as -
( a ) depriving a person removed hereunder of
compensation or damages payable to him in respect of
the termination of his appointment as director or of
  74      CAP. 386. ]                   COMPANIES
any other appointment terminating with the
termination of his appointment as director; or
( b ) derogating from any power to remove a director which
may exist apart from this article.
( 6 ) ( a ) Unless otherwise provided in the memorandum or
articles of a company, a casual vacancy may be filled
by the continuing director or directors, and without
prejudice to the aforesaid powers of the directors, it
may be filled by the company in general meeting.
( b ) A person appointed by the directors to fill a casual
vacancy shall hold office until the next following
annual general meeting and shall be eligible for re-
election, but shall not be taken into account in
determining the directors who are to retire by rotation
at that meeting.
( c ) A person appointed to fill a casual vacancy by the
company in general meeting shall be treated, for the
purpose of determining the time at which he or any
other director is to retire, as if he had become director
on the day on which the person in whose place he is
appointed was last appointed director.
Representation of 
the company.
141. (1) Where for any reason the representation of a company
ceases to be vested in any person or persons, the company shall
appoint another person or persons to exercise such function. The
appointment shall be made by ordinary resolution taken at a general
meeting notice of which shall be issued within fourteen days from
the date when the vacancy occurs.
( 2 ) The company may by ordinary resolution replace any
person or persons vested with the representation of the company.
( 3 ) Where, and for as long as, the representation of a company
cannot be exercised in accordance with the memorandum of the
company, any director shall represent the company in judicial
proceedings against it.
Disqualification 
for appointment as 
director or 
company secretary.
Amended by:
IV. 2003.67.
142. (1) A person shall not be qualified for appointment or to
hold office as director of a company or company secretary if -
( a ) he is interdicted or incapacitated or is an undischarged
bankrupt;
( b ) he has been convicted of any of the crimes affecting
public trust or of theft or of fraud or of knowingly
receiving property obtained by theft or fraud;
( c ) he is a minor who has not been emancipated; or
( d ) he is subject to a disqualification order under article
320.
( 2 ) Notwithstanding the provisions of this Act or of the
memorandum and articles of a company relating to the formalities
of the appointment of a director or other officer and to his
qualification, any irregularity concerning the appointment of a
COMPANIES [ CAP. 386.        75
director or other officer of a company raised after the completion of
the publication of his appointment shall not be relied upon by the
company as against third parties unless the company proves that
such parties were aware of the irregularity at the relevant time.
( 3 ) Third parties who were not aware of the irregularities
referred to in subarticle  ( 2 )  at the relevant time may rely on that
irregularity as against the company.
Directors 
competing with 
company.
Amended by:
IV. 2003.68.
143. (1) A director of a company may not, in competition with
the company and without the approval of the same company given
at a general meeting, carry on business on his own account or on
account of others, nor may he be a partner with unlimited liability
in another partnership or a director of a company which is in
competition with that company.
( 2 ) Where a director acts in violation of the prohibition
contained in this article, the company may, at its option, either take
action for damages and interest against him or demand payment of
any profits made by him in contravention of this article.
( 3 ) The provisions of this article shall be without prejudice to
any other remedy which a company may have against a director for
breach of duty.
Prohibition of 
loans, etc. to 
directors.
144. (1) It shall not be lawful for a company -
( a ) to make a loan to any person who is its director or a
director of its parent company, or to enter into any
guarantee or provide any security in connection with a
loan made to such a person as aforesaid by any other
person:
Provided that nothing in this paragraph shall apply
either - 
( i ) to anything done, with the approval of the
company given at a general meeting, to provide
any such person as aforesaid with funds to meet
expenditure incurred or to be incurred by him
for the purposes of the company or for the
purpose of enabling him properly to perform his
duties as an officer of the company; or
( ii ) in the case of a company whose ordinary
business includes the lending of money or the
giving of guarantees in connection with loans
made by other persons, to anything done by the
company in the ordinary course of that business; 
( b ) to make to any director of the company any payment
by way of compensation for loss of office, or as
consideration for or in connection with his retirement
from office, without particulars with respect to the
proposed payment, including the amount thereof,
being disclosed to members of the company and the
proposal being approved by the company in general
meeting.
  76      CAP. 386. ]                   COMPANIES
( 2 ) For the purposes of this article, the expression "director"
shall include any person in accordance with whose directives or
instructions the directors of a company are accustomed to act.
Duty of director to 
disclose interest in 
a contract with 
company.
145. (1) It shall be the duty of a director of a company who is
in any way, whether directly or indirectly, interested in a contract
or proposed contract with the company to declare the nature of his
interest to the other directors either at the meeting of the directors
at which the question of entering into the contract is first taken into
consideration, or, if the director was not at the date of that meeting
interested in the contract or proposed contract, at the next meeting
of the directors held after he became so interested.
( 2 ) Any director who fails to comply with the provisions of this
article shall be liable to a penalty.
Return as to 
changes among 
directors, company 
secretary and in 
representation of 
company.
146. (1) Every company shall send to the Registrar for
registration a return of any change among its directors, or company
secretary or in the representation of the company, specifying the
date of the change, together with the name and residence of any
new director or company secretary, within fourteen days from the
happening thereof:
Provided that the Registrar may, before registering the
return, take such steps and require such information as he may
deem necessary to ascertain the correctness of the return and to
determine whether the provisions of this Act have been complied
with.
( 2 ) If default is made in complying with the provisions of
subarticle (1), every officer of the company who is in default shall
be liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Joint and several 
liability of 
directors for breach 
of duty.
147. (1) The personal liability of the directors in damages for
any breach of duty shall be joint and several:
Provided that where a particular duty has been entrusted to
one or more of the directors, only such director or directors shall be
liable in damages.
( 2 ) A director shall not be liable for the acts of his co-directors
if he proves either -
( a ) that he did not know of the breach of duty before or at
the time of its occurrence and that on becoming aware
of it after its occurrence he signified forthwith to the
co-directors his dissent in writing; or
( b ) that, knowing that the co-directors intended to commit
a breach of duty, he took all reasonable steps to
prevent it.
Provisions as to 
liability of officers 
and auditors.
148. (1) Any provision, whether contained in the
memorandum or articles of a company or in any contract with a
company or otherwise for exempting any officer of the company or
any person engaged by the company as auditor from, or
indemnifying him against, any liability which by virtue of any rule
COMPANIES [ CAP. 386.        77
of law would in the absence thereof have been attached to him in
respect of negligence, default or breach of duty or otherwise of
which he may be guilty in relation to the company shall be void:
Provided that a company may, in pursuance of any such
provision as aforesaid, indemnify any such officer or auditor
against any liability incurred by him in defending any proceedings
in which judgment is given in his favour or in which he is
acquitted.
( 2 ) Nothing in this article shall be construed as preventing or
restricting a company from purchasing and maintaining for any of
its officers insurance against any such liability as is referred to in
subarticle (1); or as preventing or restricting any officer or auditor
of a company from personally purchasing and maintaining any such
insurance.
Minutes of 
proceedings.
149. (1) Every company shall cause minutes of all proceedings
of general meetings and all proceedings at meetings of its directors
to be entered in books kept for that purpose.
( 2 ) Any such minute, if purporting to be signed by the
chairman of the meeting at which the proceedings were held, or by
the chairman of the next succeeding meeting, shall be evidence of
the proceedings.
( 3 ) The books containing the minutes of proceedings of any
general meeting of a company shall be kept at the registered office
of the company, or at such other place as may be specified in the
memorandum or articles, and shall, during business hours, subject
to such reasonable restrictions as the company may by its articles
or in general meeting impose, be open to the inspection of any
member of the company without charge.
( 4 ) If a company fails to comply with the requirements of
subarticles (1) or  ( 3 ),  every officer of the company who is in default
shall be liable to a penalty.
General duty of 
officers of a 
company.
Amended by:
IV. 2003.69.
150.   Anything required to be done by a company under any
provision of this Act shall be deemed also to be required to be done
by the officers of the company.
Chapter IX - Auditors
Appointment of 
auditors.
151. (1) A company shall, at each general meeting at which
the annual accounts are laid, appoint an auditor or auditors to hold
office from the conclusion of that meeting until the conclusion of
the next general meeting at which such accounts are laid. The
company may appoint joint auditors and references in this Act to
auditor or auditors shall be deemed to include references to single
or joint auditors as the case may be.
( 2 ) The first auditors of the company may be appointed by the
directors at any time before the first general meeting of the
company at which the annual accounts are laid, and the auditors so
  78      CAP. 386. ]                   COMPANIES
appointed shall hold office until the conclusion of that meeting.
( 3 ) If the directors fail to exercise their powers under subarticle
( 2 ),  the powers may be exercised by the company in general
meeting.
( 4 ) If no auditors are appointed or re-appointed as required by
the foregoing subarticles of this article, the court on an application
made by any of the directors or by any member of the company or
by the Registrar may appoint a person to fill the vacancy.
( 5 ) In the case specified in subarticle  ( 4 ),  the company shall
within two weeks of the general meeting at which an auditor or
auditors should have been appointed by virtue of subarticle (1),
give notice to the Registrar that his power to apply to the court has
become exercisable.
( 6 ) If a company fails to give the notice required by subarticle
( 5 ),  every officer of the company who is in default shall be liable to
a penalty, and, for every day during which the default continues, to
a further penalty.
Filling of casual 
vacancies.
152. (1) The directors shall at any time before the general
meeting of the company at which the annual accounts are laid fill a
casual vacancy in the office of auditor:
Provided that the company in general meeting may fill such
a casual vacancy itself.
( 2 ) While such a vacancy continues, any surviving or
continuing auditor or auditors may continue to act.
( 3 ) Where it is proposed -
( a ) to appoint an auditor to fill a casual vacancy in the
office of auditor by resolution of the general meeting;
or
( b ) to re-appoint by resolution of the general meeting a
retiring auditor who was appointed by the directors to
fill a casual vacancy, as auditor, or to appoint a new
auditor instead of that auditor,
notice specifying the terms of the proposed resolution shall be
given forthwith to the person proposed to be appointed and, if the
casual vacancy was caused by the resignation of an auditor, to the
auditor who resigned.
( 4 ) Any director who fails to comply with the provisions of
subarticle (1) shall be liable to the same penalty as that provided
for in  article  151(6).
Disqualification 
from appointment 
as auditor.
153.   A person shall be disqualified from appointment as auditor
or from holding the office of auditor of a company if - 
( a ) in the case of an individual, he has at any time during
the previous three years been - 
( i ) an officer or employee of the company; or
( ii ) a partner, employer or employee of an officer of
the company; or
COMPANIES [ CAP. 386.        79
( iii ) a partner or employee of an employee of the
company; or
( iv ) related by consanguinity or affinity in the direct
line, or, up to the third degree, in the collateral
line, to any officer of the company;
( b ) in the case of a partnership, any of the partners thereof
is an individual who falls within paragraph  ( a )  or the
partnership itself falls within the said paragraph  ( a ) :
Provided that the third degree referred to in paragraph
( a )(iv)  shall be reduced to the second degree by consanguinity in
the case of a partnership if the partner to whom the relationship
relates is totally excluded from the audit concerned.
Right to 
information.
154. (1) The auditors of a company shall have a right of access
at all times to the company’s accounting records, accounts and
vouchers, and shall be entitled to require from the company’s
officers such information and explanations as they think necessary
for the performance of their duties as auditors.
( 2 ) An officer of a company who knowingly or recklessly
makes to the company’s auditors a statement, whether written or
oral which - 
( a ) conveys or purports to convey any information or
explanations which the auditors require, or are entitled
to require, as auditors of the company; and
( b ) is misleading, false or deceptive in a material
particular; 
shall be guilty of an offence and liable on conviction to a fine
( multa ) o f not more than two thousand liri or to imprisonment for a
term not exceeding six months or to both such fine and
imprisonment.
( 3 ) A subsidiary undertaking which is registered in Malta, and
the auditors of such an undertaking, shall give to the auditors of
any parent company of the subsidiary undertaking such information
and explanations as they may reasonably require for the purposes
of their duties as auditors of that company. If a subsidiary
undertaking fails to comply with the provisions of this subarticle,
every officer thereof who is in default shall be liable to a penalty;
and if an auditor fails without reasonable cause to comply with this
subarticle he shall be liable to a penalty.
( 4 ) A parent company having a subsidiary undertaking which is
not registered in Malta shall, if required by its auditors to do so,
take all such steps as are reasonably open to it to obtain from the
subsidiary undertaking such information and explanations as they
may reasonably require for the purposes of their duties as auditors
of that company. If a parent company fails to comply with the
provisions of this subarticle, every officer of the company who is in
default shall be liable to a penalty.
Right to attend 
company meetings.
155.   A company’s auditors shall be entitled - 
( a ) to receive all notices of, and other communications
  80      CAP. 386. ]                   COMPANIES
relating to, any general meeting which a member of
the company is entitled to receive;
( b ) to attend any general meeting of the company; and
( c ) to be heard at any general meeting which they attend
on any part of the business of the meeting which
concerns them as auditors.
Remuneration of 
auditors.
156. (1) The remuneration of auditors appointed by the
company in general meeting shall be fixed by the company in
general meeting or in such manner as the company in general
meeting may determine. The remuneration of auditors appointed by
the directors or the court shall be fixed by the directors or the court
as the case may be.
( 2 ) There shall be stated in the notes to the accounts the amount
of the remuneration of the company’s auditors in their capacity as
such; and where consolidated accounts are prepared, the notes to
the consolidated accounts shall state the total remuneration paid to
the auditors of the parent company in respect of all undertakings
included in the consolidation, and also the total remuneration paid
to all other auditors in respect of such undertakings.
( 3 ) For the purposes of this article "remuneration" includes
sums paid in respect of expenses.
( 4 ) The provisions of this article shall apply in relation to
benefits in kind as to payments in cash, and in relation to any such
benefit references to its amount are to its estimated money value.
The nature of any such benefit shall also be disclosed.
( 5 ) The Minister may make provision by regulation for
securing the disclosure of the amount of any remuneration received
or receivable by a company’s auditors or their associates in respect
of services other than those of auditors in their capacity as such,
and, in particular, the regulations may - 
( a ) define "associate" in relation to an auditor;
( b ) require the disclosure of remuneration in respect of
services rendered to associated undertakings of the
company; and 
( c ) define "associated undertaking" for that purpose.
Removal of 
auditors.
157. (1) Notwithstanding anything in a company’s
memorandum or articles or in any other agreement, the company
may at any time remove an auditor from office in the same manner
as that specified in article 140(1).
( 2 ) Where a resolution removing an auditor is passed at a
general meeting of a company, the company shall within fourteen
days give notice thereof to the Registrar for registration. If a
company fails to give the notice required by this subarticle, every
officer of the company who is in default shall be liable to a penalty,
and, for every day during which the default continues, to a further
penalty.
( 3 ) Nothing in this article shall be taken as depriving a person
COMPANIES [ CAP. 386.        81
removed under its provisions of compensation for damages payable
to him in respect of the termination of his appointment as auditor or
of any appointment terminating with that of auditor.
( 4 ) An auditor of a company who has been removed shall have,
notwithstanding his removal, the rights conferred by article 155 in
relation to any general meeting of the company - 
( a ) at which his term of office would otherwise have
expired; or
( b ) at which it is proposed to fill the vacancy caused by
his removal.
In such a case the references in that article to matters
concerning the auditor as auditor shall be construed as references to
matters concerning him as a former auditor.
Rights of auditors 
who are removed 
or not re-
appointed.
158. (1) Notice specifying the text of and reasons for a
proposed resolution of a general meeting of a company whereby it
is intended to - 
( a ) remove an auditor before the expiration of his term of
office; or
( b ) appoint as auditor a person other than a retiring
auditor; 
shall be sent forthwith by the company to the person proposed to be
removed, to the person proposed to be appointed and to the retiring
auditor, as the case may be.
( 2 ) The auditor proposed to be removed or, as the case may be,
the retiring auditor may make with respect to the intended
resolution representations in writing to the company not exceeding
a reasonable length and request their notification to members of the
company.
( 3 ) The company shall, unless the representations are received
by it too late for it to do so -
( a ) in any notice of the resolution given to members of the
company, state the fact of the representations having
been made; and
( b ) send a copy of the representations to every member of
the company to whom notice of the meeting is or has
been sent. 
( 4 ) If a copy of any such representations is not sent out as
required because it was received too late or because of the
company’s default, the auditor may, without prejudice to his right
to be heard orally, require that the representations be read out at the
meeting.
Resignation of 
auditor.
159. (1) An auditor of a company may resign his office by
depositing a notice in writing to that effect at the company’s
registered office and he shall so resign if he ceases to be qualified
as an auditor or if he fails to satisfy the conditions of qualification
provided in article 153. The notice shall not be effective unless it is
accompanied by the statement required by article 161.
  82      CAP. 386. ]                   COMPANIES
( 2 ) An effective notice of resignation shall operate to bring the
auditor’s term of office to an end as of the date on which the notice
is deposited or on such later date as may be specified in it.
( 3 ) The company shall within fourteen days of the deposit of a
notice of resignation send a copy of the notice to the Registrar for
registration. If default is made in complying with this subarticle,
every officer of the company who is in default shall be liable to a
penalty, and, for every day during which the default continues, to a
further penalty.
Rights of resigning 
auditor.
160. (1) The provisions of this article shall apply where an
auditor’s notice of resignation is accompanied by a statement of
circumstances which he considers should be brought to the
attention of members or creditors of the company.
( 2 ) The resigning auditor may deposit with the notice a signed
requisition calling on the directors of the company forthwith duly
to convene an extraordinary general meeting of the company for the
purpose of receiving and considering such explanation of the
circumstances connected with his resignation as he may wish to
place before the meeting.
( 3 ) The resigning auditor may request the company to circulate
to its members -
( a ) before the meeting convened on his requisition; or
( b ) before any general meeting at which his term of office
would otherwise have expired or at which it is
proposed to fill the vacancy caused by his resignation;
a statement in writing of the circumstances connected with his
resignation as referred to in subarticle (1).
( 4 ) The company shall, unless the statement is received too late
for it to comply - 
( a ) in any notice of the meeting given to members of the
company, state the fact of the statement having been
made; and 
( b ) send a copy of the statement to every member of the
company to whom notice of the meeting is or has been
sent.
( 5 ) If the directors do not within twenty-one days from the date
of the deposit of a requisition under this article proceed duly to
convene a meeting for a day not more than twenty-eight days after
the date on which the notice convening the meeting is given, every
director who failed to take all reasonable steps to secure that a
meeting was convened as mentioned in subarticle  ( 2 )  shall be liable
to a penalty.
( 6 ) If a copy of the statement is not sent out as required
because it was received too late or because of the company’s
default, the auditor may, without prejudice to his right to be heard
orally, require that the statement be read out at the meeting.
( 7 ) An auditor who has resigned has, notwithstanding his
COMPANIES [ CAP. 386.        83
resignation, the rights conferred by article 155 in relation to any
such general meeting of the company as is mentioned in subarticle
( 3 )( a )  or  ( b ),  and, in such a case, the references in that article to
matters concerning the auditor as auditor shall be construed as
references to matters concerning him as a former auditor.
Statement by 
person ceasing to 
hold office as 
auditor.
161. (1) Where an auditor ceases for any reason to hold office,
he shall deposit at the company’s registered office a statement of
any circumstances connected with his ceasing to hold office which
he considers should be brought to the attention of the members or
creditors of the company or, if he considers that there are no such
circumstances, a statement that there are none.
( 2 ) In the case of resignation, the statement shall be deposited
along with the notice of resignation; in the case of failure to seek
re-appointment, the statement shall be deposited not less than
fourteen days before the general meeting at which auditors are to be
reappointed; in any other case, the statement shall be deposited not
later than the end of the period of fourteen days beginning with the
date on which the auditor ceases to hold office.
( 3 ) Where the statement is of circumstances which the auditor
requests to be brought to the attention of the members or creditors
of the company, the company shall within fourteen days of the
deposit of the statement either -
( a ) send a copy of it to every person who under article 180
is entitled to be sent copies of the annual accounts; or 
( b ) submit an application to the court for an order that
there are grounds of sufficient gravity to warrant that
the statement should not be circulated.
( 4 ) Where the company submits an application to the court, the
court shall notify the auditor of the application and shall hear both
parties before making a decision on the company’s application.
( 5 ) Unless the auditor receives notice of such an application
before the end of the period of twenty-one days beginning with the
day on which he deposited the statement, he shall within a further
seven days send a copy of the statement to the Registrar.
( 6 ) If the court is satisfied that the auditor is using the
statement to secure needless publicity for defamatory matter -
( a ) it shall direct that copies of the statement need not be
sent out; and
( b ) it may further order the company’s costs on the
application to be paid in whole or in part by the
auditor, notwithstanding that he is not a party to the
application;
and the company shall within fourteen days of the court’s decision
send to the persons mentioned in subarticle  ( 3 )( a )  a statement
setting out the effect of the order.
( 7 ) If the court is not so satisfied, the company shall within
fourteen days of the court’s decision - 
  84      CAP. 386. ]                   COMPANIES
( a ) send copies of the statement to the persons mentioned
in subarticle  (3)( a );  and
( b ) notify the auditor of the court’s decision, 
and the auditor shall within seven days of receiving such notice
send a copy of the statement to the Registrar.
Failure to comply 
with article 161.
162. (1) If a person ceasing to hold office as auditor fails
without just cause to comply with the provisions of article 161 he
shall be liable to a penalty.
( 2 ) In proceedings for a default under subarticle (1) it shall be a
defence for the person against whom action is taken to show that he
took all reasonable steps and exercised all due diligence to avoid
that default.
( 3 ) If a company makes default in complying with the
provisions of article 161, every officer of the company who is in
default shall be liable to a penalty, and, for every day during which
the default continues, to a further penalty.
Chapter X - Accounts, Audit and Annual Return
Keeping of 
accounting 
records.
Cap. 13.
163. (1) In lieu of the requirements of articles 13 to 18 of the
Commercial Code a company shall be required to keep proper
accounting records with respect to - 
( a ) all sums of money received and expended by the
company and the matters in respect of which the
receipt and expenditure takes place;
( b ) the assets and liabilities of the company;
( c ) if the company’s business involves dealing in goods:
( i ) statements of stocks held by the company at the
end of each accounting period of the company;
( ii ) all statements of stocktakings from which any
such statement of stocks as is mentioned in sub-
paragraph  ( i )  has been or is to be prepared; and
( iii ) except in the case of goods sold by way of
ordinary retail trade, statements of all goods sold
and purchased, showing the goods and the
buyers and sellers in sufficient detail to enable
all these to be identified.
( 2 ) For the purposes of subarticle (1), proper accounting
records shall be deemed to have been kept with respect to the
matters aforesaid if such records are sufficient to show and explain
the company’s transactions and are such as to - 
( a ) disclose with reasonable accuracy, at any time, the
financial position of the company at that time; and
( b ) enable the directors to ensure that any balance sheet
and profit and loss account prepared under this
Chapter complies with the requirements of this Act.
COMPANIES [ CAP. 386.        85
( 3 ) The accounting records shall be kept at the registered office
of the company or at such other place as the directors think fit, and
shall be at all times open to inspection by the officers of the
company:
Provided that if accounting records are kept at a place
outside Malta there shall be sent to, and kept at a place in Malta and
at all times be open to the inspection of the officers of the company
such accounts and returns with respect to the business dealt with in
the accounting records so kept as will disclose with reasonable
accuracy the financial position of that business at intervals not
exceeding six months and will enable to be prepared, in accordance
with this Act, the company’s balance sheet and its profit and loss
account.
( 4 ) A parent company which has a subsidiary undertaking, in
relation to which the above requirements do not apply, shall take
reasonable steps to secure that the subsidiary undertaking keeps
such accounting records as to enable the directors of the parent
company to ensure that any balance sheet and profit and loss
account prepared complies with the requirements of this Act.
Cap. 13.
( 5 ) Notwithstanding the provisions of article 26 of the
Commercial Code, the accounting records of the company shall be
kept for a period of ten years:
Provided that where the accounting records are kept in a
bound or unified form, the ten years shall commence to run from
the date of the last entry made therein.
( 6 ) If a company fails to comply with any provision of
subarticles (1) to  ( 4 ),  every officer of the company who is in default
shall be guilty of an offence and liable on conviction to a fine
( multa )  of not more than five thousand liri, unless he shows that he
acted diligently and that, in the circumstances in which the
company’s business was carried on, the default was excusable.
( 7 ) If a company fails to comply with the provisions of
subarticle  ( 5 ),  every officer of the company who is in default shall
be liable to a penalty.
Accounting 
reference period 
and accounting 
reference date.
164. (1) A company’s accounting periods are determined by
reference to its accounting reference date.
( 2 ) A company may give notice in the prescribed form to the
Registrar specifying a date in the calendar year as being its
accounting reference date:
Provided that no such notice shall have effect unless it is
given before the end of nine months beginning with the date of the
company’s registration; and, failing such notice, the company’s
accounting reference date shall be the thirty-first of December.
( 3 ) A company’s first accounting reference period shall be such
period ending with its accounting reference date as begins on the
date of its registration and is a period of not less than six months
and not more than eighteen months; and each successive period of
twelve months beginning after the end of the first accounting
reference period and ending with the accounting reference date
  86      CAP. 386. ]                   COMPANIES
shall also be an accounting reference period of the company.
( 4 ) A company’s first accounting period shall commence on the
first day of its first accounting reference period and shall end on a
date not more than seven days before or after the end of that
accounting reference period as the directors may determine.
Subsequent accounting periods shall commence on the day
immediately following the company’s previous accounting period
and shall end on a date not more than seven days before or after the
end of the next accounting reference period as the directors may
determine.
( 5 ) The directors of a parent company shall secure that, except
where there are good reasons against it, the accounting period of
each of its subsidiary undertakings shall coincide with the parent
company’s own accounting period.
Alteration of 
accounting 
reference period.
Amended by:
IV. 2003.70.
165. (1) At any time during a period which is an accounting
reference period of a company by virtue of article 164 or 166 the
company may give notice in the prescribed form to the Registrar
specifying a date in the calendar year  ( "the new accounting
reference date" )  on which that accounting reference period  ( "the
current accounting reference period" )  and each subsequent
accounting reference period of the company is to be treated as
coming to an end or, as the case may require, as having come to an
end.
( 2 ) At any time after the end of a period which was an
accounting reference period of a company by virtue of article 164
or 166 the company may give notice in the prescribed form to the
Registrar specifying a date in the calendar year  ( "the new
accounting reference date" )  on which that accounting reference
period  ( "the previous accounting reference period" )  and each
subsequent accounting reference period of the company is to be
treated as coming or, as the case may require, as having come to an
end.
( 3 ) A notice under subarticle  ( 2 ),  shall, however-
( a ) have no effect unless the company is a subsidiary
undertaking or parent company of another company
and the new accounting reference date coincides with
the accounting reference date of that other company;
and
( b ) have no effect if the period allowed under article 182
for delivery of the annual accounts in relation to the
previous accounting period to be laid before the
company in general meeting has already expired at the
time when the notice is given.
( 4 ) A notice under this article shall state whether the current or
previous accounting reference period of the company -
( a ) is to be treated as shortened, so as to come to an end
or, as the case may require, be treated as having come
to an end on the new accounting reference date on the
first occasion on which that date falls or fell after the
COMPANIES [ CAP. 386.        87
beginning of that accounting reference period; or
( b ) is to be treated as extended, so as to come to an end or,
as the case may require, be treated as having come to
an end on the new accounting reference date on the
second occasion on which that date falls or fell after
the beginning of that accounting reference period.
( 5 ) A notice which states that the current or previous
accounting reference period is to be extended shall have no effect if
the current or previous accounting reference period, as extended in
accordance with the notice, would exceed eighteen months.
( 6 ) Subject to any direction given by the Registrar under
subarticle  ( 7 ),  a notice which states that the current or previous
accounting reference period is to be extended shall have no effect
unless - 
( a ) no earlier accounting reference period of the company
has been extended by virtue of a previous notice given
by the company under this article; or
( b ) the notice is given not less than five years after the
date on which any earlier accounting reference period
of the company which was so extended came to an
end; or
( c ) the company is a subsidiary undertaking or parent
company of another undertaking and the new
accounting reference date coincides with the
accounting reference date of that other undertaking.
( 7 ) The Registrar may, if he thinks fit, direct that the provisions
of subarticle  ( 6 )  shall not apply to a notice already given by a
company under this article or, as the case may be, in relation to a
notice which may be so given.
Consequence of 
giving notice under 
article 165.
166. (1) Where a company has given notice with effect in
accordance with article 165 and that notice has not been superseded
by a subsequent notice by the company which has such effect, the
new date specified in the notice shall be the company’s accounting
reference date in substitution for that which, by virtue of article 165
or this article, was its accounting reference date at the time when
the notice was given.
( 2 ) Where by virtue of a notice as is referred to in subarticle (1)
one date is substituted for another as the accounting reference date
of a company - 
( a ) the current or previous accounting reference period,
shortened or extended, as the case may be, in
accordance with the notice; and
( b ) each successive period of twelve months beginning
after the end of that accounting reference period, as so
shortened or extended, and ending with the new
accounting reference date,
shall be treated as having been an accounting reference period of
the company, instead of any period which would have been an
  88      CAP. 386. ]                   COMPANIES
accounting reference period of the company if the notice had not
been given.
( 3 ) The provisions of article 165 and the provisions of this
article shall not affect any accounting reference period of the
company which - 
( a ) in the case of a notice under article 165(1) is earlier
than the current accounting reference period; or
( b ) in the case of a notice under  article  165 ( 2 )  is earlier
than the previous accounting reference period.
General provisions 
as to content and 
form of individual 
accounts.
Amended by:
IV. 2003.71.
167. (1) The directors of every company shall prepare for each
accounting period individual accounts comprising the balance sheet
as at the last day of the accounting period to which they refer, the
profit and loss account for that period, the notes to the accounts and
any other financial statements which may be required by generally
accepted accounting principles and practice. These documents shall
constitute a composite whole.
( 2 ) The individual accounts shall be drawn up clearly and in
accordance with the provisions of this Act and with generally
accepted accounting principles and practice:
Provided that in the event that a provision of this Act is in
conflict or is not compatible with generally accepted accounting
principles and practice, the accounts shall be drawn up so as to give
a true and fair view in terms of the requirements established under
subarticle (3).
( 3 ) The individual accounts shall give a true and fair view of
the company’s assets, liabilities, financial position and profit or
loss.
(4) The individual accounts shall comply with the requirements
of the Third Schedule as to the form and content of the balance
sheet and profit and loss account and as to additional information to
be provided by way of notes to the accounts.
( 5 ) Where the application of the provisions of this Act would
not be sufficient to give a true and fair view within the meaning of
subarticle  ( 3 ),  additional information shall be given.
( 6 ) Where in exceptional cases the application of a provision of
this Act is incompatible with the obligation for the individual
accounts to give a true and fair view, that provision shall be
departed from in order to give a true and fair view. Any such
departure shall be disclosed in the notes to the accounts together
with an explanation of the reasons for it and a statement of its
effect on the assets, liabilities, financial position and profit or loss.
Annual accounts of 
banks and financial 
institutions.
Amended by:
XVII.1998.70;
IV. 2003.72.
Cap. 371.
Cap. 376.
Cap. 290.
168. (1) Notwithstanding the provisions of  article  167(4) and
of  article  171(4), banks governed by the Banking Act, financial
institutions governed by the Financial Institutions Act, and
insurance companies governed by the Insurance Business Act *  need
not apply the provisions of the Third and Fourth Schedules.
COMPANIES [ CAP. 386.        89
Cap. 371.
Cap. 376.
( 2 ) Banks and financial institutions shall follow the directives
issued by the relevant competent authority under the Banking Act,
and the Financial Institutions Act, respectively, in relation to the
form and content of their annual accounts or if no such directives
have been issued they shall follow any guidelines issued by such
competent authority in this regard.
Cap. 403.
( 3 ) Insurance companies shall comply with regulations made
under the Insurance Business Act in respect of the form and content
of their annual accounts or if no such regulations have been made
they shall follow any directives issued by the competent authority
in this regard.
( 4 ) Special provisions may be prescribed by the Minister by
notice in the Gazette for the annual accounts of investment
companies with fixed share capital and of financial holding
companies in lieu of the provisions of the Third and Fourth
Schedules. 
Accounts of 
investment 
company with 
variable capital.
Amended by:
IV. 2003.73.
169. (1) Notwithstanding the provisions of  article  167(4) in so
far as they relate to the application of the Third Schedule for the
individual accounts of companies, an investment company with
variable share capital shall prepare its individual accounts in
accordance with the format set out in the Fifth Schedule.
( 2 ) The director’s report of an investment company with
variable share capital shall provide information sufficient to enable
investors to make an informed judgment on the development of the
company’s activities and its financial performance.
( 3 ) In all other respects, the annual accounts and director’s
report of an investment company with variable share capital shall
be prepared in accordance with the provisions applicable to
companies generally to the extent that they are not inconsistent
with the provisions of the preceding subarticles of this article and
the Fifth Schedule.
Duty to prepare 
consolidated 
accounts.
170. (1) If at the end of an accounting period a company is a
parent company the directors shall, as well as preparing the
individual accounts for that company, also prepare consolidated
accounts.
( 2 ) A parent company and all of its subsidiary undertakings
shall be undertakings to be consolidated regardless of where the
registered offices or principal offices of such subsidiary
undertakings are situated.
( 3 ) A subsidiary undertaking may be excluded from
consolidation if its inclusion is not material for the purpose of
giving a true and fair view; but two or more subsidiary
undertakings may be excluded only if their inclusion is not material
when taken together.
( 4 ) A subsidiary undertaking may be excluded from
consolidation where - 
*Repealed by Act XVII of 1998 (Cap. 403).
  90      CAP. 386. ]                   COMPANIES
( a ) severe long-term restrictions substantially hinder the
exercise of the rights of the parent company over the
assets or management of that undertaking; or
( b ) the interest of the parent company is held exclusively
with a view to subsequent resale and the undertaking
has not previously been included in consolidated
accounts prepared by the parent company.
The reference in paragraph  ( a )  to the rights of the parent
company and the reference in paragraph  ( b )  to the interest of the
parent company are, respectively, to rights and interests held by or
attributed to the company for the purposes of  article  2 ( 2 )  in the
absence of which it would not be the parent company.
( 5 ) Where the activities of one or more subsidiary undertakings
are so different from those of other undertakings to be included in
the consolidation that their inclusion would be incompatible with
the obligation to give a true and fair view, those undertakings shall
be excluded from consolidation. This subarticle shall not apply
merely because some of the undertakings are industrial, some
commercial and some provide services, or because they carry on
industrial or commercial activities involving different products or
because they provide different services.
( 6 ) Where all the subsidiary undertakings of a parent company
fall within the above exclusions, no consolidated accounts shall be
required.
( 7 ) Where the undertaking excluded from the consolidation
pursuant to subarticle  ( 5 )  is an undertaking not established in Malta
its individual accounts shall be attached to the consolidated
accounts of the parent company translated into English or Maltese,
where the original is not in one of these languages.
( 8 ) The requirements specified in subarticle  ( 7 )  shall be subject
to the following qualifications - 
( a ) an undertaking is not required to prepare for the
purposes of this article accounts which would not
otherwise be prepared, and if no accounts satisfying
the said requirements are prepared, none need be
attached;
( b ) a document need not be appended if it would not
otherwise be required to be published, or made
available for public inspection, anywhere in the world,
but in that case the reason for not attaching it shall be
stated in the notes to the accounts of the company.
Form and content 
of consolidated 
accounts.
Amended by:
IV. 2003.74.
171. (1) Consolidated accounts shall comprise the
consolidated balance sheet as at the last day of the accounting
period to which these refer, the consolidated profit and loss account
for that period, the notes to the consolidated accounts and any other
financial statements which may be required by generally accepted
accounting principles and practice. These documents shall
constitute a composite whole.
( 2 ) The consolidated accounts shall be drawn up clearly and in
COMPANIES [ CAP. 386.        91
accordance with the provisions of this Act and with generally
accepted accounting principles and practice:
Provided that in the event that a provision of this Act is in
conflict or is not compatible with generally accepted accounting
principles and practice, the accounts shall be drawn up so as to give
a true and fair view in terms of the requirements established under
subarticle (3).
( 3 ) Consolidated accounts shall give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
undertakings included therein taken as a whole.
( 4 ) Consolidated accounts shall comply with the provisions of
the Fourth Schedule as to the form and content of the consolidated
balance sheet and consolidated profit and loss account and as to
additional information to be provided by way of notes to the
consolidated accounts.
( 5 ) Where the application of the provisions of this Act would
not be sufficient to give a true and fair view within the meaning of
subarticle  ( 3 ),  additional information shall be given.
( 6 ) Where in exceptional cases the application of a provision of
this Act is incompatible with the obligation for the consolidated
accounts to give a true and fair view, that provision shall be
departed from in order to give a true and fair view. Any such
departure shall be disclosed in the notes to the consolidated
accounts together with an explanation of the reasons for it and a
statement of its effect on the assets, liabilities, financial position
and profit and loss.
Financial holding 
company 
exemption.
172. (1) A parent company which is a financial holding
company shall be exempt from the requirement to prepare
consolidated accounts if it meets the following conditions - 
( a ) it has not intervened during the accounting period,
directly or indirectly, in the management of a
subsidiary undertaking;
( b ) it has not exercised the voting rights attaching to its
participating interest in respect of the appointment of a
member of the board of directors of the subsidiary
undertaking during the accounting period and the five
preceding accounting periods; or, where the exercise
of voting rights was necessary for the operation of the
board of directors of the subsidiary undertaking, such
voting rights were exercised without any interference
or influence on the part of the parent company or of
any of its subsidiary undertakings, and:
( i ) no member with majority voting rights in that
parent company; or
( ii ) no member of the board of directors of that
parent company; or
( iii ) no member of the board of directors of a member
with majority voting rights in that parent
company, 
  92      CAP. 386. ]                   COMPANIES
is a member of the board of directors of the subsidiary
undertaking; 
( c ) it has made loans only to undertakings in which it
holds participating interests provided that where such
loans have been made to other parties, they shall have
been repaid by the end of the previous accounting
period; and
( d ) the exemption has been granted by the Registrar after
he has verified that the conditions set out in this
subarticle have been fulfilled.
( 2 ) A financial holding company which is exempted from the
requirement to prepare consolidated accounts pursuant to the
provisions of subarticle (1), shall also be exempted from the
requirement to provide the information laid out in paragraph 32 of
the Third Schedule in the case of a holding other than a majority
holding:
Provided that the exemption from the requirement to
provide the information laid out in paragraph 32 of the Third
Schedule shall also extend to majority holdings where in the
opinion of the directors the disclosures required thereby are such
that they would be seriously prejudicial to the company, to its
members or to one of its subsidiaries. When any information is
omitted following the application of the provisions of this proviso,
such omission shall be disclosed in the notes to the accounts.
( 3 ) For the purposes of this article, the term "board of
directors" includes the management or administrative organ of an
undertaking, by whatever name called, formed in Malta or
elsewhere, not being a company formed and registered in Malta.
Consolidated 
accounts - size 
exemption.
Amended by:
IV. 2003.75.
173. (1) A parent company shall be exempt from the
requirements to prepare consolidated accounts if as at its balance
sheet date the undertakings to be consolidated do not together, on
the basis of their latest individual accounts, exceed the limits of
two of the three criteria laid down in article 185:
Provided that none of the undertakings to be consolidated is
a company the securities of which have been admitted to official
listing on the recognised investment exchange.
( 2 ) For the purposes of this article "securities" includes -
( a ) shares and stock;
( b ) debentures, including debenture stock, loan stock,
bonds, certificates of deposit and other instruments
creating or acknowledging indebtedness;
( c ) warrants or other instruments entitling the holder to
subscribe for securities falling within paragraph  ( a )   or
( b );  and
( d ) certificates or other instruments which confer - 
( i ) property rights in respect of a security falling
within paragraph  ( a ) ,  ( b )   or   ( c );
( ii ) any right to acquire, dispose of, underwrite or
COMPANIES [ CAP. 386.        93
convert a security, being a right to which the
holder would be entitled if he held any such
security to which the certificate or other
instrument relates; or
( iii ) a contractual right, other than an option, to
acquire any such security otherwise than by
subscription.
Exemption for 
parent companies 
included in 
accounts of larger 
groups.
Amended by:
IV. 2003.76.
174. (1) A parent company shall be exempt from the
requirement to prepare consolidated accounts if it is itself a
subsidiary company in the following cases - 
( a ) where the said parent company is a wholly-owned
subsidiary company of an immediate parent company
formed and registered under the law of Malta; or
( b ) where ninety per cent or more in nominal value of the
shares in the said parent company are held by a parent
company and notice requesting the preparation of
consolidated accounts has not been served on the first
mentioned company by shareholders holding in the
aggregate the remaining percentage in nominal value
of all the shares thereof. Such notice shall not be valid
unless it is served not later than six months after the
commencement of the accounting period to which it
relates.
( 2 ) The exemption referred to in subarticle (1) shall be
conditional upon compliance with all of the following
requirements- 
( a ) that in the case of a parent company which is itself a
subsidiary company of a parent company formed and
registered under the law of Malta, such company is
included in consolidated accounts for a larger group
drawn up to the same date, or to an earlier date in the
same accounting period, by a parent company formed
and registered under the law of Malta;
( b ) that in the case of a parent company which is itself a
subsidiary company of a parent undertaking not
established under the law of Malta, the exempted
undertaking is included in consolidated accounts for a
larger group drawn up to the same date, or to an earlier
date in the same accounting period, provided such
consolidated accounts and the director’s report thereon
are drawn up in a manner equivalent to that prescribed
by this Act and have been audited by one or more
persons authorised to audit accounts under the national
law governing the undertaking which drew them up;
( c ) that the said parent company discloses in its individual
accounts that it is exempt from the obligation to
prepare and deliver consolidated accounts;
( d ) that the said parent company states in its individual
accounts the name of the parent undertaking which
draws up the consolidated accounts referred to in
  94      CAP. 386. ]                   COMPANIES
paragraph  ( a )  or  ( b );
( e ) that the said parent company delivers to the Registrar
within the period allowed for delivering its individual
accounts, copies of the consolidated accounts referred
to in paragraph  ( a )  or  ( b ),  and of the parent
undertaking’s directors’ report or its equivalent,
together with the auditors’ report on those
consolidated accounts; and
( f ) that if any document comprised in accounts and
reports delivered in accordance with paragraph  ( e )  is in
a language other than Maltese or English, there is
annexed to the copy of that document a translation of it
into Maltese or English, certified to be a correct
translation in such manner as may be prescribed.
( 3 ) The exemption shall not apply to a parent company any of
whose securities have been admitted to official listing on the
recognised investment exchange.
( 4 ) Shares held by directors of a company for the purpose of
complying with any share qualification requirement shall be
disregarded in determining for the purposes of subarticle (1) ( a )
whether the company is a wholly-owned subsidiary company.
( 5 ) For the purposes of subarticle (1) ( b )  shares held by a
wholly-owned subsidiary undertaking of the parent undertaking, or
held on behalf of the parent company or a wholly-owned subsidiary
undertaking, shall be attributed to the parent company.
( 6 ) For the purposes of subarticle  ( 3 )  "securities" shall have the
same meaning as laid down in  article  173 ( 2 ) .
Disclosure 
required in notes to 
the accounts.
175. (1) Where the company is not required to prepare
consolidated accounts, the information specified in Part III of the
Third Schedule shall be given in notes to the accounts; and where
the company is required to prepare consolidated accounts, the
information by way of notes to the consolidated accounts specified
in the Fourth Schedule shall be given.
( 2 ) If the directors of the company are of the opinion that the
number of undertakings in respect of which the company is
required to disclose information under any provision of the Third
and Fourth Schedules is such that compliance with that provision
would result in information of excessive length being given, the
information need only be given in respect of -
( a ) the companies whose results or financial position, in
the opinion of the directors, principally affected the
figures shown in the company’s annual accounts; and
( b ) companies excluded from consolidation under  article
170 ( 3 )  or  ( 4 ) .
( 3 ) In any case where the provisions of subarticle  ( 2 )  are
applied -
( a ) there shall be included in the notes to the company’s
annual accounts a statement that the information given
COMPANIES [ CAP. 386.        95
relates only to such companies as are mentioned in that
subarticle; and
( b ) the full information, whether disclosed in the notes to
the accounts or the notes to the consolidated accounts
or not, shall be annexed to the company’s next annual
return.
For the purpose of this subarticle the "next annual return"
means the return next delivered to the Registrar after the annual
accounts referred to in this article have been approved under article
176.
Approval and 
signing of annual 
accounts.
176. (1) A company’s annual accounts shall be approved by
the board of directors and the balance sheet shall be dated and
signed on behalf of the board by two directors of the company.
( 2 ) Every copy of the balance sheet which is laid before the
company in general meeting, or which is otherwise circulated,
published or issued, shall state the name of the directors who
signed the balance sheet on behalf of the board.
( 3 ) The copy of the company’s balance sheet which is delivered
to the Registrar shall be signed on behalf of the board by the same
directors who signed the balance sheet pursuant to subarticle (1).
( 4 ) If annual accounts are approved which do not comply with
the provisions of this Act, every director of the company who is
party to their approval and who knows that they do not comply or is
negligent as to whether they comply shall be liable to a penalty. For
this purpose every director of the company at the time the accounts
are approved shall be taken to be a party to their approval unless he
proves that he took all reasonable steps to prevent their being
approved.
( 5 ) If a copy of the annual accounts -
( a ) is laid before the company, or otherwise circulated,
published or issued, without having been signed as
required by this article or without the required
statement of the signatory’s name being included; or
( b ) is delivered to the Registrar without being signed as
required by this article,
every officer of the company who is in default shall be liable to a
penalty. 
Contents of the 
directors’ report.
177. (1) For each accounting period the directors shall prepare
a report, hereinafter referred to as "the directors’ report".
( 2 ) The directors’ report shall state the names of the persons
who, at any time during the accounting period, were directors of the
company, the principal activities of the company and its
subsidiaries in the course of the accounting period and any
significant change in those activities during such period, and a fair
review of the development of the business of the company and its
subsidiaries during the accounting period, and of their position at
the end of that period.
( 3 ) The directors’ report shall furthermore comply with the
  96      CAP. 386. ]                   COMPANIES
Sixth Schedule as regards the disclosure of the matters mentioned
therein.
( 4 ) In the case of default in complying with the provisions of
this article, every person who was a director of the company
immediately before the end of the period for laying annual accounts
for the relevant accounting period shall be liable to a penalty. In
proceedings against a person under this subarticle, it shall be a
defence for him to prove that he took all reasonable steps for
securing compliance with the requirements of this article.
Approval and 
signing of 
directors’ report.
178. (1) The directors’ report shall be approved by the board
of directors and dated and signed on behalf of the board by two
directors of the company.
( 2 ) Every copy of the directors’ report which is laid before the
company in general meeting, or which is otherwise circulated,
published or issued, shall state the name of the person who signed it
on behalf of the board.
( 3 ) The copy of the directors’ report which is delivered to the
Registrar shall be signed and dated on behalf of the board by a
director or the company secretary of the company.
( 4 ) If a copy of the directors’ report -
( a ) is laid before the company, or otherwise circulated,
published or issued, without the report having been
signed as required by this article or without the
required statement of the signatory’s name being
included; or
( b ) is delivered to the Registrar without being signed as
required by this article,
every officer of the company who is in default shall be liable to a
penalty. 
Auditors’ report.
Amended by:
IV. 2003.77.
179. (1) A company’s auditors shall make a report to the
company’s members on all annual accounts of the company of
which copies are to be laid before the company in general meeting
during their tenure of office.
( 2 ) The auditors’ report shall be drawn up in accordance with
International Standards on Auditing and shall state whether in the
auditors’ opinion the annual accounts have been properly prepared
in accordance with this Act, and in particular whether a true and
fair view is given -
( a ) in the case of an individual balance sheet, of the state
of affairs of the company as at the end of the
accounting period;
( b ) in the case of an individual profit and loss account, of
the profit or loss of the company for the accounting
period;
( c ) in the case of consolidated accounts, of the state of
affairs as at the end of the accounting period, and the
profit or loss for the accounting period, of the
undertakings included in the consolidation as a whole,
COMPANIES [ CAP. 386.        97
so far as concerns members of the company.
( 3 ) The auditors shall consider whether the information given
in the directors’ report for the accounting period for which the
annual accounts are prepared is consistent with those accounts; and
if they are of the opinion that it is not they shall state that fact in
their report.
( 4 ) The auditors’ report shall state the names of the auditors
and shall be signed and dated by them.
( 5 ) Every copy of the auditors’ report which is laid before the
company in general meeting, or which is otherwise circulated,
published or issued, shall state the names of the auditors.
( 6 ) The copy of the auditors’ report which is delivered to the
Registrar shall state the names of the auditors and be signed by
them.
( 7 ) If a copy of the auditors’ report -
( a ) is laid before the company, or otherwise circulated,
published or issued, without the required statement of
the auditors’ names; or
( b ) is delivered to the Registrar without the required
statement of the auditors’ names or without being
signed as required by this article,
every officer of the company who is in default shall be liable to a
penalty. 
( 8 ) References in this article to signature by the auditors are,
where the office of auditor is held by a partnership, to the signature
of an individual partner or partners signing on behalf of the
partnership and authorised to sign on its behalf.
( 9 ) A company’s auditors shall, in preparing their report, carry
out such investigations as will enable them to form an opinion as
to-
( a ) whether proper accounting records have been kept by
the company and proper returns adequate for their
audit have been received from branches not visited by
them, and
( b ) whether the company’s individual accounts are in
agreement with the accounting records and returns.
( 10 ) If the auditors are of the opinion that proper accounting
records have not been kept, or that proper returns adequate for their
audit have not been received from branches not visited by them, or
if the company’s individual accounts are not in agreement with the
accounting records and returns, the auditors shall state that fact in
their report.
( 11 ) If the auditors are unable to obtain all the information and
explanations which, to the best of their knowledge and belief, are
necessary for the purpose of their audit, they shall state that fact in
their report.
( 12 ) If the requirements of article 31 ( o )  of the Third Schedule
  98      CAP. 386. ]                   COMPANIES
are not complied with in the annual accounts, the auditors shall
include in their report, so far as they are reasonably able to do so, a
statement giving the required particulars.
( 13 ) In this article, "International Standards on Auditing" refers
to the standards approved by the Council of the International
Federation of Accountants, established at the International
Congress of Accountants in Munich in 1977 as may be amended
from time to time.
Persons to whom a 
copy of the 
accounts of a 
company are to be 
sent.
Amended by:
IV. 2003.78.
180. (1) In the case of every company, a copy of the annual
accounts of a company for the accounting period shall, not less than
fourteen days before the date of the meeting at which they are to be
laid in accordance with the provisions of article 181, be sent to
each of the following persons: 
( a ) every member of the company;
( b ) every holder of the company’s debentures; and
( c ) all other persons who are entitled to receive notice of
general meetings.
( 2 ) Notwithstanding the provisions of subarticle (1), copies of
the annual accounts shall, unless otherwise provided in the
memorandum or articles, not be required to be sent to a debenture
holder who is not entitled to receive notices of general meetings.
( 3 ) If copies of the annual accounts are sent less than fourteen
days before the date of the meeting, they shall, notwithstanding that
fact, be deemed to have been duly sent if it is so agreed by all the
members entitled to attend the meeting who received them late.
( 4 ) If default is made in complying with subarticle (1), the
company and every officer who is in default shall be liable to a
penalty.
( 5 ) Any member of the company and any holder of the
company’s debentures, whether or not such holder is entitled to
have sent to him copies of the company’s annual accounts, shall be
entitled to be furnished, on demand and without charge, with a
copy of the last annual accounts laid before the company in general
meeting.
( 6 ) If, when a person makes a demand for a document with
which he is entitled by this article to be furnished, every officer of
the company who defaults in complying with the demand within
seven days after its making, shall be liable to a penalty, and, for
every day during which the default continues, to a further penalty.
(7) For the purposes of this article, reference to the term
"annual accounts" shall include the directors’ report as specified in
article 177 and the auditors’ report as specified in article 179.
Directors to lay 
accounts before the 
general meeting.
181. (1) In respect of each accounting period of a company the
directors shall lay before the company in general meeting for its
approval copies of the annual accounts of the company for that
period. There shall be annexed to the annual accounts, the auditors’
report as specified in article 179 and the directors’ report as
specified in article 177.
COMPANIES [ CAP. 386.        99
( 2 ) The auditors’ report shall be read before the company in
general meeting, and be open to the inspection of any member of
the company.
( 3 ) If default is made in complying with the provisions of
subarticle (1), or if the annual accounts laid before the company do
not comply with the provisions of this Act, every person who
immediately before the end of the period for laying such accounts
was a director of the company shall be liable to a penalty and, for
every day during which the default continues, to a further penalty.
( 4 ) It shall be a defence for a person charged under subarticle
( 3 )  to prove that he took all reasonable steps for securing that the
requirements of subarticle (1) would be complied with before the
end of the period for laying of annual accounts. It shall not be a
defence to prove that the document or documents in question were
not in fact prepared as required by this Act.
Period for laying 
and approval of 
accounts.
182. (1) The period allowed for laying before and approval by
the company in general meeting of a company’s annual accounts
for an accounting period shall be as provided in this article.
( 2 ) Subject to the following subarticles of this article, the
period allowed shall be -
( a ) for a private company, ten months after the end of the
relevant accounting reference period; and
( b ) for a public company, seven months after the end of
that period.
( 3 ) If a company carries on business, or has interests, outside
Malta and in respect of an accounting period, the directors, before
the end of the period allowed by subarticle  ( 2 ),  give to the Registrar
notice in the prescribed form -
( a ) stating that the company so carries on business or has
such interests; and
( b ) claiming an extension of the period so allowed by a
further three months,
the period allowed in relation to that accounting period shall be so
extended.
( 4 ) Where a company’s first accounting period is a period of
more than twelve months from the date of its registration, the
period otherwise allowed for laying before and approval by the
company in general meeting of annual accounts shall be reduced by
the number of days by which the relevant accounting period is
longer than twelve months. However, the period allowed shall not
by this provision be reduced to less than three months after the end
of that accounting period.
( 5 ) Where a company’s relevant accounting period has been
shortened due to a change in the accounting reference date, the
period allowed for laying and delivering annual accounts shall be -
( a ) the period allowed in accordance with subarticles  ( 2 )
to  ( 4 );  or
  100      CAP. 386. ]                   COMPANIES
( b ) the period of three months beginning with the date of a
notice given to the Registrar when notice has been
given to change the accounting reference date,
whichever of those periods last expires.
Copies of accounts 
to be provided to 
Registrar.
Amended by:
IV. 2003.79.
183. (1) The company directors shall deliver to the Registrar
for registration a copy of the company’s annual accounts laid
before the company in general meeting in accordance with article
181 together with a copy of the auditors’ report thereon, and the
directors’ report accompanying the annual accounts within forty-
two days from the end of the period for laying of annual accounts
prescribed by article 182.
( 2 ) Where, in accordance with article 185, a company qualifies
to draw up abridged annual accounts relating to an accounting
period, the directors of the company may deliver to the Registrar
abridged annual accounts in respect of that accounting period and
such delivery shall satisfy the company’s obligation under
subarticle (1):
Provided that where the company which qualifies to draw
up abridged annual accounts is an exempt company, it may deliver
to the Registrar only its abridged balance sheet, all the notes to the
accounts relevant for the purposes of that balance sheet and the
auditors’ report, but without the profit and loss account and the
directors’ report:
Provided further that where the exempt company which
qualifies to draw up abridged accounts is a company referred to in
article 185(1)( b ), it may deliver to the Registrar only its abridged
balance sheet, all the notes to the accounts relevant for the purposes
of that balance sheet, but without the profit and loss account, the
directors’ report and the auditors’ report.
( 3 ) The statements referred to in  article  185 ( 10 ) , shall also be
required where, notwithstanding that the annual accounts have not
been drawn up in abridged form, the directors take advantage of
exemptions conferred by subarticle  ( 2 )  regarding the delivery of the
annual accounts in abridged form.
( 4 ) Where the directors of a company propose to take
advantage of the exemptions conferred by subarticle  ( 2 ),  the
auditors shall have the duty to provide the directors with a special
auditors’ report stating whether in their opinion the company is
entitled to those exemptions as claimed in the directors’ statements
and whether the documents to be proposed to be delivered in
accordance with this article are properly prepared:
Provided that the special auditors’ report shall not be
required where the annual accounts of the company, in respect of
which the auditors’ report referred to in article 179 has been made,
are to be published as drawn up:
Provided further that the provisions of this subarticle shall
not apply to companies referred to in article 185(1)( b ).
( 5 ) The annual accounts delivered shall be accompanied by the
special auditors’ report referred to in subarticle  ( 4 ),  where required
COMPANIES [ CAP. 386.        101
to be drawn up in pursuance of the same subarticle.
( 6 ) In the case provided for in subarticle  ( 5 )  a copy of the
auditors’ report prepared under article 179 need not be delivered
separately but the full text of it shall be reproduced in the special
auditors’ report; and if the auditors’ report prepared under article
179 is qualified, there shall be included in the special auditors’
report any further material necessary to understand the
qualification.
( 7 ) A rticle  179 ( 4 )  shall apply to a special auditors’ report under
this article as it applies to a report under article 179.
( 8 ) Where a company, which is a parent company, prepares
consolidated accounts in accordance with the provisions of this Act
it need not include a copy of its profit and loss account with the
annual accounts to be delivered to the Registrar as prescribed in
subarticle (1) where the following conditions are fulfilled -
( a ) the application of this exemption is disclosed in the
notes to the accounts of the parent company and in the
notes to the consolidated accounts; and
( b ) the profit or loss of the parent company, determined in
accordance with the provisions of this Act, shall be
shown separately either on the face of the parent
company’s balance sheet or in the notes to the
accounts of the parent company.
( 9 ) If any document comprised in the annual accounts is in a
language other than Maltese or English, the company shall annex to
the copy of that delivered document a translation of it into either
Maltese or English, certified to be a correct translation in such
manner as may be prescribed.
( 10 ) In the case of default in complying with the provisions of
this article, or where the annual accounts delivered to the Registrar
do not comply with the provisions of this Act, every officer of the
company who is in default shall be liable to a penalty, and, for
every day during which the default continues, to a further penalty.
In proceedings under this subarticle it shall not be a defence to
prove that the document or documents in question were not in fact
prepared as required by this Act.
Annual return.
Substituted by:
IV. 2003.80.
184. (1) Every company shall, after 1st January 2004, upon
each anniversary of its registration, make a return in the form set
out in the Seventh Schedule showing the matters therein specified
and made up to the date of such anniversary:
Provided that -
( a ) where a company was, immediately before the 1st
January 2004, in default with respect to the delivery of
one or more annual returns, this article shall not affect
the obligation of the company to make such a return or
returns or the payment of any penalty arising from
such a default;
( b ) where a company has converted any of its shares into
  102      CAP. 386. ]                   COMPANIES
stock and registered the conversion as provided in
article 79, the list of past and present members shown
in Part 3 of the Seventh Schedule shall state the
amount of stock held by each of the existing members
instead of the amount of shares and the particulars
relating to shares required by that part.
(2) The annual return, duly completed, shall be signed by at
least one director of the company or the company secretary and
forwarded to the Registrar for registration within forty-two days
after the date to which it is made up.
(3) If default is made in complying with the provisions of this
article, every officer of the company who is in default shall be
liable to a penalty, and, for every day during which the default
continues, to a further penalty.
Exemptions for 
small companies.
Amended by:
IV. 2003.81.
185. (1) ( a )   Companies which on their balance sheet dates do
not exceed the limits of two of the three following criteria -
- balance sheet total: one million one hundred thousand
liri;
- turnover: two million two hundred thousand liri;
- average number of employees during the accounting
period: fifty;
shall in this Act be designated as "small companies" and may, for
all purposes of this Act, draw up abridged balance sheets and
abridged layouts of profit and loss account as specified in
subarticle  ( 2 )  and abridged notes to the accounts as specified in
subarticle  ( 3 ) .
( b )  Private companies which on their balance sheet dates
do not exceed the limits of two of the three following criteria:
- balance sheet total: twenty thousand liri;
- turnover: forty thousand liri;
- average number of employees during the accounting
period: two;
shall be exempted from the provisions of Chapter IX of Part V and
from the requirement imposed by article 179 and such companies
may, for all purposes of this Act, draw up abridged balance sheets
and abridged layouts of profit and loss account as specified in
subarticle (2) and abridged notes to the accounts as specified in
subarticle (3).
( 2 ) For the purposes of this article, the word "abridged" -
( a ) when used therein in relation to a balance sheet shall
mean an abbreviated version of the balance sheet,
showing only those items to which a letter or Roman
number is assigned in the balance sheet formats shown
under Part I of the Third Schedule to this Act,
immediately following paragraph 13, under the
heading "Balance Sheet Formats", but such version
shall, in all other respects, correspond to the full
COMPANIES [ CAP. 386.        103
balance sheet;
( b ) when used therein in relation to profit and loss account
layouts shall mean the full profit and loss account with
the exception that the following items can be
combined as one item under the heading "gross profit
or loss" -
( i ) items l, 2, 3 and 6 in Format 1; 
( ii ) items 1 to 5 in Format 2;
( iii ) items A.1, B.1 and B.2 in Format 3; and 
( iv ) items A.1, A.2 and B.1 to B.4 in Format 4.
The formats herein stated are those shown in Part I of the
Third Schedule, immediately following paragraph 13, under the
heading "Profit and Loss Account Formats".
( 3 ) Companies referred to in subarticle (1) may draw up
abridged notes to the accounts omitting the disclosures prescribed
by indents  ( d )  and  ( g )  to  ( o )  of paragraph 31 of Part III of the Third
Schedule. The notes to the accounts shall however disclose the
information specified in indent  ( j )  of the said paragraph 31 in total
for all the items concerned.
( 4 ) Where on its balance sheet date other than its first balance
sheet date, a company exceeds or ceases to exceed the limits of two
of the three criteria indicated in subarticle (1), that fact shall affect
the application of the derogation provided for in that subarticle
only if it occurs in two consecutive accounting periods.
( 5 ) The balance sheet total referred to in this article shall
consist of the assets in A to E in the layout in Format 1 of the
Balance Sheet Formats contained in Part 1 of the Third Schedule,
immediately following paragraph 13, or those in A to E in the
layout in Format 2 of the Balance Sheet Formats contained in the
said Part of the same Schedule.
( 6 ) A parent company shall not be treated as qualifying as a
small company in relation to an accounting period unless the group
of which it is parent qualifies as a small group. A group qualifies as
a small group in relation to an accounting period if it does not
exceed the limits of two of the three following criteria:
- aggregate balance sheet total: one million one hundred
thousand liri net or one million three hundred and
twenty thousand liri gross;
-  aggregate turnover: two million two hundred thousand
liri net or two million six hundred and forty thousand
liri gross;
- aggregate number of employees: fifty:
Provided that the provisions of this subarticle shall not
apply to a parent company which is exempted from the requirement
to prepare consolidated accounts in accordance with article 174.
( 7 ) The provisions of subarticle  ( 4 )  shall apply to parent
companies as though the reference to company were a reference to
parent company.
  104      CAP. 386. ]                   COMPANIES
( 8 ) The aggregate figures shall be ascertained by aggregating
the relevant figures determined in accordance with subarticles (1)
and  ( 6 ) . In relation to the aggregate figures for turnover and
balance sheet total, "net" means with the set-offs and other
adjustments required for the preparation of consolidated accounts
and "gross" means without those set-offs and other adjustments;
and a company may satisfy the relevant requirements on the basis
of either the net or the gross figure.
( 9 ) The figures for each subsidiary undertaking shall be those
included in its individual accounts for the relevant accounting
period, that is -
( a ) if its accounting period ends with that of the parent
company, that accounting period; and
( b ) if not, its accounting period ending last before the end
of the accounting period of the parent company.
If such figures cannot be obtained without disproportionate
expense or undue delay, the latest available figures shall be taken.
( 10 ) Where the directors of a company take advantage of the
exemptions conferred by this article, the company’s abridged
balance sheet shall contain:
( a ) a statement that advantage is taken of the exemptions
conferred by this article, and
( b ) a statement of the grounds on which, in the directors’
opinion, the company is entitled to those exemptions.
( 11 ) The statements referred to in subarticle  ( 10 )  shall appear in
the abridged balance sheet immediately above the signature
required by article 176(1).
( 12 ) In determining the average number of employees during the
accounting period, for the purposes of this article -
( a ) in relation to whole-time employees, the average
number of employees shall be that established on the
basis of the following formula:
- the aggregate number of full weeks worked
during the accounting period by all the whole-
time employees of the company divided by the
number of full weeks comprised in that period,
rounded off to the nearest number; and
( b ) in relation to part-time employees, the average number
of employees shall be that established on the basis of
the following formula:
- the aggregate number of hours worked during
the accounting period by all the part-time
employees of the company divided by the
number of full weeks comprised in that period
and again divided by forty, rounded off to the
nearest number.
COMPANIES [ CAP. 386.        105
Share capital in 
any convertible 
currency.
Amended by:
IV. 2003.82.
186. (1) The share capital of a company may be denominated
in any currency which is a convertible currency within the meaning
assigned to it by the Central Bank of Malta Act, and, for the
purposes of this Chapter, the euro shall be a convertible currency.
( 2 ) A company may by extraordinary resolution change the
currency in which its share capital is expressed, and for this
purpose the conversion rules set out in the Eighth Schedule shall
apply in respect of any company other than an investment company
with variable share capital.
( 3 ) For the purposes of applying the provisions of this Act
relating to minimum share capital, share capital expressed in a
currency other than liri shall be calculated on the basis of the liri
equivalent at the date of - 
( a ) the registration of the memorandum, in the case of
formation of a company; or
( b ) the registration of the extraordinary resolution, in the
case referred to in subarticle  ( 2 );  or
( c ) the registration of the extraordinary resolution
effecting a reduction of the issued share capital, in the
case where a company reduces its issued share capital.
( 4 ) Without prejudice to the provisions of article 83, a copy of
the extraordinary resolution referred to in subarticle  ( 2 )  shall be
delivered to the Registrar for registration and shall not be effective
until it is so registered.
( 5 ) The exchange rate to be used shall be the average of the
buying and selling rates prevailing at the date of registration
referred to in subarticle  ( 3 ),  as the case may be.
( 6 ) An investment company with variable share capital may
only change the currency in which its share capital is expressed by
complying with such conversion rules as may be prescribed by the
Minister under article 188.
Accounts in any 
convertible 
currency.
Amended by:
IV. 2003.83.
187. (1) A company shall draw up its annual accounts in the
same currency as that of its share capital.
( 2 ) Where the annual accounts of a company are drawn up in a
currency other than liri, there shall be stated on the balance sheet of
the company the exchange rate between the currency used and liri
on the balance sheet date and such rate shall be the official closing
middle rate issued by the Central Bank of Malta for that date.
( 3 ) For the purposes of applying any provision of this Act
which sets a threshold by reference to an amount in liri in the
annual accounts of a company, such amount as stated in a foreign
currency in the company’s annual accounts shall be converted into
liri by using the exchange rate referred to in subarticle  ( 2 ) .
( 4 ) Annual accounts shall be published in the currency in
which they are drawn up. They may also be published in both the
currency in which they are drawn up and in euro. The conversion
into euro shall be made by using the exchange rate between the
currency used and the euro on the balance sheet date, and such rate
  106      CAP. 386. ]                   COMPANIES
shall be the official closing middle rate issued by the Central Bank
of Malta. This rate shall be disclosed in the notes to the accounts.
Power of Minister 
to make 
regulations altering 
accounting 
requirements.
Amended by:
IV. 2003.84.
188.   For the purposes of this Chapter, the Minister may by
order make regulations which - 
( a ) add to the classes of documents required to be
prepared, laid before the company in general meeting
or delivered to the Registrar;
( b ) restrict the categories of companies which have the
benefit of any exemption, exception or special
provision;
( c ) require additional matter to be included in a document
of any class;
( d ) otherwise render the accounting requirements of this
Act more onerous;
( e ) in derogation of the provisions of article 187, permit a
company to draw up its annual accounts in a different
currency from that of its share capital, regulate the
manner and the conditions as may be considered
appropriate for this purpose, and make provision in the
Eighth Schedule to this Act for the application of the
said Schedule, with such variations as may be
specified, in relation to such a company;
( f ) prescribe conversion rules applicable on a change in
the currency in which the share capital of an
investment company with variable share capital is
expressed; or
( g ) amend or vary any of the provisions of this Chapter for
the purpose of bringing them in line with the
requirements of International Accounting Standards or
International Standards on Auditing.
Consequential 
provisions to 
article 188.
189. (1) Regulations made under article 188 may -
( a ) make different provision for different cases; and
( b ) repeal and re-issue provisions of any regulation with
modifications of form or arrangement, whether or not
they are modified in substance.
( 2 ) Regulations made under article 188 may contain such
transitional and other supplementary and incidental provisions as
appear to the Minister to be appropriate.
Court order to 
make good failure 
to lay or deliver 
accounts.
190. (1) If - 
( a ) in respect of a company’s accounting period any of the
requirements of article 182(1) has not been complied
with before the end of the period prescribed by that
article; and
( b ) the directors of the company fail to make good the
default within fourteen days after the service of a
notice on them requiring compliance,
COMPANIES [ CAP. 386.        107
the court may, on application by any member or creditor of the
company, or by the Registrar, make an order directing the directors,
or any of them, to make good the default within such time as may
be specified in the order.
( 2 ) The court’s order may provide that all costs of and
incidental to the application shall be borne by the directors.
( 3 ) Nothing in this article shall prejudice the provisions of this
Act relating to penalties for non-compliance.
Application to 
other commercial 
partnerships.
Amended by:
IV. 2003.85.
191. (1) Where all the partners of a partnership  en nom
collectif  or where all the partners having unlimited liability of a
partnership  en commandite  or limited partnership, the capital of
which is not divided into shares, are themselves partnerships  en
commandite  or limited partnerships, the capital of which is divided
into shares, the provisions of Chapter IX and of this Chapter of this
Title shall, in so far as they are applicable, apply to such a
partnership.
( 2 ) The provisions of subarticle (1) shall also apply where all
the partners of a partnership  en nom collectif  or where all the
partners having unlimited liability of a partnership  en commandite
or limited partnership the capital of which is not divided into shares
are themselves companies, or are partnerships or firms constituted
or incorporated outside Malta which are of a type which is
comparable to that of a company or that of a partnership  en
commandite  or limited partnership the capital of which is divided
into shares as regulated by this Act.
( 3 ) Where all the partners of a partnership  en nom collectif  or
where all the partners having unlimited liability of a partnership  en
commandite  or limited partnership the capital of which is not
divided into shares are themselves companies or are partnerships  en
commandite  or limited partnerships the capital of which is divided
into shares, or are commercial partnerships to which subarticle (1)
or subarticle  ( 2 )  applies, the provisions of Chapter IX and of this
Chapter of this Title shall, in so far as applicable, apply to such a
partnership.
Chapter XI - Distribution of Profits and Assets
Certain 
distributions 
prohibited.
192. (1) A company shall not make a distribution except out of
profits available for the purpose.
( 2 ) For the purposes of this Chapter, "distribution" means every
description of distribution of a company’s assets to its members,
whether in cash or otherwise, except distribution by way of - 
( a ) an issue of shares as fully or partly paid bonus shares; 
( b ) the redemption or purchase of any of the company’s
own shares out of capital, including the proceeds of
any fresh issue of shares, or out of undistributable
reserves as stipulated in  article  193 ( 3 ) ;
  108      CAP. 386. ]                   COMPANIES
( c ) the reduction of the issued share capital by
extinguishing or reducing the liability of any of the
members on any of the company’s shares in respect of
issued share capital not paid up, or by paying off paid
up issued share capital; and
( d ) a distribution of assets to members of the company on
its winding up.
( 3 ) For the purposes of this Chapter, a company’s profits
available for distribution shall be its accumulated, realised profits,
so far as not previously utilised by distribution or capitalisation,
less its accumulated, realised losses, so far as not previously
written off in a reduction or reorganisation of issued share capital
duly made. The provisions of this subarticle shall be subject to the
provisions of articles 194 and 195.
( 4 ) A company shall not apply an unrealised profit in paying up
debentures, or any amounts unpaid on its issued share capital.
( 5 ) Where the directors of a company are, after making all
reasonable enquiries, unable to determine whether a particular
profit made before the 1st January, 1995 is realised or unrealised,
they may treat the profit as realised; and where after making such
enquiries they are unable to determine whether a particular loss so
made is realised or unrealised, they may treat the loss as unrealised.
Distributions by 
public companies.
193. (1) A public company may only make a distribution at
any time -
( a ) if at that time the amount of its net assets is not less
than the aggregate of its called-up issued share capital
and undistributable reserves; and
( b ) if, and to the extent that, the distribution does not
reduce the amount of those assets to less than that
aggregate.
The provisions of this subarticle shall be subject to the
provisions of articles 194 and 195.
( 2 ) In subarticle (1), "net assets" means the aggregate of the
company’s assets less the aggregate of its liabilities. "Liabilities"
include any amount retained as reasonably necessary for the
purpose of providing for any liability or loss which is either likely
to be incurred or certain to be incurred but uncertain as to amount
or as to the date on which it will arise.
( 3 ) A company’s undistributable reserves are -
( a ) the share premium account;
( b ) the capital redemption reserve;
( c ) the amount by which the company’s accumulated,
unrealised profits, so far as not previously utilised by
capitalization of a description to which this paragraph
applies, exceed its accumulated, unrealised losses, so
far as not previously written off in a reduction or
reorganisation of capital duly made; and
COMPANIES [ CAP. 386.        109
( d ) any other reserve which the company is prohibited
from distributing by any legislation or by its
memorandum or articles; and paragraph   ( c )  shall apply
to every description of capitalization except a transfer
of profits of the company to its capital redemption
reserve on or after 1st January, 1995.
( 4 ) A public company shall not include any uncalled issued
share capital as an asset in any accounts relevant for the purposes
of this article.
Other distributions 
by investment 
companies with 
fixed share capital.
Amended by:
IV. 2003.86.
IX. 2003.85.
194. (1) Subject to the following provisions of this article, an
investment company with fixed share capital may also make a
distribution at any time out of its accumulated, realised revenue
profits, so far as not previously utilised by a distribution or
capitalisation, less its accumulated revenue losses, whether realised
or unrealised, so far as not previously written off in a reduction or
reorganisation of capital duly made - 
( a ) if at that time the amount of its assets is at least equal
to one and a half times the aggregate of its liabilities,
and
( b ) if, and to the extent that, the distribution does not
reduce that amount to less than one and a half times
that aggregate.
( 2 ) In subarticle (1) ( a ) , "liabilities" includes any provision for
liabilities or charges within the meaning of paragraph 7 of the
Third Schedule.
( 3 ) An investment company with fixed share capital shall not
include any uncalled issued share capital as an asset in any
accounts relevant for the purposes of this article.
( 4 ) An investment company with fixed share capital may not
make a distribution by virtue of subarticle (1) unless - 
( a ) its shares are listed on the recognised investment
exchange; and 
( b ) during the relevant period it has not - 
( i ) distributed any of its capital profits, or
( ii ) applied any unrealised profits or any capital
profits, realised or unrealised, in paying up
debentures or amounts unpaid on its issued share
capital.
( 5 ) The "relevant period" under subarticle  ( 4 )  shall be the
period beginning with - 
( a ) the first day of the accounting period immediately
preceding that in which the proposed distribution is to
be made; or 
( b ) where the distribution is to be made in the company’s
first accounting period, the first day of that period, 
and ending with the date of the distribution.
( 6 ) "Investment company with fixed share capital" means a
  110      CAP. 386. ]                   COMPANIES
public company which complies with the following requirements:
( a ) the business of the company consists either of -
(i) investing in funds mainly in securities with the
aim of spreading investment risk and giving
members of the company the benefit of the
results of the management of its funds; or
Cap. 450.
(ii) acting and operating as a Retirement Fund
within the meaning of articles 2 and 4 of the
Special Funds (Regulation) Act;
( b ) none of the company’s holdings in companies other
than those which are, for the time being, in investment
companies with fixed share capital, represents more
than fifteen per cent by value of the investing
company’s investments;
( c ) distribution of the company’s capital profits is
prohibited by its memorandum or articles; and
( d ) the company has not retained, otherwise than in
compliance with this Chapter, in respect of any
accounting period, more than fifteen per cent of the
income it derives from securities. 
Extension of article 
194 to other 
companies.
195. (1) The Minister may make regulations extending the
provisions of article 194, with or without modifications, to
investment companies with variable share capital or to other
companies whose principal business consists of investing their
funds in securities, land or other assets with the aim of spreading
investment risk and giving their members the benefit of the results
of the management of the assets.
( 2 ) Regulations made under this article may make different
provision for different categories of companies and may contain
such transitional and supplemental provisions as the Minister
considers necessary.
Treatment of 
development costs.
196. (1) Subject to the following provisions of this article,
where development costs are shown as an asset in a company’s
annual accounts, any amount shown in respect of those costs is to
be treated - 
( a ) under article 192, as a realised loss; and 
( b ) under article 194, as a realised revenue loss. 
( 2 ) The provisions of subarticle (1) shall not apply - 
( a ) to any part of that amount representing an unrealised
profit made on revaluation of those costs; and 
( b ) where -
( i ) there are special circumstances in the company’s
case justifying the directors in deciding that the
amount there mentioned is not to be treated as
required by subarticle (1), and
( ii ) the provision in the notes to the accounts
COMPANIES [ CAP. 386.        111
required by paragraph 18 of the Third Schedule
states that the amount is not to be so treated and
explains the circumstances relied upon to justify
the decision of the directors to that effect.
Distribution to be 
justified by 
reference to 
company’s 
accounts.
197. (1) The provisions of this article and of articles 198 to
203 shall apply for determining the question whether a distribution
may be made by a company without contravening articles 192, 193,
or 194.
( 2 ) The amount of a distribution which may be made shall be
determined by reference to the following items as stated in the
company’s accounts - 
( a ) profits, losses, assets and liabilities;
( b ) provisions of any of the kinds mentioned in the Third
Schedule to this Act in paragraphs 7, 16 and 17 and
these paragraphs as applied by paragraph 28 of the
said Third Schedule; and
( c ) share capital and reserves, including undistributable
reserves.
( 3 ) The company’s accounts which are relevant for the
purposes of this article shall be its last annual accounts, that is to
say those which were laid in respect of the last preceding
accounting period in respect of which accounts so prepared were
laid:
Provided that in the following two cases - 
( a ) where the distribution would be found to contravene
the relevant article in this Chapter if reference were
made only to the company’s last annual accounts; or
( b ) where the distribution is proposed to be declared
during the company’s first accounting period, or
before any annual accounts are laid in respect of that
period,
the accounts relevant under this article, called "interim accounts" in
the first case, and "initial accounts" in the second, shall be those
necessary to enable a reasonable judgment to be made as to the
amounts of the items mentioned in subarticle  ( 2 ) .
( 4 ) The relevant article of this Chapter is treated as
contravened in the case of a distribution unless the requirements
laid down in this article and in the following three articles, as and
where applicable, in respect of the relevant accounts are complied
with in relation to that distribution.
Requirements for 
last annual 
accounts.
198. (1) If the company’s last annual accounts constitute the
only accounts relevant under article 197, the requirements laid
down in this article shall apply in regard to such accounts.
( 2 ) The accounts shall have been properly prepared in
accordance with the provisions of this Act, or have been so
prepared subject only to matters which are not material for
determining, by reference to items mentioned in  article  197 ( 2 ) ,
whether the distribution would contravene the relevant article of
  112      CAP. 386. ]                   COMPANIES
this Chapter.
( 3 ) Without prejudice to the provisions of subarticle  ( 2 )  - 
( a ) so much of the accounts as consists of a balance sheet
shall give a true and fair view of the state of the
company’s affairs as at the balance sheet date; and
( b ) so much of the accounts as consists of a profit and loss
account shall give a true and fair view of the
company’s profit or loss for the period in respect of
which the accounts were prepared.
( 4 ) The auditors shall have made their report on the accounts,
and subarticle  ( 5 )  shall apply if the report is not a report without
qualification to the effect that in the auditor’s opinion the accounts
have been properly prepared in accordance with the provisions of
this Act.
( 5 ) The auditors shall, in the case referred to in subarticle  ( 4 ),
have stated in writing, either at the time of their report or
subsequently, whether in their opinion, the matter in respect of
which their report is qualified is material for determining, by
reference to items mentioned in  article  197 ( 2 ) , whether the
distribution would contravene the relevant article, and a copy of the
statement shall have been laid before the company in general
meeting.
( 6 ) A statement under subarticle  ( 5 )  shall suffice for purposes
of a particular distribution not only if it relates to a distribution
which has been proposed but also if it relates to distributions of any
description which include that particular distribution,
notwithstanding that at the time of the statement it had not been
proposed.
Requirements for 
interim accounts.
Amended by:
IV. 2003.87.
199. (1) The provisions of this article shall constitute the
requirements in respect of interim accounts prepared for a proposed
distribution by a public company.
( 2 ) The accounts shall have been properly prepared, or shall
have been so prepared subject only to matters which are not
material for determining, by reference to items mentioned in  article
197 ( 2 ) , whether the proposed distribution would contravene the
relevant article of this Chapter.
( 3 ) "Properly prepared" shall mean that the accounts shall
comply with this Act with such modifications as are necessary
because the accounts are prepared otherwise than in respect of an
accounting period and any balance sheet comprised in the accounts
shall have been signed in accordance with article 176.
( 4 ) Without prejudice to the provisions of subarticle  ( 3 )  - 
( a ) so much of the accounts as consists of a balance sheet
shall give a true and fair view of the state of the
company’s affairs as at the balance sheet date; and
( b ) so much of the accounts as consists of a profit and loss
account shall give a true and fair view of the
company’s profit or loss for the period in respect of
COMPANIES [ CAP. 386.        113
which the accounts were prepared.
( 5 ) A copy of the accounts shall have been delivered to the
Registrar for registration.
( 6 ) If the accounts are in a language other than English or
Maltese, a translation into English or Maltese of the accounts,
certified to be a correct translation in such manner as may be
prescribed, shall also have been delivered to the Registrar.
Requirements for 
initial accounts.
200. (1) The provisions of this article shall constitute the
requirements in respect of initial accounts prepared for a proposed
distribution by a public company.
( 2 ) The accounts shall have been properly prepared, or they
shall have been so prepared subject only to matters which are not
material for determining, by reference to items mentioned in article
197 ( 2 ) , whether the proposed distribution would contravene the
relevant article of this Chapter.
( 3 ) A rticle  199 ( 3 )  and  ( 4 )  shall apply as respects the meaning of
"properly prepared".
( 4 ) The company’s auditors shall have made a report stating
whether, in their opinion, the accounts have been properly
prepared, and subarticle  ( 5 )  shall apply if their report is a qualified
report, that is to say it is not a report without qualification to the
effect that in the auditors’ opinion the accounts have been so
prepared.
( 5 ) The auditors shall in the case referred to in subarticle  ( 4 )
also have stated in writing, whether, in their opinion, the matter in
respect of which their report is qualified is material for
determining, by reference to items mentioned in  article  197 ( 2 ) ,
whether the distribution would contravene the relevant article of
this Chapter.
( 6 ) A copy of the accounts, of the auditors’ report under
subarticle  ( 4 )  and of the auditors’ statement, if any, under subarticle
( 5 )  shall have been delivered to the Registrar.
( 7 ) If the accounts are, or the auditors’ report under subarticle
( 4 )  or their statement, if any, under subarticle  ( 5 ),  is in a language
other than Maltese or English, a translation into English or Maltese
of the accounts, the report or the statement, as the case may be,
certified to be a correct translation in such manner as may be
prescribed, shall also have been delivered to the Registrar.
Method of 
applying article 
197 to successive 
distributions.
201.   For the purpose of determining, by reference to particular
accounts, whether a proposed distribution may be made by a
company, article 197 shall have effect, in a case where one or more
distributions have already been made in pursuance of
determinations made by reference to those same accounts, as if the
amount of the proposed distribution was increased by the amount of
the distributions so made.
Treatment of assets 
in the relevant 
accounts.
202.   For the purposes of articles 192 and 193, a provision of
any kind mentioned in the Third Schedule in paragraph 7(1) and
paragraphs 16 and 17 including these paragraphs as applied by
  114      CAP. 386. ]                   COMPANIES
paragraph 28 of the said Third Schedule, shall be treated as a
realised loss.
Distributions in 
kind.
203.   Where a company makes a distribution of, or including, a
non-cash asset, and any part of the amount at which that asset is
stated in the accounts relevant for the purposes of the distribution
in accordance with articles 197 to 202 represents an unrealised
profit, that profit is to be treated as a realised profit - 
( a ) for the purpose of determining the lawfulness of the
distribution in accordance with this Chapter, whether
before or after the distribution takes place; and
( b ) for the purpose of paragraph 14 ( c )( i )  and paragraph
30 ( 3 )  of the Third Schedule in relation to anything
done with a view to or in connection with the making
of that distribution.
Consequence of 
unlawful 
distribution.
204.   Where a distribution, or part of a distribution, made by a
company to one of its members is made in contravention of this
Chapter and, at the time of the distribution, that member knows or
has reasonable grounds for believing that it is so made, he shall be
liable to repay it, or that part of it, as the case may be, to the
company or, in the case of a distribution made otherwise than in
cash, to pay the company a sum equal to the value of the
distribution, or of the part of the distribution, at that time.
Obligations 
imposed apart from 
article 204 not to 
be prejudiced.
205.   The provisions of article 204 shall apply without prejudice
to any obligation imposed apart from that article on a member of a
company to repay a distribution unlawfully made to him.
Saving for 
provision in 
articles operative 
before 1st January, 
1995.
206.   Where immediately before 1st January, 1995 a company
was authorised by a provision of its articles to apply its unrealised
profits in paying up in full or in part unissued shares to be allotted
to members of the company as fully or partly paid bonus shares,
that provision shall continue, subject to any alteration of the
articles, as authority for those profits to be so applied after that
date.
Interpretations for 
the purposes of this 
Chapter.
207. (1) The provisions of this article shall have effect for the
interpretation of this Chapter.
( 2 ) "Capitalisation", in relation to a company’s profits, shall
mean any of the following operations, whenever carried out - 
( a ) the application of the profits to wholly or partly pay up
unissued shares in the company to be allotted to
members of the company as fully or partly paid bonus
shares; or
( b ) the transfer of the profits to the capital redemption
reserve.
( 3 ) References in this Chapter to profits and losses of any
description shall be, respectively, to profits and losses of that
description made at any time and, except where the context
otherwise requires, shall be, respectively, to revenue and capital
profits and revenue and capital losses.
COMPANIES [ CAP. 386.        115
Saving for other 
restraints on 
distribution.
208.   The provisions of this Chapter shall be without prejudice
to any other provision of law, or any provision of a company’s
memorandum or articles, restricting the sums out of which, or the
cases in which, a distribution may be made.
Chapter XII - Private Company
Definition.
Amended by:
IV. 2003.88.
209. (1) A private company is a company which, besides
fulfilling the requirements of this Act for it to hold the status of a
private company, is one which, by its memorandum or articles - 
( a ) restricts the right to transfer its shares; and 
( b ) limits the number of its members to fifty; and
( c ) prohibits any invitation to the public to subscribe for
any shares or debentures of the company.
( 2 ) A private company shall not - 
( a ) offer to the public, whether for cash or otherwise, any
shares in or debentures of the company; or
( b ) allot or agree to allot, whether for cash or otherwise,
any shares in or debentures of the company with a
view to all or any of those shares or debentures being
offered to the public, within the meaning given to the
expression "offers made to the public" in article 2(3).
( 3 ) Where a private company contravenes the provisions of
subarticle  ( 2 ),  every officer thereof who is in default shall be liable
to a penalty.
Resolutions in 
writing.
Amended by:
IV. 2003.89.
210.   Subject to the provisions of this Act, in the case of a
private company, a resolution in writing signed by all the members
for the time being entitled to receive notice of and to attend and
vote at the general meetings shall be as valid and effective as if the
same had been passed at a general meeting of the company duly
convened and held and the provisions of article 155 shall not apply.
Annual general meetings of the company may be held in
accordance with this article:
Provided that a resolution in writing as aforesaid shall be
void if it purports to remove a director or an auditor before the
expiration of his term of office, or otherwise purports to deprive the
auditors of the right granted to them by virtue of the provisions of
article 155.
Exempt company.
company if the conditions mentioned in subarticle  ( 2 )  are contained
in its memorandum or articles.
( 2 ) The conditions required by subarticle (1) are- 
( a ) that the number of persons holding debentures of the
company is not more than fifty; and
( b ) that no body corporate is the holder of, or has any
interest in, any shares or debentures of the company or
is a director of the company, and neither the company
nor any of the directors is party to an arrangement
whereby the policy of the company is capable of being
  116      CAP. 386. ]                   COMPANIES
determined by persons other than the directors,
members or debenture holders thereof.
( 3 ) For the purposes of this article - 
( a ) shares held by an exempt company shall not disqualify
a company from being also exempt if, taking all the
following companies together, that is to say - 
( i ) the exempt company in question  ( hereinafter
referred to as the "relevant company" ) ;
( ii ) any company holding shares to which this
paragraph has to be applied in determining the
relevant company’s right to be exempt as
aforesaid; and
( iii ) any further company taken into account for the
purposes of this paragraph in determining the
right to be so exempted of any company holding
any such shares as aforesaid,
the total number of persons holding shares in those
companies is not more than fifty, the companies
themselves being disregarded; and
( b ) any interest of the relevant company itself in any of its
shares or debentures shall be disregarded.
( 4 ) Companies referred to in subarticle (1) shall be exempt
from the requirements of  article  138 ( 7 )  and of article 144(1) ( a ) ; and
the proviso to  article  183 ( 2 )  shall apply.
( 5 ) A sole director of an exempt company shall be entitled to
hold office as a company secretary thereof during his directorship.
( 6 ) Where an exempt company has only one director, any
requirement of this Act that two directors of a company shall act,
shall be interpreted in relation to the exempt company as requiring
one director to act.
Single member 
companies.
Amended by:
IV. 2003.90.
212. (1) A company referred to in article 211(1) may have a
single member notwithstanding the provisions of article 68 and of
article 72(1) or of any other provision of this Act, where the objects
of such a company specify which activity of the company shall be
its main trading activity and the business of the company shall
consist principally of that activity.
( 2 ) The provisions of  article  214 ( 2 )( b )( i )  shall not apply to
companies falling within the terms of this article.
( 3 ) A company may have a single member upon registration or
it may become a single member company through the acquisition of
all its shares by one person, provided that such a company complies
with the provisions laid down in subarticle (1).
( 4 ) When a company becomes a single member company
through the acquisition of all its shares by one person, the company
shall, within fourteen days, deliver to the Registrar for registration
a notice - 
( a ) specifying the fact that it has become a single member
COMPANIES [ CAP. 386.        117
company and stating the name and residence of that
single member; and
( b ) confirming compliance with the provisions laid down
in subarticle (1).
Such notice shall be deemed to satisfy the requirements of
article  120 ( 3 ) .
( 5 ) Where a person becomes a single member as a result of
acquiring shares in the company  causa mortis , such fact shall be
stated in the notice referred to in subarticle  ( 4 )  and such notice shall
be deemed to satisfy the requirements of  article  120 ( 3 ) .
( 6 ) If default is made in complying with subarticles  ( 4 ) ,  ( 5 )  and
( 10 ),  every officer of the company who is in default shall be liable
to a penalty, and, for every day during which the default continues,
to a further penalty.
( 7 ) The single member shall exercise the powers of the general
meeting of the company and the decisions taken by him in this
capacity shall be recorded as minutes of the general meeting and
the provisions of this Act regulating general meetings shall be
construed accordingly. The decisions referred to in this subarticle
shall be deemed to be resolutions of the company for the purposes
of the application of the provisions of this Act:
Provided that the provisions of this subarticle shall not
prejudice the rights of the auditors of the company under the
provisions of article 155, and the rights granted to persons as are,
by the articles of the company, entitled to receive notices of, attend
and be heard at general meetings of the company.
( 8 ) The single member shall record in writing all agreements
between him and the company as represented by him in a minute
book kept by the company specifically for the purpose.
( 9 ) If default is made in complying with the provisions of
subarticle  ( 8 ),  the single member shall be liable to a penalty.
( 10 ) When a company ceases to be a single member company, it
shall, within fourteen days, deliver to the Registrar for registration
a notice specifying the fact that it is no longer a single member
company and the provisions of this article shall not apply to such
company from the date it has ceased to be a single member
company.
Change of status of 
company.
213. (1) A private company may change its status to a public
company by altering its memorandum or articles and incorporating
in such alteration all those changes required by the provisions of
this Act for a company to hold the status of a public company,
including the removal of the restrictions resulting by virtue of the
provisions of article 209 which conflict with the status of a public
company.
( 2 ) The alteration referred to in subarticle (1) shall not take
effect unless and until it is registered and the provisions of  article
79 ( 2 )  shall apply thereto.
( 3 ) The Registrar shall, upon the registration referred to in
  118      CAP. 386. ]                   COMPANIES
subarticle  ( 2 ),  enter in the register the fact of such change as
referred to in subarticle (1) and he shall issue a certificate of
registration altered to reflect that change.
( 4 ) A public company may change its status to a private
company if, after having effected compliance with the restrictions
resulting by virtue of the provisions of article 209, it alters its
memorandum or articles, incorporating in such alteration all those
changes required by the provisions of this Act for a company to
hold the status of a private company, including the introduction of
the restrictions resulting by virtue of the provisions of article 209.
( 5 ) The alteration referred to in subarticle  ( 4 )  shall not take
effect unless and until that alteration, accompanied by a declaration
made by the directors of the company that the company is
effectively in compliance with the provisions of article 209, is
registered, and the provisions of  article  79 ( 2 )  shall apply thereto.
( 6 ) The Registrar shall, upon the registration referred to in
subarticle  ( 5 ),  enter in the register the fact of such change as
referred to in subarticle  ( 4 )  and he shall issue a certificate of
registration altered to reflect that change.
( 7 ) A private company may change its status to an exempt
company if, after having effected compliance with the conditions
laid down in article 211, it alters its memorandum or articles by
incorporating therein all the said conditions.
( 8 ) The alteration referred to in subarticle  ( 7 )  shall not take
effect unless and until that alteration, accompanied by a declaration
made by the directors of the company that the company is
effectively in compliance with the provisions of article 211, is
registered, and the provisions of  article  79 ( 2 )  shall apply thereto.
( 9 ) An exempt company which resolves not to continue
fulfilling any of the conditions of article 211, shall change its status
to a private company by altering its memorandum or articles to
remove any such conditions.
( 10 ) The alteration referred to in subarticle  ( 9 )  shall not take
effect unless and until it is registered and the provisions of  article
79 ( 2 )  shall apply thereto.
( 11 ) Where a private company changes its status to a public
company in accordance with the provisions of this article, the
company shall, in addition to the documents referred to in
subarticle  ( 2 ),  deliver to the Registrar for registration - 
( a ) a copy of a balance sheet prepared as at a date being
not more than four months before the date of the
registration of the alteration referred to in subarticle
(1), together with a report of the company’s auditors in
relation to that balance sheet; and 
( b ) a written statement by the company’s auditors that in
their opinion the balance sheet shows that at the
balance sheet date the amount of the company’s net
assets was not less than the aggregate of its called up
issued share capital and undistributable reserves; and
COMPANIES [ CAP. 386.        119
( c ) a declaration by any director of the company that
between the balance sheet date and the date of delivery
of the alteration to the Registrar for registration, there
has been no change in the company’s financial position
that has resulted in the amount of its net assets
becoming less than the aggregate of its called up
issued share capital and undistributable reserves.
In this subarticle, "net assets" shall have the same meaning
assigned to it under  article  193 ( 2 ) .
( 12 ) A private company which proceeds to change its status to a
public company in accordance with the provisions of this article
shall not allot or propose to allot shares for a consideration
otherwise than in cash at any time between the date of the balance
sheet and the date of delivery of the alteration referred to in
subarticle  ( 11 ) .
( 13 ) Where a public company changes its status to a private
company in accordance with the provisions of this article, it shall
be required to redeem the shares held by the dissenting members, if
they so request, on such terms as may be agreed or as the court, on
a demand of either the company or the dissenting members, thinks
fit to order.
TITLE II - DISSOLUTION AND CONSEQUENTIAL 
WINDING UP OF COMPANIES
Causes of 
dissolution and 
consequential 
winding up.
Amended by:
IV. 2003.91.
214. (1) A company shall be dissolved and consequently
wound up in the following cases -
( a ) the company has by extraordinary resolution resolved
that the company be dissolved and consequently
wound up by the court;
( b ) the company has by extraordinary resolution resolved
that the company be dissolved and consequently
wound up voluntarily.
( 2 ) In addition to the modes of dissolution referred to in
subarticle (1) - 
( a ) a company may be dissolved and wound up by the
court in the following cases - 
( i ) if the business of the company is suspended for
an uninterrupted period of twenty-four months;
( ii ) the company is unable to pay its debts; and
( b ) a company shall be dissolved by the court in the
following cases - 
( i ) the number of members of the company is
reduced to below two and remains so reduced
for more than six months:
Provided that this paragraph shall not apply
  120      CAP. 386. ]                   COMPANIES
to single member companies specified in  article
212 ( 3 ) ;
( ii ) the number of directors is reduced to below the
minimum prescribed by article 137 and remains
so reduced for more than six months;
( iii ) the court is of the opinion that there are grounds
of sufficient gravity to warrant the dissolution
and consequent winding up of the company;
( iv ) when the period, if any, fixed for the duration of
the company by the memorandum or articles
expires, or the event occurs, if any, on the
occurrence of which the memorandum or articles
provide that the company is to be wound up, and
the company in general meeting has not before
such expiry or event passed a resolution to be
wound up voluntarily.
( 3 ) In the cases of dissolution falling within subarticle  ( 2 )( b ),
the court shall, at its discretion, determine whether the company
shall be wound up by the court or voluntarily:
Provided that for the purposes of subparagraphs  ( ii )  and  ( iv )
of the said paragraph  ( b ) , the court at its discretion and upon good
cause being shown may, and for the purposes of sub paragraph  ( i )
of the same paragraph, the court shall, before ordering the
dissolution of the company, allow a period of time not exceeding
thirty days, within which the company may remedy the default and
upon proof being submitted to it that any such default has been
remedied, the court shall not order the company’s dissolution.
( 4 ) Where a company continues carrying on business without
having at least two members beyond the period of six months
referred to in subarticle (2)( b )(i), a person who, for the whole or
any part of the period that the company carries on business after the
said six months, is a member of the company and knows that it is
carrying on business with only one member, shall be held
unlimitedly and jointly and severally liable with the company for
all the obligations contracted by the company for the whole period
or as the case may be, that part of it, from the lapse of the six
months until the dissolution of the company or until such time as
the default is remedied by the company in accordance with the
proviso to subarticle (3).
( 5 ) For the purposes of subarticle  ( 2 )( a )( ii ),  a company shall be
deemed to be unable to pay its debts - 
Cap. 12.
( a ) if a debt due by the company has remained unsatisfied
in whole or in part after twenty-four weeks from the
enforcement of an executive title against the company
by any of the executive acts specified in article 273 of
the Code of Organisation and Civil Procedure; or
( b ) if it is proved to the satisfaction of the court that the
company is unable to pay its debts, account being
taken also of contingent and prospective liabilities of
the company.
COMPANIES [ CAP. 386.        121
( 6 ) Where a company has passed a resolution in accordance
with subarticle (1) ( a ) , it shall be required to give the notice
specified in article 265(1) and subarticle  ( 2 )  thereof shall apply.
( 7 ) For the purposes of this Title, a company shall be wound up
by the court if it is wound up in accordance with the provisions of
Sub-Title I of this Title; and a company shall be wound up
voluntarily if it is wound up in accordance with the provisions of
Sub-Title II of this Title.
Meaning of 
"contributory".
215.   The term "contributory" means every person liable to
contribute to the assets of a company in the event of its dissolution,
and the provisions of articles 216 and 217 shall apply for
determining the persons so liable:
Provided that a reference in a company’s memorandum or
articles to a contributory shall not, unless the context otherwise
requires, include a person who is a contributory only by virtue of
article 217.
Liability as 
contributories of 
present and past 
members.
216.   In the winding up of a company every present and past
member shall be liable to contribute to the assets of the company to
an amount sufficient for payment of its debts and liabilities, and the
costs, charges and expenses of the winding up, and for the
adjustment of rights of the contributories among themselves,
subject to the following qualifications - 
( a ) no contributions shall be required from any member
exceeding the amount, if any, unpaid on the shares in
respect of which he is liable as a present or past
member;
( b ) a past member shall not be liable to contribute in any
of the following cases - 
( i ) if he has ceased to be a member for at least one
year before the dissolution of the company;
( ii ) in respect of any debt or liability contracted after
he has ceased to be a member;
( iii ) unless it appears to the court that the existing
members are unable to satisfy the contributions
required to be made by them in pursuance of this
Act;
( c ) a sum due to any member of a company, as a member,
by way of dividends, profits or otherwise shall not be
deemed to be a debt of the company payable to that
member in the case of competition between himself
and any other creditor not being a member of the
company, but any such sum may be taken into account
for the purpose of the final adjustment of the rights of
the contributories among themselves.
Liability of past 
directors and 
shareholders.
Amended by:
IV. 2003.92.
217. (1) The provisions of subarticles (2) and (3) shall only
apply following the dissolution of a company where a company
before its dissolution - 
( a ) has made a payment out of capital in respect of the
  122      CAP. 386. ]                   COMPANIES
redemption or purchase of any of its own shares,
which payment is referred to in the following
provisions of this article as "the relevant payment";
and
( b ) the aggregate amount of the company’s assets and the
amounts paid by way of contribution to its assets in
terms of article 216, apart from the provisions of this
article, is not sufficient for payment of its debts and
liabilities, and the expenses of the winding up.
( 2 ) Where the dissolution has occurred within twelve months of
the date on which the relevant payment was made, then - 
( a ) the person from whom the shares were redeemed or
purchased, and
( b ) the directors who authorised the redemption or
purchase, 
shall, so as to enable the insufficiency referred to in subarticle
(1) ( b )  to be met, be liable to contribute to the company’s assets to
the extent referred to in subarticle  ( 3 ) .
( 3 ) A person from whom any of the shares were redeemed or
purchased shall be liable to contribute an amount not exceeding so
much of the relevant payment as was made by the company in
respect of his shares; and the directors shall be jointly and severally
liable with that person to contribute that amount.
SUB-TITLE I - WINDING UP BY THE COURT 
Chapter I - General Provisions
Dissolution and 
winding up 
application.
Amended by : 
XXIV.1995.362;
IV. 2003.93;
IX. 2003.86.
218. (1) A request to the court  ( hereinafter referred to as the
"winding up application" )  for the - 
( a ) winding up of a company by the court in accordance
with article 214(1) ( a ) ; or 
( b ) dissolution and winding up of a company by the court
in accordance with  article  214 ( 2 )( a ) ; or
( c ) dissolution and winding up of a company in
accordance with  article  214 ( 2 )( b ) ,
shall be made by means of an application which may be made
either by the company following a decision of the general meeting
or by its board of directors, or by any debenture holder, creditor or
creditors, or by any contributory or contributories:
Provided that an application in terms of paragraphs ( b ) or
( c ) may also be made by any shareholder or director of the
company.
( 2 ) Except as provided in subarticle  ( 3 ),  a contributory shall not
be entitled to make a winding up application unless - 
COMPANIES [ CAP. 386.        123
( a ) the shares in respect of which he is a contributory, or
some of them, either were originally allotted to him, or
have been held by him, and registered in his name, for
at least six months during the eighteen months before
the date of the company’s dissolution, or have
devolved on him through the death of a former
shareholder; or
( b ) the number of members was reduced and remains
reduced below the minimum prescribed by article 72
while he holds shares in respect of which he is a
contributory.
( 3 ) Notwithstanding the provisions of subarticle (1), a person
who is liable under article 217 to contribute to a company’s assets
in the event of its dissolution may only file a winding up
application on either of the grounds set out in  article  214 ( 2 )( a )( ii )
and  ( b )( iii ) .
( 4 ) The Registrar may file a winding up application where it
appears to him that it is expedient and in the public interest that a
company should be dissolved and wound up for any of the reasons
set out in article 214(2)( b )(ii) and (iii).
( 5 ) By virtue of article 294, a winding up application for a
winding up by the Court may be filed notwithstanding that a
company is being wound up voluntarily. Such an application may
also be made by the official receiver appointed in accordance with
the provisions of article 225.
( 6 ) The directors, the company secretary, and every
contributory and creditor of the company shall be entitled to make
submissions on the hearing of a winding up application made under
this article.
( 7 ) In the event of a winding up application made under
subarticle (1) ( c ) , if the court decides that the company shall be
wound up voluntarily, the provisions of Sub-title II of this Title
other than article 265 shall apply.
( 8 ) On the making of a winding up application, a copy thereof
shall forthwith be forwarded by the Registrar of Courts to the
Registrar for registration.
Powers of the 
court.
Amended by:
IV. 2003.94.
219.   (1) On the hearing of the winding up application, the
court may either dismiss the application or make an order acceding
thereto  ( hereinafter referred to as a "winding up order" )  and in
either case make such other orders, including provisional orders,
and adjourn the hearing conditionally or otherwise as it thinks fit;
but no winding up order shall be made before the application has
been served on such persons as the court in the circumstances, and
upon information given by the applicant, deems it appropriate to
call upon to make their submissions.
(2) Notwithstanding the provisions of subarticle (1), where the
Court is satisfied that the requirements of article 218(1)( a ) have
been complied with, the Court shall accede to the application.
  124      CAP. 386. ]                   COMPANIES
Power to stay 
proceedings 
against company.
220.   At any time after the filing of a winding up application,
and before a winding up order has been made, the company, or any
creditor or contributory, may apply to the court for a stay of judicial
proceedings pending against the company, and the court may stay
those proceedings accordingly on such terms as it thinks fit.
Dispositions of 
property etc., after 
date of deemed 
dissolution.
221.   In a winding up by the court, any disposition of the
property of the company, including any rights of action, and any
transfer of shares, or alteration of the status of the members of the
company, made after the date of its deemed dissolution, shall be
void, unless the court otherwise orders.
Warrants not to be 
carried into effect 
against company.
Amended by:
IV. 2003.95.
222.   When a company is being wound up by the court, any act
or warrant, whether precautionary or executive, other than a
warrant of prohibitory injunction, issued or carried into effect
against the company after the date of its deemed dissolution, shall
be void.
Deemed date of 
dissolution.
Amended by:
IV. 2003.96.
223. (1) Where a winding up order has been made, the
company shall be deemed to have been dissolved at the time of the
filing of the winding up application:
Provided that where a winding up order has been made in
terms of  article  214 ( 2 )( b )( iii ) , the company shall be deemed to have
been dissolved on the date when the winding up order is made:
Provided further that where a winding up order has been
made by virtue of article 218(1)( a ), the date of dissolution shall be
the date of passing of the resolution for dissolution and
consequential winding up by the Court or such later date as may be
specified in the said resolution.
( 2 ) Notwithstanding the provisions of subarticle (1), where,
before the filing of a winding up application, an extraordinary
resolution had been passed by the company for it to be dissolved
and consequently wound up voluntarily, the company shall be
deemed to have been dissolved at the time of the passing of the
resolution, and unless the court, upon proof of fraud or mistake
thinks fit otherwise to direct, all proceedings taken in the voluntary
winding up shall be deemed to have been validly taken.
Consequences of a 
winding up order.
Amended by: 
XXIV.1995.362;
IV. 2003.97.
224. (1) On the making of a winding up order, or on the
dismissal of a winding up application, a copy thereof shall
forthwith be forwarded by the Registrar of Courts to the Registrar
for registration.
( 2 ) Where a winding up order has been made or a provisional
administrator has been appointed in accordance with the provisions
of article 228, no action or proceeding shall be proceeded with or
commenced against the company or its property except by the leave
of the court and subject to such terms as the court may impose.
Chapter II - Official Receiver
Official receiver.
Amended by:
XVII. 2002.232.
225. (1) The Minister shall appoint an individual to be the
official receiver for the purposes of this Act and may at any time
COMPANIES [ CAP. 386.        125
terminate any such appointment or designation.
 (2) The Minister may authorise in writing any individual to
assist the official receiver, conferring on any such person all or any
of the powers of the official receiver under this Act or any
regulations made thereunder.
( 3 ) The Minister may prescribe regulations specifying the fees
payable out of a company’s assets for the performance by the
official receiver  of his general duties as  official receiver .
Statement of 
company’s affairs 
to be submitted to 
official receiver .
226. (1) Where the court has made a winding up order or
appointed a provisional administrator, there shall be made out and
submitted to the  official receiver  a statement as to the affairs of the
company in the prescribed form, or in such form as the  official
receiver  accepts, verified by affidavit, and showing the particulars
of its assets, debts and liabilities, the names, residences and
occupations of its creditors, the securities held by them
respectively, the dates when the securities were respectively given,
and such further or other information as may be prescribed or as the
official receiver  may require.
( 2 ) The statement shall be submitted and verified by one or
more of the persons who are at the relevant date the directors of the
company and by such of the persons hereinafter in this subarticle
mentioned, as the  official receiver  may require to submit and verify
the statement, that is to say, persons - 
( a ) who are or have been officers of the company at any
time in the three years immediately preceding the date
of the winding up order;
( b ) who have taken part in the formation of the company
at any time within twelve months before the relevant
date;
( c ) who are in the employment of the company, or have
been in the employment of the company within the
said twelve months, and are in the opinion of the
official receiver  capable of giving the information
required;
( d ) who are or have been within the said twelve months
officers of or in the employment of a company which
is, or within the said twelve months was, an officer of
the company to which the statement relates.
( 3 ) The statement shall be submitted within twenty-one days
from the relevant date or within such extended period as the  official
receiver  or the court may for special reasons appoint.
( 4 ) Any person making or concurring in making the statement
and affidavit required by this article shall be allowed, and shall be
paid by the  official receiver  or provisional administrator, as the
case may be, out of the assets of the company such costs and
expenses incurred in and about the preparation and making of the
statement and affidavit as the  official receiver  may consider
reasonable subject to an appeal to the court.
( 5 ) The  official receiver , if he thinks fit, may - 
  126      CAP. 386. ]                   COMPANIES
( a ) at any time release a person from an obligation
imposed on him under subarticle (1) or  ( 2 );  or
( b ) either when giving the period mentioned in subarticle
( 3 )  or subsequently, extend the period so mentioned,
and where the  official receiver  has refused to exercise a power
conferred by this subarticle, the court, if it thinks fit, may exercise
it.
( 6 ) If any person, without reasonable excuse, makes default in
complying with the requirements of this article, he shall be liable to
a penalty, and, for every day during which the default continues, to
a further penalty.
( 7 ) Any person stating himself in writing to be a creditor or
contributory of the company shall be entitled personally or by his
agent at all reasonable times, on payment of the prescribed fee, to
inspect the statement submitted in pursuance of this article, and to a
copy thereof or extract therefrom.
( 8 ) In this article the expression "relevant date" means, in a
case where a provisional administrator is appointed, the date of his
appointment, and, in a case where no such appointment is made, the
date of the winding up order.
Report by  official 
receiver .
227. (1) In a case where a winding up order is made, the
official receiver  shall, as soon as practicable after receipt of the
statement to be submitted under article 226 or, in a case where he
or the court orders that no statement shall be submitted, as soon as
practicable after the date of the order, carry out such investigations
as he may deem appropriate and submit to the court a preliminary
report, if any, as he thinks fit - 
( a ) as to the amount of share capital issued, and paid up,
and the estimated amount of the assets and liabilities;
( b ) if the company has failed, as to the causes of the
failure; and
( c ) whether in his opinion further enquiry is desirable as
to any matter relating to the promotion, formation or
failure of the company or the conduct of the business
thereof.
( 2 ) The  official receiver  may also, if he thinks fit, make a
further report, or further reports, stating the manner in which the
company was formed and whether in his opinion any fraud has been
committed by any person in its promotion or formation or by any
officer of the company since the formation thereof, and any other
matter which, in his opinion, is desirable to bring to the notice of
the court.
( 3 ) If the  official receiver  states in any such further report that
in his opinion a fraud has been committed as specified in subarticle
( 2 ),  the court shall have the further powers provided in article 260,
without prejudice to the exercise of any other powers it may have.
COMPANIES [ CAP. 386.        127
Chapter III - Liquidators in a winding up by the court
Appointment and 
powers of 
provisional 
administrator.
228. (1) The court may by order appoint a provisional
administrator at any time after the presentation of a winding up
application and before the making of a winding up order, and either
the  official receiver  or any other competent person may be so
appointed.
( 2 ) The provisional administrator shall carry out such functions
and powers in relation to the administration of the estate or
business of the company as the court may specify in the order
appointing him.
( 3 ) The provisional administrator holds office until such time
as the winding up order is made or the winding up application is
dismissed unless before such time he resigns or he is removed by
the court upon good cause being shown.
Functions of 
official receiver in 
relation to office of 
liquidator.
229. (1) The  official receiver , by virtue of his office, becomes
the liquidator of the company and continues in office until another
person becomes liquidator under the provisions of this Title.
( 2 ) The  official receiver  is, by virtue of his office, the
liquidator during any vacancy.
( 3 ) At any time when he is the liquidator of the company, the
official receiver  may summon separate meetings of the company’s
creditors and contributories for the purpose of choosing a person to
be liquidator of the company in place of the  official receiver .
( 4 ) It shall be the duty of the  official receiver  to summon
meetings under subarticle  ( 3 )  if he is at any time requested to do so
by one-fourth in value of the company’s creditors.
( 5 ) Without prejudice to the provisions of subarticles  ( 3 )  and
( 4 ),  the  official receiver  shall within a period of twelve weeks from
the date of the winding up order give notice to the court and to the
company’s creditors and contributories of his intentions whether or
not to summon the said meetings. The notice shall indicate the right
of the creditors arising under subarticle  ( 3 ) .
Choice of 
liquidator at 
meetings of 
creditors and 
contributories.
Amended by:
IV. 2003.98.
230. (1) The provisions of this article shall apply where a
company is being wound up by the court and separate meetings of
the company’s creditors and contributories are summoned for the
purpose of choosing a person to be liquidator of the company in
accordance with article 229.
( 2 ) The creditors and the contributories at their respective
meetings may nominate a person to be liquidator. The nomination
by the creditors shall be made by resolution of the creditors, and
the nomination by the contributories shall be made by a resolution
of the contributories.
( 3 ) The liquidator shall be the person nominated by the
creditors or, where no person has been so nominated, the person, if
any, nominated by the contributories.
( 4 ) Where no person is nominated by either the creditors or the
contributories to act as liquidator, the  official receiver  may, at any
  128      CAP. 386. ]                   COMPANIES
time, apply to the court for the appointment of a liquidator.
Meetings of 
creditors and 
contributories.
231. (1) The dates of meetings of creditors and contributories
shall be fixed and the meetings shall be summoned by the
liquidator. 
( 2 ) The notices of meetings of creditors and contributories
shall state the time and place appointed for the respective meetings. 
Creditors entitled 
to vote.
232. (1) In the case of a first meeting of creditors or of an
adjournment thereof a person shall not be entitled to vote as a
creditor unless he has duly lodged with the liquidator, not later than
the time mentioned for that purpose in the notice convening the
meeting or adjourned meeting, a proof of the debt which he claims
to be due to him from the company.
( 2 ) In the case of a subsequent meeting of creditors held in a
winding up by the court, a person shall not be entitled to vote as a
creditor unless he has lodged with the liquidator a proof of the debt
which he claims to be due to him from the company and such proof
has been admitted wholly or in part before the date on which the
meeting is held.
( 3 ) The chairman as provided for in  article  297 ( 3 )  shall have
power to admit or reject a creditor’s proof of his debt for the
purpose of voting, but his decision shall be subject to appeal to the
court. If he is in doubt whether a creditor’s proof of his debt shall
be admitted or rejected, the chairman shall mark it as objected to
and allow the creditor to vote, subject to the vote being declared
invalid in the event of the objection being sustained.
( 4 ) A guarantor of a debt owed by the company shall not be
deemed a creditor for the purposes of this Title unless he has
discharged the guaranteed debt in full.
Notice of first 
meeting to officers 
of company.
233. (1) The  official receiver  shall also give to each of the
officers of the company who, in his opinion ought to attend the first
meetings of creditors and contributories, seven days’ notice of the
time and place appointed for each meeting.
( 2 ) It shall be the duty of every officer who is given notice of
such meeting to attend if so required by the  official receiver  and if
such officer fails to attend the  official receiver  shall report such
failure to the court.
Summary of 
statement of 
affairs.
234. (1) The  official receiver  shall also, as soon as practicable
before the first meeting, send to each creditor mentioned in the
company’s statement of affairs, and to each person appearing from
the company’s accounting records or otherwise to be a contributory
of the company, a summary of the company’s statement of affairs,
including the causes of its failure, and any observations thereon
which the  official receiver  may think fit to make, but the
proceedings at a meeting shall not be invalidated by reason of any
summary aforesaid not having been sent or received before the
meeting.
( 2 ) Where prior to the winding up order, winding up of the
COMPANIES [ CAP. 386.        129
company has commenced voluntarily, the  official receiver  may, if
in his absolute discretion he sees fit to do so, send to the persons
aforesaid or any of them an account of such voluntary winding up
showing how such winding up has been conducted and how the
property of the company has been disposed of and any further
observations he may think fit to make.
Where person 
other than the 
official receiver is 
appointed 
liquidator.
235. (1) Where in the winding up of a company by the court a
person other than the  official receiver  is appointed liquidator, that
person - 
( a ) shall not be capable of acting as liquidator until he has
notified his appointment to the Registrar;
( b ) shall give the  official receiver  such information and
such access to and facilities for inspecting the
accounts, accounting records and documents of the
company and generally such aid as may be requisite
for enabling the  official receiver  to perform his duties
under this Act.
( 2 ) The Registrar shall on receipt of the notice of appointment
specified in subarticle (1) ( a )  register it.
( 3 ) Until the person appointed to act as liquidator is capable of
acting within the meaning of subarticle (1) ( a ) , the  official receiver
shall continue to act as liquidator.
General provisions 
as to liquidators.
236. (1) A liquidator appointed in accordance with the
provisions of article 230 may resign or, on the application of any
creditor or contributory, may be removed by the court if it is
satisfied that there exist sufficient grounds for his removal.
( 2 ) Where a person other than the  official receiver  is appointed
liquidator, he shall be remunerated on such basis as the court may
direct.
( 3 ) More than one person may be appointed to exercise the
function of liquidator of a company, and the remuneration of each
liquidator so appointed shall be determined on such basis as the
court may direct.
( 4 ) A vacancy resulting from the death or resignation of a
liquidator or from his removal by the court, shall be filled by the
court. 
( 5 ) If more than one liquidator is appointed by the court, the
court shall declare whether any act which is by this Act required or
authorised to be done by the liquidator is to be done by all or any
one or more of the persons so appointed.
( 6 ) Subject to the provisions of article 305, the acts of a
liquidator shall be valid notwithstanding any defects that may
afterwards be discovered in his appointment.
Custody and 
control of 
company’s 
property.
237. Where a company is being wound up by the court, the
liquidator or the provisional administrator, as the case may be, shall
take into his custody or under his control all the property and all
rights to which he has reasonable cause to believe the company to
  130      CAP. 386. ]                   COMPANIES
be entitled.
Powers of 
liquidator.
Amended by:
IV. 2003.99.
238. (1) The liquidator in a winding up by the court shall have
the power, with the sanction either of the court or of the liquidation
committee appointed under the provisions of Chapter IV of this
Sub-title -
( a ) to bring or to defend any action or other legal
proceeding in the name and on behalf of the company;
( b ) to carry on the business of the company so far as may
be necessary for the beneficial winding up thereof;
( c ) to pay creditors according to their ranking at law;
( d ) to make any compromise or arrangement with
creditors or persons claiming to be creditors, or having
or alleging themselves to have any claim, present or
future, certain or contingent, ascertained or which may
be due in damages against the company or whereby the
company may be rendered liable, and to refer any such
matter to arbitration;
( e ) to make calls on contributories or alleged
contributories and to effect any compromise or
arrangement in relation to debts, liabilities and claims
of the company present or future, certain or
contingent, ascertained or which may be due in
damages, subsisting or supposed to subsist between
the company and a contributory or alleged
contributory or other debtor or alleged debtor, and all
questions in any way relating to or affecting the assets
or the winding up of the company, on such terms as
may be agreed, and take any security for the discharge
of any such call, debt, liability or claim and give a
complete discharge in respect thereof;
( f ) to represent the company in all matters and to do all
such things as may be necessary for winding up the
affairs of the company and distributing its assets:
Provided that the Court may provide by an order that the
liquidator may, where there is no liquidation committee, exercise
any of the powers mentioned in paragraphs ( a ) or ( b ) without the
sanction of the Court.
( 2 ) The liquidator in a winding up by the court shall, in
particular, have the power -
( a ) to sell the movable and immovable property, including
any right, of the company by public auction or private
agreement with power to transfer the whole or any part
thereof;
( b ) to do all acts and to execute, in the name and on behalf
of the company, all deeds, receipts and other
documents;
( c ) to raise on the security of the assets of the company
any money requisite;
( d ) to appoint a mandatory to act for him in his capacity as
COMPANIES [ CAP. 386.        131
liquidator for particular purposes.
( 3 ) The exercise by the liquidator in a winding up by the court
of the powers conferred by this article shall be subject to the
control of the court, and any creditor or contributory may apply to
the court with respect to any exercise or proposed exercise of any
of those powers.
Exercise and 
control of 
liquidator’s 
powers.
239. (1) Subject to the provisions of this Act, the liquidator of
a company which is being wound up by the court shall, in the
administration of the assets of the company and in the distribution
thereof among its creditors, have regard to any directives that might
be given by resolution of the creditors or contributories at any
general meeting or by the liquidation committee, and any directives
given by the creditors and contributories in common shall, in case
of conflict with any directives given by the liquidation committee,
be deemed to override such latter directives; otherwise the
directives given by the liquidation committee shall prevail.
( 2 ) The liquidator may summon general meetings of the
creditors or contributories for the purpose of ascertaining their
wishes, and it shall be his duty to summon meetings at such times
as the creditors or contributories, by resolution, either at the
meeting appointing the liquidator or otherwise, may direct, or
whenever requested in writing to do so by one-fourth in value of
the creditors or contributories, as the case may be.
( 3 ) The liquidator may apply to the court for directions in
relation to any particular matter arising under the winding up.
( 4 ) If any person is aggrieved by any act or decision of the
liquidator, that person may apply to the court and the court may
confirm, reverse or modify the act or decision complained of, and
make such order on the matter as it thinks just.
Books to be kept 
by liquidator.
240.   Every liquidator of a company which is being wound up
by the court shall keep proper books in which he shall cause to be
made entries or minutes of proceedings at meetings, and of such
other matters as may be prescribed.
Payments of 
liquidator into 
bank.
241. (1) Upon his appointment the liquidator shall notify the
Registrar of any bank account which the liquidator shall use for the
purposes of receiving and making payments on behalf of the
company. The liquidator shall not be entitled to receive and make
payments until he has made such notification.
( 2 ) If any such liquidator retains for more than ten days a sum
exceeding two hundred liri or such other amount as the Registrar in
any particular case authorizes him to retain, then, unless he
explains the retention to the satisfaction of the Registrar, the
liquidator shall pay interest on the amount so retained in excess, at
the annual rate of two percentage points above the Central Bank of
Malta minimum discount rate and shall be liable to forfeiture of all
or such part of his remuneration as the court may think just, and to
be removed from his office by the court, and shall furthermore be
liable to pay any expenses occasioned by his default.
( 3 ) A liquidator of a company which is being wound up by the
  132      CAP. 386. ]                   COMPANIES
court shall not pay any sums received by him as liquidator into an
account or accounts other than an account or accounts which has
been notified to the Registrar.
( 4 ) It shall not be lawful to issue precautionary or executive
warrants over any accounts opened by the liquidator in accordance
with this article.
Audit of 
liquidator’s 
accounts.
242. (1) Every liquidator of a company which is being wound
up by the court shall, at such times as may be prescribed but not
less than twice in each year during his tenure of office, send to the
Registrar, and to such other place as the Registrar may direct, an
account of his receipts and payments as liquidator.
( 2 ) The account shall be in a proper form, shall be made in
duplicate, and shall be duly certified by the liquidator:
Provided that the Minister may make regulations
prescribing the proper form in which the account is to be made.
( 3 ) The Registrar may, at the company’s expense, cause such
account to be audited, and for the purpose of the audit the
liquidator shall furnish the auditor appointed by the Registrar with
such vouchers and information as the auditor may require and the
auditor may at any time require the production of and inspect any
accounting records or documents kept by the liquidator.
( 4 ) When the account has been audited, one copy thereof shall
be delivered to the Registrar for registration and the other copy
shall be delivered to the court for filing, and each copy shall be
open to inspection of any person on payment of the prescribed fee.
Control over 
liquidators.
243. (1) If an application is made to the court by any creditor
or contributory complaining on the conduct of a liquidator of a
company the court shall inquire into the matter and take such action
thereon as it may think expedient.
( 2 ) The Registrar may at any time require any liquidator of a
company which is being wound up by the court to answer any
inquiry in relation to any winding up in which he is engaged, and
the Registrar may, if he thinks fit, apply to the court to examine the
liquidator or any other person on oath concerning the winding up.
( 3 ) The Registrar may also direct an investigation to be made
of the accounts, accounting records and documents of the
liquidator. 
Release of 
liquidator from his 
appointment.
Amended by: 
XXIV.1995.362.
244. (1) When the liquidator of a company which is being
wound up by the court has realised all the property of the company,
or so much thereof as can, in his opinion, be realised without
needlessly protracting the liquidation, and has distributed a final
payment, if any, to the creditors, and has adjusted the rights of the
contributories among themselves, and made a final return, if any, to
the contributories, or has resigned, the court shall, on the
liquidator’s application, cause a report to be prepared on the
liquidator’s accounts at the company’s expense. On being satisfied
that the liquidator has complied with the requirements of this Act
and such other requirements, if any, as may be laid down by it and,
COMPANIES [ CAP. 386.        133
after taking into consideration the report and any objection which
may be raised by any creditor or contributory or person interested,
the court shall proceed to release the liquidator from his
appointment.
( 2 ) The Registrar of Courts shall forthwith deliver a notice of
the release to the Registrar for registration.
Chapter IV - Liquidation Committees in a winding up by the 
court
Determination 
whether committee 
is to be appointed.
245. (1) When a winding up order has been made by the court,
the separate meeting of the creditors referred to in article 229
summoned for the purpose of choosing a liquidator in place of the
official receiver  shall determine further whether or not to appoint a
liquidation committee to act with the liquidator and who are to be
the members of the committee, if appointed.
( 2 ) Where a liquidation committee has not been appointed in
accordance with the provisions of subarticle (1), the liquidator,
other than the  official receiver , may at any time, if he thinks fit,
summon a separate meeting of the company’s creditors for the
purpose of determining whether such a committee should be
appointed and, if it is so determined, of appointing it.
( 3 ) Where a liquidation committee has not been appointed in
accordance with the provisions of subarticle (1), the liquidator,
other than the  official receiver , shall summon a meeting of creditors
for the appointment of such a committee if he is requested to do so
by one-fourth in value of the company’s creditors.
Constitution and 
proceedings of 
liquidation 
committee.
Amended by:
IV. 2003.100.
246. (1) The liquidation committee shall consist of not more
than five creditors of the company elected by the meeting of
creditors. 
( 2 ) Where the meeting of creditors does not appoint a
liquidation committee, the meeting of contributories may appoint
one of their members to make an application to the court for an
order to the liquidator that a further meeting of creditors be
summoned for the purpose of appointing a liquidation committee.
( 3 ) If the meeting of creditors so summoned does not appoint a
liquidation committee, the meeting of contributories may do so.
( 4 ) The committee shall then consist of not less than three and
not more than five contributories elected by that meeting.
( 5 ) The committee shall meet at such times as they may from
time to time determine, and, failing such appointment, at least once
every six months, and the liquidator or any member of the
committee may also call a meeting of the committee as and when
he thinks necessary.
( 6 ) A meeting of the committee may not be held unless a
majority in number of the committee is present and decisions shall
be taken by a majority in number of the members present at the
  134      CAP. 386. ]                   COMPANIES
meeting.
( 7 ) A member of the committee may resign by notice in writing
signed by him and delivered to the liquidator.
( 8 ) If a member of the committee is absent from five
consecutive meetings of the committee without the leave of those
members who together with himself represent the creditors or
contributories, as the case may be, his office shall thereupon
become vacant.
( 9 ) A member of the committee may be removed by a
resolution of a meeting of the creditors, if he represents creditors,
or by a resolution of a meeting of the contributories, if he
represents contributories, in accordance with article 298:
Provided that at least seven days’ notice of the meeting has
been given, stating the object of the meeting.
( 10 ) On a vacancy occurring in the committee, the liquidator
shall forthwith summon a meeting of creditors or contributories, as
the case may require, to fill the vacancy, and the meeting may, by
resolution, re-appoint the same or appoint another creditor or
contributory to fill the vacancy:
Provided that if the liquidator, having regard to the state of
the winding up, is of the opinion that it is unnecessary for the
vacancy to be filled he may apply to the court and the court may
make an order that the vacancy shall not be filled, or shall not be
filled except in such circumstances as may be specified in the order.
( 11 ) The continuing members of the committee, if not less than
two, may act notwithstanding any vacancy in the committee. 
Powers of official 
receiver where 
there is no 
committee.
247.   Where there is no liquidation committee, the  official
receiver  may, on the request of the liquidator, do any act or thing or
give any direction or permission which is by this Act authorised or
required to be done by the committee.
Chapter V - General Powers of the court in a winding up 
by the court
Power to stay 
winding up.
Amended by: 
XXIV.1995.362.
248. (1) The court may at any time after a winding up order,
on the application either of the liquidator or the  official receiver  or
any creditor or contributory, and on proof to the satisfaction of the
court that all proceedings in relation to the winding up ought to be
stayed, make an order staying the proceedings, for such duration
and on such terms and conditions as the court thinks fit. Any such
stay of proceedings shall not affect the continuing validity and
operation of the winding up orders.
( 2 ) On an application under this article the court may, before
making an order, require the  official receiver  or liquidator to
furnish to the court a report with respect to any facts or matters
which are in its opinion relevant to the application.
( 3 ) A copy of every order made under this article shall
COMPANIES [ CAP. 386.        135
forthwith be forwarded by the Registrar of Courts to the Registrar
for registration.
Settlement of list 
of contributories 
and application of 
assets.
249.   As soon as may be after making a winding up order, the
court shall draw up a list of contributories and shall have the power
to rectify the register of members, if required, and shall cause the
assets of the company to be collected, and applied in the discharge
of the company’s liabilities in accordance with the provisions of
article 302:
Provided that, where it appears to the court that it will not
be necessary to make calls on or adjust the rights of contributories,
the court may dispense with the drawing up of a list of
contributories.
Delivery of 
property to 
liquidator.
250.   The court may, at any time after making a winding up
order, require - 
( a ) any contributory for the time being on the list of
contributories; and
( b ) any person who holds any money, property or
accounting records and documents in his hands to
which the company is  prima facie  entitled, to pay,
deliver, convey, transfer or otherwise hand over such
money, property, accounting records or documents to
the liquidator forthwith or within such time as the
court directs. 
Debts due by 
contributory and 
extent of set-off.
251. (1) The court may at any time after making a winding up
order, make an order on any contributory for the time being
appearing on the list of contributories to pay, in the manner
directed by the order, any money due from him to the company,
exclusive of any money payable by him by virtue of any call in
pursuance of the provisions of this Act.
( 2 ) When all the creditors are paid in full, any money due on
any account whatever to a contributory from the company may be
set-off against any subsequent call made on him.
Power to make 
calls.
252. (1) The court may, at any time after making a winding up
order, and either before or after it has ascertained the sufficiency of
the assets of the company, make calls on all or any of the
contributories for the time being appearing on the list of
contributories to the extent of their liability, for payment of any
money which the court considers necessary to satisfy the debts and
liabilities of the company, and the costs, charges and expenses of
winding up, and for the adjustment of the rights of the
contributories among themselves, and make an order for payment
of any calls so made.
( 2 ) In making a call the court may take into consideration the
probability that some of the contributories may partly or fully fail
to pay the call.
Order of court to 
be conclusive 
evidence.
253.   An order made by the court on a contributory shall, subject
to any right of appeal, be conclusive evidence that the money, if
  136      CAP. 386. ]                   COMPANIES
any, thereby appearing to be due or ordered to be paid, is due; and
all other pertinent matters stated in the order shall be taken as truly
stated as against all persons and in all proceedings.
Appointment of 
special manager.
254. (1) The liquidator or provisional administrator may, if
satisfied that the nature of the estate or business of the company, or
the interests of the creditors or contributories generally, require the
appointment of a special manager of the estate or business of the
company other than himself, apply to the court, and the court may,
on such application, by order appoint a special manager of the said
estate or business to act during such time as the court may direct,
with such functions and powers as may be entrusted to him by the
court in the order appointing him. The special manager shall
restrict his activities to the said functions and powers and to such
acts as may be necessary or consequential thereto.
( 2 ) The special manager shall give an account of his
management as the court may direct.
( 3 ) The special manager shall receive such remuneration as
may be fixed by the court.
Fixing of time for 
proofs of debt.
Amended by:
IV. 2003.101.
255.   The court may fix a time or times within which creditors
are to prove their debts or claims or are to be excluded from the
benefit of any distribution made before those debts are proved.
Adjustments of 
rights of 
contributories.
256.   The court shall adjust the rights of the contributories
among themselves and distribute any surplus among the persons
entitled thereto. 
Inspection of 
books of company.
Amended by:
IV. 2003.102.
257. (1) The court may, at any time after making a winding up
order, make such order for inspection of accounts, accounting
records and documents of the company by creditors and
contributories as the court thinks fit, and any accounts, accounting
records and documents in the possession of the company may be
inspected by creditors and contributories in accordance with that
order.
( 2 ) Nothing contained in this article shall be construed as
excluding or restricting any rights deriving from any law of Malta
of a government department or other authority or person acting
under the authority of any such department or authority.
Payments of costs 
of winding up out 
of assets.
258. (1) The court may, in the event of the assets being
insufficient to satisfy the liabilities, make an order as to the
payment out of the assets of the costs, charges and expenses
incurred in the dissolution and winding up in such order of priority
as the court thinks fit.
( 2 ) In so doing the court shall have regard to the following
general order of priority - 
( a ) expenses properly chargeable or incurred by the
official receiver  or the liquidator in preserving,
realising or collecting any of the assets of the
company;
( b ) any other expenses incurred or disbursements made by
the  official receiver  or under his authority, including
COMPANIES [ CAP. 386.        137
those incurred or made in carrying on the business of
the company;
( c ) the remuneration of the provisional administrator, if
any; 
( d ) the costs of the applicant, and of any person appearing
on the application whose costs are allowed by the
court;
( e ) the remuneration of the special manager, if any;
( f ) any amount payable to a person employed or
authorised to assist in the preparation of a statement of
affairs or of account; 
( g ) any allowance made by order of the court, towards
costs on an application for release from the obligation
to submit a statement of affairs, or for an extension of
time for submitting such a statement;
( h ) any necessary disbursements by the liquidator in the
course of his administration, including any expenses
incurred by members of the liquidation committee or
their representatives and allowed by the liquidator;
( i ) the remuneration of any person employed by the
liquidator to perform any services for the company, as
required or authorised by the provisions of this Act;
( j ) the remuneration of the liquidator.
Summoning of 
persons suspected 
of having property 
of the company, 
etc.
259.   The court may, at any time after the appointment of a
provisional administrator or the making of a winding up order,
summon before it any officer of the company or person known or
suspected to have in his possession any property of the company or
supposed to be indebted to the company, and any person whom the
court deems capable of giving information concerning the
promotion, formation, trade, dealings, affairs or property of the
company. The court may require any such officer or person to
produce any accounting records and documents in his custody
relating to the company.
Power to order 
examination of 
promoters and 
officers.
Amended by:
XVII. 2002.233.
260. (1) Where a winding up order has been made by the
court, and the  official receiver  has made a report under this Act
stating that in his opinion a fraud has been committed by any
person in the promotion or formation of the company or by an
officer of the company in relation to the company since its
formation, the court may direct that person or officer to attend
before the court on a day appointed by the court for that purpose
and be examined as to the promotion or formation or the conduct of
the business of the company or as to his conduct and dealings as
officer thereof.
( 2 ) The Official Receiver shall take part in the examination,
and for that purpose may be assisted by an advocate.
( 3 ) The liquidator, where the  official receiver  is not the
liquidator, and any creditor or contributory may also take part in
the examination either personally or represented by an advocate.
  138      CAP. 386. ]                   COMPANIES
( 4 ) The court may put such questions to the person referred to
in subarticle (1) as the court thinks fit.
( 5 ) The person shall be examined on oath and shall answer all
such questions as the court may put or allow to be put to him.
( 6 ) A person ordered to be examined under this article shall,
before his examination, be furnished with a copy of the  official
receiver ’s report and may, at his own cost be assisted by an
advocate, who shall be at liberty to put to him such questions as the
court may deem fit for enabling him to explain or qualify any
answers given by him:
Provided that, if any such person applies to the court to be
discharged from any charges made or suggested against him, it
shall be the duty of the  official receiver  to appear on the hearing of
the application and call the attention of the court to any matters
which appear to the  official receiver  to be relevant, and if the court,
after hearing any evidence given or witnesses called by the  official
receiver , grants the application, the court may allow the applicant
such costs as in its discretion it may think fit.
( 7 ) Notes of the examination shall be taken down in writing,
and shall be read over to or by, and signed by, the person examined,
and may thereafter be used in evidence against him, and shall be
open to the inspection of any creditor or contributory at all
reasonable times.
( 8 ) The court may, if it thinks fit, adjourn the examination from
time to time.
( 9 ) An examination under this article may, if the court so
directs, be held before a magistrate, and the powers of the court
may, in any such case, be exercised by the magistrate before whom
the examination is held.
Power to arrest 
absconding 
contributory.
261.   The court, at any time before or after making a winding up
order, on proof of probable cause for believing that a contributory
is about to leave Malta or otherwise to abscond or to remove or
conceal any of his property for the purpose of evading payment of
calls or of avoiding examination respecting the affairs of the
company, may cause the contributory to be precluded from leaving
Malta and his accounting records, documents and movable property
to be seized, and the court may further order the contributory’s
detention and the safekeeping of his accounting records, documents
and movable property until such time as the court thinks fit.
Powers of court 
cumulative.
262.   Any powers conferred by this Act on the court shall be in
addition to any powers exercisable by any person under this Act of
instituting proceedings against any contributory or debtor of the
company or the estate of any contributory or debtor for the
recovery of any call or other sums.
Liquidator may 
exercise certain 
powers of court.
263.   The powers conferred and the duties imposed on the court
by this Act in respect of the following matters - 
( a ) the holding and conduct of meetings to ascertain the
wishes of creditors and contributories;
COMPANIES [ CAP. 386.        139
( b ) the drawing up of lists of contributories and the
rectification of the register of members, if required,
and the collection and application of assets;
( c ) the payment, delivery, conveyance, surrender or
transfer of money, property, accounting records or
documents to the liquidator;
( d ) the making of calls;
( e ) the fixing of a time within which debts and claims
must be proved;
may, subject to the provisions of this article or any other provision
of this Act, be exercised or performed by the liquidator, subject to
the control of the court:
Provided that the liquidator shall not, without the special
leave of the court, rectify the register of members and shall not
make any call without either the special leave of the court or the
sanction of the liquidation committee.
Striking of name of 
the company off 
the register.
Amended by: 
XXIV.1995.362.
264. (1) When the affairs of the company have been
completely wound up and the requirements of article 244 have been
complied with, the court shall make an order that the name of the
company be struck off the register from the date of the order.
( 2 ) A copy of the order shall within fourteen days from the date
thereof be forwarded by the Registrar of Courts to the Registrar
who shall comply therewith.
SUB-TITLE II - VOLUNTARY WINDING UP 
Chapter I - General Provisions
Notice of 
resolution for 
dissolution and 
consequential 
voluntary winding 
up.
Amended by:
IV. 2003.103.
265. (1) When a company has passed a resolution for
dissolution and consequential voluntary winding up, it shall, within
fourteen days after the date of dissolution of the company, deliver a
notice of the resolution to the Registrar for registration.
( 2 ) If default is made by the company in complying with this
article, every liquidator or officer of the company who is in default
shall be liable to a penalty, and, for every day during which the
default continues, to a further penalty.
Date of dissolution 
in a voluntary 
winding up.
Amended by:
IV. 2003.104.
266.   Where a company is dissolved in accordance with the
provisions of article 214(1) ( b ) , the date of dissolution shall be the
date of the passing of the resolution for dissolution and
consequential voluntary winding up or such later date as may be
specified in the said resolution:
Provided that where the Court has ordered that the company
be wound up voluntarily by virtue of the provisions of article
214(3), the company shall be deemed to have been dissolved at the
time of the filing of the winding up application.
  140      CAP. 386. ]                   COMPANIES
Effects of 
voluntary winding 
up.
267. (1) In case of a voluntary winding up, the company shall,
from the date of dissolution, cease to carry on its business except so
far as may be required for the beneficial winding up thereof.
( 2 ) Any transfer of shares, not being a transfer made with the
sanction in writing of the liquidator, and any alteration in the status
of the members of the company, made after, or so as to have effect
after, the date of dissolution, shall be void.
Declaration of 
solvency.
Amended by:
IV. 2003.105.
268. (1) When it is proposed to dissolve and wind up a
company voluntarily, in accordance with article 214(1) ( b ) , the
directors of the company, or in the case of a company having more
than two directors, the majority of the directors, may, at a meeting
of the directors make a declaration to the effect that they have made
a full inquiry into the affairs of the company, and that, having so
done, they have formed the opinion that the company will be able
to pay its debts in full within such period not exceeding twelve
months from the date of dissolution as may be specified in the
declaration.
( 2 ) A declaration made in accordance with subarticle (1) shall
have no effect for the purposes of this Act unless - 
( a ) it is made within the month immediately preceding the
date of the passing of the resolution for dissolution and
consequential voluntary winding up of the company
and is delivered to the Registrar for registration
together with the notice of the said resolution pursuant
to article 265(1); and
( b ) it contains a statement of the company’s assets and
liabilities made up to a date not earlier than the date of
the declaration by more than three months.
( 3 ) When the court has ordered that the company be wound up
voluntarily by virtue of the provisions of  article  214 ( 3 ) , the court
shall, before making the winding up order require the directors of
the company to make the declaration referred to in subarticle (1)
within such time as it may establish and the provisions of subarticle
(1) and of subarticle  ( 2 )( b )  shall apply accordingly.
( 4 ) Any director of a company making a declaration under this
article without having reasonable grounds for the opinion that the
company will be able to pay its debts in full within the period
specified in the declaration, shall be guilty of an offence and liable
on conviction to a fine  ( multa )  of not more than twenty thousand
liri or to imprisonment for a term not exceeding three years or to
both such fine and imprisonment; and if the debts of the company
are not paid or provided for in full within the period stated in the
declaration, it shall be presumed, until the contrary is shown that
the director did not have reasonable grounds for this opinion.
( 5 ) A winding up in relation to which a declaration has been
made and delivered in accordance with this article is in this Act
referred to as "a members’ voluntary winding up", and a winding
up in relation to which a declaration has not been made and
delivered as aforesaid is in this Act referred to as "a creditors’
voluntary winding up".
COMPANIES [ CAP. 386.        141
Chapter II - Provisions applicable to a members’ voluntary 
winding up
Provisions 
applicable to a 
member’s 
voluntary winding 
up.
269.   The provisions contained in articles 270 to 275 shall,
subject to the provisions of article 276, apply in relation to a
members’ voluntary winding up.
Appointment, 
remuneration and 
removal of 
liquidators.
Amended by:
IV. 2003.106.
270. (1) The company shall by extraordinary resolution
appoint a liquidator for the purpose of winding up the affairs and
distributing the assets of the company, and may fix the
remuneration to be paid to him.
( 2 ) Except where a company has appointed a liquidator at the
meeting at which the extraordinary resolution referred to in article
214(1) ( b )  has been passed, the directors shall call a general meeting
of the company, to be held within thirty days after the date of the
dissolution, for the purposes of subarticle (1).
( 3 ) If for any cause whatsoever, a liquidator is not appointed by
the general meeting, any director shall apply to the court for the
appointment of a liquidator and the appointment shall be made by
the court; the application to the court for the appointment of a
liquidator under this subarticle shall be made within fourteen days
from the date for which the general meeting referred to in
subarticle  ( 2 )  was summoned.
( 4 ) If default is made by the directors in complying with the
provisions of subarticles  ( 2 )  and  ( 3 ),  every director who is in
default shall be liable to a penalty, and, for every day during which
the default continues, to a further penalty.
( 5 ) Notwithstanding the preceding subarticles of this article,
where the court has ordered that the company be wound up
voluntarily by virtue of the provisions of  article  214 ( 3 ) , and a
declaration has been made in accordance with article 268, the court
shall in the winding up order, at its sole discretion, either appoint a
liquidator for the purpose of winding up the affairs and distributing
the assets of the company and shall fix the remuneration to be paid
to him; or give the necessary directives for the holding of a general
meeting for the purpose of appointing a liquidator and for the
fixing of the remuneration to be paid to him.
( 6 ) A liquidator appointed in accordance with the provisions of
this article may be removed by extraordinary resolution of the
company; except where he has been appointed by the court in terms
of this article.
Vacancy in office 
of liquidator.
Amended by:
IV. 2003.107.
271. (1) If a vacancy occurs by death, resignation or removal
in the office of liquidator appointed by the company, the company
shall by extraordinary resolution fill the vacancy.
( 2 ) For the purposes of subarticle (1), a general meeting shall
be convened by any member, contributory or, if there were more
than one liquidator, by the continuing liquidator or liquidators and
notice of the meeting shall be given within fourteen days of the
occurrence of the vacancy referred to in subarticle (1).
( 3 ) The general meeting shall be held in the manner provided
  142      CAP. 386. ]                   COMPANIES
by this Act or by the memorandum and articles, or in such manner
as may, on the application of any member, contributory or by the
continuing liquidator, be determined by the court.
( 4 ) If for any cause whatsoever a liquidator is not appointed in
the manner specified by subarticle (1), or if a vacancy occurs in the
office of a liquidator appointed by the Court, any member,
contributory or the continuing liquidator or liquidators may, at any
time thereafter, apply to the court for the appointment of a
liquidator, and the appointment shall be made by the court.
Duty of liquidator 
in case of 
insolvency.
272. (1) If the liquidator is, at any time after a declaration is
made in accordance with article 268, of opinion that the company
will not be able to pay its debts within the period stated in the said
declaration, he shall forthwith summon a meeting of the creditors,
and shall lay before the meeting a statement of the assets and
liabilities of the company and the provisions of article 276 shall
apply.
( 2 ) If the liquidator fails to comply with the provisions of this
article, he shall be liable to a penalty.
Liquidator to hold 
general meeting 
where winding up 
continues for more 
than twelve 
months.
273. (1) Subject to the provisions of article 276, in the event
of the winding up continuing for more than twelve months, the
liquidator shall summon a general meeting of the company at the
end of the first period of twelve months from the commencement of
the winding up, and of each succeeding period of twelve months, or
at the first convenient date within three months from the end of the
period of twelve months, or within a longer term as the Registrar
may allow, and shall lay before the meeting an account of his acts
and dealings and of the conduct of the winding up during the
preceding twelve months, including a summary of receipts and
expenditure.
( 2 ) If the liquidator fails to comply with the provisions of
subarticle (1) he shall be liable to a penalty.
( 3 ) A member or members holding not less than one-tenth of
the paid up share capital having the right to vote at general
meetings of the company may at any time, by request in writing
require the liquidator to convene a general meeting of the company.
Such request shall be signed by such member or members and shall
state the objects of the meeting.
Final meeting.
Amended by:
IV. 2003.108.
274. (1) Subject to the provisions of article 276, as soon as the
affairs of the company are fully wound up, the liquidator shall
make an account of the winding up, showing how the winding up
has been conducted and how the property of the company has been
disposed of and shall draw up a scheme of distribution indicating
the amount due in respect of each share from the assets of the
company, where applicable, and he shall cause the account to be
audited by one or more auditors appointed by ordinary resolution of
the company, or in default by the court. The liquidator shall
thereupon call a general meeting of the company for the purpose of
laying before it the account and scheme of distribution, if any,
together with the auditors’ report, and giving any explanation
COMPANIES [ CAP. 386.        143
thereof.
( 2 ) Within seven days after the meeting, the liquidator shall
send to the Registrar a copy of the account and of the scheme of
distribution, if any, together with the auditors’ report, and shall
make a return to him of the holding of the meeting and of its date,
and if the copy is not sent or the return is not made in accordance
with this subarticle the liquidator shall be liable to a penalty, and,
for every day during which the default continues, to a further
penalty:
Provided that, if a quorum is not present at the meeting, the
liquidator shall, in lieu of the return mentioned in this subarticle,
make a return that the meeting was duly summoned and that no
quorum was present thereat, and upon such a return being made the
provisions of this subarticle as to the making of the return shall be
deemed to have been complied with.
( 3 ) If the liquidator fails to call a general meeting of the
company as required by this article, he shall be liable to a penalty. 
( 4 ) The provisions of article 153 shall apply to an auditor
appointed in terms of subarticle (1), and the words "the previous
three years" in the said article 153 shall be construed as referring to
the previous three years immediately preceding the date of
dissolution. Such auditor shall not be a person who has held the
office of auditor of the company at any time during the previous
three years immediately preceding the date of dissolution.
Striking company’s 
name off the 
register.
Amended by: 
XXIV.1995.362.
275. (1) The Registrar, on receiving the account and the
scheme of distribution, if any, together with the auditors’ report and
either of the returns mentioned in  article  274 ( 2 ) , shall forthwith
register them, and on the expiration of three months from the
publication of the notice referred to in article 401(1) ( e ) , the
Registrar shall strike the name of the company off the register:
Provided that the court may, on the application filed within
the said period of three months by the liquidator or by any other
person who appears to the court to have an interest, make an order
deferring the date at which the name of the company shall be struck
off the register for such time and subject to such conditions as the
court may provide.
( 2 ) When an order by the court is made under the proviso to
subarticle (1), the Registrar of Courts shall forthwith forward a
copy of it to the Registrar for registration and the Registrar shall
defer applying the provisions of subarticle (1) in accordance with
the order given by the court referred to in that subarticle.
Alternative 
provisions in case 
of insolvency.
276.   Where the provisions of article 272 have effect, articles
283 to 285 shall apply to the winding up in lieu of articles 273 to
275, as if the winding up were a creditors’ voluntary winding up
and not a members’ voluntary winding up.
  144      CAP. 386. ]                   COMPANIES
Chapter III - Provisions applicable to a creditors’ voluntary 
winding up
Provisions 
applicable to 
creditors’ 
voluntary winding 
up.
277.   The provisions of articles 278 to 285 shall apply in
relation to a creditors’ voluntary winding up.
Meeting of 
creditors.
278. (1) The directors of the company shall cause a meeting of
the creditors of the company to be summoned for a day not later
than the fourteenth day from the day of the general meeting of the
company at which the resolution for dissolution and consequential
voluntary winding up is passed, and shall cause the notice of the
said meeting of the creditors to be sent by post to the creditors at
least seven days before the date of that meeting.
( 2 ) The directors of the company shall -
( a ) cause a full statement of the position of the company’s
affairs, together with a list of the creditors of the
company and the estimated amount of their claims to
be laid before the meeting of the creditors to be held as
aforesaid; and
( b ) appoint one of their number to preside at the said
meeting.
( 3 ) It shall be the duty of the director appointed to preside at
the meeting of creditors to attend the meeting and preside thereat. 
( 4 ) Where the court has ordered that the company be wound up
voluntarily by virtue of the provisions of  article  214 ( 3 )  and a
declaration in accordance with article 268 has not been made, the
court shall, at its sole discretion, determine whether or not to
appoint a liquidator itself in the winding up order. Where no
liquidator is so appointed the general meeting of the company and
the meeting of the creditors referred to in this article, shall be
summoned within fourteen days from the date of the winding up
order, and notice thereof shall be given by the directors of the
company at least seven days before the date of such meetings; and
the provisions of subarticles  ( 2 )  and  ( 3 )  shall apply.
( 5 ) The directors of the company shall cause the notice of the
meeting of the creditors referred to in this article to be advertised
once in at least one local daily newspaper.
( 6 ) If default is made by the directors, or the director, as the
case may be, in complying with any of the provisions of this article,
every director who is in default shall be liable to a penalty.
Appointment and 
removal of 
liquidator.
Amended by:
IV. 2003.109.
279. (1) The creditors and the company at their respective
meetings mentioned in article 278 may nominate a person to be
liquidator for the purpose of winding up the affairs and distributing
the assets of the company. The nomination of a person as liquidator
by the creditors shall be made by a resolution of the creditors, and
the nomination by the company shall be made by an extraordinary
resolution of the company. If the creditors and the company
nominate different persons, the person nominated by the creditors
shall be liquidator, and if no person is nominated by the creditors
COMPANIES [ CAP. 386.        145
the person, if any, nominated by the company shall be liquidator.
( 2 ) Where no person is nominated to act as liquidator by either
the creditors or the company, an application to the court for the
appointment of a liquidator shall be made by any director of the
company within fourteen days from the date for which the meeting
of the creditors referred to in article 278 was summoned, and the
appointment shall be made by the court.
( 3 ) If default is made by the directors in complying with the
provisions of subarticle  ( 2 ),  every director who is in default shall be
liable to a penalty, and, for every day during which the default
continues, to a further penalty.
( 4 ) A liquidator appointed in accordance with the provisions of
this article may be removed by a resolution of the creditors except
where he has been appointed by the court in terms of article 278 or
of this article.
( 5 ) In this article, a resolution of the creditors shall have the
meaning assigned to it under article 298.
Liquidation 
committee.
Amended by:
IV. 2003.110.
280. (1) The creditors at the meeting to be held in pursuance
of article 278, or at any subsequent meeting may, if they think fit,
by resolution appoint not more than five representatives of the
creditors to a liquidation committee, and if such committee is
appointed, the contributories may by resolution appoint up to five
persons to act as their representatives on the committee:
Provided that the creditors may, if they think fit, resolve
that all or any of the persons so appointed by the company ought
not to be members of the liquidation committee, and, if the
creditors so resolve, the persons mentioned in the resolution shall
not, unless the court otherwise directs, be qualified to act as
members of the committee, and on any application to the court
under the provisions of this subarticle the court may, if it thinks fit,
appoint other persons to act as such members in place of the
persons mentioned in the resolution.
( 2 ) Subject to the provisions of subarticle (1) or as may be
otherwise prescribed, the provisions of article 246, other than
subarticles (1) to  ( 4 )  thereof, shall apply with respect to a
liquidation committee appointed under this article as they apply
with respect to a liquidation committee appointed in a winding up
by the court.
Remuneration of 
liquidator.
281.   The liquidation committee or, if there is no such
committee, the creditors, shall fix the basis of remuneration to be
paid to the liquidator or liquidators.
Vacancy in office 
of liquidator.
Amended by:
IV. 2003.111.
282.   If a vacancy occurs, by death, resignation or removal in
the office of a liquidator who was not appointed by the Court, a
new liquidator shall be appointed in accordance with the provisions
of article 279(1):
Provided that if a liquidator is not appointed in accordance
with the provisions of the said subarticle, any member or creditor
of the company may apply to the court for the appointment of a
  146      CAP. 386. ]                   COMPANIES
liquidator and the appointment shall be made by the court.
Liquidator to hold 
meeting of 
company and 
creditors where 
winding up 
continues for more 
than twelve 
months.
Amended by:
IV. 2003.112.
283. (1) In the event of the winding up continuing for more
than twelve months, the liquidator shall summon a general meeting
of the company and a meeting of the creditors at the end of the first
period of twelve months from the commencement of the winding
up, and of each succeeding period of twelve months, or at the first
convenient date within three months from the end of the period of
twelve months, or within a longer term as the Registrar may allow,
and shall lay before the meetings an account of his acts and
dealings and of the conduct of the winding up during the preceding
twelve months, including a summary of receipts and expenditure.
( 2 ) If the liquidator fails to comply with the provisions of
subarticle (1), he shall be liable to a penalty.
( 3 ) A member or members holding not less than one tenth of
the paid up share capital having the right to vote at general
meetings of the company or a creditor or creditors representing not
less than one tenth in value of the company creditors may, at any
time, by request in writing require the liquidator to convene a
general meeting of the company, or a creditors’ meeting, as the case
may be. Such request shall be signed by such member or members,
or such creditor or creditors, as the case may be, and shall state the
objects of the meeting.
Final meetings. 284. (1) As soon as the affairs of the company are fully wound
up, the liquidator shall make an account of the winding up, showing
how the winding up has been conducted and how the property of
the company has been disposed of, and shall draw up a scheme of
distribution indicating the amount due in respect of each share from
the assets of the company, where applicable, and he shall cause the
account to be audited by one or more auditors appointed by
resolution of the creditors, or in default by the court. The liquidator
shall thereupon call a general meeting of the company and a
meeting of the creditors for the purpose of laying the account and
scheme of distribution, if any, together with the auditors’ report,
before the meetings and giving any explanations thereof.
( 2 ) Within seven days after the date of the meetings or, if the
meetings are not held on the same date, after the date of the later
meeting, the liquidator shall send to the Registrar a copy of the
account and of the scheme of distribution, if any, together with the
auditors’ report, and shall make a return to him of the holding of
the meetings and of their dates; and if the copy is not sent or the
return is not made in accordance with this subarticle the liquidator
shall be liable to a penalty, and, for every day during which the
default continues, to a further penalty:
Provided that, if a quorum is not present at either such
meeting, the liquidator shall, in lieu of the return mentioned in this
subarticle, make a return that the meeting was duly summoned and
that no quorum was present thereat and upon such a return being
made the provisions of this subarticle as to the making of the return
shall, in respect of that meeting, be deemed to have been complied
with.
COMPANIES [ CAP. 386.        147
( 3 ) If the liquidator fails to call a general meeting of the
company or a meeting of the creditors as required by this article, he
shall be liable to a penalty.
( 4 ) The provisions of  article  274 ( 4 )  shall apply to an auditor
appointed in terms of subarticle (1). 
Striking 
company’s name 
off the register.
Amended by: 
XXIV.1995.362.
285. (1) The Registrar shall, on receiving the account and the
scheme of distribution, if any, together with the auditors’ report
and, in respect of each such meeting as is referred to in article 284,
the return or returns as mentioned in that article, forthwith register
them, and on the expiration of three months from the publication of
the notice referred to in article 401(1) ( e ) , the Registrar shall strike
the name of the company off the register:
Provided that the court may, on an application filed within
the said period of three months by the liquidator or by any other
person who appears to the court to have an interest, make an order
deferring the date at which the name of the company shall be struck
off the register for such time and subject to such conditions as the
court may provide.
( 2 ) When an order by the court is made under the proviso to
subarticle (1), the Registrar of Courts shall forthwith forward a
copy of it to the Registrar for registration and the Registrar shall
defer applying the provisions of subarticle (1) in accordance with
the order given by the court referred to in that subarticle.
Chapter IV - Provisions applicable to every voluntary 
winding up
Provisions 
applicable to every 
voluntary winding 
up.
286.   The provisions contained in articles 287 to 294 shall apply
to every voluntary winding up, whether a members’ or a creditors’
voluntary winding up.
Distribution of 
property of 
company.
287.   Subject to the provisions of this Act and of any other law
as to preferential debts or payments, the property of a company
shall, on its winding up, be applied in satisfaction of its liabilities
pari passu , and, subject to such application, shall, unless the
articles otherwise provide, be distributed among the members
according to their rights and interests in the company.
Powers and duties 
of liquidator.
288. (1) The liquidator may - 
( a ) in the case of a members’ voluntary winding up, with
the sanction of an extraordinary resolution of the
company, and, in the case of a creditors’ voluntary
winding up, with the sanction of the court or of the
liquidation committee or, if there is no such
committee, of a meeting of the creditors, exercise any
of the powers given by article 238(1) ( c ) ,  ( d )  and  ( e )  to
a liquidator in a winding up by the court;
( b ) without sanction, exercise any of the other powers
given by this Act to a liquidator in a winding up by the
court;
  148      CAP. 386. ]                   COMPANIES
( c ) exercise the power of the court under this Act of
drawing up a list of contributories, which list shall be
prima facie  evidence of the liability of the persons
named therein to be contributories;
( d ) exercise the power of the court of making calls;
( e ) summon general meetings of the company for the
purpose of obtaining the sanction of the company by
extraordinary resolution or for any other purpose he
may think fit.
( 2 ) The liquidator shall pay the debts of the company and shall
adjust the rights of the contributories among themselves.
( 3 ) More than one person may be appointed to exercise the
function of liquidator of a company. Where more than one
liquidator is appointed, any power given by this Act may be
exercised by one or more of them as may be determined at the time
of their appointment, or in default of such determination, by any
two of them acting jointly.
( 4 ) Subject to the provisions of article 305, the acts of a
liquidator shall be valid notwithstanding any defects that may
afterwards be discovered in his appointment.
Powers of the court 
to remove 
liquidators.
Amended by:
IV. 2003.113.
289.  (1) The court may, on the application of any member,
creditor or contributory, remove a liquidator if it is satisfied that
there exist sufficient grounds to warrant his removal and appoint
another liquidator.
(2) A vacancy resulting from the death or resignation of a
liquidator appointed by the Court may, on the application of any
member, creditor or contributory, be filled by the Court.
(3) The person who applied to the Court in terms of subarticle
(2) shall, in the case of a vacancy resulting from the death of a
liquidator, inform the Registrar of the demise of the liquidator.
Notice by 
liquidator of his 
appointment.
Amended by:
IV. 2003.114.
290. (1) The liquidator shall, within fourteen days after his
appointment, deliver to the Registrar for registration a notice of his
appointment stating his name and residence.
( 2 ) If the liquidator fails to comply with the requirements of
this article he shall be liable to a penalty, and, for every day during
which the default continues, to a further penalty.
When arrangement 
is binding on 
members.
291. (1) Any arrangement entered into between a company in
the course of being wound up, and its creditors shall, subject to the
right of appeal under this article, be binding on the company if
sanctioned by an extraordinary resolution, and on the creditors if
acceded to by two-thirds in value.
( 2 ) Any creditor or contributory may, within fourteen days
from the completion of the arrangement, apply to the court
contesting the arrangement, and the court may thereupon, as it
thinks fit, amend, vary or confirm the arrangement.
COMPANIES [ CAP. 386.        149
Court may 
determine 
questions and 
exercise powers.
Amended by: 
XXIV.1995.362;
IV. 2003.115.
292. (1) The liquidator or any member, contributory or
creditor may apply to the court to determine any question arising in
the course of winding up of a company, or to exercise, as respects
the enforcement of calls or any other matter, all or any of the
powers which the court might exercise if the company were being
wound up by the court.
(2) The liquidator may apply to the Court to fix a time or times
within which creditors are to prove their debts or claims or to be
excluded from the benefit of any distribution made before those
debts are proved.
( 3 ) The court, if satisfied that the determination of the question
or the required exercise of power referred to in subarticles (1) and
(2) will be just and beneficial, may accede wholly or partially to the
application on such terms and conditions as it thinks fit or may
make such other order on the application as it so determines.
( 4 ) A copy of any order made by virtue of this article staying
the proceedings in the winding up shall forthwith be forwarded by
the Registrar of Courts to the Registrar who shall make a minute of
the order in the register relating to the company.
Costs of voluntary 
winding up.
293.   All costs, charges and expenses properly incurred in the
winding up, including the remuneration of the liquidator, shall be
payable out of the assets of the company in priority to all other
claims, and they shall, in so far as applicable, be paid in the order
of priority established under article 258, unless the court otherwise
directs.
Savings for rights 
of creditors and 
contributories.
294.   The voluntary winding up of a company shall not bar the
right of any creditor or contributory to have it wound up by the
court, but in the case of an application by a contributory the court
must be satisfied that the rights of the contributories will be
prejudiced by a voluntary winding up, and the provisions of  article
223 ( 2 )  shall apply.
SUB-TITLE III - PROVISIONS APPLICABLE TO EVERY 
MODE OF WINDING UP
Chapter I - Effect of appointment of liquidator and convening 
of meetings
Powers of directors 
and company 
secretary to cease.
295.   On the appointment of a liquidator, all the powers of the
directors and of the company secretary shall cease, except as may
be otherwise provided in this Title. 
Summoning of 
meetings.
296. (1) The liquidator, including the official receiver while
occupying the office of liquidator, shall summon all meetings of
creditors or contributories by giving not less than fourteen days’
notice thereof in a daily newspaper circulating wholly or mainly in
Malta; and shall, not less than fourteen days before the day
appointed for the meeting, send by post to every person appearing
in the company’s accounting records to be a creditor of the
  150      CAP. 386. ]                   COMPANIES
company, notice of the meeting of creditors, and, to every person
appearing in the company’s accounting records or otherwise to be a
contributory of the company, notice of the meeting of
contributories.
( 2 ) The notice to each creditor shall be sent to the address
given in the creditors’ proof of his debt, or, if he has not proved his
debt, to the address given in the statement of affairs of the
company, if any, or to such other address as may be known to the
person summoning the meeting.
( 3 ) Where there is no continuing liquidator, any member,
creditor or contributory may apply to the court for directions as to
the summoning and holding of a meeting.
( 4 ) The provisions of this article shall not apply to meetings
held under article 278 or article 284.
Proof of notice and 
chairman of 
meeting.
297. (1) A certificate by the  official receiver , or an affidavit by
the liquidator or creditor, or as the case may be by some officer of
the company, that the notice of any meeting has been duly posted,
shall be sufficient evidence of such notice having been duly sent to
the person to whom the same was addressed.
( 2 ) The involuntary omission of any notice required to be given
by article 296 or any other provision of this Title shall not
invalidate the meeting.
( 3 ) Where a meeting is summoned by the  official receiver  or
the liquidator, he or someone nominated by him shall be chairman
of the meeting.
Resolutions of 
creditors and 
contributories.
Amended by:
IV. 2003.116.
298. (1) ( a ) At a meeting of creditors a resolution shall be
deemed to be passed when a majority in value of the
creditors present personally or by proxy and voting on
the resolution have voted in favour of the resolution.
( b ) At a meeting of contributories a resolution shall be
deemed to be passed when three-fourths in value of the
contributories present in person or by proxy and voting
on the resolution, or a majority in value of all the
contributories, have voted in favour of the resolution.
The value of the contributories shall be determined
according to the number of votes conferred on each
contributory by the memorandum or articles of the
company or, if the memorandum and articles are silent,
according to the value of their respective liabilities to
contribute.
( 2 ) The provisions of this Act and of the memorandum or
articles of the company with respect to proxies at general meetings
of the company shall apply to proxies at meetings of creditors and
contributories, with such modifications and adaptations as may be
required.
( 3 ) A copy of every resolution of a meeting of creditors or
contributories in a winding up by the court shall be certified by the
official receiver  or the liquidator, as the case may be, and filed in
COMPANIES [ CAP. 386.        151
the Registry of the Superior Courts.
( 4 ) Where a resolution is passed at an adjourned meeting of any
creditors or contributories of a company, the resolution shall, for all
purposes, be treated as having been passed on the date on which it
was in fact passed, and shall not be deemed to have been passed at
any earlier date.
Other proceedings 
at meetings.
299. (1) A meeting of creditors or contributories may act
provided there is a quorum present consisting of:
( a ) in the case of a creditors’ meeting, at least three
creditors or all the creditors where these number less
than three; and
( b ) in the case of a meeting of contributories, at least three
contributories, or all the contributories where these
number less than three.
( 2 ) If within half an hour from the time appointed for the
meeting, a quorum of creditors or contributories, as the case may
be, is not present or represented, the meeting shall be adjourned to
the same day in the following week at the same time and place or to
such other day or time or place as the chairman may appoint, but so
that the day appointed shall be not less than seven and not more
than twenty-one days from the day from which the meeting was
adjourned, and at such adjourned meeting the number present or
represented shall form a quorum and may act for any purpose.
( 3 ) The chairman may, with the consent of the meeting, adjourn
it from time to time and from place to place, but the adjourned
meeting shall be held at the same place as the original meeting
unless in the resolution for adjournment another place is specified
or unless the court otherwise orders.
( 4 ) The chairman shall cause minutes of the proceedings of
meetings to be drawn up and properly entered in a book kept for
that purpose and the minutes shall be signed by him.
( 5 ) A list of creditors and contributories present at every
meeting shall be made and kept in such form as the chairman may
deem appropriate or as may be prescribed.
Notice of 
resignation or 
removal of 
liquidator.
Amended by: 
XXIV.1995.362.
300. (1) Upon the resignation of a liquidator from his office,
he shall deliver to the Registrar for registration a notice of his
resignation and the resignation shall only become effective on such
registration.
( 2 ) Where a liquidator is removed from office by the court in
accordance with the provisions of this Title, the Registrar of Courts
shall forthwith deliver a notice of such removal to the Registrar for
registration.
( 3 ) Where a liquidator has been removed by an extraordinary
resolution of the company in a members’ voluntary winding up, a
notice thereof shall be delivered to the Registrar for registration by
any member of the company who has duly been authorised by the
same resolution or by the company in general meeting.
  152      CAP. 386. ]                   COMPANIES
( 4 ) Where a liquidator has been removed by a resolution of the
creditors in terms of article 298, in a creditors’ voluntary winding
up, a notice thereof shall be delivered to the Registrar for
registration by any creditor of the company who has been duly
authorised by the same resolution or by the creditors’ meeting.
Rectification of 
scheme of 
distribution.
Added by:
IV. 2003.117.
300A.  (1) Where in the course of the winding up of a company
the liquidator has not taken into account any asset of the company,
and the name of the company has been struck off the register, any
interested person may, by an application, request the Court to order
the rectification of the scheme of distribution, and the Court may,
where it considers it appropriate, order such rectification under
those terms and conditions it may deem fit.
(2) Where a company has made a distribution to its
shareholders pursuant to a scheme of distribution and the name of
such company has been struck off the register, any creditor whose
claim against the company has not been satisfied may, by an
application, claim what is due to him from the shareholders of the
company  pro rata  to the amount received by the shareholders upon
the distribution, and the Court may, where it considers it
appropriate, order that payments be made by the shareholders to
such creditor under those terms and conditions it may deem fit:
Provided that in no case shall a shareholder be required to
contribute an amount exceeding that received by him upon
distribution.
(3) No application may be made under this article after the
expiration of five years from the date on which the name of the
company has been struck off the register.
Restoration of 
company name on 
register.
Added by:
IV. 2003.117.
300B.  (1) Where a company has been struck off the register, any
interested person may, by an application, request the Court to order
that the name of the company be restored to the register and the
winding up be reopened.
(2) Where, on an application made in terms of subarticle (1),
the Court is satisfied that the winding up and striking off of the
company has been vitiated by fraud or illegality of a material
nature, the Court may order that the name of the company be
restored to the register and the winding up be reopened for such
purposes and such period as the Court shall specify in its decision,
and the Court shall give such directives and impose such conditions
as it may consider appropriate.
(3) The Court shall only accede to the application where it is
satisfied that this is the only remedy available.
(4) In its decision the Court shall also determine whether its
orders and directives shall be effective in favour of all persons or
shall apply limitedly to specified persons indicated in the decision.
(5) No application may be made under this article after the
expiration of five years from the date on which the name of the
company has been struck off the register.
COMPANIES [ CAP. 386.        153
Chapter II - Proof and ranking of claims
Debts of all 
descriptions may 
be proved.
301.   In every winding up of a company the assets of which are
sufficient to meet the liabilities, all debts payable on a contingency,
and all claims against the company, present or future, certain or
contingent, ascertained or which may be due in damages, shall be
admissible as proof against the company, a just estimate being
made, so far as possible, of the value of such debts or claims as
may be subject to any contingency or which are due in damages but
not ascertained, or which for some other reason do not bear a
certain value.
Application of 
rules on ranking.
302.   In the winding up of a company the assets of which are
insufficient to meet the liabilities, the rights of secured and
unsecured creditors and the priority and ranking of their debts shall
be regulated by the law for the time being in force.
Chapter III - Effects of winding up on antecedent transactions 
Fraudulent 
preference.
Substituted by:
IV. 2003.118.
303.   (1) Every privilege, hypothec or other charge, or transfer
or other disposal of property or rights, and any payment, execution
or other act relating to property or rights made or done by or
against a company, and any obligation incurred by the company
within six months before the dissolution of the company shall be
deemed to be a fraudulent preference against its creditors whether
it is of a gratuitous nature or an onerous nature if it constitutes a
transaction at an undervalue or if a preference is given, unless the
person in whose favour it is made, done or incurred, proves that he
did not know and did not have reason to believe that the company
was likely to be dissolved by reason of insolvency, and in the event
of the company being so dissolved every such fraudulent
preference shall be void.
(2) For the purposes of this article -
( a ) a company enters into a transaction at an undervalue
if:
(i) the company makes a gift or otherwise enters
into a transaction on terms that provide for the
company to receive no consideration, or
(ii) the company enters into a transaction for a
consideration the value of which, in money or
money’s worth, is significantly less than the
value in money or money’s worth of the
consideration provided by the company;
( b ) a company gives a preference to a person if:
(i) that person is one of the company’s creditors or
a surety or guarantor for any of the company’s
debts or other liabilities; and
(ii) the company does anything or suffers anything
to be done which, in either case, has the effect of
putting that person into a position which, in the
  154      CAP. 386. ]                   COMPANIES
event of the company going into insolvent
winding up, will be better than the position he
would have been had that act or omission not
occurred.
Liabilities and 
rights with respect 
to fraudulent 
preferences.
304. (1) Where anything made or done after the appointed day
is void under article 303 as a fraudulent preference of a person
interested in property privileged, hypothecated or otherwise
charged to secure the company’s debt, then, without prejudice to
any rights or liabilities arising apart from the provisions of this
article, the person preferred shall be subject to the same liabilities
and shall have the same rights as if he had undertaken to be
personally liable as surety for the debt to the extent of the charge
on the property or the value of his interest, whichever is the less.
( 2 ) The value of the preferred person’s interest shall be
determined as at the date of the transaction constituting the
fraudulent preference, and shall be determined as if the interest
were free of all encumbrances or burdens other than those to which
the charge for the company’s debt referred to in subarticle (1) was
then subject.
( 3 ) On any application made to the court with respect to any
payment on the ground that the payment was a fraudulent
preference of a surety or guarantor, the court may determine any
questions with respect to the payment arising between the person to
whom the payment was made and the surety or guarantor and to
grant relief in respect thereto.
( 4 ) The provisions of subarticle  ( 3 )  shall apply, with the
necessary modifications, in relation to transactions other than
payments of money, as they apply in relation to such payments.
Chapter IV - Qualification of Liquidators and Prohibition of 
Certain Transfers by Liquidators
Qualification of 
liquidators.
Amended by:
IV. 2003.119.
305. (1) A person shall not be qualified to act as liquidator
unless he is an advocate or is an individual who is a certified public
accountant or certified public accountant and auditor, or is
registered with the Registrar as fit and proper to exercise the
function of liquidator.
( 2 ) A person who is qualified to act as liquidator in virtue of
subarticle (1), may not act as liquidator if he has held the office of
director or company secretary or has held any other appointment
with or in connection with that company, at any time during the
four years prior to the date of dissolution of the company as
determined in accordance with the provisions of this Act.
For the purposes of this subarticle, director includes a
person in accordance with whose directions or instructions the
directors of the company are or have been accustomed to act.
Prohibition of 
certain transfers by 
liquidators.
306. (1) A liquidator shall be prohibited from transferring or
disposing of any assets of a company, directly or indirectly, in
COMPANIES [ CAP. 386.        155
favour of - 
( a ) the liquidator himself, his partners or employees, or to
the spouse of the liquidator, or to any other person
related to him by consanguinity or affinity in the direct
line, or, up to the third degree, in the collateral line; or
( b ) a commercial partnership, other than a company, of
which he is a partner; or
( c ) a company of which he is a director, or of which he
holds more than half in nominal value of its issued
share capital, or in which he is entitled to more than
half its voting power, or to a subsidiary or parent
company thereof.
( 2 ) A person who acts in contravention of any of the provisions
of subarticle (1) or of article 305 shall be guilty of an offence and
liable on conviction to a fine  ( multa )  of not more than five thousand
liri.
Chapter V - Offences antecedent to dissolution or in course of 
winding up
Fraud in 
anticipation of 
dissolution.
307. (1) When a company has been dissolved in accordance
with the provisions of article 214, any person, being a past or
present officer of the company, shall be guilty of an offence if,
within the twelve months immediately preceding the deemed date
of dissolution, he has -
( a ) concealed any part of the company’s property, or
concealed any debt due to or from the company; or
( b ) fraudulently removed any part of the company’s
property; or
( c ) concealed, destroyed, mutilated or falsified any book
or paper affecting or relating to the company’s
property or affairs; or
( d ) made any false entry in any book or paper affecting or
relating to the company’s property or affairs; or
( e ) fraudulently parted with, or altered any document
affecting or relating to the company’s property or
affairs; or
( f ) pledged or disposed of any property of the company
which has been obtained on credit and has not been
paid for, unless the pledging or disposal was in the
ordinary course of the company’s business; or
( g ) by any false representation or other fraud, obtained
property for or on behalf of the company on credit
which the company does not subsequently pay for; or
( h ) exercised any false representation or fraud for the
purpose of obtaining the consent of the creditors of the
company or of any of them to an agreement with
  156      CAP. 386. ]                   COMPANIES
reference to the affairs of the company or to its
dissolution.
( 2 ) Such person shall be guilty of an offence if within the
period mentioned in subarticle (1) he has been a party to the doing
by others of any of the things mentioned in paragraphs  ( c ) ,  ( d )   and
( e )  thereof, and he shall be guilty of an offence if, at any time after
the deemed date of dissolution, he does any of the things mentioned
in paragraphs  ( a )   to   ( h )  of the said subarticle, or is party to the
doing by others of any of the things mentioned in paragraphs  ( c )   to
( e )   of that subarticle.
( 3 ) It shall be a defence for a person charged to prove that he
had no intent to defraud or to conceal the affairs of the company or
to defeat the law.
( 4 ) Where a person pledges or otherwise disposes of any
property in circumstances which amount to an offence under
subarticle (1) ( f ) , every person who receives the property on pledge
or otherwise receives the property knowing it to be pledged or
disposed of in such circumstances, shall be guilty of an offence.
( 5 ) For the purposes of this article, the expression "officer"
shall include any person in accordance with whose directions or
instructions the directors of a company have been accustomed to
act.
( 6 ) A person guilty of an offence under this article shall be
liable on conviction to a fine  ( multa )  of not more than one hundred
thousand liri or to imprisonment for a term not exceeding five years
or to both such fine and imprisonment.
Fraud by officers 
of companies being 
wound up.
308. (1) When a company is being wound up by the court or
voluntarily, a person shall be guilty of an offence if, being an
officer of the company, he - 
( a ) has made or caused to be made any gift or transfer of,
or charge on, or has caused or connived at the
enforcement of any executive title against, the
property of the company; or
( b ) has concealed or removed any part of the property of
the company since, or within two months before, the
date of any unsatisfied judgment or order for payment
of money against the company.
( 2 ) A person shall not be guilty of an offence under subarticle
(1) if he proves that, at the time of the conduct constituting the
offence, he had no intent to defraud the company’s creditors.
( 3 ) A person guilty of an offence under this article shall be
liable on conviction to a fine  ( multa )  of not more than one hundred
thousand liri or imprisonment for a term not exceeding five years or
to both such fine and imprisonment.
( 4 ) For the purposes of this article, the expression "officer"
shall include any person in accordance with whose directions or
instructions the directors of a company have been accustomed to
act.
COMPANIES [ CAP. 386.        157
Other offences by 
officers of 
companies being 
wound up.
309. (1) If any person, being a past or present officer of a
company - 
( a ) does not to the best of his knowledge and belief fully
and truly reveal to the liquidator all the property,
movable and immovable, corporeal or incorporeal, of
the company, and how and to whom and for what
consideration and when the company disposed of any
part thereof, except such part as has been disposed of
in the ordinary course of the business of the company;
or
( b ) does not deliver up to the liquidator, or as the
liquidator directs, all or such part of the property of the
company as is in his custody or under his control, and
which he is required by law to deliver up; or
( c ) does not deliver up to the liquidator, or as the
liquidator directs, all accounts, accounting records and
documents in his custody or under his control
belonging to the company and which he is required by
law to deliver up; or
( d ) makes any material omission in any statement relating
to the affairs of the company; or
( e ) knowing or believing that a false debt has been proved
by any person in the winding up, fails for the period of
one month to inform the liquidator thereof; or
( f ) after the dissolution of the company prevents the
production of any book or paper affecting or relating
to the property or affairs of the company; or
( g ) after the dissolution of the company or at any meeting
of the creditors of the company within twelve months
immediately preceding the dissolution of the company
attempts to account for any part of the property of the
company by fictitious losses or expenses,
he shall be guilty of an offence and shall be liable on conviction to
a fine  ( multa )  of not more than one hundred thousand liri or to
imprisonment for a term not exceeding five years or to both such
fine and imprisonment if, at the time of the commission of the
alleged offence, the company is being wound up, whether by the
court or voluntarily, or if, subsequent to the commission of the
alleged offence, the company is dissolved in accordance with the
provisions of article 214.
( 2 ) For the purposes of this article, the expression "officer"
shall include any person in accordance with whose directions or
instructions the directors of a company have been accustomed to
act.
Defence to a 
charge under 
article 309.
310.   It shall be a good defence to a charge under any of
paragraphs  ( a ) ,  ( b ) ,  ( c )   and  ( d )  of article 309(1), if the accused
proves that he had no intent to defraud; and to a charge under
paragraph  ( f )  of the said article, if he proves that he had no intent to
conceal the state of affairs of the company or to defeat the law.
  158      CAP. 386. ]                   COMPANIES
Fraud by 
contributory.
311.   If any contributory of any company being wound up
destroys, mutilates, alters or falsifies any accounts, accounting
records, documents, books or securities, or makes or is party to the
making of any false or fraudulent entry in any register, accounting
record or document belonging to the company with intent to
defraud or deceive any person, he shall be guilty of an offence and
shall be liable on conviction to a fine  ( multa )  of not more than one
hundred thousand liri or to imprisonment for a term not exceeding
five years or to both such fine and imprisonment.
Remedy against 
delinquent 
directors, 
liquidators, etc.
312. (1) The provisions of this article shall apply if in the
course of the winding up of a company, whether by the court or
voluntarily, it appears that a person who - 
( a ) is or has been an officer of the company; 
( b ) has acted as liquidator of the company; or
( c ) not being a person falling within paragraphs  ( a )   and
( b ),  is or has been concerned, or has taken part in the
promotion, formation or management of the company,
has misapplied or retained or become accountable for, any money
or other property of the company, or been guilty of any improper
performance or breach of duty in relation to the company.
( 2 ) The court may, on the application of the  official receiver  or
the liquidator, or of any creditor or contributory, examine the
conduct of any person referred to in subarticle (1) and may compel
him - 
( a ) to repay, restore or account for the money or property
or any part of it, with interest at such rate as the court
thinks fit; or 
( b ) to contribute such sum to the company’s assets by way
of compensation in respect of the improper
performance or breach of duty as the court thinks fit.
Fraud by officers 
of companies 
subsequently 
dissolved.
313. (1) If any person, being at the time of the commission of
the alleged offence, an officer of a company which is subsequently
dissolved in accordance with the provisions of article 214, has - 
( a ) by false pretences or by means of any other fraud
induced any person to give credit to the company; or
( b ) with intent to defraud creditors of the company, made
or caused to be made any gift or transfer of or charge
on, or has caused or connived at the enforcement of
any executive title against, the property of the
company; or
( c ) with intent to defraud creditors of the company,
concealed or removed any part of the property of the
company since, or within two months before, the date
of any unsatisfied judgment or order for payment of
money obtained against the company,
he shall be guilty of an offence and shall be liable on conviction to
a fine  ( multa )  of not more than one hundred thousand liri or
imprisonment for a term not exceeding five years or to both such
COMPANIES [ CAP. 386.        159
fine and imprisonment.
( 2 ) A person shall not be guilty of an offence under subarticle
(1) by reason of conduct constituting an offence under paragraph
( b )  of the said subarticle which occurred more than five years
before the date of deemed dissolution.
Liability when 
proper accounting 
records are not 
kept by insolvent 
company.
314.   If, where a company is dissolved, it is shown that proper
accounting records were not kept by the company throughout the
period of two years immediately preceding the dissolution or the
period between the registration of the company and the dissolution,
whichever is the shorter, and it is furthermore shown that the
company was, at the moment of its dissolution, unable to pay its
debts, every officer of the company who is in default shall, unless
he shows that he acted diligently and that in the circumstances in
which the business of the company was carried on the default was
excusable, be guilty of an offence and liable on conviction to a fine
( multa )  of not more than twenty thousand liri, or imprisonment for
a term not exceeding three years, or to both such fine and
imprisonment.
Responsibility for 
fraudulent trading.
315. (1) If in the course of the winding up of a company,
whether by the court or voluntarily, it appears that any business of
the company has been carried on with intent to defraud creditors of
the company or creditors of any other person or for any fraudulent
purpose, the court on the application of the  official receiver , or the
liquidator or any creditor or contributory of the company, may, if it
thinks proper so to do, declare that any persons who were
knowingly parties to the carrying on of the business in the manner
aforesaid be personally responsible, without any limitation of
liability for all or any of the debts or other liabilities of the
company as the court may direct.
( 2 ) Where the business of a company is carried on with such
intent or for such purposes as is mentioned in subarticle (1), every
person who was knowingly a party in the carrying on of the
business in the manner aforesaid, shall be guilty of an offence and
liable on conviction to a fine  ( multa )  of not more than one hundred
thousand liri or imprisonment for a term not exceeding five years,
or to both such fine and imprisonment.
Wrongful trading.
company has been dissolved and is insolvent and it appears that a
person who was a director of the company knew, or ought to have
known prior to the dissolution of the company that there was no
reasonable prospect that the company would avoid being dissolved
due to its insolvency.
( 2 ) The court, on the application of the liquidator of a company
to which this article applies, may declare the person who was a
director referred to in subarticle (1) liable to make a payment
towards the company’s assets as the court thinks fit.
( 3 ) The court shall not grant an application under this article if
it is satisfied that the person who was a director knew that there
was no reasonable prospect that the company would avoid being
dissolved due to its insolvency and accordingly took every step he
  160      CAP. 386. ]                   COMPANIES
ought to have taken with a view to minimising the potential loss to
the company’s creditors.
( 4 ) For the purposes of subarticles  ( 2 )  and  ( 3 ),  the facts which a
director of a company ought to know or ascertain, the conclusions
which he ought to reach and the steps which he ought to take, are
those which would be known or ascertained, or reached or taken, by
a reasonably diligent person having both - 
( a ) the knowledge, skill and experience that may
reasonably be expected of a person carrying out the
same functions as are carried out by or entrusted to
that director in relation to the company; and
( b ) the knowledge, skill and experience that the director
has. 
( 5 ) For the purposes of this article, "director" includes a person
in accordance with whose directions or instructions the directors of
the company are accustomed to act.
Restriction on 
reuse of company 
names.
317. (1) The provisions of this article shall apply to a person
who, on or after the appointed day, was a director of a company
( "the company being wound up" )  at any time in the twelve months
preceding its dissolution and the company is insolvent upon such
dissolution.
( 2 ) Except with leave of the court, or in such circumstances as
may be prescribed, any person referred to in subarticle (1) shall not
at any time during the winding up of the company and up to two
years from the date when its name is struck off the register - 
( a ) be a director of a company that is known by a name
which is prohibited by virtue of the provisions of
subarticle  (3):  or
( b ) in any way, whether directly or indirectly, be
concerned or take part in the promotion, formation or
management of any such company; or
( c ) in any way, whether directly or indirectly, be
concerned or take part in the carrying on of a business
carried on under such a prohibited name.
( 3 ) For the purposes of subarticle  ( 2 ),  a name is a prohibited
name in relation to any person referred to in subarticle (1) if -
( a ) it is a name by which the company being wound up
was known at any time in that period of twelve
months; or
( b ) it is a name which is so similar to a name falling
within paragraph  ( a )  as to suggest an association with
that company.
( 4 ) A person who acts in contravention of the provisions of this
article shall be guilty of an offence and liable on conviction to a
fine  ( multa )  of not more than five thousand liri. Such person shall
also be personally responsible for the debts of any company
referred to in subarticle  ( 2 )( a )   and   ( b )  which are incurred while he
acts in relation to the company in the manner described in those
COMPANIES [ CAP. 386.        161
paragraphs.
( 5 ) For the purposes of this article, "director" includes a person
in accordance with whose directions or instructions the directors of
the company are accustomed to act.
Reference by court 
for prosecution of 
delinquent officers, 
etc.
Amended by: 
XXIV.1995.362.
318.   If it appears to the court in the course of a winding up by
the court that any past or present officers, or any member of the
company, or any other person, has been guilty of any offence in
relation to the company which is an offence under this Act or for
which he is otherwise criminally liable, the court shall, either on
the application of any person interested in the winding up or of its
own motion, refer the matter to the Commissioner of Police
through the Registrar of Courts.
Report by 
liquidator for 
prosecution of 
delinquent officers, 
etc.
319.   If it appears to the liquidator in the course of a voluntary
winding up that any past or present officer, or any member, of the
company has been guilty of an offence in relation to the company
which is an offence under this Act or for which he is otherwise
criminally liable, he shall forthwith report the matter to the
Commissioner of Police.
Disqualification 
orders.
Amended by: 
XXIV.1995.362.
320. (1) The court, upon the application of the Attorney
General or the Registrar, may make a disqualification order against
any person who is found guilty of an offence under this Act, other
than an offence punishable only with a fine, or who has infringed
any requirement of this Act with the consequence that the person
becomes liable to contribute to the assets of a company or becomes
personally liable for the debts of the company.
( 2 ) The court, upon the application of the Attorney General or
the Registrar, may also make a disqualification order against any
person if it is satisfied - 
( a ) that such person is or has been a director of a company
which at any time has become insolvent, whether
while he was a director or subsequently; and
( b ) that his conduct as a director of that company, either
taken alone or taken together with his conduct as a
director of any other company or companies, makes
him unfit to be involved in the management of a
company.
( 3 ) A disqualification order made under this article may be for
a minimum period of one year and a maximum period of fifteen
years.
( 4 ) For the purposes of this article, a disqualification order is
an order whereby a person shall not, without leave of the court, be - 
( a ) a director or company secretary of a company; or
( b ) a liquidator or provisional administrator of a company;
or
( c ) a special manager of the estate or business of a
company; or
( d ) concerned in any way, whether directly or indirectly,
or take part in the promotion, formation or
  162      CAP. 386. ]                   COMPANIES
management of a company, 
for a specified period beginning with the date of the order.
( 5 ) A notice of a disqualification order made under this article
shall - 
( a ) be delivered by the Registrar of Courts to the Registrar
for registration;
( b ) be furthermore recorded in a register to be kept for this
purpose by the Registrar and which shall be open for
public inspection.
( 6 ) Any person who, while being subject to a disqualification
order, acts in contravention thereof, shall be guilty of an offence
and liable on conviction to a fine  ( multa )  of not more than twenty
thousand liri or imprisonment for a term not exceeding three years
or to both such fine and imprisonment.
Other remedies. 321.   The provisions of this Chapter shall be without prejudice
to any other offences or remedies which may exist under any other
law.
Chapter VI - Supplementary Provisions
Statement by 
liquidator in 
respect of pending 
winding up.
Amended by:
IV. 2003.120.
322. (1) If, where a company is being wound up, whether by
the court or voluntarily, the winding up is not concluded within
twelve months after the dissolution of the company, the liquidator,
not being the  official receiver , shall, within thirty days from the
expiry of the said period of twelve months, and subsequently at
intervals of six months, until the winding up is concluded, send to
the Registrar for registration a statement with respect to the
proceedings in and position of the winding up commencing on the
date when the liquidator was first appointed and drawn to the end
of the period in respect of which the statement is due, and made in
such form and containing such particulars as may be prescribed. In
a winding up by the court, where the assets of the company have
been fully realised and distributed before the expiration of a six-
monthly interval, a final statement shall be sent to the Registrar for
registration.
( 2 ) If a liquidator fails to comply with the provisions of this
article, he shall be liable to a penalty and, for every day during
which the default continues, to a further penalty.
Supplementary 
powers of the 
court.
323. (1) The court may, with respect to all matters relating to
the dissolution and winding up of a company, have regard to the
wishes of the creditors or contributories of the company, as proved
to it by any sufficient evidence, and may, if it thinks fit, for the
purpose of ascertaining those wishes direct that meetings of the
creditors or contributories be called, held and conducted in such
manner as the court considers appropriate and may appoint a person
to act as chairman of any such meeting and to report the result
thereof to the court.
COMPANIES [ CAP. 386.        163
( 2 ) In the case of creditors, regard shall be had to the value of
each creditors’ debt; and in the case of contributories, regard shall
be had to the number of votes conferred on each contributory by the
memorandum or articles of the company or, if the memorandum
and articles are silent, to the value of their respective liabilities to
contribute.
Publication of 
striking off and 
disposal of 
accounting records 
of company.
324. (1) Where the name of a company is struck off the
register, the Registrar shall forthwith proceed to publish a notice
thereof in the Gazette.
( 2 ) The liquidator shall keep the accounts, accounting records
and documents of the company for a period of ten years from the
date of publication of the striking of the company’s name off the
register.
( 3 ) If the liquidator fails to comply with subarticle  ( 2 )  he shall
be liable to a penalty.
Defunct 
companies.
Substituted by:
IV. 2003.121.
325. (1) Where the Registrar has reasonable cause to believe
that a company is not carrying on business or is not in operation, he
may send to the company by post a letter inquiring whether the
company is carrying on business or is in operation.
(2) If the Registrar receives an answer to the effect that the
company is not carrying on business or is not in operation, or does
not within one month of sending the letter receive an answer
thereto, he may send to the company by post and publish a notice in
the Gazette and in a daily newspaper circulating wholly or mainly
in Malta that, at the expiration of three months from the date of the
last publication of the said notice, the company’s name shall, unless
cause is previously shown to the contrary or the Registrar is
satisfied that there are sufficient grounds not to proceed with the
striking off, be struck off the register; and the assets of the
company shall devolve upon the Government of Malta.
(3) If, in any case where a company is being wound up
voluntarily, the Registrar has reasonable cause to believe either that
no liquidator is acting or that the affairs of the company are fully
wound up, and the returns required to be made by the liquidator in
terms of article 322 are overdue by six months or more, the
Registrar may publish in the Gazette and in a daily newspaper
circulating wholly or mainly in Malta, a notice that at the
expiration of three months from the date of the last publication of
the said notice, the winding up of the company shall, unless cause
is previously shown to the contrary, be deemed to be concluded and
consequently that the company’s name be struck off the register.
The Registrar shall also cause a copy of the said notice to be sent
by post to the company and to the liquidator, if any. At the
expiration of the aforesaid period of three months the winding up of
the company shall, unless cause is previously shown to the
contrary, be deemed to be concluded and the Registrar shall strike
the name of the company off the register and the company’s assets
shall devolve upon the Government of Malta.
(4) If any member or creditor of the company, or any other
person who appears to the Court to have an interest feels aggrieved
  164      CAP. 386. ]                   COMPANIES
by the fact that the name of the company has been struck off the
register by virtue of this article, the Court on an application made
by the member or creditor or such other person before the
expiration of five years from the publication of the notice of the
striking off provided for in subarticles (2) and (3) may, if satisfied
that it is proper that the name of the company be restored to the
register, order that such name be restored to the register, and upon
an official copy of the order being delivered by the Registrar of the
Courts to the Registrar for registration, the company shall be
deemed to have continued in existence as if its name had not been
struck off; and the Court may by its order give such directions and
make such provisions as seem fit for placing the company and all
other persons in the same position as nearly as may be as if the
name of the company had not been struck off. The Registrar shall
forthwith proceed to publish a notice in the Gazette and in a daily
newspaper circulating wholly or mainly in Malta that the name of
the company has been restored to the register.
(5) A notice to be sent under this article to a liquidator may be
addressed to the liquidator at his last known place of business or
address, and a letter or notice to be sent under this article to a
company may be addressed to the company at its registered office.
(6) Notwithstanding that the name of the company has been
struck off the register in terms of the preceding provisions of this
article, the liability, if any, of every director or other officer of the
company and of every member of the company shall continue and
may be enforced as if the name of the company had not been struck
off the register.
(7) Notwithstanding the provisions of article 429(1), the
provisions of this article shall apply to companies whose
dissolution and consequential winding up is regulated by the
Ordinance.
Relationship with 
enactments on 
bankruptcy.
Cap. 13.
326. (1) Part III of the Commercial Code relating to
bankruptcy shall not apply to a company.
( 2 ) References in other laws other than Part III of the
Commercial Code to a bankrupt shall, when the context requires, be
interpreted as including references to a company being wound up in
circumstances of insolvency under the provisions of this Title, and
references to bankrupt shall be construed accordingly.
PART VI - COMPANY RECONSTRUCTIONS
Power of company 
to compromise 
with creditors and 
members.
Amended by:
IV. 2003.122.
327. (1) Where a compromise or arrangement is proposed
between a company and its creditors, or any class of them, or
between the company and its members, or any class of them, the
court may on the application of the company or any creditor or
member of it or, in the case of a company being wound up, the
liquidator, order a meeting of the creditors or class of creditors, or
of the members of the company or class of members, as the case
COMPANIES [ CAP. 386.        165
may be, to be summoned in such manner as the court directs.
( 2 ) If a majority in number representing three-fourths in value
of the creditors or class of creditors or members or class of
members, as the case may be, present and voting either in person or
by proxy at the meeting, agree to any compromise or arrangement,
the compromise or arrangement, if sanctioned by the court, shall be
binding on all creditors or the class of creditors or on the members
or class of members, as the case may be, and also on the company
or, in the case of a company in the course of being wound up, on
the liquidator and contributories of the company.
( 3 ) The court’s order under subarticle  ( 2 )  shall have no effect
until a copy of it has been delivered to the Registrar for registration
in accordance with  article  329 ( 5 ) ; and a copy of every such order
shall be annexed to every copy of the company’s memorandum
issued after the order has been made.
( 4 ) If a company makes default in complying with subarticle
( 3 ),  the company and every officer thereof who is in default shall be
liable to a penalty.
( 5 ) For the purposes of this article and article 328 - 
( a ) "company" means any company which is unable to pay
its debts in terms of  article  214(5) or in those
circumstances where the court is of the opinion that
there are grounds of sufficient gravity that would have
otherwise warranted the dissolution and consequent
winding up of the company in terms of  article
214 ( 2 )( b )(iii) ; and
( b ) "arrangement" includes a reorganisation of the
company’s share capital by the consolidation of shares
of different classes or by the division of shares into
shares of different classes, or by both of those
methods.
Information as to 
compromise to be 
circulated.
328. (1) The provisions of this article shall apply where a
meeting of creditors or any class of creditors, or of members or any
class of members, is summoned under article 327.
( 2 ) With every notice summoning the meeting which is sent to
a creditor or member there shall be sent also a statement explaining
the effect of the compromise or arrangement and in particular
stating any material interests of the directors of the company,
whether as directors or as members or as creditors of the company
or otherwise, and the effect on those interests of the compromise or
arrangement, in so far as it is different from the effect on the like
interests of other persons.
( 3 ) In every notice summoning the meeting which is given by
advertisement there shall be included either such a statement as
abovementioned or a notification of the place at which, and the
manner in which, creditors or members entitled to attend the
meeting may obtain copies of the statement.
( 4 ) Where the compromise or arrangement affects the rights of
debenture holders of the company, the statement shall give the like
  166      CAP. 386. ]                   COMPANIES
explanation as regards the holders of any security for the issue of
the debentures as it is required to give as regards the company’s
directors.
( 5 ) Where a notice given by advertisement includes a
notification that copies of a statement explaining the effect of the
compromise or arrangement proposed can be obtained by creditors
or members entitled to attend the meeting, every such creditor or
member shall, on making a request in the manner indicated by the
notice, be furnished by the company free of charge with a copy of
the statement.
( 6 ) If a company makes default in complying with any
requirement of this article, the company and every officer thereof
who is in default shall be liable to a penalty; and for this purpose a
liquidator of the company shall be deemed to be an officer of the
company:
Provided that a person shall not be liable under this
subarticle if he shows that the default was due to the refusal of
another person, being a director, to supply the necessary particulars
of his interests.
( 7 ) It shall be the duty of any director of the company to give
notice to the company and to any debenture holders of such matters
relating to himself as may be necessary for purposes of this article;
and any person who makes default in complying with this
subarticle shall be liable to a penalty.
Provisions for 
facilitating 
company 
reconstruction or 
amalgamation.
329. (1) The provisions of this article shall apply where
application is made to the court under article 327 for the
sanctioning of a compromise or arrangement proposed between a
company and any such persons as are mentioned in that article.
( 2 ) If it is shown - 
( a ) that the compromise or arrangement has been proposed
for the purposes of, or in connection with, a scheme
for the reconstruction of any company or companies,
or the amalgamation of any two or more companies;
and
( b ) that under the scheme the whole or any part of the
undertaking or the property of any company concerned
in the scheme  ( in this article referred to as "a
transferor company" )  is to be transferred to another
company  ( in this article referred to as "the transferee
company" ) ,
the court may, either by the order sanctioning the compromise or
arrangement or by any subsequent order, make provision for all or
any of the matters specified in subarticle  ( 3 ) .
( 3 ) The matters for which the court’s order may make provision
are - 
( a ) the transfer to the transferee company of the whole or
any part of the undertaking and of the property or
liabilities of any transferor company;
COMPANIES [ CAP. 386.        167
( b ) the allotting or appropriation by the transferee
company of any shares, debentures, securities or other
like interests in that company which under the
compromise or arrangement are to be allotted or
appropriated by that company to or for any person;
( c ) the continuation by or against the transferee company
of any legal proceedings pending by or against any
transferor company;
( d ) the dissolution of any transferor company and the
striking off of its name, without its having to be wound
up;
( e ) the provision to be made for any persons who, within
such time and in such manner as the court directs,
dissent from the compromise or arrangement;
( f ) such incidental, consequential and supplemental
matters as are necessary to secure that the
reconstruction or amalgamation is fully and effectively
carried out.
( 4 ) If an order under this article provides for the transfer of
property or liabilities, then - 
( a ) that property shall by virtue of the order be transferred
to, and vest in, the transferee company; and
( b ) those liabilities shall, by virtue of the order, be
transferred to and become liabilities of that company,
and property, if the order so directs, shall vest freed from any
charge or other burden which shall, by virtue of the compromise or
arrangement, cease to have effect.
( 5 ) Where an order is made under this article, every company
in relation to which the order is made shall cause a certified copy of
the order to be delivered to the Registrar for registration within
seven days after its making; and if default is made in complying
with this subarticle, the company and every officer thereof who is
in default shall be liable to a penalty, and, for every day during
which the default continues, to a further penalty.
Duties of directors 
where company 
unable to pay 
debts.
Added by:
IV. 2003.123.
329A.  Where the directors of a company become aware that the
company is unable to pay its debts or is imminently likely to
become unable to pay its debts, they shall forthwith, not later than
thirty days from when the fact became known to them, duly
convene a general meeting of the company by means of a notice to
that effect for a date not later than forty days from the date of the
notice for the purpose of reviewing the company’s position and of
determining what steps should be taken to deal with the situation,
including consideration as to whether the company should be
dissolved or, where applicable, whether the company should make
a company recovery application in terms of article 329B.
Company recovery 
procedure.
Added by:
IV. 2003.123.
329B.  (1) ( a )  Where a company is unable to pay its debts or is
imminently likely to become unable to pay its debts, a
company recovery application may be made to the
Court requesting the Court to place the company under
  168      CAP. 386. ]                   COMPANIES
the company recovery procedure and to appoint a
special controller to take over, manage and administer
the business of the company for a period to be
specified by the Court subject to the limitation
imposed by paragraph ( c ).
( b ) A company recovery application, hereinafter in this
article also referred to as the "application", shall be
made by means of an application which may be made:
(i) by the company following an extraordinary
resolution;
(ii) by the directors following a decision of the
board of directors; or
(iii) by creditors of the company representing more
than half in value of the company’s creditors.
( c ) The appointment of a special controller shall be made
for a period not exceeding twelve months; provided
that, at any time during which the company recovery
procedure is in force, the Court may, upon good cause
being shown, extend the period by such additional
period or periods which in aggregate do not exceed a
further twelve months.
( d ) The provisions of this article shall apply to:
(i) all companies other than companies which
qualify as "small companies" in terms of article
185; and
(ii) to "small companies" having more than
Lm200,000 in value owed to creditors.
( e ) The Minister may, by regulations, amend or substitute
the criteria set out in paragraph ( d ) for the purpose of
establishing the applicability of the provisions of this
article.
( f ) No application may be submitted by a company after it
has been dissolved voluntarily or if, in respect of the
same company, a winding-up order has already been
made.
(2) ( a ) The application shall, as far as possible, give the full
facts, circumstances and reasons which led to the
company’s inability or likely imminent inability to pay
its debts, together with a statement by the applicants as
to how the financial and economic situation of the
company can be improved in the interests of its
creditors, employees and of the company itself as a
viable going concern.
( b ) Where an application is made by the company, the
following documents shall be annexed to it:
(i) a statement of the company’s assets and
liabilities made up to a date not earlier than the
date of the application by more than two
months; and
COMPANIES [ CAP. 386.        169
(ii) a list containing the names and addresses of the
creditors together with an indication of the
amount due to each such creditor and the
security, if any, of the respective creditors.
( c ) Where the application is made by the creditors, it shall
be accompanied by appropriate supporting
documentation and statements.
Power of the 
Court.
(3) ( a ) On the hearing of an application, the Court may, after
examining all the circumstances and the options that
are available, either dismiss the application or issue a
company recovery order, hereinafter also referred to in
this article as an "order", acceding thereto and placing
the company under the company recovery procedure.
( b ) The Court shall accede to the application, and
accordingly place the company under the company
recovery procedure and issue an order, only if -
(i) it is satisfied that the company is, or is
imminently likely to become, unable to pay its
debts within the meaning of article 214(5); and
(ii) if it considers that the making of the order would
be likely to achieve one of the following
purposes:
- the survival of the company as a viable going
concern in part or in whole; or
- the sanctioning under article 327 of a
compromise or arrangement between the
company and any of its creditors or
members.
( c ) In making an order, the Court shall take into account:
(i) the best interests of the creditors, shareholders
and of the company itself, and the possibility of
safeguarding employment as appears to be
reasonably and financially possible in the
circumstances; and
(ii) the cost that would have to be incurred by
adopting the company recovery procedure,
particularly the fees and charges that would have
to be incurred.
( d ) Where the company is in possession of a licence or
other authorisation under the laws regulating banking,
insurance, investment services, financial institutions
or listing of securities on a recognised investment
exchange, the court shall not proceed to make an order
without first having consulted with the relevant
competent authority responsible for supervising that
company or any of its activities.
( e ) The Court shall take its decision whether to dismiss
the application or to make a company recovery order
within not more than twenty working days from the
filing of the application.
  170      CAP. 386. ]                   COMPANIES
Effect of the 
company recovery 
order.
(4) Upon the submission of an application and unless it is
dismissed, or during the period during which the company recovery
procedure is in force:
( a ) any pending or new winding up application shall be
stayed;
( b ) no resolution for the dissolution and consequential
winding up of the company may be passed or given
effect to;
( c ) the execution of claims of a monetary nature against
the company and any interest that may otherwise
accrue thereon shall be stayed;
( d ) during the tenure of the lease, no landlord or other
person to whom rent is payable may exercise any right
of termination of lease in relation to premises leased to
the company in respect of a failure by the company to
comply with any term or condition of its tenancy of
such premises, except with leave of the Court and
subject to such terms as the Court may deem fit to
impose;
( e ) no other steps may be taken to enforce any security
over the property of the company, or to repossess
goods in the possession of the company under any
hire-purchase agreement, except with the leave of the
Court and subject to such terms as the Court may deem
fit to impose;
Cap. 12.
( f ) no precautionary or executive act or warrant
mentioned in the Code of Organization and Civil
Procedure shall be made against the company or any
property of the company except with leave of the
Court and subject to such terms as the Court may deem
fit to impose; and
( g ) no judicial proceedings shall be commenced or
continued against the company or its property except
with leave of the Court and subject to such terms as the
Court thinks fit to impose.
Appointment of 
special controller.
(5) ( a ) In the order, the Court shall:
(i) appoint an individual to act as a special
controller and to carry out such functions and
powers as the Court may entrust to him in the
administration and management of the property
and business of the company;
(ii) fix such reasonable remuneration of the special
controller, as the Court may consider appropriate
after taking into account the company’s financial
position, business and assets;
(iii) determine the period, not exceeding ten working
days from the making of the company recovery
order, within which the company shall deposit a
sum of money in Court or offer other suitable
guarantee or other appropriate arrangement,
COMPANIES [ CAP. 386.        171
which, in the opinion of the Court, is sufficient
to cover the remuneration, and charges of the
special controller connected to his appointment.
( b ) The Court shall appoint as the special controller an
individual who the Court has ascertained to its
satisfaction enjoys proven competence and experience
in the management of business enterprises, is qualified
and willing to accept the appointment, and has no
conflict of interest in relation to his appointment.
( c ) For so long as the special controller holds office, the
fact of his appointment to such office and his full name
together with his residential or business address shall
be clearly indicated in all the business letters, order
forms, invoices and any other documents of the
company.
Powers and duties 
of the special 
controller.
(6) ( a ) During the period that an order is in force, the
company shall continue to carry on its normal
activities under the management of the special
controller.
( b ) The special controller shall, as soon as possible upon
his appointment, take into his custody or under his
control all the property of the company and he shall
thenceforth be responsible to manage and supervise its
activities, business and property.
( c ) The special controller shall examine the assets, affairs
and business performance of the company and shall
ascertain and verify whether there is a reasonable
expectation of the company’s recovery and
continuation as a viable going concern, in whole or in
part, and he shall submit an initial report thereon to the
Court not later than two months from the date of his
appointment.
( d ) On the appointment of the special controller, any
power conferred on the company, its directors or its
officers, whether by this Act, by any other law, or by
the Memorandum or Articles of Association of the
company, shall be suspended unless the consent of the
special controller to exercise such power has been
obtained, which consent may be given either generally
or in relation to a particular case or cases, and no
meeting of the company may be summoned except
with leave of the Court and subject to such terms as the
Court may deem fit to impose.
( e ) During such time as the company recovery procedure
is in force, any duty conferred on the company, its
directors or its officers, whether by this Act, by any
other law, or by the Memorandum or Articles of
Association of the company, shall be assumed and
exercised by the special controller.
( f ) In addition and without prejudice to any other duty
assigned to the special controller by the Court or this
  172      CAP. 386. ]                   COMPANIES
Act or any other law, the special controller shall be
obliged to perform his functions fairly and equitably
taking into account the best interests of the company,
its shareholders and creditors together with the
interests of any other interested party.
( g ) In addition to the functions and powers entrusted to
him by the Court, the special controller shall have the
power:
(i) after informing the Court, by means of a note, to
remove any director of the company and to
appoint any individual to serve as a manager;
(ii) to engage persons for the provision of
professional or administrative services, and
commit the company to the payment of their
respective fees or charges; or
(iii) to call any meeting of the members or creditors
of the company.
( h ) The special controller shall not, without the prior
express authorisation of the Court:
(i) engage the company into any commitment of
more than six months duration; or
(ii) terminate the employment of company
employees as he considers necessary for
insuring the continuation of the company as a
viable going concern in whole or in part; or
(iii) sell or otherwise dispose of property of the
company to himself, or to his spouse or relatives
and the provisions of article 306 shall apply as
though references to the liquidator were
references to the special controller.
( i ) The Court may, upon the request of the special
controller, and upon good cause being shown, extend
his appointment and relative functions and powers to
any company being a group company in relation to the
company placed under the company recovery
procedure, provided that, in so far as possible, the
Court shall, before so doing, hear the views of the
directors, or any of them, of such group company, as it
may deem appropriate.
Meeting of 
creditors and 
members.
(7) ( a ) Within one month from his appointment, the special
controller shall convene a meeting or meetings of
creditors and members, whether separately or jointly as
he may consider appropriate, for the purpose of -
(i) laying before them for their information and
review a comprehensive statement of the
company’s affairs together with preliminary
proposals on the future prospects and
management of the company; and
(ii) appointing a joint creditors and members
committee, consisting of not more than three
COMPANIES [ CAP. 386.        173
creditors and not more than three members, to
render such advice and assistance as the special
controller may require in the management of the
affairs, business and property of the company
and its recovery as a viable going concern.
( b ) Not less than fourteen days notice shall be given of the
holding of any such meeting or meetings, and the
special controller shall also send a copy of the notice
convening the meeting to any directors or other
officers of the company, including persons who have
been directors or other officers in the past, whose
presence at the meeting is, in the opinion of the special
controller, required.
( c ) The special controller shall publish a notice of the
meetings of creditors and members in a daily
newspaper circulating wholly or mainly in Malta, not
later than fourteen days before the holding of the
meeting.
( d ) Where for any reason the creditors or the members or
both do not appoint their representatives on the joint
creditors’ and members’ committee, the special
controller may proceed to continue in the exercise of
his functions without such committee or solely with a
creditors’ or members’ committee, as the case may be.
Fraudulent trading.
is in force, it appears that any business of the company
has been carried on with intent to defraud creditors of
the company or for any fraudulent purpose, the Court
on the application of the special controller, may, if it
thinks proper so to do, declare that any persons who
were knowingly parties to the carrying on of the
business in the manner aforesaid be personally
responsible, without any limitation of liability for all
or any of the debts or other liabilities of the company
as the Court may direct.
( b ) Where the business of a company is carried on with
such intent or for such purposes as is mentioned in
paragraph ( a ), every person who was knowingly a
party in the carrying on of the business in the manner
aforesaid, shall be guilty of an offence and liable on
conviction to a fine ( multa ) of not more than one
hundred thousand liri or imprisonment for a term not
exceeding five years, or to both such fine and
imprisonment.
Wrongful trading.
company recovery procedure is in force and it appears
that a person who is a director of the company knew, or
ought to have known, that the company is unable to
pay its debts or is imminently likely to become unable
to pay its debts.
( b ) The Court, on the application of the special controller
  174      CAP. 386. ]                   COMPANIES
of a company to which this subarticle applies, may
declare the person being a director referred to in
paragraph ( a ) liable to make a payment towards the
company’s assets as the Court thinks fit.
( c ) The Court shall not grant an application under this
subarticle if it is satisfied that the person who is a
director took every step he ought to have taken with a
view to minimising the potential loss to the company’s
creditors.
( d ) For the purposes of paragraphs ( b ) and ( c ), the facts
which a director of a company ought to know or
ascertain, the conclusions which he ought to reach and
the steps which he ought to take, are those which
would be known or ascertained, or reached or taken,
by a reasonably diligent person having both -
(i) the knowledge, skill and experience that may
reasonably be expected of a person carrying out
the same functions as are carried out by or
entrusted to that director in relation to the
company; and
(ii) the knowledge, skill and experience that the
director has.
( e ) For the purposes of this subarticle, director includes a
person in accordance with whose directions or
instructions the directors of the company are
accustomed to act.
Removal or 
vacancy in the 
office of special 
controller.
(10) ( a ) If a vacancy occurs by reason of death, resignation or
otherwise in the office of the special controller, the
Court may appoint another individual to fill the
vacancy on an application made for this purpose by the
outgoing special controller, by a creditor, by a member,
by a director, or by the Court of its own motion, as the
case may be.
( b ) The Court may, of its own motion or on the application
of any member or creditor, review, confirm, modify or
reverse any act or decision of the special controller
and give him such directions or orders as it deems fit
or remove a special controller if it is satisfied that
there exist sufficient grounds to warrant his removal
and appoint another special controller.
Reports to be 
submitted by the 
special controller.
(11) ( a ) At the end of every period of four months commencing
from the date of the making of the order until the
termination of his appointment, the special controller
shall submit to the Court a comprehensive report in
writing on the proceedings of his administration and of
his proposals regarding the prospects for the recovery
of the company as a viable going concern in whole or
in part.
( b ) When the special controller submits to the Court the
report referred to in paragraph ( a ), the Registrar of
COMPANIES [ CAP. 386.        175
Courts shall forthwith forward a copy of it to the
Registrar for registration.
Termination of 
company recovery 
order.
(12) ( a ) If, at any time during which a company recovery
procedure is in force, it results to the special controller,
after consulting the joint creditors’ and members’
committee, that it would serve no useful purpose for
the company to continue with the said procedure, the
special controller shall forthwith make an application
to the Court for the termination of the company
recovery procedure, containing his detailed and
comprehensive reasons therefor.
Following the receipt of the application made by the
special controller for the termination of the company
recovery procedure, the Court shall order that the
company be wound up by the Court. On the making of
the winding up order, a copy thereof shall forthwith be
forwarded by the Registrar of Courts to the Registrar
for registration.
( b ) If, at any time during which a company recovery
procedure is in force, it results to the special
controller, after consulting the joint creditors’ and
members’ committee, that the affairs of the company
have improved to the extent that it is in a position to
pay its debts, he shall submit an application to the
Court, containing his detailed and comprehensive
reasons to that effect, and requesting the Court to issue
an order for the termination of the company recovery
procedure. In the event that the Court accedes the
application, it shall make such provisions and
conditions, as it may consider necessary in the
circumstances of the case.
( c ) If, at any time during which a company recovery
procedure is in force, the directors of the company or
the members at an extraordinary general meeting
become satisfied that the affairs of the company have
improved to the extent that it is in a position to pay its
debts, they may submit an application to the Court,
accompanied by appropriate supporting documentation
and information, confirming that they are so satisfied,
and requesting the Court to issue an order for the
termination of the company recovery procedure, and
the Court shall not proceed to make an order acceding
to or declining the application without having first
heard the special controller.
In the event that the Court accedes the application, it
shall make such provisions and conditions, as it may
consider necessary in the circumstances of the case.
( d ) At the end of the period of his appointment, the special
controller shall submit a written final report to the
Court containing his detailed and comprehensive
opinions and reasons as to whether or not the company
  176      CAP. 386. ]                   COMPANIES
has a reasonable prospect of continuing as a viable
going concern in whole or in part and will be in a
position to pay its debts regularly in the future.
( e ) Where the final report submitted by the special
controller expresses the opinion that the company has
a reasonable prospect of continuing as a viable going
concern, in whole or in part, or where an application is
made to the Court by the special controller under
paragraph ( b ), it shall additionally have attached to it a
precise and detailed recovery plan which shall contain
all the proposals required to enable the company to
continue as a viable going concern, with such
explanations as may be required to give effect to such
recovery, including proposals in relation to financial
resources, the retention of employees and the future
management of the company. The said recovery plan
shall also explain the proposed manner of paying
creditors the whole or a proportion of their claims,
whether a voluntary compromise has been reached
with all the creditors, or whether it is proposed that the
Court sanction a compromise which has not been
approved by all the creditors.
( f ) Following receipt of the application referred to in
paragraph ( b ) or of the final report and the recovery
plan, the Court may request any explanations and
clarifications as it may consider appropriate which
shall be provided either verbally or in writing as the
Court may direct.
( g ) The Court may either reject the proposed recovery
plan, or it may accept and approve it in whole or in
part and may require amendments thereto. Where the
Court approves the recovery plan submitted by the
special controller, whether with or without
amendments as the Court may direct, the recovery plan
shall be effective and binding on all interested parties
for all purposes of law.
Submission of 
documents to 
Registrar for 
registration.
(13) ( a ) Upon the submission of a company recovery
application, the issue of a company recovery order, the
appointment and termination of the appointment of a
special controller and the appointment of a
replacement thereof, the submission of an application
for the termination of a company recovery order and
the order of the Court terminating the company
recovery procedure for any reason, the Registrar of
Courts shall forthwith submit a copy of any such
application, Court order or other relevant document to
the Registrar for registration.
( b ) The Registrar of Courts shall forthwith forward a true
copy of the final report, as accepted and approved by
the Court, to the Registrar for registration.
( c ) Notwithstanding the provisions of paragraphs ( a ) and
COMPANIES [ CAP. 386.        177
( b ), a copy of the recovery plan, attached to the final
report or required to be attached to an application for
the termination of a company recovery order, shall not
be delivered to the Registrar together with such report
or application.
Winding up by the 
Court.
(14) Where, in terms of any of the provisions of this article, the
Court issues an order for the termination of the company recovery
procedure on the grounds that the company has no reasonable
prospect of continuing as a viable going concern and will not be in
a position to pay its debts regularly in the future, it shall order that
the company be wound up by the Court. On the making of the
winding up order, a copy thereof shall forthwith be forwarded by
the Registrar of Courts to the Registrar for registration.
Power to make 
regulations.
(15) The Minister may make regulations for the better carrying
out of any of the provisions of this article.
PART VII - CONVERSION OF COMMERCIAL 
PARTNERSHIPS 
Requirements for 
conversion of 
commercial 
partnerships.
Amended by:
IV. 2003.124.
330. (1) A commercial partnership  ( in this Chapter referred to
as "the commercial partnership to be converted" )  may, by
complying with the requirements prescribed in relation to the
formation, share capital and validity of the kind of commercial
partnership into which it is to be converted, be converted into a
commercial partnership of that kind  ( in this Chapter referred to as
"the commercial partnership resulting from the conversion" ) .
( 2 ) Where the commercial partnership to be converted is either
an  en nom collectif  or an  en commandite  or limited partnership the
conversion may only be made by a decision taken in accordance
with the provisions of the deed of partnership or, in the absence of
any such provision, with the consent of all the partners both general
and limited:
Provided that where one or more limited partners holding in
the aggregate not more than one-fourth of the total contribution of
the limited partners of a partnership  en commandite  or limited
partnership, the capital of which is not divided into shares, or one-
tenth of the share capital of the partnership  en commandite  or
limited partnership, the capital of which is divided into shares, have
not given their consent, the commercial partnership may
nevertheless proceed with the conversion, but it shall be required,
for the purposes of the conversion, to liquidate and re-imburse to
every limited partner who has not given his consent, if he so
requests, his interest in the commercial partnership or to redeem the
shares held by him on such terms as may be agreed or as the court,
on a demand of either the commercial partnership or the limited
partner, thinks fit to order.
( 3 ) Where the commercial partnership to be converted is a
company, whether public or private, the conversion may only be
made if it has been approved by an extraordinary resolution taken
  178      CAP. 386. ]                   COMPANIES
at a general meeting of the company. The company shall be
required, for the purpose of the conversion, to redeem the shares
held by the dissenting members, if they so request, on such terms as
may be agreed or as the court, on a demand of either the company
or the dissenting members, thinks fit to order.
( 4 ) The commercial partnership to be converted shall be
dissolved without having to be wound up in accordance with the
provisions of Title II of Part V of this Act in relation to a company
and with the relevant provisions of Part III of this Act in relation to
the other kinds of commercial partnerships; and dissolution shall be
deemed to take place when the conversion becomes effective in
accordance with the provisions of article 332.
Registration of the 
conversion of 
commercial 
partnerships.
331. (1) The decision or resolution approving the conversion
of a commercial partnership together with the instruments giving
effect to the decision or resolution, or an authentic copy thereof,
shall be delivered for registration to the Registrar who, being
satisfied that the requirements of article 330 have been complied
with, shall register it.
( 2 ) The aforesaid delivery shall be made by any of the partners
or directors of the new commercial partnership as the case may be.
Where commercial 
partnership ceases 
to exist on 
conversion.
332. (1) Upon the conversion of a commercial partnership
which has become effective either through the lapse of the period
referred to in article 334 or, where objection is made under that
article, by a decision of the court, the Registrar shall strike the
name of the commercial partnership that has been converted off the
register and shall issue a new certificate of registration for the
commercial partnership resulting from the conversion, denoting the
fact of the formation of that commercial partnership as a result of
the conversion. Where a conversion which has been registered
under this article becomes ineffective by a decision of the court
under article 334, the Registrar shall amend the registration
accordingly.
( 2 ) The Registrar shall, in the cases specified in subarticle (1),
either proceed to publish the conversion after it has become
effective or to publish a notice that the conversion has become
ineffective by decision of the court under article 334, in accordance
with the provisions of article 401(1) ( e ) .
Partners with 
unlimited liability 
to remain bound 
unless creditors 
consent to 
conversion.
333.   The conversion of a commercial partnership shall not
discharge partners with unlimited liability from liability for the
obligations of the commercial partnership contracted prior to the
publication of the statement referred to in article 401(1) ( e )  unless it
is proved that the creditors of the commercial partnership have
given their consent to the conversion.
Rights of creditors 
to oppose 
conversion.
334. (1) The conversion of a commercial partnership shall not
take effect until three months from the date of the publication of the
statement referred to in article 401(1) ( e )  relating to the decision or
resolution approving the conversion.
( 2 ) During the aforesaid period of three months any creditor of
the commercial partnership whose debt existed prior to the
COMPANIES [ CAP. 386.        179
publication of the statement referred to in subarticle (1) may by
writ of summons object to the conversion and, if he shows good
cause why it should not take effect, the court shall either uphold the
objection or allow the conversion on sufficient security being
given.
( 3 ) Without prejudice to the provisions of subarticle  ( 2 )  any
partner or shareholder, as the case may be, of the commercial
partnership being converted, or the Registrar, shall have the right to
challenge the validity of the conversion only within the aforesaid
period of three months by means of a writ of summons.
( 4 ) Where as a result of the proceedings for which provision is
made in subarticle  ( 3 ),  the court is satisfied that the conversion is
not valid, the court shall disallow the said conversion:
Provided that the court shall have the right to suspend its
decision disallowing the conversion and to grant time, which shall
not be in excess of six months, to the commercial partnership in
default, to remedy the default rendering the conversion invalid; and
if the default is remedied within the time allowed the conversion
shall take effect.
Commercial 
partnership formed 
succeeds 
commercial 
partnership ceasing 
to exist.
Amended by:
IV. 2003.125.
335. (1) The commercial partnership resulting from the
conversion shall succeed to all the assets, rights, liabilities and
obligations without the requirement of any formalities other than
those arising under this Part, and shall retain the same legal
personality of the commercial partnership that has been converted;
and the said succession shall be effective as regards third parties.
( 2 ) Where the commercial partnership resulting from the
conversion is a partnership  en nom collectif  or a partnership  en
commandite  or limited partnership the unlimited liability of all the
partners in the partnership  en nom collectif  and that of the general
partners in the partnership  en commandite  or limited partnership, as
the case may be, shall also extend to the obligations of the
commercial partnership that has been converted.
Cap. 364.
Cap. 123.
( 3 ) The succession to all assets, rights, liabilities and
obligations of the commercial partnership that has been converted,
by the commercial partnership resulting from the conversion
referred to in subarticle (1), shall not give rise to any liability to the
payment of any duty or tax under the Duty on Documents and
Transfers Act or the Income Tax Act:
Provided that this subarticle shall not apply to such duty
and any other fees that may be payable upon the registration of the
commercial partnership resulting from the conversion.
  180      CAP. 386. ]                   COMPANIES
PART VIII - AMALGAMATION OF COMMERCIAL 
PARTNERSHIPS 
TITLE I - AMALGAMATION OF PARTNERSHIPS  EN NOM 
COLLECTIF  AND  EN COMMANDITE
Application of 
articles 337 to 342.
Amended by:
IV. 2003.126.
336. (1) The provisions of articles 337 to 342 shall apply to
the amalgamation of partnerships  en nom collectif  and partnerships
en commandite  or limited partnerships .
( 2 ) Amalgamation between two or more commercial
partnerships  ( referred to in this Part as "the amalgamating
commercial partnerships" )  may be effected where all the
amalgamating commercial partnerships are  en nom collectif  or
where they are all  en commandite  or or limited partnerships or
where at least one of the commercial partnerships being
amalgamated is  en nom collectif  and the other commercial
partnership or partnerships are  en commandite  or limited
partnerships, or vice versa.
Requirements for 
amalgamation of 
commercial 
partnerships.
337. (1) The provisions of  article  330 ( 2 )  shall apply to the
amalgamation of any two or more commercial partnerships whether
such an amalgamation is effected by the formation of a new
commercial partnership  ( referred to in this Part as "the new
commercial partnership" )  instead of the existing commercial
partnerships  ( referred to in this Part as "the commercial
partnerships to be substituted" )  or by the merger of one or more
commercial partnerships  ( referred to in this Part as "the commercial
partnerships to be acquired" )  with another existing commercial
partnership  ( referred to in this Part as "the acquiring commercial
partnership" )  as though references to conversion therein were
references to amalgamation.
( 2 ) The commercial partnerships to be acquired or, as the case
may be, the commercial partnerships to be substituted, shall be
dissolved without having to be wound up in accordance with the
relevant provisions of Part III of this Act, and dissolution shall be
deemed to take place when the amalgamation becomes effective in
accordance with the provisions of article 339.
Registration of the 
amalgamation of 
commercial 
partnerships.
338. (1) The decisions taken by each of the amalgamating
commercial partnerships approving the amalgamation together with
the instruments giving effect thereto, or an authentic copy thereof,
shall be delivered for registration to the Registrar, who, being
satisfied that the requirements of article 337 have been complied
with, shall register them.
( 2 ) The aforesaid delivery shall be made by any of the partners
of the new commercial partnership or of the acquiring commercial
partnership as the case may be.
Where a 
commercial 
partnership ceases 
or partnerships 
cease to exist on 
amalgamation.
339. (1) Upon the amalgamation of two or more commercial
partnerships which has become effective either through the lapse of
the period referred to in article 341 or where objection is made
under that article, by a decision of the court, the Registrar shall
strike the name of the commercial partnership or of each of the
COMPANIES [ CAP. 386.        181
commercial partnerships ceasing to exist off the register and shall,
according to the case, either issue a new certificate of registration
for the new commercial partnership denoting the fact of the
formation of the commercial partnership as a result of the
amalgamation, or issue a certificate of registration altered to meet
the circumstances of the case and denoting the fact of the
amalgamation for the acquiring commercial partnership; and where
an amalgamation which has been registered under this article
becomes ineffective by a decision of the court under article 341, the
Registrar shall amend the registration accordingly.
( 2 ) The Registrar shall, in the cases specified in subarticle (1),
in respect of every one of the amalgamating commercial
partnerships, either proceed to publish the amalgamation after it
has become effective or to publish a notice that the amalgamation
has become ineffective by decision of the court under article 341,
in accordance with the provisions of article 401(1)( e ).
Partners with 
unlimited liability 
to remain bound 
unless creditors 
consent to 
amalgamation.
340.   The amalgamation of two or more commercial
partnerships shall not discharge partners with unlimited liability
from liability for the obligations of the amalgamating commercial
partnerships contracted prior to the publication of the statement
referred to in article 401(1)( e ), unless it is proven that the creditors
of the amalgamating commercial partnerships have given their
consent to the amalgamation.
Right of creditors 
to oppose 
amalgamation.
341. (1) The amalgamation of two or more commercial
partnerships shall not take effect until three months from the date
of the publication of the statement referred to in article 401(1)( e )
relating to the decisions approving the amalgamation.
( 2 ) During the aforesaid period of three months any creditor of
any of the amalgamating commercial partnerships whose debt
existed prior to the publication of the statement referred to in
subarticle (1) may by writ of summons object to the amalgamation,
and if he shows good cause why it should not take effect, the court
shall either uphold the objection or allow the amalgamation to
proceed upon sufficient security being given.
( 3 ) Without prejudice to the provisions of subarticle  ( 2 )  any
partner of any of the amalgamating commercial partnerships or the
Registrar shall have the right to challenge the validity of the
amalgamation only within the aforesaid period of three months by
means of a writ of summons.
( 4 ) Where as a result of the proceedings for which provision is
made in subarticle  ( 3 ),  the court is satisfied that the amalgamation
is not valid, the court shall disallow the said amalgamation:
Provided that the court shall have the right to suspend its
decision disallowing the amalgamation and to grant time which
shall not be in excess of six months, to the commercial partnership
or partnerships in default to remedy the default rendering the
amalgamation invalid; and if the default is remedied within the
time allowed, the amalgamation shall take effect.
  182      CAP. 386. ]                   COMPANIES
Acquiring or new 
commercial 
partnership 
succeeds 
commercial 
partnership ceasing 
to exist.
Amended by:
IV. 2003.127.
342. (1) An acquiring commercial partnership or, where a new
commercial partnership is formed, the new commercial partnership,
shall succeed to all the assets, rights, liabilities and obligations of
the commercial partnership or partnerships ceasing to exist,
without the requirement of any formalities other than those
required under this Title, and the said succession shall be effective
as regards third parties.
( 2 ) Where the acquiring commercial partnership or the new
commercial partnership, as the case may be, is a partnership  en nom
collectif , the unlimited liability of all the partners thereof shall also
extend to the obligations of the commercial partnership or
partnerships ceasing to exist.
( 3 ) Where the acquiring commercial partnership or the new
commercial partnership as the case may be is a partnership  en
commandite  or limited partnership the unlimited liability of all the
general partners thereof shall also extend to the obligations of the
commercial partnership or partnerships ceasing to exist.
Cap. 364.
Cap. 123.
( 4 ) The succession to all assets; rights, liabilities and
obligations of the commercial partnership or partnerships ceasing
to exist, by the acquiring commercial partnership or, where a new
commercial partnership is formed, the new commercial partnership,
referred to in subarticle (1), shall not give rise to any liability to the
payment of any duty or tax under the Duty on Documents and
Transfers Act or the Income Tax Act: 
Provided that this subarticle shall not apply to such duty
and any other fees that may be payable upon any increase in the
contribution, the allotment of new shares and the registration of any
new commercial partnership resulting from the amalgamation, as
the case may be.
TITLE II - AMALGAMATION OF COMPANIES
Amalgamation in 
the form of a 
"merger by 
formation of a new 
company" or 
"merger by 
acquisition".
Amended by:
IV. 2003.128.
343. (1) Amalgamation of two or more companies may be
effected by - 
( a ) merger by acquisition; or
( b ) merger by formation of a new company.
( 2 ) Merger by acquisition is the operation whereby a company
( referred to in this Part as "the acquiring company" )  acquires all the
assets and liabilities of one or more other companies  ( referred to in
this Part as "the companies being acquired" )  in exchange for the
issue to the shareholders of the companies being acquired of shares
in the acquiring company and a cash payment, if any, not exceeding
ten per cent of the nominal value of the shares so issued.
( 3 ) Merger by formation of a new company is the operation
whereby two or more companies  ( referred to in this Part as "the
merging companies" )  deliver to a company which they set up
( referred to in this Part as "the new company" )  all their assets and
COMPANIES [ CAP. 386.        183
liabilities in exchange for the issue to the shareholders of the
merging companies of shares in the new company and a cash
payment, if any, not exceeding ten per cent of the nominal value of
the shares so issued.
( 4 ) The companies being acquired or, as the case may be, the
merging companies, shall be dissolved without having to be wound
up in accordance with the provisions of Title II of Part V of this Act
and dissolution shall be deemed to take place when the
amalgamation becomes effective in accordance with the provisions
of article 353.
( 5 ) The fact that one or more of the companies being acquired,
or one or more of the merging companies has been dissolved
voluntarily by an extraordinary resolution, and a declaration of
solvency has been filed shall not prevent such companies taking
part in the amalgamation provided that none of their assets have
been distributed to shareholders after dissolution. Any provision of
this Part requiring the directors of a company to act shall be
interpreted in relation to a company which has been dissolved as
requiring the liquidator to act.
( 6 ) The fact that one or more of the companies being acquired
or one or more of the merging companies has been dissolved by the
court in terms of article 214, and in the case of a voluntary winding
up a declaration of solvency has not been filed, shall invalidate the
amalgamation with respect to all the amalgamating companies.
( 7 ) A company may only be amalgamated with one or more
companies, and may not be amalgamated with any other kind of
commercial partnership.
Chapter I - Merger by acquisition
Draft terms of 
merger.
344. (1) The directors of the acquiring company and of each of
the companies being acquired  ( hereinafter referred to in this Part as
"the amalgamating companies" )  shall draw up draft terms of merger
in writing.
( 2 ) The draft terms of merger shall specify the following:
( a ) the status, name and registered office of each of the
amalgamating companies;
( b ) the share exchange ratio and the amount of any cash
payment;
( c ) the terms relating to the allotment of shares in the
acquiring company;
( d ) the date from which the holding of such shares entitles
the holders to participate in profits and any special
conditions affecting that entitlement;
( e ) the date from which the transactions of each of the
companies being acquired shall be treated for
accounting purposes as being those of the acquiring
company;
  184      CAP. 386. ]                   COMPANIES
( f ) the rights conferred by the acquiring company on the
holders of shares to which special rights are attached
and on the holders of debentures or other securities, or
the measures proposed concerning them; and
( g ) any special advantage granted to the experts referred
to in article 348 acting on behalf of each of the
amalgamating companies authorised to examine the
draft terms of merger and to draw up a written report
to the shareholders, and to the directors of each of the
amalgamating companies.
( 3 ) The draft terms of merger, duly completed, shall be signed
by at least one director and the company secretary of each of the
amalgamating companies, and forwarded to the Registrar for
registration, who being satisfied that the requirements of subarticle
( 2 )  have been complied with, shall register them.
Approval by 
extraordinary 
resolution of 
amalgamation.
Amended by:
IV. 2003.129.
345. (1) A merger by acquisition shall only be made if it has
been approved by an extraordinary resolution of each of the
amalgamating companies. Each of such companies shall be
required to redeem the shares held by the dissenting members, if
they so request, on such terms as may be agreed or as the court, on
a demand by either the company or the dissenting members, thinks
fit to order.
( 2 ) For the purposes of subarticle (1), approval shall not be
valid unless the extraordinary resolution is adopted at least one
month after the publication of the draft terms of merger and not
later than three months therefrom.
( 3 ) The provisions of this Act governing alterations and
additions to the memorandum and articles shall, as appropriate,
apply to any alterations and additions to the memorandum and
articles necessitated by any amalgamation referred to in this Part.
( 4 ) Where there is more than one class of shares in any of the
amalgamating companies the extraordinary resolutions of those
companies concerning the amalgamation shall be subject to a
separate vote by at least each class of shareholders whose rights are
affected thereby.
( 5 ) The extraordinary resolution taken by each of the
amalgamating companies shall cover both the approval of the draft
terms of merger and any alterations and additions to the
memorandum and articles necessitated by the amalgamation.
( 6 ) The approval of the general meeting of the acquiring
company shall not be required if the following conditions are
fulfilled - 
( a ) the draft terms of the merger for the acquiring
company have been duly published in accordance with
paragraph  ( e )  of subarticle (1) of article 401 by the
Registrar at least one month before, and not more than
three months before the date fixed for the general
meeting of the company or the latest of the separate
general meetings of the companies being acquired
COMPANIES [ CAP. 386.        185
which are to decide on the draft terms of merger; and
( b ) at least one month before the date specified in
paragraph  ( a ),  all shareholders of the acquiring
company shall be entitled to inspect the documents
referred to in article 349, at the registered office of the
acquiring company:
Provided that, in any case,  one or more shareholders of the
acquiring company holding at least five per cent of the issued share
capital of the company entitled to vote at general meetings of the
company shall have the right to require that a general meeting of
the acquiring company be called to decide whether to approve the
amalgamation. 
Drawing up of 
detailed written 
report on draft 
terms of merger by 
directors.
346.   The directors of each of the amalgamating companies shall
draw up a detailed written report explaining the draft terms of the
merger and setting out the legal and economic grounds for them, in
particular the share exchange ratio, and shall describe any special
valuation difficulties which have arisen.
Non applicability 
of article 73(4), (5) 
and (6) in certain 
cases of 
amalgamation.
347.   In the event of an increase in the issued share capital made
to pay the shareholders of the companies being acquired in order to
give effect to an amalgamation,  article  73 ( 4 ) ,  ( 5 )  and  ( 6 )  shall not
apply.
Written report to 
shareholders to be 
drawn up by one or 
more experts.
348. (1) One or more experts acting on behalf of each of the
amalgamating companies, but independent of them and approved
by the Registrar, shall examine the draft terms of the merger and
draw up a written report to the shareholders.
( 2 ) The report shall specify whether the share exchange ratio is
fair and reasonable and to this effect it shall - 
( a ) indicate the method or methods used to arrive at the
share exchange ratio proposed; and
( b ) state whether such method or methods are adequate in
the case in question, indicating the values arrived at
using each such method and giving an opinion on the
relative importance attributed to such method or
methods in arriving at the value decided on.
( 3 ) The report shall describe any special valuation difficulties
which have arisen.
( 4 ) Each expert shall be entitled to obtain from the
amalgamating companies all relevant information and documents
and to carry out all necessary investigations.
( 5 ) One or more independent experts may be appointed to draw
up a joint report for all the amalgamating companies by the
Registrar at the joint request of the companies involved.
Documents which 
shareholders of 
amalgamating 
companies are 
entitled to inspect.
349. (1) All shareholders of every amalgamating company are
entitled to inspect the following documents at the registered office
of each company at least one month before the date fixed for the
general meeting which is to decide on the draft terms of merger - 
( a ) the draft terms of merger;
  186      CAP. 386. ]                   COMPANIES
( b ) the annual accounts and the directors’ reports of the
amalgamating companies for the preceding three
accounting periods;
( c ) an accounting statement drawn up as at a date which
shall not be earlier than the first day of the third month
preceding the date of the draft terms of the merger, if
the latest annual accounts relate to an accounting
period which ended more than six months before that
date;
( d ) the reports of the directors of the amalgamating
companies relating to the amalgamation; and
( e ) the reports of the experts relating to the amalgamation. 
( 2 ) The accounting statement provided for in paragraph  ( c )  of
subarticle (1) shall be drawn up using the same methods and the
same layout as used for the latest balance sheet:
Provided that - 
( a ) it shall not be necessary to take a fresh physical
inventory; and
( b ) the valuations shown in the latest balance sheet shall
be altered only to reflect entries in the accounting
records. 
Notwithstanding the provisions of paragraphs  ( a )
and   ( b ),  interim depreciation and provisions as well as
material changes in actual values not shown in the
accounting records shall be taken into account.
( 3 ) Every shareholder shall be entitled to obtain, on request and
free of charge, full or, if so desired, partial copies of the documents
mentioned in subarticle (1).
Registration of the 
amalgamation of 
companies.
350.   The extraordinary resolutions taken by each of the
amalgamating companies approving the amalgamation together
with the instruments giving effect thereto, or an authentic copy
thereof, shall be delivered for registration to the Registrar, who,
being satisfied that the requirements of this Part have been
complied with, shall register them.
Rights of creditors 
to oppose 
amalgamation.
351. (1) The amalgamation of two or more companies shall
not take effect until three months from the date of the last
publication of the statement referred to in article 401(1) ( e )  relating
to the extraordinary resolutions approving the amalgamation,
referred to in article 350.
( 2 ) During the aforesaid period of three months any creditor of
any of the amalgamating companies whose debt existed prior to the
publication of the draft terms of merger in terms of  article  345 ( 6 )( a )
may by writ of summons object to the amalgamation and, if he
shows good cause why it should not take effect, the court shall
either uphold the objection or allow the amalgamation on sufficient
security being given.
( 3 ) The provisions of subarticles (1) and  ( 2 )  shall apply to the
debenture holders of the amalgamating companies so long as the
COMPANIES [ CAP. 386.        187
merger has not already been approved by the debenture holders
individually, or by a special meeting of the debenture holders called
specifically for the purpose, at which meeting all the debenture
holders shall signify their consent.
Protection of 
holders of 
securities in an 
amalgamation.
352.   The holders of securities, other than shares, in the
companies being acquired, to which special rights are attached
shall be given rights against the acquiring company in accordance
with the draft terms of merger at least equivalent to those they
possessed in the companies being acquired, unless - 
( a ) the holders of those securities individually agree to the
alteration of their rights; or
( b ) the alteration has been approved by a meeting of the
holders of those securities called specifically for the
purpose, at which meeting all the holders of such
securities shall signify their consent; or
( c ) the holders of those securities are entitled to have their
securities re-purchased by the acquiring company.
Duties of Registrar 
in respect of 
amalgamations.
353. (1) Upon the amalgamation of two or more companies
which has become effective either through the lapse of the period
referred to in article 351 or, where objection is made under that
article, by decision of the court, the Registrar shall strike the name
of the companies being acquired off the register and issue a
certificate of registration, altered to meet the circumstances of the
case and denoting the fact of the merger for the acquiring company;
and where an amalgamation which has been registered under this
Part does not become effective pursuant to a decision of the court
under article 351, the Registrar shall amend the registration
accordingly.
( 2 ) The Registrar shall in respect of every one of the
amalgamating companies, either proceed to publish a notice of the
amalgamation after it has become effective or to publish a notice
that the amalgamation has not become effective pursuant to a
decision of the court under article 351, in both cases as specified in
subarticle (1).
Consequences of 
amalgamation.
Amended by:
IV. 2003.130.
354. (1) An amalgamation shall have the following
consequences: 
( a ) the acquiring company shall succeed to all the assets,
rights, liabilities and obligations of the companies
being acquired, both as between the companies being
acquired and the acquiring company and as regards
third parties, without the requirement of any
formalities other than those arising under this Title;
( b ) the shareholders of the companies being acquired shall
become shareholders of the acquiring company; and
( c ) the companies being acquired shall cease to exist.
( 2 ) No shares in the acquiring company shall be exchanged for
shares in the companies being acquired held either - 
( a ) by the acquiring company; or
  188      CAP. 386. ]                   COMPANIES
( b ) by the companies being acquired.
Cap. 364.
Cap. 123.
( 3 ) The succession to all assets, rights, liabilities and
obligations of the companies being acquired by the acquiring
company, referred to in subarticle (1) ( a ) , shall not give rise to any
liability to the payment of any duty or tax under the Duty on
Documents and Transfers Act or the Income Tax Act:
Provided that any fees that may be payable upon an
increase in the authorised share capital of the acquiring company
shall remain due and payable.
Liability of 
director or expert 
for misconduct.
355.   Any director of any of the amalgamating companies
answerable for wilful or negligent misconduct in the preparation
and the implementation of the amalgamation, or any expert
responsible for drawing up, on behalf of any of the amalgamating
companies, of the report on the draft terms of the merger
answerable for wilful or negligent misconduct in the performance
of his duties, shall be liable for all damages occasioned to any
shareholder of any of the amalgamating companies as a
consequence of his misconduct.
Appeal from 
decision of the 
Registrar.
356.   Any interested party may contest the registration made by
the Registrar, by virtue either of article 344 or article 350 before
the court in accordance with the following conditions:
( a ) the contestation shall be made by application against
the Registrar within one month from the publication
following the registration referred to in article 344 on
the grounds that the draft terms of merger were not
drawn up in accordance with the provisions of article
344; or within three months from the publication
following the registration referred to in article 350 on
the grounds that the resolution of the extraordinary
general meeting was void or voidable; notice of the
application shall be published by the Registrar in the
Gazette;
( b ) where it is possible to remedy a defect liable to render
an amalgamation void or voidable, the court shall
grant the companies involved a period within which to
rectify the situation;
( c ) a notice that the judgment of the court has been
delivered shall be published by the Registrar in the
Gazette, which notice shall specify whether the
application has been allowed or dismissed;
( d ) a judgment declaring an amalgamation void or
voidable shall not of itself affect the validity of
obligations owed by or in relation to the acquiring
company which arose before the judgment was
delivered and after the date of registration of the draft
terms of merger referred to in article 344 or of the
resolutions and the other instruments referred to in
article 350 according to the case;
( e ) companies which have been parties to an
amalgamation shall be jointly and severally liable in
COMPANIES [ CAP. 386.        189
respect of the obligations of the acquiring company
referred to in paragraph   ( d );
( f ) the amalgamation shall not take effect until the lapse
of the three months referred to in paragraph  ( a )  or, if
an application is filed, until the date of the final
judgment, if the application is refused; and
( g ) upon the delivery of the judgment the Registrar shall,
where the application is allowed, amend the
registration accordingly as if the amalgamation
procedure had never commenced.
Chapter II - Merger by formation of a new company
Application of 
articles 344 to 356 
to merger by 
formation of a new 
company.
Amended by:
IV. 2003.131.
357. (1) The provisions of articles 344 to 356 other than  article
345 ( 6 )  shall apply to merger by formation of a new company as
though references to the acquiring company were references to the
new company and as though references to the amalgamating
companies and to the companies being acquired were references to
the merging companies:
Provided that, in the case of a merger by formation of a new
company, the draft terms of merger shall only be drawn up by each
of the merging companies:
Provided further that in  article  344 ( 2 )( a ) , the reference to
amalgamating companies shall also include the new company:
Provided further that the proviso to  article  354 ( 3 )  shall be
deemed to refer to such fees as may be payable upon the
registration of the new company.
( 2 ) The draft terms of merger of each of the merging companies
and the memorandum and articles of association of the new
company shall be approved by an extraordinary resolution of each
of the merging companies.
( 3 ) The new company shall be formed in accordance with the
provisions of this Act except that the rules governing the
verification of any consideration other than cash laid down in
article  73 ( 4 ) ,  ( 5 )  and  ( 6 )  shall not apply.
( 4 ) The Registrar shall, after striking the name of the company
being acquired off the register in accordance with the provisions of
article 353(1), proceed to issue a certificate of registration for the
new company denoting the fact of the formation of that company as
a result of the merger.
  190      CAP. 386. ]                   COMPANIES
Chapter III - Acquisition of one company by another which 
holds ninety per cent or more of its shares
Acquisition of one 
company by 
another which 
holds all its shares.
Amended by:
IV. 2003.132.
358. (1) The operation whereby the assets and liabilities of
one or more companies are delivered to another company which is
the holder of all their shares and whereby the former companies are
dissolved without having to be wound up shall be regulated by
articles 344 to 356 to the exclusion of the provisions contained in
article  344 ( 2 )( b ) ,  ( c )   and   ( d ) , article 346, article 348, particle
349(1) ( d )  and  ( e ) , article 354(1) ( b )  and article 355.
( 2 ) For the purpose of this article and of article 359, any
reference to "draft terms of acquisition" shall be taken to be a
reference to "draft terms of merger" as specified in article 344.
( 3 ) The approval of the general meeting of each of the
companies involved in the operation shall not be required and
article 345 shall not apply to the operation specified in subarticle
(1), if the following conditions are fulfilled:
( a ) the draft terms of acquisition as regards each company
involved in the operation shall be delivered to the
Registrar for registration and shall be published by
him at least three months before the operation takes
effect; and
( b ) within the period mentioned in paragraph   ( a ),  all
shareholders of the acquiring company shall be
entitled to inspect at the registered office of the
company the documents specified in article 349(1) ( a ) ,
( b )  and  ( c )  which those same shareholders would be
entitled to inspect in case of an amalgamation made in
any of the manners specified in article 343; and the
provisions of  article  349 ( 2 )  and  ( 3 )  shall apply:
Provided that, in any case, the shareholders of the acquiring
company holding at least five per cent of the issued share capital
carrying the right to vote at general meetings of the company shall
be entitled to require that a general meeting of the acquiring
company be called to decide whether to approve the operation.
Acquisition of one 
company by 
another which 
holds 90% or 
more, but not all, 
of its voting shares.
Amended by:
IV. 2003.133.
359. (1) Where one or more companies are acquired by
another company which holds ninety per cent or more, but not all of
the shares of each of those companies, having the right to vote at
general meetings, the general meeting of the acquiring company
need not approve the acquisition provided the following conditions
are fulfilled:
( a ) the draft terms of the acquisition as regards the
acquiring company shall be delivered to the Registrar
for registration and shall be published by him;
( b ) the general meetings of the companies being acquired
which are to decide on the draft terms of acquisition
shall be held not later than three months from the
publication referred to in paragraph ( a );
( c ) within the period mentioned in the preceding
paragraph ,  all shareholders of the acquiring company
COMPANIES [ CAP. 386.        191
shall be entitled to inspect the documents referred to in
article  358 ( 3 )( b )  and the provisions of the said  article
358 ( 3 )( b )  shall apply;
( d ) the provisions of  article  358 ( 3 )( c )  shall apply to the
acquisition regulated by this article.
( 2 ) All the other provisions of Chapter I of this Part relating to
merger by acquisition shall apply:
Provided that the provisions regarding the drawing up of a
report on the draft terms of the merger by the directors and by the
experts as specified in articles 346 and 348 respectively and the
right of all shareholders to inspect and obtain copies of the
documents specified in article 349 shall not apply, as long as the
dissenting minority shareholders of the company or companies
being acquired have the right to have their shares purchased by the
acquiring company for a consideration corresponding to the fair
value of their shares and in the event of disagreement regarding the
fair value of such consideration, as shall be determined by the
court.
PART IX - DIVISION OF COMPANIES
Division of a 
company by 
acquisition or by 
formation of new 
companies.
Amended by:
IV. 2003.134.
360. (1) Division of a company into two or more companies
may be effected by - 
( a ) division by acquisition; or
( b ) division by formation of new companies; or
( c ) division by a combination of a division by acquisition
with a division by the formation of one or more new
companies.
( 2 ) Division by acquisition is the operation whereby a company
( referred to in this Part as "the company to be divided" )  delivers to
two or more existing companies  ( referred to in this Part as "the
recipient companies" )  all its assets and liabilities in exchange for
the allocation to the shareholders of the company to be divided of
shares in the recipient companies and a cash payment, if any, not
exceeding ten per cent of the nominal value of the shares so issued.
( 3 ) Division by formation of new companies is the same as the
operation described in subarticle  ( 2 )  except that the recipient
companies are formed as new companies for the purposes of taking
part in the division. The expression "the companies involved in a
division" used in the case of a division by formation of new
companies in this Part shall be interpreted as referring only to the
company to be divided.
(4) Division by a combination of a division by acquisition with
a division by formation of one or more new companies is the same
as the operation described in subarticle (2) combined with the
operation as described in subarticle (3).
  192      CAP. 386. ]                   COMPANIES
( 5 ) The company to be divided shall be dissolved without
having to be wound up in accordance with the provisions of Title II
of Part V of this Act; dissolution shall be deemed to take place
when the division becomes effective in accordance with the
provisions of article 370.
( 6 ) The fact that the company to be divided has been dissolved
voluntarily by an extraordinary resolution, and a declaration of
solvency has been filed, shall not prevent that company taking part
in the division provided that none of its assets have been
distributed to shareholders after dissolution. Any provision of this
Part requiring the directors of a company to act shall be interpreted
in relation to a company which has been dissolved as requiring the
liquidator to act.
( 7 ) The fact that the company to be divided has been dissolved
by the court in terms of article 214, and in the case of a voluntary
winding up a declaration of solvency has not been filed, shall
invalidate the division with respect to all the companies involved in
the division.
( 8 ) A division of a company may only be effected into two or
more companies, and it shall not be possible to effect a division
involving any other kind of commercial partnership.
Chapter I - Division by acquisition
Draft terms of 
division.
Amended by:
IV. 2003.135.
361. (1) The directors of the company to be divided and of
each of the recipient companies  ( hereinafter referred to in this Part
as "the companies involved in a division" )  shall draw up draft terms
of division in writing.
( 2 ) The draft terms of division shall specify the following:
( a ) the status, name and registered office of each of the
companies involved in the division;
( b ) the share exchange ratio and the amount of any cash
payment;
( c ) the terms relating to the allotment of shares in each of
the recipient companies;
( d ) the date from which the holding of such shares entitles
the holders to participate in profits and any special
conditions affecting that entitlement;
( e ) the date from which the transactions of the company to
be divided shall be treated for accounting purposes as
being those of one or other of the recipient companies;
( f ) the rights conferred by each of the recipient companies
on the holders of shares to which special rights are
attached and the holders of securities other than
shares, or the measures proposed concerning them;
( g ) any special advantage granted to the experts referred
to in article 364 and to the directors of each of the
COMPANIES [ CAP. 386.        193
companies involved in the division;
( h ) the precise and detailed description and allocation of
the assets, rights, liabilities and obligations to be
delivered to each of the recipient companies; and
( i ) the allocation to the shareholders of the company to be
divided of shares in the recipient companies and the
criterion upon which such allocation is based.
( 3 ) Where an asset is not allocated by the draft terms of
division and where the interpretation of these terms does not make
a decision on its allocation possible, the asset or the consideration
therefor shall be allocated to all the recipient companies in
proportion to the share of the net assets allocated to each of those
companies under the draft terms of the division.
( 4 ) Where a liability is not allocated by the draft terms of
division and where the interpretation of these terms does not make
a decision on its allocation possible, each of the recipient
companies shall be jointly and severally liable for it:
Provided that such joint and several liability shall be
limited to the net assets allocated to each company.
( 5 ) The draft terms of division for each of the companies
involved in a division duly completed, shall be signed by at least
one director and the company secretary of each of the companies
involved in the division, and forwarded to the Registrar by each
company for registration, who being satisfied that the requirements
of the provisions of this article have been complied with, shall
register them.
Approval by 
extraordinary 
resolution of 
division.
Amended by:
IV. 2003.136.
362. (1) A division may only be made if it has been approved
by an extraordinary resolution of each company involved in the
division to be adopted by each such company at least one month
after the publication of its draft terms of division and not later than
three months therefrom.
( 2 ) Where shares in the recipient companies are allocated to the
shareholders of the company to be divided otherwise than in
proportion to their rights in the capital of that company, the
dissenting members of that company may exercise the right to have
their shares redeemed. In such case, the shares shall be redeemed
on such terms as may be agreed or as the court, on a demand made
either by any of the recipient companies or by any of the dissenting
members of the company to be divided, thinks fit to order.
( 3 ) The provisions of this Act governing alterations and
additions to the memorandum and articles shall, as appropriate,
apply to any alterations and additions to the memorandum and
articles necessitated by any division referred to in this Part.
( 4 ) Where there is more than one class of shares in any of the
companies involved in a division the extraordinary resolutions of
those companies concerning the division shall be subject to a
separate vote by at least each class of shareholders whose rights are
affected thereby.
  194      CAP. 386. ]                   COMPANIES
( 5 ) The extraordinary resolution taken by each of the
companies involved in a division shall cover both the approval of
the draft terms of division and any alterations and additions to the
memorandum and articles necessitated by the division.
( 6 ) The general meeting of any recipient company shall not be
required if the following conditions are fulfilled: 
( a ) the publication of the statement referred to in article
401(1) ( e ) , provided for pursuant to the registration
required by virtue of  article  361 ( 5 )  shall be effected,
for each recipient company, at least one month and not
more than three months before the date fixed for the
general meeting of the company to be divided which is
to decide on the draft terms of division;
( b ) at least one month before the date specified in
paragraph  ( a )  all shareholders of each recipient
company shall be entitled to inspect the documents
specified in article 365(1) at the registered office of
that company; and
( c ) one or more shareholders of any recipient company
holding at least five per cent of the issued share capital
which carries a right to vote at general meetings of the
company shall be entitled to require that a general
meeting of that recipient company be called to decide
whether to approve the division.
Drawing up of 
detailed written 
report on draft 
terms of division 
by directors.
Amended by:
IV. 2003.137.
363. (1) The directors of each of the companies involved in a
division shall draw up a detailed written report explaining the draft
terms of division and setting out the legal and economic grounds
for them, in particular the share exchange ratio and the criterion
determining the allocation of shares. The report shall also describe
any special valuation difficulties which have arisen.
( 2 ) The report shall refer to any report prepared pursuant to
article  73 ( 4 ) .
( 3 ) The directors of a company to be divided shall inform the
general meeting of that company of any material change in the
assets and liabilities between the date of preparation of the draft
terms of division and the date of the general meeting of the
company to be divided which is to be convened to decide on the
draft terms of division.
( 4 ) The directors of a company to be divided shall furthermore
inform the directors of the recipient companies so that these
directors can inform the respective general meetings of any
material change in the assets and liabilities as specified in
subarticle  ( 3 ) .
Written report to 
shareholders to be 
drawn up by one or 
more experts.
364. (1) One or more experts acting on behalf of each of the
companies involved in a division but independent of them and
approved by the Registrar, shall examine the draft terms of division
and draw up a written report to the shareholders.
( 2 ) The provisions of  article  348 ( 2 )  to  ( 5 )  shall apply to the
COMPANIES [ CAP. 386.        195
report.
( 3 ) The report on considerations other than in cash referred to
in  article  73 ( 4 )  and the report on the draft terms of division drawn
up in accordance with subarticle (1) shall be drawn up by the expert
or experts approved under subarticle (1).
Documents which 
shareholders of 
companies 
involved in a 
division are 
entitled to inspect.
365. (1) All shareholders of the companies involved in a
division shall be entitled to inspect the following documents at the
registered office of each company involved in the division at least
one month before the date of the general meeting which is to decide
on the draft terms of division: 
( a ) the draft terms of division;
( b ) the annual accounts and directors’ reports of the
companies involved in the division for the preceding
three accounting periods;
( c ) an accounting statement drawn up as at a date which
shall not be earlier than the first day of the third month
preceding the date of the draft terms of division, if the
latest annual accounts relate to an accounting period
which ended more than six months before that date;
( d ) the reports of the directors of the companies involved
in the division provided for in article 363(1); and
( e ) the reports provided for in article 364.
( 2 ) The accounting statement provided for in subarticle (1) ( c )
shall be drawn up using the same methods and the same layout as
the latest balance sheet:
Provided that - 
( a ) it shall not be necessary to take a fresh physical
inventory;
( b ) the valuations shown in the latest balance sheet shall
be altered only to reflect entries in the accounting
records; and
( c ) the following shall nevertheless be taken into account:
interim depreciation and provisions, and material
changes in actual values not shown in the accounting
records.
( 3 ) Every shareholder shall be entitled to obtain, on request and
free of charge, full or, if so desired, partial copies of the documents
referred to in subarticle (1).
Non-applicability 
of certain 
provisions where 
shareholders 
involved in a 
division are in 
agreement.
366.   The provisions of article 363,  article  364(1) and  ( 2 )  and
article 365(1) ( c ) ,  ( d )   and   ( e )  shall not apply if all the shareholders
of all the companies involved in a division have so agreed.
  196      CAP. 386. ]                   COMPANIES
Delivery of 
extraordinary 
resolutions relating 
to division to 
Registrar for 
registration.
367.   The extraordinary resolution approving the division
passed by the company to be divided and the extraordinary
resolutions passed by the recipient companies together with the
instruments giving effect to the division, or an authentic copy
thereof, shall be delivered for registration to the Registrar who,
being satisfied that the requirements of the preceding provisions of
this Part have been complied with, shall register them.
Rights of creditors 
to oppose division.
Amended by:
IV. 2003.138.
368. (1) The division shall not take effect until three months
from the date of the publication of the statement referred to in
article 401(1) ( e )  relating to the extraordinary resolutions approving
the division.
( 2 ) During the aforesaid period of three months any creditor of
any of the companies involved in a division whose debt existed
prior to the publication of the statement referred to in article
401(1) ( e ) , provided for pursuant to the registration required by
virtue of  article  361 ( 5 )  may, by writ of summons, object to the
division, and if he shows good cause why it should not take effect,
the court shall either uphold the objection or allow the division on
sufficient security being given.
( 3 ) In so far as a creditor of a company to which the obligation
or liability has been allocated in accordance with the draft terms of
division has not obtained satisfaction, the recipient companies shall
be jointly and severally liable for that obligation:
Provided that as regards the recipient companies other than
the one to which the obligation or liability has been allocated, this
liability shall be limited to the net assets allocated to each of those
companies:
Provided further that this subarticle shall not apply where
the operation involving the division is subject to the supervision of
the court in accordance with article 375 and a majority in number
representing three-fourths in value of the creditors of the company
to be divided have agreed to forego such joint and several liability
at a meeting held pursuant to article 375(2) ( c ) .
( 4 ) The provisions of subarticles (1),  ( 2 )  and  ( 3 )  shall apply to
the debenture holders of the companies involved in a division so
long as the division has not already been approved by the debenture
holders, individually or by a special meeting of the debenture
holders called specifically for the purpose, at which meeting all the
debenture holders shall signify their consent.
Protection of 
holders of 
securities in a 
division.
369.   The holders of securities, other than shares, to which
special rights are attached, shall be given rights in the recipient
companies against which such securities may be invoked in
accordance with the draft terms of division, at least equivalent to
the rights they possessed in the company to be divided, unless - 
( a ) the holders of those securities individually agree to the
alteration of their rights; or
( b ) the alteration has been approved by a meeting of the
holders of those securities called specifically for the
purpose at which meeting all the holders of such
COMPANIES [ CAP. 386.        197
securities shall signify their consent; or
( c ) the holders of these securities are entitled to have their
securities repurchased.
Duties of Registrar 
in respect of a 
division.
Amended by:
IV. 2003.139.
370. (1) Upon the division becoming effective either through
the lapse of the period referred to in article 368 or, where objection
is made under that article, by a decision of the court, the Registrar
shall strike the name of the company to be divided off the register
and issue a certificate of registration, altered to meet the
circumstances of the case and denoting the fact of the division, for
all the recipient companies, and where a division which has been
registered under this Part does not become effective pursuant to a
decision of the court under article 368, the Registrar shall amend
the registration accordingly.
( 2 ) The Registrar shall, in respect of every company involved
in a division, either proceed to publish a notice of the division after
it has become effective or to publish a notice that the division has
not become effective pursuant to a decision of the court under
article 368 in both cases as specified in subarticle (1). The
publication shall be made in accordance with the provisions of
article 401(1) ( e ) .
Consequences of 
division.
Amended by:
IV. 2003.140.
371. (1) A division shall have the following consequences:
( a ) the recipient companies shall succeed to all the assets,
rights, liabilities and obligations of the company to be
divided, both as between the company to be divided
and the recipient companies and as regards third
parties without the requirement of any formalities
other than those arising under this Part;
( b ) the shareholders of the company to be divided shall
become shareholders of one or more of the recipient
companies; and
( c ) the company to be divided shall cease to exist.
( 2 ) No shares in a recipient company shall be exchanged for
shares held in the company to be divided either - 
( a ) by that recipient company; or 
( b ) by the company to be divided.
Cap. 364.
Cap. 123.
( 3 ) The succession to all assets, rights, liabilities and
obligations of the company to be divided by the recipient
companies, referred to in subarticle (1) ( a ) , shall not give rise to any
liability to the payment of any duty or tax under the Duty on
Documents and Transfers Act or the Income Tax Act:
Provided that any fees that may be payable upon an
increase in the authorised share capital of the recipient companies
shall remain due and payable.
( 4 ) The division shall not prejudice the rights enjoyed by the
creditors of the company to be divided over any of the assets of that
company.
(5) Where the assets of the company to be divided include
  198      CAP. 386. ]                   COMPANIES
immovable property or rights relating thereto, the directors of the
recipient companies shall cause within one month from the coming
into force of the division, a declaratory public deed to be published,
containing a detailed description and the allocation of the
immovable property or rights relating thereto delivered to each of
the recipient companies, and a true copy of the said deed shall be
lodged with the Registrar within fourteen days from the enrolment
thereof at the Public Registry.
Liability of 
director or expert 
for wilful or 
negligent 
misconduct.
Amended by:
IV. 2003.141.
372.   Any person who - 
( a ) being a director of a company to be divided and who is
responsible for the preparation and the implementation
of the division, or
( b ) being an expert who is responsible for drawing up on
behalf of the said company the report on the draft
terms of the division,
and who, as a consequence of his wilful or negligent misconduct in
the performance of his duties causes damages to any shareholder of
the company to be divided, shall be liable for such damages.
Appeal from 
decisions of 
Registrar.
Amended by:
IV. 2003.142.
373.   Any interested party may contest the registration made by
the Registrar, by virtue either of article 361 or of article 367 before
the court in accordance with the following conditions:
( a ) the contestation shall be made by application against
the Registrar within one month from the publication
following the registration referred to in article 361 on
the grounds that the draft terms of division were not
drawn up in accordance with the provisions of article
361, or within three months from the publication
following the registration referred to in article 367 on
the grounds that any of the resolutions of the
extraordinary general meetings mentioned therein was
void or voidable; notice of the application shall be
published by the Registrar;
( b ) where it is possible to remedy a defect liable to render
a division void or voidable, the court shall grant the
companies involved a period within which to rectify
the situation;
( c ) a notice that the judgment of the court has been
delivered shall be published by the Registrar, which
notice shall specify whether the application has been
allowed or dismissed;
( d ) a judgment declaring a division void or voidable shall
not of itself affect the validity of obligations owed by
or in relation to the recipient companies which arose
before the judgment was delivered and after the date of
registration of the draft terms of division referred to in
article 361 or of the resolutions and the other
instruments referred to in article 367 according to the
case;
( e ) each of the recipient companies shall be liable for its
COMPANIES [ CAP. 386.        199
obligations arising after the date on which the division
took effect and before the date on which the judgment
declaring the division void was delivered;
( f ) the company to be divided shall also be liable for the
obligations referred to in paragraph  ( e ) :
      Provided that the extent of this liability shall be
limited to the share of the net assets delivered to the
recipient company on whose account such obligations
arose;
( g ) the division shall not become operative until the lapse
of the three months referred to in paragraph   ( a )  or, if
an application is filed, until the date of the final
judgment, if the application is refused; and
( h ) upon the delivery of the judgement the Registrar shall,
where the application is allowed, amend the
registration accordingly as if the division procedure
had never commenced.
Chapter II - Division by the formation of new companies
Application of 
preceding articles 
of this Part to 
division by 
formation of new 
companies.
Amended by:
IV. 2003.143.
374. (1) The provisions of articles 361, 362(1) to (5), 363,
364(1) and  ( 2 )  and articles 365 to 373 shall apply to division by the
formation of new companies, as though references to the companies
involved in a division were references only to the company to be
divided:
Provided that the proviso to article 371(3) shall be deemed
to refer to such fees as may be payable upon the registration of the
new companies.
( 2 ) In addition to the information specified in  article  361 ( 2 ) , the
draft terms of division, which in the case of a division by formation
of new companies shall only be drawn up by the company to be
divided, shall indicate the status, name and registered office of each
of the new companies.
( 3 ) The draft terms of division of the company to be divided
and, if they are contained in a separate document, the draft
memorandum and the draft articles of each of the new companies
shall be approved by an extraordinary resolution taken at a general
meeting of the company to be divided.
( 4 ) The report on the consideration other than in cash as
referred to in  article  73 ( 4 )  and the report on the draft terms of
division of the company to be divided as referred to in article
364(1) shall be drawn up by the same expert or experts.
( 5 ) Neither article 364 nor article 365, in so far as they relate to
the expert’s report, shall apply where the shares in each of the new
companies are allocated to the shareholders of the company to be
divided in proportion to their holding in the issued share capital of
that company.
( 6 ) The Registrar shall, after striking the name of the company
  200      CAP. 386. ]                   COMPANIES
to be divided off the register in accordance with the provisions of
article 370(1), proceed to issue a certificate of registration for each
one of the new companies formed, denoting the fact of its
formation as a result of the division.
Added by:
IV. 2003.145.
Chapter III - Division by a combination of a division by 
acquisition with a division by the formation of one or more new 
companies
Division by a 
combination of 
division by 
acquisition and 
division by 
formation of new 
companies.
Added by:
IV. 2003.145.
374A.  (1) The provisions of articles 361, 362, 363, 364(1) and
(2) and articles 365 to 373 shall apply to division by combination
of a division by acquisition with a division by formation of one or
more new companies:
Provided that the proviso to article 371(3) shall be deemed
to refer also to such fees as may be payable upon the registration of
the new companies where that is the case.
(2) In addition to the information specified in article 361(2),
the draft terms of division, shall also indicate the status, name and
registered office of the new company or companies.
(3) The draft terms of division and, if they are contained in a
separate document, the draft memorandum and the draft articles of
the new company or companies shall be approved by an
extraordinary resolution taken at a general meeting of the company
to be divided and of each existing recipient company.
(4) Neither article 364 nor article 365, in so far as they relate to
the written report drawn up by one or more experts shall apply in
respect of new companies where the shares in such companies are
allocated to the shareholders of the company to be divided in
proportion to their holding in the issued share capital of that
company.
(5) The Registrar shall, after striking the name of the company
to be divided off the register in accordance with the provisions of
article 370(1), proceed to issue a certificate of registration for each
one of the new companies formed, denoting the fact of its
formation as a result of the division.
Amended by:
IV. 2003.144.
Chapter IV - Division under the supervision of the court
Application to 
court to supervise 
division and 
powers of the court 
in relation thereto.
Amended by:
IV. 2003.146.
375. (1) The company to be divided may apply to the court for
it to supervise the division.
( 2 ) The court shall as a result have the power - 
( a ) to call a general meeting of the shareholders of the
company to be divided in order to decide upon the
division by extraordinary resolution;
( b ) to ensure that the shareholders of each of the
companies involved in the division have received or
COMPANIES [ CAP. 386.        201
can obtain at least the documents referred to in article
365 in time to examine them before the date of the
general meeting of their company called to decide
upon the division:
Provided that if, by virtue of  article  362 ( 6 ) , the
general meeting of any of the recipient companies is
not to be held, the court shall ensure that the
shareholders of the recipient companies shall have at
least one month within which to exercise the rights
conferred on them by that article:
Provided further that the provisions of this
paragraph shall, with regard to division by the
formation of new companies, apply only to the
company being divided;
( c ) to call any meeting of creditors of each of the
companies involved in the division in order to decide
upon the division;
( d ) to ensure that the creditors of each of the companies
involved in the division have received or can obtain at
least the draft terms of division in time to examine
them before the date referred to in paragraph  ( b );  and
( e ) to approve the draft terms of division.
( 3 ) Where the court establishes that the conditions referred to
in subarticle  ( 2 )( b )  and  ( d )  have been fulfilled and that no prejudice
would be caused to shareholders or creditors, it may - 
( a ) relieve the Registrar from the obligation relating to the
publication of the statement referred to in article
401(1) ( e )  required pursuant to the registration of the
draft terms of division in accordance with  article
361 ( 5 ) ;
( b ) relieve the companies involved in the division from
applying the conditions referred to in  article  362 ( 6 )( a )
and   ( b ) ; and
( c ) relieve the companies involved in the division from
applying the provisions of article 365, in so far as they
relate to the period and the manner prescribed for the
inspection of the documents referred to therein.
(4) The provisions of article 368(3) shall not apply to a divison
under this Chapter where a majority in number representing three-
fourths in value of the creditors of the company to be divided have
agreed to forego such joint and several liability as is referred to in
article 368(3).
PART X - ASSOCIATION  EN PARTICIPATION
Definition.
person assigns to another person, for a valuable consideration
  202      CAP. 386. ]                   COMPANIES
contributed by the latter, a portion of the profits and losses of a
business or of one or more commercial transactions.
Consent of 
associates required 
for admission of 
other associates.
377.   Saving any agreement to the contrary, the associating
party may not have other associates in the same business or
transactions without the consent of his associates.
Relations of parties 
vis-à-vis  third 
parties and among 
themselves.
378. (1) In regard to third parties the ownership of, or other
rights over, a thing contributed by an associate shall vest in the
associating party.
( 2 ) In the relations of the parties among themselves, saving any
agreement that a thing contributed is to be restored in kind, the
associate shall, on the termination of the association, be entitled to
the reimbursement of the value of his contribution.
Only associating 
party acquires 
rights and assumes 
obligations.
379.   A third party shall acquire rights and assume obligations
against and in favour only of the associating party.
Rights of 
associating party 
and of associates.
380.   The management of the business or of the transactions in
respect of which the association was formed shall vest only in the
associating party:
Provided that the associate may, where it is so agreed and to
the extent agreed, supervise such business or transactions:
Provided further that the associate shall, in all cases, be
entitled to an account of any transaction that is completed and,
where the association lasts for more than one year, to an annual
account of the management of the business or transactions in
respect of which the association was formed.
Liability of 
associate.
381.   Unless otherwise agreed, the associate shall bear the
losses in the same proportion in which he partakes in the profits,
and his liability shall be limited to his contribution.
Agreements 
allowed between 
parties.
382.   Saving the provisions of the preceding articles of this Part,
an association  en participation  may be formed in such manner, in
such proportions of interests and upon such conditions as may be
agreed upon by the parties.
Formalities 
required for 
association  en 
participation .
383.   An association  en participation  shall be constituted by an
instrument in writing although any such association so constituted
shall not be subject to any other formalities prescribed in regard to
partnerships and it shall not have a legal personality distinct from
that of its members.
COMPANIES [ CAP. 386.        203
PART XI - BODIES CORPORATE CONSTITUTED OUTSIDE 
MALTA
Amended by:
IV. 2003.147.
Chapter I - Provisions as to establishment of branch
or place of business in Malta
Application of 
articles 385 to 389.
Amended by:
IV. 2003.147.
384.   Articles 385 to 389 shall apply to all bodies corporate,
whatever their type, constituted or incorporated outside Malta
( hereinafter in this Chapter and in Chapter III of this Part referred
to as "oversea companies" )  which establish a branch or place of
business within Malta.
Documents, etc., to 
be delivered by 
oversea companies 
carrying on 
business in Malta.
Amended by:
IV. 2003.147, 148.
385. (1) Oversea companies which, on or after the appointed
day, establish a branch or place of business within Malta shall,
within one month of the establishment of the place of business,
deliver to the Registrar for registration - 
( a ) an authentic copy of the charter, statutes or
memorandum and articles of the oversea company or
other instrument constituting or defining the
constitution of the oversea company, and, if the
instrument is not written in the English or Maltese
language, a translation thereof into either of such
languages, certified to be a correct translation in such
manner as may be prescribed;
( b ) a list of the directors and company secretary, if any, or
of the persons vested with the administration of the
oversea company, where that company does not have
directors or a company secretary, and, in all cases, a
list of the persons vested with the representation of the
oversea company. Such lists shall include the
following particulars:
(i) in the case of an individual, his name, his usual
residential address, his nationality and his
business occupation; and
(ii) in the case of a body corporate, its registered or
corporate name and registered or principal
office;
( c ) a return containing the following particulars:
(i) the name under which the branch or place of
business is carrying on its activities where
different from the name of the oversea company;
(ii) the address of the branch or place of business
established in Malta by the oversea company,
and where more than one branch or place of
business has been established, there shall be
indicated the address of the principal branch or
place of business;
(iii) the activities to be carried out by the branch or
place of business established in Malta;
(iv) the names and addresses of one or more
individuals resident in Malta authorised to
represent the oversea company for the activities
  204      CAP. 386. ]                   COMPANIES
of the branch or place of business established in
Malta; and
(v) the extent of the authority of any individual
falling within subparagraph (iv), including
whether that individual is authorised to act alone
or jointly with others, and in the latter case, the
name of any person with whom he is authorised
to act;
( d ) unless disclosed by the document specified in
paragraph ( a ), a return containing the following
particulars about the oversea company:
(i) the legal form of the oversea company; and
(ii) the identity of the register in which the oversea
company is registered and the number with
which it is so registered.
( 2 ) Oversea companies constituted or incorporated outside
Malta which, before the appointed day, have been duly registered
with the Registrar in accordance with the provisions of Part VIII of
the Ordinance, shall be deemed to be registered in accordance with
the provisions of this Part:
Provided that oversea companies which have, before the
appointed day, established a branch or place of business within
Malta and continue to have an established branch or place of
business within Malta on the appointed day, shall comply with the
provisions of this Part and in particular shall deliver to the
Registrar for registration the documents and particulars specified
under subarticle (1) ( a ) ,  ( b )  and  ( c )  within six months of the
appointed day, unless they have already registered such documents
and particulars under the Ordinance.
Return to be 
delivered by 
oversea company 
where documents, 
etc., altered.
Amended by:
IV. 2003.149.
386.   If any alteration is made in - 
( a ) the charter, statutes or memorandum and articles of an
oversea company or any such instrument as aforesaid;
or
( b ) the directors or company secretary or the persons
vested with the administration or the representation of
an oversea company, or in the particulars specified
under article 385(1)( b ); or
( c ) the names or addresses of the individuals authorised to
represent an oversea company for the activities of the
branch or place of business established in Malta,
the company shall, within one month of any such alteration, deliver
to the Registrar for registration a return containing the particulars
of the alteration, signed by a director, the company secretary or
other authorised officer of the company.
Accounts of 
oversea company.
387. (1) Every oversea company shall, in every calendar year,
make out and deliver to the Registrar for registration a balance
sheet, a profit and loss account and the notes to the accounts in
such form, and containing such particulars and including such
documents as, under the provisions of this Act, the directors would,
COMPANIES [ CAP. 386.        205
if the company had been a company formed and registered under
this Act, be required to make out and lay before the company in
general meeting:
Provided that the Registrar may accept for registration a
balance sheet, profit and loss account and the notes to the accounts
prepared in the form required under the law of the place of the
company’s constitution or incorporation if, in his opinion, or if as
prescribed, such accounts give substantially the same information
as, or greater information than, that required to be given in the
accounts referred to in article 167.
( 2 ) Notwithstanding that the balance sheet, profit and loss
account and the notes to the accounts prepared in the form required
under the law of the place of the company’s constitution or
incorporation do not give substantially as much information as that
required in the accounts referred to in article 167, the Registrar
may, in his absolute discretion, nevertheless agree to accept such
accounts for registration in compliance with subarticle (1); but in
that event, subject as provided by subarticle  ( 4 ),  the company shall
also deliver to the Registrar for registration -
( a ) a profit and loss account made out as nearly as may be
in the form and containing the particulars required by
the provisions of Chapter X of Title I of Part V and the
Third Schedule governing the profit and loss account
of companies formed and registered in Malta and
giving a true and fair view of the profit and loss,
during the period to which it relates, on the company’s
operations in Malta as if such operations had been
conducted by a separate company formed and
registered in Malta under this Act;
( b ) a statement, as at the end of the period to which the
profit and loss account referred to in paragraph   ( a )
relates, showing the company’s assets locally situated
in Malta classified, distinguished and valued in
accordance with the provisions governing the accounts
of companies formed and registered in Malta
contained in Chapter X of Title I of Part V and the
Third Schedule, and the nature and amount of the
specific charges on such assets; and
( c ) the notes to the accounts giving additional information
to that given in the profit and loss account and in the
balance sheet referred to in paragraphs  ( a )  and  ( b )
relating to the company’s operations in Malta and the
assets locally situated in Malta, drawn up in
accordance with the provisions of Chapter X of Title I
of Part V and the Third Schedule governing the notes
to the accounts of companies formed and registered in
Malta; and
( d ) a report on the account and statement referred to in the
foregoing paragraphs of this subarticle by an auditor
qualified in accordance with article 153 stating that in
his opinion and to the best of his information the
  206      CAP. 386. ]                   COMPANIES
accounts and statements are in accordance with the
accounting records of the company and give the
information required by this Act in the manner therein
required and give a true and fair view of the matters
therein stated:
Provided that the provisions of this subarticle shall not
apply to any company which has at any time made in Malta any
invitation to the public to acquire any of its shares or debentures or
to deposit money with it.
( 3 ) In the profit and loss account referred to in subarticle  ( 2 )( a ),
the company may make such apportionments and add such
explanations as shall, in its opinion, be necessary or desirable in
order to give a true and fair view of the profit or loss of its
operations in Malta and for this purpose may debit a reasonable rate
of interest on capital employed in Malta.
( 4 ) Notwithstanding that the Registrar agrees to accept a
balance sheet, profit and loss account and the notes to the accounts
under subarticle  ( 2 )  he may waive compliance with paragraphs  ( a ) ,
( b ) ,  ( c )  and  ( d )  of that subarticle or any of such paragraphs if
satisfied that compliance therewith is impracticable having regard
to the nature of the company’s operations in Malta.
( 5 ) If any such document as is mentioned in subarticles (1) to
( 4 )  is not written in the Maltese or English language there shall be
annexed to it a translation thereof into either of such languages,
certified to be a correct translation in such manner as may be
prescribed.
Other obligations 
of oversea 
company.
388.   Every oversea company shall in every prospectus inviting
subscriptions for its shares or debentures in Malta state the country
in which the company is constituted or incorporated.
Penalties. 389.   If an oversea company fails to comply with any of the
foregoing provisions of this Part, any officer or agent of the
company who is in default shall be liable to a penalty, and, in the
case of a continuing default, to a further penalty for every day
during which the default continues.
Chapter II - Issues by companies constituted or incorporated or 
to be constituted or incorporated outside Malta
Application of 
articles 391 to 399.
Amended by:
IV. 2003.150.
390. (1) The provisions of articles 391 to 399 shall apply to
companies constituted or incorporated or to be constituted or
incorporated outside Malta:
Cap. 370.
Provided that the said provisions shall not apply to a
prospectus issued by a holder of a collective investment scheme
licence within the meaning of the Investment Services Act and
provided further that the issue of such a prospectus complies with
the rules and regulations made under that Act.
( 2 ) In this Chapter the term "expert" includes engineer, valuer,
accountant and any other person whose profession gives authority
COMPANIES [ CAP. 386.        207
to a statement made by him.
Prospectus of 
oversea company.
Amended by:
IV. 2003.147, 151.
391. (1) It shall not be lawful for a person to issue, circulate or
distribute in Malta any prospectus offering for subscription shares
in or debentures of a company constituted or incorporated or to be
constituted or incorporated outside Malta, whether the company
has or has not established, or when formed will or will not
establish, a branch or place of business in Malta, unless the
prospectus complies with the requirements of subarticles  ( 2 )  and
( 3 ) .
( 2 ) The prospectus shall be dated and shall contain particulars
with respect to the following matters:
( a ) the instrument constituting or defining the constitution
of the company;
( b ) the enactments, or provisions having the force of an
enactment, by or under which the constitution or
incorporation of the company was effected;
( c ) an address in Malta where that instrument, and those
enactments or provisions, or copies of them, and, if
they are not in the Maltese or English language, a
translation thereof into either of such languages,
certified to be a correct translation in such manner as
may be prescribed, can be inspected;
( d ) the date on which, and the country in which, the
company was constituted or incorporated; and
( e ) whether the company has established a place of
business in Malta and, if so, the address of that place
where the business is principally carried out in Malta.
( 3 ) Subject to the following provisions of this article, the
prospectus shall comply - 
( a ) with Part I of the Second Schedule, as respects the
matters to be specified in the prospectus; and
( b ) with Part II of that Schedule as respects the reports to
be set out.
( 4 ) Subarticle  ( 2 )( a )   to   ( c )  shall not apply in the case of a
prospectus issued more than two years after the company is entitled
to commence business, and, in the application of Part I of the
Second Schedule for the purposes of this subarticle, references to
the articles of a company shall be interpreted as references to the
constitution or incorporation of the company.
( 5 ) It shall not be lawful for a person to issue to any person in
Malta a form of application for shares in or debentures of such a
company or intended company as is mentioned in subarticle (1)
unless the form is issued with a prospectus which complies with
this Chapter and the issue of which in Malta does not contravene
the provisions of articles 393 and 394:
Provided that this subarticle shall not apply if it is shown
that the form of application was issued in connection with a  bona
fide  invitation to a person to enter into an underwriting agreement
  208      CAP. 386. ]                   COMPANIES
with respect to the shares or debentures.
( 6 ) The provisions of this article - 
( a ) shall not apply to the issue to a company’s existing
members or debenture holders of a prospectus or form
of application relating to shares in or debentures of the
company, whether an applicant for shares or
debentures will or will not have the right to renounce
in favour of other persons; and
( b ) except in so far as it requires a prospectus to be dated,
shall not apply to the issue of a prospectus relating to
shares or debentures which are or are to be in all
respects uniform with shares or debentures previously
issued and for the time being listed on the recognised
investment exchange or on such other investment
exchange as may be prescribed; but subject as
aforesaid the provisions of this article shall apply to a
prospectus or form of application whether issued on or
with reference to the formation of a company or
subsequently. 
Attempted evasion 
of article 391 to be 
void.
392.   A condition requiring or binding an applicant for shares or
debentures to waive compliance with any requirement imposed - 
( a ) by  article  391 ( 2 ) , as regards the particulars to be
contained in the prospectus; or
( b ) by  article  391 ( 3 ) , as regards compliance with the
Second Schedule,
or purporting to affect an applicant with notice of any contract,
document or matter not specifically referred to in the prospectus,
shall be void.
Prospectus 
containing 
statement by 
expert.
Amended by:
IV. 2003.147.
 393. (1) The provisions of this article shall apply in the case of
a prospectus offering for subscription shares in or debentures of a
company constituted or incorporated or to be constituted or
incorporated outside Malta, whether it has or has not established, or
when formed will or will not establish, a branch or place of
business in Malta, if the prospectus includes a statement purporting
to be made by an expert.
( 2 ) It shall not be lawful for any person to issue, circulate or
distribute in Malta such a prospectus if - 
( a ) the expert has not given, or has before delivery of the
prospectus for registration withdrawn, his written
consent to the issue of the prospectus with the
statement included in the form and context in which it
is included; or
( b ) there does not appear in the prospectus a statement that
he has given and has not withdrawn his consent as
above mentioned. 
( 3 ) For the purposes of this article, a statement shall be deemed
to be included in a prospectus if it is contained in it, or in any
report or memorandum appearing on its face, or by reference
COMPANIES [ CAP. 386.        209
incorporated in, or issued with, the prospectus.
Restrictions on 
allotment to be 
secured in 
prospectus.
Amended by:
IV. 2003.147.
394. (1) It shall not be lawful for a person to issue, circulate or
distribute in Malta a prospectus offering for subscription shares in
or debentures of a company constituted or incorporated or to be
constituted or incorporated outside Malta, whether the company
has or has not established, or when formed will or will not
establish, a branch or place of business in Malta unless the
prospectus complies with the condition set out in subarticle  ( 2 ) .
( 2 ) The prospectus shall have the effect, where an application
is made in pursuance of it, of rendering all persons concerned
bound by all the provisions of articles 99, 101 and 102 so far as
applicable.
Stock exchange 
certificate 
exempting from 
compliance with 
the Second 
Schedule.
Amended by:
IV. 2003.147, 152.
395. (1) The provisions of this article shall apply where -
( a ) it is proposed to offer to the public by a prospectus any
shares in or debentures of a company constituted or
incorporated or to be constituted or incorporated
outside Malta, whether the company has or has not
established, or when formed will or will not establish,
a branch or place of business in Malta; and
( b ) application is made to the Listing Authority for the
admissibility to listing of its shares or debentures on a
recognised investment exchange.
( 2 ) There may, on the applicant’s request, be given by or on
behalf of the Listing Authority a certificate that compliance with
the Second Schedule would be unduly burdensome, having regard
to the proposals, as stated in the request, as to the size and other
circumstances of the issue of shares or debentures and as to any
limitation on the number and class of persons to whom the offer is
to be made.
( 3 ) If a certificate is given under subarticle  ( 2 ),  and if the
proposals above mentioned are adhered to and the particulars and
information required to be published in connection with the
application for admissibility to listing on a recognised investment
exchange are so published - 
( a ) a prospectus giving the particulars and information in
the form in which they are so required to be published
shall be deemed to comply with the Second Schedule;
and
( b ) except as respects the requirement for the prospectus
to be dated, article 391 shall not apply to any issue,
after the permission applied for is given, of a
prospectus or form of application relating to the shares
or debentures.
Registration of 
oversea prospectus 
before issue.
Amended by:
IV. 2003.147, 153.
396. (1) It shall not be lawful for a person to issue, circulate or
distribute in Malta a prospectus offering for subscription shares in
or debentures of a company constituted or incorporated or to be
constituted or incorporated outside Malta, whether the company
has or has not established, or when formed will or will not
  210      CAP. 386. ]                   COMPANIES
establish, a branch or place of business in Malta, unless before the
issue, circulation or distribution the requirements of this article
have been complied with.
( 2 ) A copy of the prospectus, certified by two directors, or
persons holding or occupying equivalent posts, of the company as
having been approved by resolution of the board of directors or
equivalent body, shall have been delivered for registration to the
Registrar.
( 3 ) The prospectus shall state on the face of it that a copy has
been so delivered to the Registrar and the following shall be
endorsed or attached to that copy of the prospectus - 
( a ) any consent to the issue of the prospectus which is
required by article 393;
( b ) a copy of any contract required by paragraph 23 of the
Second Schedule to be stated in the prospectus or, in
the case of a contract not reduced into writing, a
memorandum giving full particulars of it.
( 4 ) Where, in the case of a prospectus deemed by virtue of a
certificate under article 395 to comply with the Second Schedule, a
contract or a copy of it, or a memorandum of a contract, is required
to be available for inspection in connection with an application
under that article to the recognised investment exchange, a copy or,
as the case may be, a memorandum of the contract shall be
endorsed on or attached to the copy of the prospectus delivered to
the Registrar for registration.
( 5 ) References in subarticle  ( 3 )( b )  and in subarticle  ( 4 )  to the
copy of a contract shall be, in the case of a contract wholly or partly
in a foreign language, to a copy of a translation of the contract into
Maltese or English, or a copy embodying a translation into Maltese
or English of the parts in a foreign language, as the case may be,
and - 
( a ) the translation shall in either case be certified to be a
correct translation in such manner as may be
prescribed; and
( b ) the reference in subarticle  ( 4 )  to a copy of a contract
required to be available for inspection includes a copy
of a translation of it or a copy embodying a translation
of parts of it, certified as aforesaid.
Consequences of 
non-compliance 
with articles 391 to 
396.
Amended by:
IV. 2003.147.
397. (1) A person who is knowingly responsible for the issue,
circulation or distribution of a prospectus, or for the issue of a form
of application for shares or debentures, in contravention of any of
the provisions of articles 391 to 396 shall be liable to a penalty.
( 2 ) The provisions of article 94 shall extend to every
prospectus offering for subscription shares in or debentures of a
company constituted or incorporated or to be constituted or
incorporated outside Malta, whether the company has or has not
established, or when formed will or will not establish, a branch or
place of business in Malta, substituting for any reference to article
92 a reference to article 393.
COMPANIES [ CAP. 386.        211
( 3 ) In the event of non-compliance with or contravention of
any of the requirements of  article  391(2) as regards the particulars
to be contained in the prospectus, or  article  391(3) as regards
compliance with the Second Schedule, a director or other person
responsible for the prospectus shall incur no liability by reason of
the non-compliance or contravention if - 
( a ) as regards any matter not disclosed, he proves that he
was not cognisant of it; or
( b ) he proves that the non-compliance or contravention
arose from an honest mistake of fact on his part; or
( c ) the non-compliance or contravention was in respect of
matters which, in the opinion of the court, were
immaterial or were otherwise such as ought, in the
opinion of the court, having regard to all the
circumstances of the case, reasonably to be excused.
( 4 ) In the event of failure to include in a prospectus to which
this Part applies a statement with respect to the matters contained in
paragraph 24 of the Second Schedule, no director or other person
shall incur any liability in respect of the failure unless it is proved
that he had knowledge of the matters not disclosed.
( 5 ) Nothing contained in articles 391 or 392 or in this article,
shall limit or diminish any liability which a person may incur under
this Act or under any other law in force in Malta apart from those
provisions.
Supplementary.
of a company constituted or incorporated outside Malta are offered
for sale to the public would, if the company had been a company
formed and registered under this Act, have been deemed by virtue
of article 95 to be a prospectus issued by the company, that
document shall be deemed, for the purposes of this Part a
prospectus so issued.
( 2 ) An offer of shares or debentures for subscription or sale to a
person whose ordinary business it is to buy or sell shares or
debentures, whether as principal or agent, shall not be deemed an
offer to the public for those purposes.
( 3 ) In this Part "shares" and "debentures" have the same
meaning as when these expressions are used, elsewhere in this Act,
in relation to a company formed and registered under this Act.
Chapter III - Provisions as to the winding up of the affairs in 
Malta of an oversea company
Affairs in Malta of 
an oversea 
company may be 
wound up by the 
court.
399. (1) The court may wind up the affairs in Malta of an
oversea company constituted or incorporated outside Malta in any
of the cases mentioned in article 214 in which it may dissolve and
wind up a company formed and registered in Malta.
( 2 ) The court may exercise its power under subarticle (1)
  212      CAP. 386. ]                   COMPANIES
irrespective of whether the oversea company is being or has been
wound up or has otherwise been dissolved or ceased to exist as a
company under the law of its constitution or incorporation.
( 3 ) For the purposes of this article, every person, who is liable
to pay or contribute to the payment of any debt or liability of the
oversea company, or to pay or contribute to the payment of any sum
for the adjustment of the rights of members among themselves, or
to pay or contribute to the payment of the expenses of the winding
up of the company, shall be deemed to be a contributory.
( 4 ) Every contributory shall be liable to contribute to the
oversea company’s assets all sums due from him in respect of such
liability as is mentioned in subarticle  ( 3 ) .
( 5 ) Subject to the provisions of subarticles (1) to  ( 4 ),  the
winding up of the oversea company’s affairs in Malta shall be
carried out by applying the provisions of Title II of Part V of this
Act, with such modifications as are necessary to accommodate the
fact that the oversea company, the affairs of which are being wound
up, is a company constituted or incorporated outside Malta.
Closure by oversea 
company of its 
branch or place of 
business in Malta.
Added by:
IV. 2003.154.
399A.  (1) ( a )  An oversea company shall within one month of
the closure of its branch or place of business in Malta
deliver a notice to the Registrar for registration
notifying him of such closure.
( b ) Where an oversea company, constituted or
incorporated outside Malta, which has established a
branch or place of business within Malta, has been
dissolved or for any other reason is being wound up, it
shall, within one month from the date of the
dissolution or the date on which the winding-up
begins, deliver to the Registrar for registration a return
in the prescribed form containing the following
particulars:
(i) a brief description of the winding-up or other
proceedings to which the oversea company has
become subject to, specifying whether such
proceedings amount to insolvency proceedings,
or an arrangement or composition, or any
analagous proceedings;
(ii) whether the oversea company has been dissolved
or is being wound up by an order of a court;
(iii) if the company is not being so dissolved or
wound up, as a result of what action the
dissolution or winding-up has commenced;
(iv) whether the dissolution or winding up has been
instigated by:
( a ) the oversea company’s members;
( b ) the oversea company’s creditors; or
( c ) some other person or persons; and
(v) the date on which the dissolution or winding-up
became or will become effective.
COMPANIES [ CAP. 386.        213
( c ) If an oversea company fails to comply with the
provisions of this subarticle, the liquidator or any
officer or agent of the company, as the case may be,
who is in default shall be liable to a penalty and, in the
case of a continuing default, to a further penalty for
every day during which the default continues.
(2) ( a ) A person appointed to be the liquidator of the oversea
company shall, within one month from the date of his
appointment, deliver to the Registrar for registration a
return in the prescribed form containing the following
particulars:
(i) his name, his residential address and his
business or professional occupation;
(ii) the date of his appointment; and
(iii) a description of his powers together with an
explanation of the extent to which these powers
are derived otherwise than from the general law
or the company’s consititution.
( b ) The liquidator of the oversea company shall, within
one month from the termination of the winding up of
the oversea company, deliver to the Registrar for
registration, a return in the prescribed form notifying
him of such termination.
( c ) If the liquidator fails to comply with any of the
requirements of paragraphs ( a ) and ( b ) he shall be
liable to a penalty and, for every day during which the
default continues, to a further penalty.
PART XII - GENERAL
Power of Minister 
to appoint 
Registrar.
400. (1) The Minister shall appoint a person to be Registrar of
Companies and other Commercial Partnerships, who shall be
designated "Registrar of Companies", and may appoint persons to
assist such Registrar, conferring on any such persons all or any of
the powers of the Registrar under this Act or any other law.
( 2 ) Without prejudice to the provisions of subarticle (1), the
Registrar may authorise in writing any person serving with the
office of the Registrar to perform any of the functions assigned to
the Registrar under this Act or any other law.
Additional duties 
of Registrar.
Amended by:
IV. 2003.155.
401. (1) In addition to the other duties prescribed by this Act,
it shall be the duty of the Registrar - 
( a ) to ensure compliance with any provision of this Act
requiring an act to be done or to be omitted to be done
whether under a penalty or not; and to consult the
official receiver  where such action relates to matters
falling within Title II of Part V of this Act;
  214      CAP. 386. ]                   COMPANIES
( b ) to recover penalties due under this Act in accordance
with the provisions of subarticles  ( 3 )  to  (17);
( c ) to exercise any powers of investigation conferred upon
him by this Act;
Cap. 426.
( d ) to retain and register any document which is required
to be delivered or given to or served on him for
registration under any of the provisions of this Act and
any such delivery, submission or service to the
Registrar and the retention and registration of any
document by the Registrar, may be carried out in such
manner and by such means and in such format,
including electronic communication within the
meaning of the Electronic Commerce Act, as the
Registrar may deem appropriate;
( e ) where under any of the provisions of this Act - 
( i ) any document is required to be delivered or
given to or served on him for registration; or
( ii ) any certificate is issued by him on the
registration or change of name or conversion or
amalgamation or division of a commercial
partnership, or the name of a commercial
partnership is struck off the register,
to cause without delay a statement to be published in
the Gazette showing the date at which the registration,
delivery or service was made, or at which the
certificate was issued or at which the name of the
commercial partnership was struck off the register, and
the general nature of the document or certificate, and
giving such particulars as are necessary to distinguish
the commercial partnership to which the statement
related:
Provided that the Registrar shall additionally be
required to publish without delay in a daily newspaper
circulating wholly or mainly in Malta a notice showing
substantially the same information contained in the
statement published in the Gazette, consequent to the
registration referred to in the following articles of this
Act:
Subarticle  ( 2 ) of article  19; 
Subarticle (1) of article 36; 
Subarticle  ( 3 ) of article  88;
Subarticle  ( 6 ) of article  88; 
Subarticle  ( 8 ) of article  88; 
Subarticle (1) of article 224; 
Subarticle (1) of article 265; 
Subarticle  ( 5 ) of article  320; 
Subarticle (1) of article 331; 
Subarticle (1) of article 338; 
COMPANIES [ CAP. 386.        215
Article 350;
Paragraph  ( a )   of subarticle  ( 3 ) of article  358; 
Paragraph   ( a )   of subarticle (1) of article 359; 
Article 367; and
Subarticle  ( 4 ) of article  428.
In the event of any reduction, dissolution or
assignment as are referred to in article 21, or of any
deduction referred to in article 83, the Registrar shall
proceed with the publication of a statement in the
Gazette and in a daily newspaper in accordance with
the requirements of this paragraph.
The publication of the notice referred to in this
proviso shall be subject to the following provisions:
( i ) The publication of the notice shall be made by
the Registrar at the expense of the commercial
partnership concerned, with the exception of the
publication of a disqualification order made in
accordance with article 320, in which case the
publication shall be made at the expense of the
person disqualified;
( ii ) A commercial partnership, liable for the expense
of the publication of a notice in accordance with
this proviso, shall effect payment without delay,
and in the event that such commercial
partnership is or has been dissolved, the
Registrar shall, in regard to the said expense,
enjoy the same preferential ranking as expenses
properly incurred by a liquidator in accordance
with this Act;
( iii ) The expense incurred by the Registrar in
publishing a notice pursuant to this proviso shall
be notified in writing to the commercial
partnership or person liable for the expense in
accordance with this proviso. Such notification
shall be deemed equivalent to a notice given in
terms of subarticle  ( 3 ),  and the expense incurred
by the Registrar shall, in so far as applicable, be
considered equivalent to a penalty referred to in
the same subarticle. The provisions of
subarticles  ( 3 )  to  ( 17 )  shall  mutatis mutandis
apply to such expense;
( f ) to supply copies, certified copies or verified and
certified copies of documents registered pursuant to
this article against payment of the prescribed fee to
any person who requests them;
( g ) to deliver to the Director of the Public Registry for
registration at the Public Registry Office a notice
containing the particulars of any conversion,
amalgamation or division which has taken effect in
accordance with Parts VII, VIII and IX respectively of
  216      CAP. 386. ]                   COMPANIES
this Act, or of the striking off of the name of a
company, under the provisions of article 325. Such
notice shall show substantially the same particulars as
the statement published in the Gazette pursuant to the
proviso to paragraph  ( e );  and it shall be the duty of the
Director of the Public Registry to register the notice or
a note thereof in like manner as notes of reference, in
so far as applicable, as the Director may consider
appropriate.
( 2 ) Any document, certificate, or other particular required to be
delivered, given to or served on the Registrar for registration may
be relied on by the commercial partnership as against third parties
only after it has been duly published in accordance with subarticle
(1) ( e ) , unless the commercial partnership proves that third parties
had knowledge thereof in which case the commercial partnership
may rely on any such document, certificate or other particular
notwithstanding that it has not yet been so published. Any
transactions taking place before the sixteenth day following the
publication of any such document, certificate or other particular
shall not be relied on as against third parties who prove that it was
not possible for them to have had knowledge thereof:
Provided that at any time third parties may always rely on
any such document, certificate or other particular, even if the
publication formalities in relation thereto have not at that time been
complied with:
Provided further that where this Act requires that any
provision shall not take effect until the lapse of a particular period,
the provisions of this subarticle shall only come into effect on the
lapse of the later period.
( 3 ) Where the Registrar gives notice in writing to any person
that such person has become liable to a penalty under this Act
specifying the nature of the infringement, and indicating an amount
as due by way of penalty in respect of such infringement, the
person to whom the notice is given shall, without prejudice to the
provisions of subarticles  ( 4 )  to  ( 17 ),  be deemed to have incurred a
penalty under this Act, and the amount indicated as aforesaid as
due by way of penalty including any penalty due for each day
during which the default continues shall be deemed to be the
penalty due under this Act in respect of the infringement specified
in the notice.
Cap. 12.
( 4 ) A notice as is referred to in subarticle  ( 3 )  shall, upon the
service of a copy thereof by means of a judicial act on the person
indicated in the notice, constitute an executive title for all effects
and purposes of Title VII of Part I of Book Second of the Code of
Organization and Civil Procedure unless such person shall within
thirty days from the date of such service institute proceedings
before the court objecting to the penalty so fixed.
( 5 ) Where any person desires to institute proceedings objecting
to a penalty referred to in subarticle  ( 3 ),  such proceedings shall be
instituted by application against the Registrar.
( 6 ) The application shall, under pain of nullity, state clearly
COMPANIES [ CAP. 386.        217
and concisely the nature of the complaint, the facts out of which the
complaint arises, the reasons why such complaint should be upheld,
and the claim that the penalty is not due at law or is due at law only
in a smaller amount.
( 7 ) The court shall not annul or reduce a penalty as aforesaid
unless such penalty cannot at law be imposed in the circumstances
of the case, or cannot at law be fixed in the amount fixed by the
Registrar.
( 8 ) The applicant shall attach to the application all such
documents in support of his claim as it may be in his power to
produce, and shall indicate in his application the names of all
witnesses he intends to produce stating, in respect of each, the
proof which he intends to make.
( 9 ) The court shall, without delay, set down the application for
hearing at an early date, which date shall in no case be later than
thirty days from the date of the filing of the application.
( 10 ) The application, and the notice of the date fixed for
hearing, shall be served on the Registrar without delay, and the said
Registrar shall file his reply thereto within fourteen days after the
date of the service of the application.
( 11 ) The Registrar shall, in his reply, state clearly and concisely
whether he agrees to the facts set out in the application, and the
reasons why he objects to the claim; he shall moreover state in his
reply the names of the witnesses in support of his reasons and shall
attach thereto all the documents in support thereof.
( 12 ) On the day fixed for the hearing of the application, the
court shall consider only the issues of fact and of law as are
ascertainable from the application, reply or documents filed, by
either of the parties, or from the evidence indicated by either of the
parties in the application or reply, as the case may be, or from the
oral pleading of either of the parties.
( 13 ) The court shall hear the application to a conclusion within
five working days from the date fixed for the original hearing of the
application, and no adjournment shall be granted except either with
the consent of both parties, or for an exceptional reason to be
recorded by the court, and such adjourned date shall not be later
than that justified by any such reason.
Cap. 12.
( 14 ) Saving the preceding provisions of this article, the
provisions of the Code of Organization and Civil Procedure
relating to proceedings before the First Hall of the Civil Court shall
apply in relation to any such application.
Cap. 12.
of Organization and Civil Procedure, the executive title referred to
in subarticle  ( 4 )  shall not be enforceable before the lapse of thirty
days from the service of the judicial act therein referred to.
( 16 ) The decision of the court upon an application referred to in
subarticle  ( 5 ),  confirming the imposition of a penalty fixed by the
Registrar or reducing any such penalty, shall upon becoming  res
judicata  be deemed to be a judgment of the court ordering the
  218      CAP. 386. ]                   COMPANIES
payment by the applicant of the penalty as confirmed or reduced.
( 17 ) An appeal from a decision of the court upon an application
referred to in subarticle  ( 5 ),  shall be made by means of an
application to the Court of Appeal to be filed within six working
days of the date of the decision; the person against whom the
appeal is entered shall within six working days from the service
upon him of the application file a reply to the appeal.
Protection of 
shareholders 
against unfair 
prejudice.
Amended by:
IV. 2003.156.
402. (1) Any member of a company who complains that the
affairs of the company have been or are being or are likely to be
conducted in a manner that is, or that any act or omission of the
company have been or are or are likely to be, oppressive, unfairly
discriminatory against, or unfairly prejudicial, to a member or
members or in a manner that is contrary to the interests of the
members as a whole, may make an application to the court for an
order under this article.
( 2 ) Where the Registrar has received a report on a company
under article 410 and it appears to him that the company’s affairs
are being or have been conducted in a manner falling within the
meaning of subarticle (1), he may make an application to the court
for the issue of an order under this article.
( 3 ) If on an application made in terms of subarticle (1) or  ( 2 ),
the court is of the opinion that the complaint is well-founded and
that it is just and equitable to do so, the court may make such order
under such terms as it thinks fit - 
( a ) regulating the conduct of the company’s affairs in the
future; or
( b ) restricting or forbidding the carrying out of any
proposed act; or
( c ) requiring the company to do an act which the applicant
has complained it has omitted to do; or
( d ) providing for the purchase of the shares of any
members of the company by other members of the
company or by the company itself and, in the case of a
purchase by the company, for the reduction
accordingly of the company’s issued share capital; or
( e ) directing the company to institute, defend, continue or
discontinue court proceedings, or authorising a
member or members of the company to institute,
defend, continue or discontinue court proceedings in
the name and on behalf of the company; or
( f ) providing for the payment of compensation by such
person as may have been found by the court
responsible for loss or damage suffered as a result of
the act or omission complained of, to the person
suffering the said loss or damage; or
( g ) dissolving the company and providing for its
consequential winding up.
(4) When an order is made for the dissolution of a company in
COMPANIES [ CAP. 386.        219
terms of subarticle (3)( g ), the company shall be deemed to have
been dissolved on the date when the order is made and the
provisions of Sub-Titles I and III of Title II of Part V of this Act
regulating the winding up of companies shall apply.
( 5 ) An order made under this article may require a company not
to make any amendment, or to make such amendment as may be
required, in its memorandum or articles.
( 6 ) In this article, the term "member" includes a person entitled
at law to represent the interests of a deceased member, a person to
whom shares in the company have lawfully devolved by way of
testate or intestate succession, and a licensed nominee, as defined
in article 127, who holds in his name shares in the company on
behalf of and for the interest of another person beneficially entitled
thereto.
Investigation of 
commercial 
partnerships and 
oversea 
companies.
403. (1) The provisions of articles 404 to 413 and of articles
418 to 423 which regulate the investigation of the affairs of
companies, shall also apply to other commercial partnerships as
though references to "companies" include references to
"commercial partnerships", references to "shares" and to "issued
share capital" include references to " interests in the partnership",
and references to "directors" include references to "partners other
than limited partners."
( 2 ) The provisions of articles 405 to 410, 412, 413 and 423(1)
shall apply to all bodies corporate constituted or incorporated
outside Malta which are carrying on business in or have at any time
carried on business in Malta, as if they were companies under this
Act, but subject to any adaptations and modifications as may be
prescribed.
( 3 ) Where the Registrar appoints one or more inspectors for
any of the purposes specified in the following articles of this Part,
such inspectors shall produce their letter of authority when so
required in the exercise of their powers.
( 4 ) Where any of the powers arising in terms of this article or
in terms of articles 404 to 407, 410, 411, 414 and 416 to 419 are
exercised or are to be exercised in respect of a company which is
licensed or supervised by a competent authority as defined in  article
420 ( 3 ) , such powers shall be exercised after consultation with the
relevant competent authority.
( 5 ) An inspector appointed under this Part shall be a person
selected by the Registrar from a list, approved by the Minister from
time to time, of persons deemed competent to act as inspectors
under this Part.
Investigation of a 
company on its 
own application or 
that of its 
members.
Amended by:
IV. 2003.157.
404. (1) The Registrar may by letter of authority appoint one
or more inspectors to investigate the affairs of a company and to
report thereon in such manner as he may direct.
( 2 ) The appointment may be made at the request of at least two
hundred members or of members holding at least one-tenth of the
issued share capital, or at the request of the company.
  220      CAP. 386. ]                   COMPANIES
( 3 ) The request shall be supported by such evidence as the
Registrar may require for the purpose of showing that the person or
persons making the request have good reason for requiring the
investigation.
( 4 ) The Registrar may, before appointing inspectors, require
the person or persons making the request to give such security as he
may require for payment of the expenses of the investigation.
( 5 ) The Registrar may exercise the powers conferred by this
article with respect to a company notwithstanding that it is in the
course of being wound up voluntarily.
(6) The Registrar shall exercise the powers conferred by this
article where it appears to him that it is expedient and in the public
interest to do so.
Other company 
investigations.
405. (1) Where the court, in the course of proceedings before
it under this Act, by order declares that the affairs of a company are
to be investigated, the Registrar shall by letter of authority appoint
one or more inspectors to investigate the affairs of that company
and to report thereon in such manner as he directs.
( 2 ) The court shall make an order as specified in subarticle (1)
if it appears to it that there are circumstances suggesting - 
( a ) that the company’s affairs are being or have been
conducted with intent to defraud its creditors or
otherwise for a fraudulent or unlawful purpose, or in a
manner which is unfairly prejudicial to some part of its
members; or
( b ) that any actual or proposed act or omission of the
company is or would be so prejudicial, or that the
company was formed for any fraudulent or unlawful
purpose; or
( c ) that persons concerned with the company’s formation
or the management of its affairs have in connection
therewith been guilty of fraud or other misconduct
towards it or towards its members; or
( d ) that the company’s members have not been given all
the information with respect to its affairs which they
might reasonably expect.
( 3 ) The provisions of subarticles (1) and  ( 2 )  shall apply without
prejudice to the powers of the Registrar under article 404.
( 4 ) The power conferred by subarticle  ( 2 )  shall be exercisable
with respect to a company notwithstanding that it is in the course of
being wound up voluntarily.
Inspectors’ powers 
during 
investigation.
Amended by:
IV. 2003.158.
406. (1) If inspectors appointed under article 404 or article
405 to investigate the affairs of a company think it necessary for
the purposes of their investigation to investigate also the affairs of
another body corporate which is or at any relevant time has been
the company’s subsidiary or parent company, or a subsidiary of its
parent company or a parent company of its subsidiary, they shall
have power to do so; and they shall report on the affairs of the other
COMPANIES [ CAP. 386.        221
body corporate so far as they think that the results of their
investigation of its affairs are relevant to the investigation of the
affairs of the first mentioned company.
( 2 ) Inspectors appointed under article 404 or article 405 may at
any time in the course of their investigation, without the necessity
of making an interim report, inform the Registrar of matters coming
to their knowledge as a result of the investigation tending to show
the existence of a default or the commission of an offence.
Production of 
documents and 
evidence to 
inspectors.
407. (1) When inspectors are appointed under article 404 or
article 405, it shall be the duty of all officers and agents of the
company, and of all officers and agents of any other body corporate
whose affairs are investigated under article 406(1) - 
( a ) to produce to the inspectors all accounts, accounting
records and documents of or relating to the company
or, as the case may be, the other body corporate which
are in their custody or power, when required to do so;
( b ) to attend before the inspectors when required to do so;
and
( c ) otherwise to give the inspectors all assistance in
connection with the investigation which they are
reasonably able to give.
( 2 ) If the inspectors consider that a person other than an officer
or agent of the company or other body corporate is or may be in
possession of information concerning its affairs, they may require
that person to produce to them any accounts, accounting records or
documents in his custody or power relating to the company or other
body corporate, to attend before them and otherwise to give them
all assistance in connection with the investigation which he is
reasonably able to give, and it shall be the duty of that person to
comply with that requirement.
( 3 ) An inspector may examine on oath the officers and agents
of the company or other body corporate, and any such person as is
mentioned in subarticle  ( 2 ),  in relation to the affairs of the company
or other body corporate, and may administer an oath accordingly.
( 4 ) In this article a reference to officers or to agents includes
past, as well as present, officers or agents, as the case may be; and
"agents", in relation to a company or other body corporate, includes
its bankers and persons appointed by it as auditors, whether these
persons are or are not officers of the company or other body
corporate.
Power of inspector 
to call for 
directors’ bank 
accounts.
408.   If an inspector has reasonable grounds for believing that a
director, or past director, of the company or other body corporate as
referred to in article 406(1) whose affairs he is investigating
maintains or has maintained a bank account of any description,
whether alone or jointly with another person and whether in Malta
or elsewhere, into or out of which there has been paid - 
( a ) the emoluments or part of the emoluments of his office
as director as aforesaid, whether or not disclosed in the
  222      CAP. 386. ]                   COMPANIES
accounting records of the company; or
( b ) any money which has resulted from or been used in the
financing of an undisclosed transaction, arrangement
or agreement; or
( c ) any money which has been in any way connected with
an act or omission, or series of acts or omissions which
on the part of that director constituted misconduct,
whether fraudulent or not, towards the company or
body corporate or its members,
the inspector may require the director to produce to him all
documents in the director’s possession, or under his control,
relating to that bank account.
Obstruction of 
inspectors during 
investigation of 
company’s affairs.
409.   If any person referred to in article 407 - 
( a ) refuses to produce any book or document which it is
his duty under article 407 or article 408 to produce to
the inspectors; or
( b ) refuses to attend before the inspectors when required
to do so; or
( c ) refuses to answer any question put to him by the
inspectors with respect to the affairs of the company or
other body corporate, as referred to in article 406(1),
as the case may be,
he shall be guilty of an offence and liable on conviction to a fine
( multa )  of not more than two thousand liri or imprisonment for a
term not exceeding six months or to both such fine and
imprisonment.
Inspectors’ reports. 410. (1) The inspectors shall make interim reports to the
Registrar and on the conclusion of their investigation shall make a
final report to him.
( 2 ) If the inspectors were appointed under article 405 in
pursuance of an order of the court, the Registrar shall furnish a
copy of all their reports to the court.
( 3 ) The Registrar may, if he thinks fit - 
( a ) forward a copy of any report made by the inspectors to
the company’s registered office;
( b ) furnish a copy on request and on payment of the
prescribed fee to - 
( i ) any member of the company or other body
corporate which is the subject of the report;
( ii ) any person whose conduct is referred to in the
report;
( iii ) the auditors of that company or body corporate; 
( iv ) the applicants for the investigation;
( v ) any other person whose financial interests
appear to the Registrar to be affected by the
matters dealt with in the report, whether as a
creditor of the company or body corporate, or
COMPANIES [ CAP. 386.        223
otherwise; and
( c ) cause any such report to be published.
Power to bring 
civil proceedings 
on company’s 
behalf.
411. (1) If, from any report made under article 410 or from
information or documents obtained under article 418 or article 419,
it appears to the Registrar that any civil proceedings ought in the
public interest to be brought by any body corporate, he may himself
with the consent of the Attorney General bring such proceedings in
the name and on behalf of that body corporate.
( 2 ) The Registrar shall indemnify the body corporate against
any costs or expenses incurred by it in or in connection with
proceedings brought under this article.
Expenses of 
investigating a 
company’s affairs.
412. (1) The expenses of and incidental to an investigation by
inspectors appointed by the Registrar shall be defrayed by him;
provided that the persons mentioned in subarticles  ( 2 )  to  ( 5 )  shall
be, to the extent there specified, liable to make repayment to the
Registrar.
( 2 ) A person who is convicted on a prosecution instituted as a
result of the investigation, or is ordered to pay the whole or any
part of the costs of proceedings brought under article 411 may in
the same proceedings be ordered to pay those expenses to such
extent as may be specified in the order.
( 3 ) A body corporate in whose name proceedings are brought
under article 411 shall be liable to the amount or value of any sums
or assets recovered by it as a result of those proceedings; and any
amount for which a body corporate is liable under this subarticle
shall be paid, in priority to all other claims, from the sums or assets
recovered.
( 4 ) A body corporate dealt with by the inspectors’ report shall
be liable for the expenses of and incidental to the investigation
unless that body corporate was the applicant for the investigation,
and unless the Registrar otherwise directs.
( 5 ) The applicant or applicants for the investigation, where the
inspectors were appointed under article 404, shall be liable to such
extent, if any, as the Registrar may direct.
( 6 ) The report of the inspectors may include a recommendation
as to the directions which they think appropriate, in the light of
their investigation, to be given under subarticle  ( 4 )  or subarticle  ( 5 ) .
( 7 ) For the purposes of this article, any costs or expenses
incurred by the Registrar in or in connection with proceedings
brought under article 411 are to be treated as expenses of the
investigation giving rise to the proceedings.
( 8 ) Any liability to repay the Registrar arising from subarticles
( 2 )  and  ( 3 )  shall, subject to satisfaction of the right of the Registrar
to repayment, be a liability also to indemnify all persons against
liability under subarticles  ( 4 )  and  ( 5 );  and any such liability
imposed by subarticle  ( 2 )  shall, subject as mentioned above, be a
liability also to indemnify all persons against liability under
subarticle  ( 3 ).
  224      CAP. 386. ]                   COMPANIES
( 9 ) A person liable under any one of the subarticles referred to
in subarticle  ( 8 )  is entitled to contribution from any other person
liable by virtue of the same subarticle, according to the amount of
their respective liabilities by virtue of that subarticle.
( 10 ) Expenses to be defrayed by the Registrar under this article
shall, insofar as not recovered by virtue of its provisions, be paid
out of public funds.
Inspectors’ report 
to be admissible as 
evidence.
413.   A copy of any report of inspectors appointed under article
404 or article 405 certified by the Registrar to be a true copy, shall
be admissible in any legal proceedings as evidence of the opinion
of the inspectors in relation to any matter contained in that report.
Power to 
investigate 
company 
ownership.
414. (1) Where it appears to the Registrar that there is good
reason to appoint one or more inspectors to investigate and report
on the membership of any company for the purpose of determining
the true persons who are or have been financially interested in the
success or failure of the company or able to control or materially
influence its policy, he may by letter of authority appoint one or
more inspectors for such purpose.
( 2 ) The appointment of inspectors made by virtue of this article
may establish the scope of their investigation, whether as respects
the matter or the period to which it is to extend or otherwise, and in
particular may limit the investigation to matters connected with
particular shares or debentures.
( 3 ) If a request for an investigation under this article with
respect to particular shares or debentures of a company is made to
the Registrar by members of the company, and the number of
persons making the request or the amount of the shares held by
them is not less than that required for a request for the appointment
of inspectors made by virtue of  article  404 ( 2 )  - 
( a ) the Registrar shall appoint inspectors to conduct the
investigation, unless he is satisfied that the request is
vexatious; and
( b ) the Registrar may exclude from the scope of the
investigation any matter in respect of which he is
satisfied that it would be unreasonable to investigate.
( 4 ) Subject to the terms of their appointment, the inspectors’
powers shall extend to the investigation of any circumstances
suggesting the existence of an arrangement or understanding
which, though not legally binding, is or was adhered to or likely to
be adhered to in practice and which is relevant to the purposes of
the investigation.
( 5 ) The Registrar may, before appointing inspectors, require
the person or persons making the request to give such security as he
may require for payment of expenses of the investigation.
Provisions 
applicable on 
investigation under 
article 414.
415. (1) For the purposes of an investigation made by virtue of
article 414, the provisions of articles 406(1), 407, 408 and 409 shall
apply with the necessary modifications of references to the affairs
of the company or to those of any other body corporate, subject
COMPANIES [ CAP. 386.        225
however to the provisions of subarticles  ( 2 )  to  ( 4 ).
( 2 ) The provisions of the articles referred to in subarticle (1)
shall apply to - 
( a ) all persons who are or have been, or whom the
inspector has reasonable cause to believe to be or have
been, financially interested in the success or failure of
the company or any other body corporate whose
membership is investigated with that of the company,
or able to control or materially influence its policy,
including persons concerned in the affairs of the
company only on behalf of others; and
( b ) any other person whom the inspector has reasonable
cause to believe possesses information relevant to the
investigation, 
as they apply in relation to officers and agents of the company or
any other body corporate whose membership is investigated, as the
case may be. "officers" and "agents" shall have the meaning
assigned to them by  article  407 ( 4 ) .
( 3 ) If the Registrar is of the opinion that there is good reason
for not divulging any part of a report made by virtue of article 414
and of this article, he may forward or furnish a copy of the report in
accordance with the provisions of  article  410 ( 3 )  with the omission
of that part.
( 4 ) The applicant or applicants for the investigation shall be
liable to such extent, if any, as the Registrar may direct; and subject
as aforesaid, the expenses of an investigation made by virtue of
article 414 shall be paid out of public funds.
Power to obtain 
information as to 
those interested in 
shares, etc.
416. (1) If it appears to the Registrar that there is good reason
to investigate the ownership of any shares in or debentures of a
company and that it is unnecessary to appoint inspectors for the
purpose, he may require any person, whom he has reasonable cause
to believe to have or to be able to obtain any information as to the
present and past interests in those shares or debentures and the
names and addresses of the persons interested and of any persons
who act or have acted on their behalf in relation to those shares or
debentures, to give any such information to the Registrar.
( 2 ) For the purpose of this article a person is deemed to have an
interest in shares or debentures if he has any right to acquire or
dispose of them or of any interest in them, or to vote in respect of
them, or if his consent is necessary for the exercise of any of the
rights of other persons interested in them, or if other persons
interested in them can be required, or are accustomed, to exercise
their rights in accordance with his instructions.
( 3 ) A person who fails to give information required of him by
virtue of this article, or who in giving such information makes any
statement which he knows to be false in a material particular, or
recklessly makes any statement which is false in a material
particular, shall be guilty of an offence and shall be liable on
conviction to a fine  ( multa )  of not more than twenty thousand liri or
  226      CAP. 386. ]                   COMPANIES
imprisonment for a term not exceeding three years or to both such
fine and imprisonment.
Power to impose 
restrictions on 
shares or 
debentures.
417. (1) Where in connection with an investigation made by
virtue of article 414 or article 416, it appears to the Registrar that
there is difficulty in finding out the relevant facts about any shares,
whether issued or to be issued, and that the difficulty is due wholly
or mainly to the unwillingness of any of the persons referred to in
the said two articles to assist the investigation as required by this
Act, the Registrar may by order direct that the shares shall until
further notice be subject to the restrictions imposed by subarticles
( 2 )  to  ( 7 ).
( 2 ) An order made by virtue of subarticle (1) shall have the
following effects:
( a ) any transfer of those shares, or in the case of unissued
shares any transfer of the right to be issued with them
and any issue of them, shall be void;
( b ) no voting rights shall be exercisable in respect of those
shares;
( c ) no further shares shall be issued in lieu of those shares
or in pursuance of any offer made to their holder;
( d ) except in a winding up, no payment shall be made of
any sums due from the company on those shares,
whether in respect of capital or otherwise.
( 3 ) Where the Registrar makes an order directing that shares
shall be subject to the restrictions mentioned in subarticle  ( 2 ),  any
person aggrieved thereby may apply to the court and the court may,
if it deems fit, direct that the shares shall cease to be subject to the
said restrictions.
( 4 ) Any notice of the Registrar or order of the court may direct
that shares shall cease to be subject to the restrictions mentioned in
subarticle  ( 2 )( a )  and  ( b ),  with a view to permitting a transfer of
those shares, and may retain the restrictions mentioned in the said
subarticle  ( 2 )( c )  and  ( d ) , either in whole or in part, insofar as they
relate to any right acquired or offer made before the transfer.
( 5 ) Any person who - 
( a ) exercises or purports to exercise any right to dispose
of any shares which, to his knowledge, are for the time
being subject to the restrictions mentioned in
subarticle  ( 2 ),  or of any right to be issued with any
such shares; or
( b ) votes in respect of any such shares, whether as holder
or as proxy, or appoints a proxy to vote in respect
thereof,
shall be guilty of an offence and shall be liable on conviction to a
fine  ( multa )  of not more than two thousand liri or imprisonment for
a term not exceeding six months or to both such fine and
imprisonment.
( 6 ) Where shares in any company are issued in contravention of
COMPANIES [ CAP. 386.        227
the restrictions mentioned in subarticle  ( 2 ),  every officer of the
company who is in default shall be guilty of an offence and shall be
liable on conviction to a fine  ( multa )  of not more than five thousand
liri.
( 7 ) This article shall apply in relation to debentures as it
applies in relation to shares.
Registrar’s powers 
to require 
production of 
documents.
Amended by:
IV. 2003.159.
418. (1) The powers arising under this article shall be
exercisable in relation to the following persons with regard to the
respective entity as follows:
( a ) ( i ) the officers of a company;
( ii ) the partners having the administration or
representation of any other commercial
partnership; and
( b ) the persons having the administration or control in
Malta of, or any individuals authorised to represent in
Malta a body corporate constituted or incorporated
outside Malta which is carrying on business in Malta
or has at any time carried on business in Malta.
( 2 ) The Registrar may at any time, if he thinks there is good
reason to do so, in the exercise of the duties and powers vested in
him under this Part, give directions to any person referred to in
subarticle (1) requiring him, at such time and place as may be
specified in the directions, to produce such accounts, accounting
records or documents as may be so specified.
( 3 ) Where by virtue of subarticle  ( 2 )  the Registrar has power to
require the production of accounts, accounting records or
documents from any person referred to in subarticle (1), he shall
have the like power to require production of those accounts,
accounting records or documents from any person who appears to
him to be in possession of them; provided that where any such
person claims a privilege or other charge on accounts, accounting
records or documents produced by him, the production shall be
without prejudice to that privilege or charge.
( 4 ) The power under this article to require a person referred to
in subarticle (1) or other person to produce accounts, accounting
records or documents shall include the power- 
( a ) if the accounts, accounting records or documents are
produced - 
( i ) to take copies of or extracts from them; and
( ii ) to require that person, or any other person who is
a present or past officer of, or is or was at any
time employed by the entity in question, to
provide an explanation of any of them;
( b ) if the accounts, accounting records or documents are
not produced, to require the person who was required
to produce them to state, to the best of his knowledge
and belief, where they are.
( 5 ) If the requirement to produce accounts, accounting records
  228      CAP. 386. ]                   COMPANIES
or documents or to provide an explanation or to make a statement is
not complied with, the person on whom the requirement was so
imposed shall be guilty of an offence and liable on conviction to a
fine  ( multa )  of not more than five thousand liri.
( 6 ) Where a person is charged with an offence under subarticle
( 5 )  in respect of a requirement to produce any accounts, accounting
records or documents, it shall be a defence to prove that they were
not in his possession or under his control and that it was not
reasonably practicable for him to comply with the requirement.
Entry and search of 
premises.
419. (1) If the Registrar is satisfied that reasonable grounds
exist for suspecting that there are on any premises any accounts,
accounting records or documents of which production has been
required under article 418 and which have not been produced in
compliance with that requirement, he shall have the right to enter
and search any such premises in accordance with the provisions of
subarticles  ( 2 )  and  ( 3 ).
( 2 ) The Registrar, in exercising his right to enter and search the
premises as specified in subarticle (1), shall have the right to take
possession of any accounts, accounting records or documents
appearing to be such accounts, accounting records or documents as
referred to in the said subarticle, or to take in relation to any
accounts, accounting records or documents so appearing, any other
steps which he shall consider to be necessary for preserving them
and preventing interference with them.
( 3 ) The right conferred upon the Registrar by virtue of
subarticle (1) shall only be exercisable during working days,
between seven in the morning and seven in the evening, and in all
cases the Registrar shall be accompanied by an officer of the Police
of a rank not below that of inspector and the Registrar shall, if
required, produce evidence of his authority.
( 4 ) Any accounts, accounting records or documents of which
possession is taken under this article may be retained - 
( a ) for a period of ninety days; or
( b ) if within that period any such criminal proceedings as
are mentioned in article 420(1) ( a )  or  ( b ) , being
proceedings to which the accounts, accounting records
or documents are relevant, shall commence,
until the conclusion of those proceedings.
( 5 ) A person who obstructs the exercise of a right of entry or
search conferred by virtue of this article, or who obstructs the
exercise of a right so conferred to take possession of any accounts,
accounting records or documents, shall be guilty of an offence and
liable on conviction to a fine  ( multa )  of not more than two thousand
liri or to imprisonment for a term not exceeding six months or to
both such fine and imprisonment.
Provision for 
security of 
information 
obtained.
420. (1) No information or document relating to an entity as is
referred to in article 418(1) which has been obtained under the said
article 418 or article 419 shall, without the previous consent in
COMPANIES [ CAP. 386.        229
writing of that entity, be published or disclosed, unless the
publication or disclosure is required - 
( a ) with a view to the institution of, or otherwise for the
purposes of, any criminal proceedings pursuant to, or
arising out of, this Act or any other law;
( b ) for the purposes of the examination of any person by
inspectors appointed under this Part in the course of
their investigation;
Cap. 290. 
Cap. 330.
Cap. 345.
Cap. 375.
Cap. 370.
Cap. 371.
Cap. 376.
( c ) for the purpose of enabling the responsible Minister,
the Registrar or the competent authority to exercise, in
relation to the entity or any other entity, any of their
functions under this Act, the Insurance Business Act * ,
the Malta Financial Services Authority Act, the
Financial Markets Act, the Insider Dealing Act, the
Investment Services Act, the Banking Act and the
Financial Institutions Act;
( d ) for the purposes of proceedings under article 419.
( 2 ) A person who publishes or discloses any information or
document in contravention of this article shall be guilty of an
offence and liable on conviction to a fine  ( multa )  of not more than
twenty thousand liri or imprisonment for a term not exceeding three
years or to both such fine and imprisonment. 
( 3 ) For the purposes of this article "competent authority" shall
mean - 
( a ) the Central Bank of Malta;
Cap. 370.
Act;
Cap. 290.
Act † ; 
Cap. 371.
Cap. 330.
( e ) the Malta Financial Services Authority carrying out its
functions under the Malta Financial Services Authority
Act;
Cap. 345.
( f ) the recognised stock exchange carrying out its
functions under the Financial Markets Act; and
Cap. 376.
Institutions Act.
Punishment for 
destroying, 
mutilating, etc., 
company 
documents.
421. (1) A person, being an officer of any such entity as is
referred to in article 418(1), who - 
( a ) destroys, mutilates or falsifies, or permits, assists or
participates in the destruction, mutilation or
falsification of a document affecting or relating to the
entity’s assets or affairs; or
*Repealed by Act XVII of 1998 (Cap. 403).
†Repealed by Act XVII of 1998 (Cap. 403).
  230      CAP. 386. ]                   COMPANIES
( b ) makes, or permits, assists or participates in the making
of, a false entry in such a document,
shall be guilty of an offence.
( 2 ) Any person as referred to in subarticle (1) who fraudulently
either disposes of, alters or makes an omission in any such
document as is referred to in that subarticle or permits, assists or
participates in a fraudulent disposal, fraudulent altering or
fraudulent making of an omission in, any such document, shall be
guilty of an offence.
( 3 ) A person guilty of an offence under this article shall be
liable on conviction to a fine  ( multa )  of not more than twenty
thousand liri or imprisonment for a term not exceeding three years
or to both such fine and imprisonment.
Punishment for 
furnishing false 
information.
422.   A person who, in responding to a requirement imposed
under article 418 to provide an explanation or make a statement,
knowingly or recklessly provides or makes an explanation or
statement which is false in a material particular shall be guilty of an
offence and liable on conviction to a fine  ( multa )  of not more than
twenty thousand liri or imprisonment for a term not exceeding three
years or to both such fine and imprisonment.
Privileged 
information.
423. (1) Nothing contained in articles 404 to 417 shall require
the disclosure to the Registrar or to an inspector appointed by him - 
Cap. 12.
( a ) of communications which are privileged by virtue of
the provisions of article 588 of the Code of
Organization and Civil Procedure;
( b ) by a company’s bankers of information on the affairs
of any of their customers other than the company
itself.
( 2 ) Nothing contained in articles 418 to 422 shall be deemed to
compel the production by any person as is referred to in article 588
of the Code of Organization and Civil Procedure of any document
containing a communication which is privileged in accordance with
that article, or shall authorise the taking of possession of any such
document which is in that person’s possession.
( 3 ) Notwithstanding the provisions of article 418, the Registrar
shall not require the production by a person carrying on the
business of banking of a document relating to the affairs of a
customer, unless it appears to the Registrar that it is necessary to do
so for the purpose of investigating the affairs of that person
carrying on the business of banking or of the customer, being an
entity in terms of article 418.
Cap. 377.
( 4 ) Subject to the provisions of subarticle  ( 3 ),  nothing
contained in the Professional Secrecy Act shall be construed as
precluding or otherwise restricting - 
( a ) the powers and functions assigned to the Registrar or
to an inspector appointed by him under the provisions
of this Part; and
( b ) the disclosure by any person of information,
COMPANIES [ CAP. 386.        231
documentation or other communication to the
Registrar or to an inspector appointed by him, or the
doing of anything required to be done, by virtue of any
of the provisions of this Part.
Right to inspect 
and obtain copies 
of documents, etc., 
kept by Registrar.
424.   Any person may - 
  ( a ) inspect the documents kept by the Registrar other than
documents obtained by him or coming to his
knowledge in the course of the exercise of his powers
arising under articles 403 to 423;
( b ) obtain a copy of the certificate of the registration of
any commercial partnership or a copy or extract of any
other document, and require it to be certified by the
Registrar as a true copy.
Power to make 
regulations.
Amended by:
XVII. 2002.234;
IV. 2003.160.
 425. (1) The Minister may make regulations for the purpose of
carrying into effect the provisions of this Act, and may, without
prejudice to the generality of the foregoing, by such regulations - 
( a ) prescribe the fees to be levied in relation to the
registration, publication, inspection or issue of
documents, certificates, copies or extracts, required or
allowed under this Act, and different fees may be
levied for different kinds or categories of commercial
partnerships, and may further prescribe different fees
for companies on the basis of their status;
( b ) prescribe forms to be used under this Act;
( c ) amend, revoke or substitute the minimum share capital
requirement established by article 72, the criteria set
out in article 185 and the formulae for determining the
average number of employees set out in subarticle  ( 12 )
of the last mentioned article;
( d ) amend any Schedule to this Act other than the Ninth,
Tenth, Eleventh and Twelfth Schedule and for this
purpose may distinguish between different categories
of companies;
( e ) prescribe the qualifications necessary to act as
company secretary, including any residence
qualification, as he may deem fit;
( f ) prescribe regulations, not inconsistent with the
provisions of this Act, for the conduct of winding up
proceedings under Title II of Part V of this Act, and
prescribe criteria for establishing who may be
considered as a fit and proper person to act as
liquidator for the purposes of article 305(1);
( g ) prescribe requirements in relation to the allotment and
the transfer of shares or debentures, their numbering,
their registration with the company and with the
Registrar, the keeping of the register of members and
of debentures, and the issue of the relevant share and
debenture certificates in respect of any allotment or
  232      CAP. 386. ]                   COMPANIES
transfer of shares or debentures, in relation to
companies listed on any recognised investment
exchange and to investment companies with variable
share capital, and such requirements that are
prescribed may also be in substitution of those of the
relevant provisions contained in Chapters IV and VI of
Title I of Part V of this Act;
( h ) specify the categories of public companies which may
not issue share warrants by whatever designation
described and prescribe rules further regulating and
restricting the issue of share warrants;
( i ) provide for the exemption of companies, or any kind
or category thereof, from any of the provisions of
articles 105 to 111, or for the application to any such
companies of the said provision subject to such
variations and conditions as may be prescribed;
Cap. 330.
( j ) provide for the exemption of offshore companies
formed and registered under the Malta Financial
Services Authority Act from any of the provisions of
this Act, or for the application to any such companies
of the said provisions with such qualifications and
subject to such variations and conditions as may be
prescribed, including the prescription of additional or
different rules and requirements regulating such
companies;
( k ) provide for the exemption of oversea companies,
which establish a branch or place of business within
Malta under Part XI of this Act, from any of the
provisions of Part XI of this Act, or for the application
to any such oversea companies of the said provisions
with such qualifications and subject to such variations
and conditions as may be prescribed, including the
prescription of additional or different rules and
requirements regulating such oversea companies; and
( l ) prescribe anything that may be prescribed and
generally do any other matter incidental or
supplementary to any of the foregoing matters.
( 2 ) The Minister may by regulations provide for the obligation
and for the form and manner of disclosure and notification of
interests, including ownership, in shares in public companies, and
may in particular:
( a ) prescribe by and to whom, when, under what
circumstances and conditions and how such disclosure
or notification shall be made; and different obligations
and duties may be prescribed for different types of
companies;
( b ) establish the particulars to be contained in any
notification of interests in shares and the
circumstances when investigations may be carried out
by a company in respect of the holding of any shares,
or other interest therein, and further establish when, to
COMPANIES [ CAP. 386.        233
whom and in what manner the company shall be
obliged to report on the findings of any such
investigation;
( c ) provide for the keeping of registers of interests in
shares, for the notification and registration of share
acquisitions and disposals, and for the manner in
which such notification and registration shall be
recorded, and provide for the investigation of share
acquisitions and disposals;
( d ) establish -
( i ) offences, providing for a fine  ( multa )  of not
more than one hundred thousand liri or a term of
imprisonment not exceeding five years, or for
both such fine and imprisonment;
( ii ) administrative penalties not exceeding one
thousand liri, or daily default penalties not
exceeding twenty liri for every day during which
the default continues, or both such penalties and
daily default penalties;
for failure to effect a prescribed disclosure or to make
a notification or for any other contravention of the
provisions of any regulation made in terms of this
subarticle;
( e ) provide for any matter incidental to or connected with
any of the above.
( 3 ) ( a ) The Minister may by regulations provide for the
formation, constitution and regulation of economic
interest groupings to be endowed with such legal
personality and capacity as may be established. In this
subarticle, "economic interest groupings" refers to
groups or associations consisting of two or more
persons and whose objects are to facilitate or develop
the economic activities of their members, or to
improve or increase the profits or benefits of such
activities.
( b ) Regulations made by the Minister in virtue of
paragraph  ( a ),  shall, in particular and without
prejudice to the authority vested in the Minister by the
said paragraph, prescribe:
( i ) the contents and particulars that are to be stated
in the deed or instrument of constitution of an
economic interest grouping, including its name,
objects and purposes, capital structure, duration,
membership, the location of its principal or
registered office, and the requirements relating
to the form, registration and publication of such
deed or instrument, and the particulars to be
stated in the business letters of an economic
interest grouping;
( ii ) requirements relating to the keeping of records
  234      CAP. 386. ]                   COMPANIES
with respect to the transactions and financial
position of the grouping, and other accounting,
auditing, reporting and disclosure obligations;
( iii ) rules in respect of the administration and
management of the grouping and of the
administrative and management organs of the
grouping, including the powers and
responsibilities of the directors, and holding of
meetings of the members, the keeping of
registers of members and such other records as
may be prescribed;
( iv ) rules governing the rights and obligations of the
members, the admission, cessation or expulsion
of members, the rights of members to share in
the profits of the grouping and in its residual
assets on liquidation and their liability to
contribute to losses;
( v ) rules governing the conversion, dissolution and
winding up of an economic interest grouping,
including the appointment of a liquidator, and
his powers and responsibilities;
( vi ) rules providing for the possibility of cross-
border and transnational economic interest
groupings, including European Economic
Interest Groupings, enjoying the same capacity
in two or more states by virtue of their
registration in one state; for the regulation of the
formation, constitution and recognition of such
groupings; and providing for the application of
any regulations made by virtue of this subarticle
to such groupings with such exemptions,
variations or modifications as may be
established;
( vii ) the fees that may be levied in relation to the
registration of groupings referred to in this
subarticle, or categories of such groupings;
( viii ) the articles of this Act which shall apply to
economic interest groupings, or to particular
categories thereof, subject to such conditions
and with such exemptions, modifications and
variations as may be deemed appropriate. 
(4) The Minister may make detailed regulations -
( a ) for the purpose of allowing a body corporate, formed
and incorporated or registered in a country other than
Malta, which is similar in nature to a company as
known under the laws of Malta, to be continued as a
company under this Act and under the applicable laws
of Malta, and
( b ) for the purpose of allowing the continuance of a
company registered under this Act as a body corporate
incorporated or registered under the laws of a country
COMPANIES [ CAP. 386.        235
other than Malta.
Such regulations may establish requirements in relation to
the procedures to be followed and the documentation, undertakings
and information to be supplied to the Registrar for the purpose of
carrying out any such continuance, and the rules may further
authorise the Registrar to issue guidelines stipulating such further
conditions and requirements as the Minister may deem appropriate,
and different regulations and guidelines may be issued for different
categories or classes of cases.
( 5 ) Where in respect of any of the services or other acts to be
performed by the Registrar a fee is prescribed under subarticle (1),
the regulations may prescribe that the Registrar may decline to
perform such service or other act until the appropriate fee is paid;
and that any instrument, notice, return or other document delivered,
given or forwarded to the Registrar under this Act shall, if a fee is
prescribed as aforesaid in respect of the registration or publication
thereof, be deemed not to have been delivered, given or forwarded
as required by this Act until the appropriate fee is paid.
Breach of 
regulations.
426. (1) The power to make regulations under article 425
includes the power to prescribe that any person in breach of any
provision of any such regulation shall be guilty of an offence and
shall on conviction be liable to a fine  ( multa )  of not more than two
thousand liri or imprisonment for a term not exceeding six months
or to both such fine and imprisonment, as may be prescribed.
( 2 ) The power to make regulations under article 425 includes
the power to prescribe that any person who acts in breach of any
such regulation shall be liable to a penalty of not more than one
thousand liri and, where applicable, to a further penalty of twenty
liri for every day during which the default continues, to be imposed
by the Registrar in terms of article 401.
Administrative 
penalties under this 
Act.
Amended by:
IV. 2003.161.
427. (1) Where any provision of this Act provides for the
imposition of a penalty, the amount of such penalty shall be
determined by reference to the Eleventh Schedule, which specifies
the maximum penalty that may be imposed by the Registrar under
any of the provisions of this Act.
( 2 ) In the Eleventh Schedule, the first column indicates the
article and subarticle of this Act which prescribes that a penalty
shall be imposed, the second column gives a general description of
the infringement, which description shall not be relied on in
interpreting any provision of this Act, the third column prescribes
the maximum penalty and the fourth column prescribes the
maximum daily default penalty, if any. The penalty shall become
due on the day on which the default occurs and the daily default
penalty shall be due for every day during which the default
continues and shall accrue from the day following that on which the
default occurs.
( 3 ) Action by the Registrar for the recovery of a penalty under
this Act shall be prescribed by the lapse of five years from the day
on which the default occurs.
  236      CAP. 386. ]                   COMPANIES
(4) A company shall be jointly and severally liable with its
officers for the payment of any administrative penalties imposed
under this Act.
PART XIII - TRANSITIONAL AND FINAL PROVISIONS
Transitional 
provisions.
Amended by:
XXX. 1997.2;
IV. 2003.162.
428. (1) As from the appointed day a commercial partnership
shall not be formed and registered unless it complies with the
provisions of this Act, and a commercial partnership formed and
registered as aforesaid shall be regulated by this Act.
( 2 ) Subject to the provisions of this Part, as from the appointed
day all commercial partnerships formed and registered under the
Ordinance shall be deemed to be formed and registered under this
Act, and shall retain the same legal personality and maintain all
existing rights and obligations.
( 3 ) Investment companies with variable share capital formed
and registered before the appointed day shall comply with the
provisions of this Act within one month from the appointed day and
the provisions of subarticles  ( 4 )  to  ( 13 ) , other than subarticle  ( 8 ) ,
shall not apply to them.
(4) Unless otherwise provided in this article, and
notwithstanding anything contained in the Memorandum or
Articles or in the deed of partnership, as the case may be, as from
the 1st March, 1998, the provisions of this Act shall apply to
commercial partnerships formed and registered under the
Ordinance. Such commercial partnerships shall, before the 1st
March, 1998, comply with the provisions of this Act and shall, until
such time, continue to be regulated by the Ordinance:
Provided that a commercial partnership may, by complying
with the provisions of this Act before such date, elect to be
regulated by the provisions of this Act and for this purpose the
company shall additionally deliver a notice in writing to the
Registrar for registration; and such election shall not take effect
unless and until such notice is registered.
( 5 ) The provisions of Chapters IX and X of Part V of this Act
shall, in regard to companies formed and registered under the
Ordinance, apply to accounting periods commencing after 30th
June 1996.
( 6 ) A private company formed and registered under the
Ordinance shall, by complying with the provisions of this Act
relating to private companies within the period specified in
subarticle  ( 4 ),  continue as a private company under this Act unless
it changes its status to one of a public company in accordance with
the provisions of article 213.
( 7 ) A public company formed and registered under the
Ordinance shall, by complying with the provisions of this Act
relating to public companies within the period specified in
subarticle  ( 4 ),  continue as a public company under this Act unless it
COMPANIES [ CAP. 386.        237
changes its status to one of a private company in accordance with
the provisions of article 213.
(8) If an investment company as is referred to in subarticle (3),
fails to comply with the provisions of the said subarticle within the
period therein specified, that company shall be considered
dissolved and the Registrar may, at any time, apply to the court in
accordance with the provisions of Title II of Part V of this Act:
Provided that the court may, if it thinks fit, grant a further
period not exceeding one year from the date of its decision in which
the commercial partnership may remedy the failure.
(9) A commercial partnership as is referred to in subarticle (4)
shall make the changes necessary in order to comply with the
provisions of this Act by the 28th February, 1998.
(10) Any changes necessitated by virtue of subarticle (9) shall
be made:
( a ) in the case of a partnership  en nom collectif ,   with the
consent of a partner or partners having contributed at
least fifty per cent of the contributions made to the
partnership;
( b ) in the case of a partnership  en commandite ,   with the
consent of a general partner or partners having
contributed at least fifty per cent of the contributions
made by the general partners to the partnership, or
holding at least fifty per cent of the nominal value of
the shares of the partnership held by the general
partners as the case may be, together with the consent
of a limited partner or partners having contributed at
least fifty per cent of the contributions made by the
limited partners to the partnership or holding at least
fifty per cent of the nominal value of the shares held
by the limited partners as the case may be;
( c ) in the case of a company, notwithstanding anything
contained in the Memorandum or Articles, by means
of a resolution, passed by a general meeting of the
company called for the purpose, by -
(i) fifty per cent of the members represented at the
meeting and voting; or
(ii) a number of members having between them not
less than fifty per cent of the nominal value of
the shares represented at that meeting, and
voting thereat;
and any provision relating to the quorum of members
at that meeting shall not apply.
The provisions of this subarticle shall not   apply to any
changes to the deed of partnership or to the Memorandum or
Articles, as the case may be, which are not strictly necessary in
order to comply with the provisions of this Act.
( 11 ) An association  en participation  constituted before the
appointed day shall comply with the provisions of this Act within a
  238      CAP. 386. ]                   COMPANIES
period of two years from the appointed day.
( 12 ) Notwithstanding the other provisions of this article, article
127 shall come into effect on the appointed day.
( 13 ) The provisions of Parts VII, VIII and IX of this Act shall, in
regard to companies formed and registered under the Ordinance,
come into effect as from the appointed day; and a commercial
partnership resulting from a conversion within the meaning of Part
VII, a new commercial partnership or an acquiring commercial
partnership within the meaning of Title I of Part VIII, a new
company or an acquiring company within the meaning of Title II of
Part VIII and recipient companies or new companies resulting from
a division within the meaning of Part IX, shall comply with and
shall be regulated by this Act as from the date when the conversion,
amalgamation or the division becomes effective in terms of this
Act, according to the case.
(14) A commercial partnership as is referred to in subarticle (4)
which fails to effect the changes necessary in order to comply with
the provisions of this Act before the 1st March 1998 shall become
liable to a penalty of fifty liri, and for every day thereafter during
which the default continues, to a further penalty of two liri. The
provisions of article 427(1) and (2) shall not apply to the penalties
imposed under this subarticle.
(15) Notwithstanding the provisions of article 401(1)( d ), until
such time as the instrument or resolution, or a copy thereof, giving
effect to the changes necessitated by virtue of subarticle (4) is
delivered to the Registrar for registration, and until such time as
any penalties that may be incurred by virtue of subarticle (14) are
paid, the Registrar shall not retain and register:
- in the case of a company, any resolution, notice or return
required to be delivered to the Registrar in terms of the provisions
of Title II of Part V and of articles 122, 146, 183 and 184; and
- in the case of any other commercial partnership any
instrument giving effect to any alteration or addition to the deed of
partnership.
(16) The Minister may by order in the Gazette, establish a date,
being a date after the 31st December 1998, on which any company
which fails to comply with the provisions of subarticle (4) shall be
deemed to be a company which is not carrying on business or is not
in operation for the purposes of article 325. 
Transitional 
provisions as to 
winding up of 
commercial 
partnerships.
429. (1) The dissolution of a commercial partnership
occurring before, on or within six months from the appointed day
shall, after the appointed day, continue to be in accordance with the
provisions of the Ordinance and the consequential winding up of
such a commercial partnership shall be regulated accordingly:
Provided that, where, after the lapse of the two year period
referred to in  article  428 ( 4 ) , the name of any commercial
partnership to which this subarticle applies has not already been
struck off the register, the Registrar may, at any time thereafter,
apply to the court for it to order that the winding up of the affairs of
COMPANIES [ CAP. 386.        239
that commercial partnership shall, from then onwards, be in
accordance with the provisions of this Act relating to winding up
by the court, and to appoint, where necessary, a liquidator or
liquidators or substitute any existing liquidator or liquidators to
carry out that winding up.
( 2 ) Any dissolution of a commercial partnership occurring after
the expiry of six months from the appointed day, shall be in
accordance with the provisions of this Act and the consequential
winding up of such a commercial partnership shall be regulated
accordingly.
( 3 ) The provisions of article 304 shall, in relation to companies
formed and registered under the Ordinance, commence to apply on
the expiry of six months from the appointed day.
( 4 ) The provisions of article 326 shall come into force on the
expiry of six months from the appointed day.
Cap. 13.
( 5 ) In relation to a company, bankruptcy proceedings
commenced before, on or within six months from the appointed day
shall, after the appointed day, continue to be governed by the
provisions of Part III of the Commercial Code relating to
bankruptcy.
( 6 ) The provisions of this article shall apply notwithstanding
anything contained in article 428.
Periods for the 
exercise of rights.
430.   Where for the exercise of a right this Act establishes a
period shorter than that established by any other law, the period
established by this Act shall apply even to such rights as may have
arisen before the appointed day but shall commence to run as from
such day:
Provided that where, on the appointed day, the period which
is still to run under such other law is shorter than that established
by this Act, reckoned as aforesaid, the period established by such
other law shall continue to apply.
Savings.
Amended by:
XXX. 1997.3;
XXII. 2000. 104;
IV. 2003.163.
Cap. 330.
431. (1) Notwithstanding anything to the contrary contained in
articles 428 and 429 - 
( a ) offshore companies formed and registered under the
Malta Financial Services Authority Act shall, subject
to the provisions of the said Act, continue to be
regulated by the Ordinance, and the provisions of this
Act shall not apply thereto, for such period or until
such date as the Minister may, by order in the Gazette,
establish and the provisions of this Act shall
commence to apply to them from such date:
Provided that the Minister may, by regulations
made under this Act, exempt such companies from any
one or more of the provisions of this Act, with such
qualifications and subject to such variations and
conditions as may be specified therein;
  240      CAP. 386. ]                   COMPANIES
Cap. 234. 
( b ) private companies, other than offshore companies
referred to in paragraph  ( a ),  whose objects and
activities are limited to the sole purposes of owning,
managing, administering or operating ships and to
transactions ancillary thereto, whether formed and
registered before, on or after the appointed day, shall
be regulated by the Ordinance and shall continue to be
so regulated until such date, as the Minister may by
order in the Gazette establish, from when the
provisions of this Act shall commence to apply to
them. In this paragraph "ships" shall have the meaning
assigned to it by the Merchant Shipping Act:
Provided that the Minister may establish
different dates on which the different provisions of this
Act shall commence to apply with respect to such
companies: 
Provided further that, in his order, the Minister
may exempt such companies from any one or more of
the provisions of this Act, with such qualifications and
under such conditions as may be specified in the order;
( c ) the deed of partnership of a partnership  en nom
collectif,  or of a partnership  en commandite,  formed
and registered under the Ordinance, shall not be
required to be amended so as to specify the value of
the respective contribution of every partner in terms of
article 14(1) ( e ) :
Provided that where all the partners in a
partnership  en nom collectif  and where all the partners,
both general and limited, in a partnership  en
commandite , so agree, they may specify in the deed of
partnership the value of their respective contribution
to the partnership; and
Cap. 383.
( d ) a commercial partnership which on the 1st March,
1998, is a controlled asset as defined in the Controlled
Companies (Procedure for Liquidation) Act, shall
continue to be regulated by the Ordinance until six
months after such commercial partnership shall have
ceased to be a controlled asset in accordance with that
Act; and the provisions of article 428 shall apply to
such controlled company as if reference therein to the
28th February 1998 were a reference to the last day of
the period of six moths after the commercial
partnership shall have ceased to be a controlled asset,
and a reference to the 1st March 1998 were a reference
to the first day immediately following such period, and
the provisions of subarticle (16) of the said article 428
shall only be applicable after the 31st December of the
year in which the said period of six months would have
lapsed.
( 2 ) Save as otherwise provided in subarticle (1), in article 428
and 429 or in any other provision of this Act, the Ordinance and the
COMPANIES [ CAP. 386.        241
Commercial Partnerships  ( Special Provisions )  Act, 1994, are
hereby repealed:
Provided that notwithstanding their repeal - 
( a ) anything that has lawfully been done by virtue of the
Ordinance and the Commercial Partnerships  ( Special
Provisions )  Act, 1994, shall remain in force, except
insofar as it is inconsistent with any of the provisions
of this Act;
( b ) all regulations made under the Ordinance and under
the Commercial Partnerships  ( Special Provisions )  Act,
1994, shall remain in force and continue to have effect
as if made under this Act, except insofar as any such
regulation is inconsistent with any of the provisions of
this Act, until such time as they are repealed; and
( c ) any liability to any penalty under any of the provisions
of the Ordinance shall continue to subsist
notwithstanding the repeal of the Ordinance. The
provisions of article 401 shall apply also to penalties
fixed by the Registrar under the Ordinance unless
proceedings for the recovery of such penalties have
already been instituted in accordance with the
provisions of the Ordinance before the appointed day.
  242      CAP. 386. ]                   COMPANIES
 FIRST SCHEDULE 
( Article 75 )
MODEL REGULATIONS FOR A LIMITED LIABILITY COMPANY 
PART I   REGULATIONS FOR THE MANAGEMENT OF A LIMITED 
LIABILITY COMPANY
Share capital and variation of rights
1. Without prejudice to any special rights previously conferred on the holders
of any existing shares or class of shares, any share in the company may be issued
with such preferred, deferred or other special rights or such restrictions, whether in
regard to dividend, voting, return of capital or otherwise as the company may from
time to time by ordinary resolution determine.
2. Subject to the provisions of article 115 of the Companies Act,  ( hereinafter
referred to as "the Act" ) , any preference shares may, with the sanction of an ordinary
resolution, be issued on the terms that they are, or at the option of the company are
liable, to be redeemed on such terms and in such manner as the company before the
issue of the shares may by extraordinary resolution determine.
3. If at any time the share capital is divided into different classes of shares, the
change of any shares from one class into another or the variation of the rights
attached to any class  ( unless otherwise provided by the terms of issue of the shares
of that class which is to be changed or the rights attached to which are to be varied,
according to the case )  may, whether or not the company is being wound up, be made
with the consent in writing of the holders of three-fourths of the issued shares of that
class, and the holders of three-fourths of the issued shares of any other class affected
thereby. Such change or variation may also be made with the sanction of an
extraordinary resolution passed at a separate general meeting of the holders of the
issued shares of that class and of an extraordinary resolution passed at a separate
general meeting of the holders of the issued shares of any other class affected
thereby. To every such separate general meeting the provisions of these regulations
relating to general meetings shall apply.
4. The company may exercise the power of paying commissions or of making
discounts or allowances provided it complies with the requirements of article 113 of
the Act. Such commission may be satisfied by the payment of cash or the allotment
of fully or partly paid shares or partly in one way and partly in the other.
5. Every person whose name is entered as a member in the register of members
shall be entitled without payment to receive one certificate for all his shares or
several certificates each for one or more of his shares upon payment of 20c for every
certificate after the first or such less sum as the directors shall from time to time
determine. If a share certificate be defaced, lost or destroyed, it may be renewed on
payment of a fee of 20c or such less sum and on such terms, if any, as to evidence
and indemnity and the payment of out-of-pocket expenses of the company on
investigating evidence as the directors think fit.
Calls on shares
6. The directors may from time to time make calls upon the members in respect
of any moneys unpaid on their shares  ( whether on account of the nominal value of
the shares or by way of premium )  and not by the conditions of allotment thereof
made payable at fixed times, provided no call shall exceed one-fourth of the nominal
COMPANIES [ CAP. 386.        243
value of the share or be payable at less than one month from the date fixed for the
payment of the last preceding call, and each member shall  ( subject to receiving at
least fourteen days’ notice specifying the time or times and place of payment )  pay to
the company, at the time or times and place so specified, the amount called on his
shares. A call may be revoked or postponed as the directors may determine.
7. The joint holders of a share shall be jointly and severally liable to pay all
calls in respect thereof.
8. If a sum called in respect of a share is not paid before or on the date
appointed for payment thereof, the person from whom the sum is due shall pay
annual interest thereon from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding two percentage points over the Central
Bank of Malta minimum discount rate as the directors may determine, but the
directors shall be at liberty to waive payment of such interest wholly or in part.
9. Any sum which by the terms of issue of a share becomes payable on
allotment or at any fixed date, whether on account of the nominal value of the share
or by way of premium, shall for the purposes of these regulations be deemed to be a
call duly made and payable on the date on which, by the terms of issue, the same
becomes payable, and in case of non-payment, all the relevant provisions of these
regulations as to payment of interest and expenses, forfeiture or otherwise shall
apply as if such sum had become payable by virtue of a call duly made and notified.
10. The directors may, on the issue of shares, differentiate between the holders
as to the amount of calls to be paid and the times of payment.
11. The directors may, if they think fit, receive from any member willing to
advance the same, all or any part of the moneys uncalled and unpaid upon any shares
held by him, and upon all or any of the moneys so advanced may  ( until the same
would, but for such advance, become payable )  pay annual interest at such rate not
exceeding two percentage points over the Central Bank of Malta minimum discount
rate, as may be agreed upon between the directors and the members paying such sum
in advance.
Transfer and transmission of shares
12. The instrument of transfer of any share shall be executed by or on behalf of
the transferor and transferee and the transferor shall be deemed to remain a holder of
the share until the name of the transferee is entered in the register of members in
respect thereof.
13. Subject to such of the restrictions of these regulations as may be applicable,
any member may transfer all or any of his shares by instrument in writing in any
usual or common form or any other form which the directors may approve.
14. The directors may decline to register the transfer of a share  ( not being a fully
paid share )  to a person of whom they shall not approve.
15. The directors may also decline to recognise any instrument of transfer
unless-
( a ) the instrument of transfer is accompanied by the certificate of the shares
to which it relates, and such other evidence as the directors may
reasonably require to show the right of the transferor to make the
transfer; and
( b ) the instrument of transfer is in respect of only one class of share.
16. The registration of transfers may be suspended at such times and for such
periods as the directors may from time to time determine, provided always that such
  244      CAP. 386. ]                   COMPANIES
registration shall not be suspended for more than thirty days in any year.
17. Any person becoming entitled to a share in consequence of the death of a
member may, upon such evidence being produced as may from time to time properly
be required by the directors and subject as hereinafter provided, elect either to be
registered himself as holder of the share or to have some person nominated by him
registered as the transferee thereof, but the directors shall, in either case, have the
same right to decline or suspend registration as they would have had in the case of a
transfer of the share by that member before his death.
18. If the person so becoming entitled shall elect to be registered himself, he
shall deliver or send to the company a notice in writing signed by him stating that he
so elects. If he shall elect to have another person registered he shall testify his
election by executing to that person a transfer of the share.
19. All the limitations, restrictions and provisions of these regulations relating
to the right to transfer and the registration of transfers of shares shall be applicable
to any such notice or transfer as aforesaid as if the death of the member had not
occurred and the notice or transfer were a transfer signed by that member.
20. A person becoming entitled to a share by reason of the death of the holder
shall be entitled to the same dividends and other advantages to which he would be
entitled if he were the registered holder of the share, except that he shall not, before
being registered as a member in respect of the share, be entitled in respect of it to
exercise any right conferred by membership in relation to meetings of the company.
21. Notwithstanding the provisions of regulation 20, the directors may at any
time give notice requiring any person referred to in that regulation to elect either to
be registered himself or to transfer the share, and if the notice is not complied with
within ninety days the directors may thereafter withhold payment of all dividends,
bonuses or other moneys payable in respect of the share until the requirements of the
notice have been complied with.
Forfeiture or surrender of shares
22. If a member fails to pay any call or instalment of a call on the day appointed
for payment thereof, the directors may, at any time thereafter during such time as any
part of the call or instalment remains unpaid, require payment of so much of the call
or instalment as is unpaid, together with any interest which may have accrued, by
means of a notice which shall also name a further day  ( not earlier than the expiration
of fourteen days from the date of service of the notice )  on or before which the
payment required by the notice is to be made, and shall state that in the event of non-
payment, at or before the time appointed, the shares in respect of which the call was
made will be liable to be forfeited.
23. If the requirements specified in any such notice as aforesaid are not
complied with, any share in respect of which the notice has been given may at any
time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the directors to that effect, or otherwise be surrendered in
favour of the company by the member to whom the said notice is addressed, if the
directors of the company accept such surrender.
24. A forfeited or a surrendered share may be sold or otherwise disposed of on
such terms and in such manner as the directors think fit, and the company may
receive the consideration, if any, given for the share on any sale or disposition
thereof and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of, who shall thereupon be registered as the holder of the
share. At any time before a sale or disposition the forfeiture or surrender may be
cancelled on such terms as the directors think fit.
COMPANIES [ CAP. 386.        245
25. A person whose shares have been forfeited or who has surrendered his
shares to the company shall cease to be a member in respect of the forfeited or
surrendered shares, but shall, notwithstanding, remain liable to pay to the company
all moneys which, at the date of the forfeiture or surrender, were payable by him to
the company in respect of the shares; but his liability shall cease if and when the
company shall have received payment in full of all such moneys in respect of the
shares.
Conversion of shares into stock
26. The company may by ordinary resolution convert any paid up shares into
stock, and re-convert any stock into paid up shares of any denomination.
27. The holders of stock may transfer the same, or any part thereof, in the same
manner and subject to the same regulations, as and subject to which the shares from
which the stock arose might previously to conversion have been transferred, or as
near thereto as circumstances permit; and the directors may from time to time fix the
minimum amount of stock transferable but so that such minimum shall not exceed
the nominal amount of the shares from which the stock arose.
28. The holders of stock shall, according to the amount of stock held by them,
have the same rights, privileges and advantages as regards dividends, voting at
meetings of the company and other matters as if they held the shares from which the
stock arose, but no such privilege or advantage  ( except participation in the dividends
and profits of the company and in the assets on winding up )  shall be conferred by
any amount of stock which would not, if existing in share, have conferred that
privilege or advantage.
29. Such of the regulations of the company as are applicable to paid up shares
shall apply to stock, and the words "share" and "shareholder" therein shall include
"stock" and "stockholder".
General meetings
30. Subject to the provisions of the Act the annual general meetings shall be
held at such time and place as the directors shall appoint.
31. The directors may, whenever they think fit, convene an extraordinary
general meeting, and extraordinary general meetings shall also be convened on such
requisition, or, in default, may be convened by such requisitionists, as provided by
article 129 of the Act.
32. If at any time there are not in Malta sufficient directors capable of acting to
form a quorum, any director or any two members of the company may convene an
extraordinary general meeting in the same manner, as nearly as possible, as that in
which meetings may be convened by the directors.
Notice of general meetings
33. A general meeting of the company shall be called by fourteen days’ notice in
writing at the least. The notice shall be exclusive of the day on which it is served or
deemed to be served and of the day for which it is given, and shall specify the place,
the day and the hour of meeting and, in case of special business, the general nature
of that business, and shall be given, in the manner hereinafter mentioned or in such
other manner, if any, as may be prescribed by the company in general meeting, to
such persons as are, by the Act and under the regulations of the company, entitled to
receive such notices from the company:
Provided that a meeting of the company shall, notwithstanding that it is called by
shorter notice than that specified in this regulation, be deemed to have been duly
  246      CAP. 386. ]                   COMPANIES
called if it is so agreed by all the members entitled to attend and vote thereat.
34. The accidental omission to give notice of a meeting to, or the non-receipt of
notice of a meeting by, any person entitled to receive notice shall not invalidate the
proceedings at that meeting.
Proceedings at general meetings
35. All business shall be deemed special that is transacted at an extraordinary
general meeting, and also all that is transacted at an annual general meeting, with the
exception of declaring a dividend, the consideration of the annual accounts and the
reports of the directors and auditors, the election of directors in the place of those
retiring and the appointment of, and the fixing of the remuneration of, the auditors.
36. No business shall be transacted at any general meeting unless a quorum of
members is present at the time when the meeting proceeds to business; save as herein
otherwise provided, a member or members present in person or by proxy holding in
aggregate not less than one tenth of the paid up share capital of the company
carrying the right to attend and vote at general meetings of the company at the date
of the holding of the meeting, shall be a quorum.
37. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened by the requisition of members, shall be
dissolved; in any other case it shall stand adjourned to the same day in the next
week, at the same time and place or to such other day and at such other time and
place as the directors may determine, and if at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the member or
members present shall be a quorum.
38. The chairman, if any, of the board of directors shall preside as chairman at
every general meeting of the company, or if there is no such chairman, or if he shall
not be present within fifteen minutes after the time appointed for the holding of the
meeting or is unwilling to act, the directors present shall elect one of their number to
be chairman of the meeting.
39. If at any meeting no director is willing to act as chairman or if no director is
present within fifteen minutes after the time appointed for holding the meeting, the
members present shall choose one of their number to be chairman of the meeting.
40. The chairman may, with the consent of any meeting at which a quorum is
present  ( and shall if so directed by the meeting ) , adjourn the meeting from time to
time and from place to place, but no business shall be transacted at any adjourned
meeting other than the business left unfinished at the meeting from which the
adjournment took place. When a meeting is adjourned for thirty days or more, notice
of the adjourned meeting shall be given as in the case of an original meeting. Save as
aforesaid it shall not be necessary to give any notice of an adjourned meeting or of
the business to be transacted at such meeting.
41. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is  ( before or on the declaration of the result
of the show of hands )  demanded -
( a ) by the chairman; or
( b ) by at least three members present in person or by proxy; or
( c ) by any member or members present in person or by proxy and
representing not less than one-tenth of the total voting rights of all the
members having the right to vote at the meeting; or
( d ) by a member or members holding shares in the company conferring a
COMPANIES [ CAP. 386.        247
right to vote at the meeting being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total sum paid up on
all the shares conferring that right.
Unless a poll be so demanded a declaration by the chairman that a resolution has
on a show of hands been carried or carried unanimously, or by a particular majority,
or lost and an entry to that effect in the book containing the minutes of the
proceedings of the company shall be conclusive evidence of the fact without proof of
the number or proportion of the votes recorded in favour of or against such
resolution:
Provided that where a resolution requires a particular majority in value, the
resolution shall not be deemed to have been carried on a show of hands by the
required majority unless there be present at that meeting, whether in person or by
proxy, a number of members holding in the aggregate the required majority as
aforesaid.
The demand for a poll may be withdrawn
42. Except as provided in regulation 44, if a poll is duly demanded it shall be
taken in such manner as the chairman directs and the result of the poll shall be
deemed to be the resolution of the meeting at which the poll was demanded.
43. In the case of an equality of votes, whether on a show of hands or on a poll,
the chairman of the meeting at which the show of hands takes place or at which the
poll is demanded, shall be entitled to a second or casting vote.
44. A poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other question shall
be taken at such time as the chairman of the meeting directs, and any business other
than that upon which a poll has been demanded may be proceeded with pending the
taking of the poll.
Votes of members
45. Subject to any rights or restrictions for the time being attached to any class
or classes of shares, on a show of hands every member present in person shall have
one vote, and on a poll every member shall have one vote for each share of which he
is the holder. On a poll votes may be given either personally or by proxy.
46. No member shall be entitled to vote at any general meeting unless all calls
or other sums presently payable by him in respect of shares in the company have
been paid.
47. No objection shall be raised to the qualification of any voter except at the
meeting or adjourned meeting at which the vote objected to is given or tendered, and
every vote not disallowed at such meeting shall be valid for all purposes. Any such
objection made in due time shall be referred to the chairman of the meeting, whose
decision shall be final and conclusive.
48. The instrument appointing a proxy and the power of attorney or other
authority, if any, under which it is signed or a notarially certified copy of that power
or authority shall be deposited at the registered office of the company or at such
other place in Malta as is specified for that purpose in the notice convening the
meeting, not less than twenty-four hours before the time for holding the meeting or
adjourned meeting, at which the person named in the instrument proposes to vote, or,
in the case of a poll, not less than twenty-four hours before the time appointed for
the taking of the poll, and in default the instrument of proxy shall not be treated as
valid.
  248      CAP. 386. ]                   COMPANIES
49. An instrument appointing a proxy shall be in the following form or a form as
near thereto as circumstances permit:
......................................... ( name of the company )
"I/We...............................................................
of .............................................................................................................
residing at .........................................................................................................
being a member/members of the above-named company, hereby appoint
..................................................... of ............................................................ or
failing him...................................... of ............................................................ as
my/our proxy to vote for me/us on my/our behalf at the  ( annual or extraordinary, as
the case may be )  general meeting of the company, to be held on the
................................... day of ................................. 19 ......., and at any adjournment
thereof.
Signed this ................ day of   ............................ 19.......
This form is to be used in favour of/against *  the resolution. Unless otherwise
instructed, the proxy will vote as he thinks fit.".
*Strike out whichever is not desired. 
Directors
50. The remuneration of the directors shall from time to time be determined by
the company in general meeting. Such remuneration shall be deemed to accrue from
day to day. The directors may also be paid all travelling, hotel and other expenses
properly incurred by them in attending and returning from meetings of the directors
or any committee of the directors or general meetings of the company or in
connection with the business of the company.
51. The shareholding qualification for directors may be fixed by the company in
general meeting, and unless and until so fixed no qualification shall be required.
Powers and duties of directors
52. The directors shall exercise their powers subject to any of these regulations,
to the provisions of the Act and to such regulations, being not inconsistent with the
aforesaid regulations or provisions, as may be prescribed by the company in general
meeting; but no regulation made by the company in general meeting shall invalidate
any prior act of the directors which would have been valid if that regulation had not
been made.
53. The directors shall have power to appoint any person to be the attorney of
the company for such purposes and with such powers, authorities and discretion  ( not
exceeding those vested in or exercisable by the directors under these regulations )
and for such period and subject to such conditions as they may think fit, and any
such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorney as the directors may think fit,
and may also authorise any such attorney to delegate all or any of the powers,
authorities and discretions vested in him.
54. A director shall not vote at a meeting of the directors in respect of any
contract or arrangement in which he is interested, and if he shall do so his vote shall
not be counted, nor shall he be counted in the quorum present at the meeting, but
neither of these prohibitions shall apply to - 
( a ) any arrangement for giving any director any security or indemnity in
COMPANIES [ CAP. 386.        249
respect of money lent by him to or obligations undertaken by him for
the benefit of the company; or
( b ) any arrangement for the giving by the company of any security to a third
party in respect of a debt or obligation of the company for which the
director himself has assumed responsibility in whole or in part under a
guarantee or indemnity or by the deposit of a security; or
( c ) any contract by a director to subscribe for or underwrite shares or
debentures of the company; or
( d ) any contract or arrangement with any other company in which he is
interested only as an officer of the company or as a holder of shares or
other securities,
and these prohibitions may at any time be suspended or relaxed to any extent, and
either generally or in respect of any particular contract, arrangement or transaction,
by the company in general meeting.
55. The directors shall cause minutes to be made in books provided for the
purpose -
( a ) of all appointments of officers made by the directors;
( b ) of the names of the directors present at each meeting of the directors
and of any committee of the directors;
( c ) of all resolutions and proceedings at all meetings of the company, and of
the directors, and of committees of directors.
56. The directors on behalf of the company may pay a gratuity or pension or
allowance on retirement to any director who has held any other salaried office or
place of profit with the company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
Rotation of Directors
57. At the first annual general meeting of the company all the directors shall
retire from office, and at the annual general meeting in every subsequent year one-
third of the directors for the time being or, if their number is not three or a multiple
of three, then the number nearest one-third, shall retire from office.
58. The directors to retire in every year shall be those who have been longest in
office since their last election, but as between persons who became directors on the
same day those to retire shall  ( unless they otherwise agree among themselves )  be
determined by lot.
59. A retiring director shall be eligible for re-election.
60. The company at the meeting at which a director retires in manner aforesaid
may fill the vacated office by electing a person thereto.
61. No person other than a director retiring at the meeting shall unless
recommended by the directors be eligible for election to the office of director at any
general meeting unless not less than three nor more than fourteen days before the
date appointed for the meeting there shall have been left at the registered office of
the company notice in writing, signed by a member duly qualified to attend and vote
at the meeting for which such notice is given, of his intention to propose such person
for election, and also notice in writing signed by that person of his willingness to be
elected.
  250      CAP. 386. ]                   COMPANIES
Proceedings of directors
62. The directors may meet together for the despatch of business, adjourn and
otherwise regulate their meetings, as they think fit. Questions arising at any meeting
shall be decided by a majority of votes. In case of an equality of votes, the chairman
shall have a second or casting vote. A director may, and the company secretary on
the requisition of a director shall, at any time summon a meeting of the directors. It
shall not be necessary to give notice of a meeting of directors to any director for the
time being absent from Malta.
63. The quorum necessary for the transaction of the business of the directors
may be fixed by the directors, and unless so fixed shall be two.
64. The continuing directors may act notwithstanding any vacancy in their body,
but, if and so long as their number is reduced below the number fixed by or pursuant
to the regulations of the company as the necessary quorum of directors, the
continuing directors or director may act for the purpose of increasing the number of
directors to that number, or of summoning a general meeting of the company, but for
no other purpose.
65. The directors may elect a chairman of their meetings and determine the
period for which he is to hold office; but if no such chairman is elected, or if at any
meeting the chairman is not present within five minutes after the time appointed for
holding the same, the directors present may choose one of their number to be
chairman of the meeting.
66. A resolution in writing, signed by all the directors for the time being entitled
to receive notice of a meeting of the directors, shall be as valid and effectual as if it
had been passed at a meeting of the directors duly convened and held.
Delegation of directors’ powers
67. The directors may from time to time appoint a managing director or a
director or directors holding any other executive office or offices from amongst
themselves delegating to him or them any of the powers provided in regulation 70.
68. Each such appointment shall be for such period and on such terms as the
directors think fit, and, subject to the terms of any agreement entered into in any
particular case, the directors may revoke such appointment. Any director so
appointed shall not, whilst holding that office, be subject to retirement by rotation or
be taken into account in determining the rotation or retirement of directors, but his
appointment shall be automatically determined if he ceases for any reason to be a
director.
69. A managing director or director holding any other executive office shall
receive such remuneration as the directors, subject to the approval of the company in
general meeting, may from time to time determine.
70. The directors may delegate to any managing director, or to any director
holding any other executive office, any of the powers exercisable by them upon such
terms and conditions and with such restrictions as they may think fit, and either
collaterally with or to the exclusion of their own powers and may from time to time
revoke, withdraw or vary any of such powers.
71. The directors may also appoint a committee consisting of one of more
persons selected from among themselves delegating to it any of their powers. Any
such delegation may be made subject to any condition or requirement as the directors
may impose and may be made either collaterally with or to the exclusion of their
own powers, and the directors may from time to time revoke, withdraw, alter or vary
all or any of such powers. Any such committee shall, subject to any of the said
COMPANIES [ CAP. 386.        251
conditions or requirements, regulate its own proceedings, in so far as possible in like
manner as if its meetings were meetings of the directors.
Company Secretary
72. Without prejudice to the provisions of the Act regulating the appointment
and functions of the company secretary, the appointment or replacement of the
company secretary and the conditions of holding office shall be determined by the
directors. The company secretary shall be responsible for keeping:
- the minute book of general meetings of the company; 
- the minute book of meetings of the board of directors; 
- the register of members;
- the register of debentures; and
- such other registers and records as the company secretary may be required to
keep by the board of directors.
The company secretary shall:
- ensure that proper notices are given of all meetings; and
- ensure that all returns and other documents of the company are prepared and
delivered in accordance with the requirements of the Act.
Dividends and reserve
73. The company in general meeting may declare dividends, but no dividend
shall exceed the amount recommended by the directors.
74. The directors may from time to time pay to the members such interim
dividends as appear to the directors to be justified by the profits of the company.
75. The directors may, before recommending any dividend, set aside out of the
profits of the company such sums as they think proper as a reserve or reserves which
shall, at the discretion of the directors, be applicable for any purpose to which the
profits of the company may be properly applied, and pending such application may,
at the like discretion, either be employed in the business of the company or be
invested in such investments, other than shares of the company, as the directors may
from time to time think fit. The directors may also without placing the same to
reserve carry forward any profits which they may think prudent not to divide.
76. Subject to the rights of persons, if any, entitled to shares with special rights
as to dividend, all dividends shall be declared and paid according to the amounts
paid or credited as paid on the shares in respect whereof the dividend is paid, but no
amount paid or credited as paid on a share in advance of calls shall be treated for the
purposes of this regulation as paid on the share. All dividends shall be apportioned
and paid proportionately to the amounts paid or credited as paid on the shares during
any portion or portions of the period in respect of which the dividend is paid; but if
any share is issued on terms providing that it shall rank for dividend as from a
particular date such share shall rank for dividend accordingly.
77. The directors may deduct from any dividend payable to any member all
sums of money, if any, presently payable by him to the company on account of calls
or otherwise in relation to the shares of the company.
78. No dividend shall bear interest against the company.
Accounts
79. Subject to the provisions of article 180 of the Act, the directors shall from
  252      CAP. 386. ]                   COMPANIES
time to time determine whether and to what extent and at what times and places and
under what conditions or regulations the annual accounts and accounting records of
the company or any of them shall be open to the inspection of members not being
directors, and no member, not being a director, shall have any right of inspecting any
such account or record or other document of the company except as conferred by law
or authorised by the directors or by the company in general meeting.
Capitalisation of profits
80. The company in general meeting may upon the recommendation of the
directors resolve that it is desirable to capitalise any part of the amount for the time
being standing to the credit of any of the company’s reserve accounts or to the credit
of the profit and loss account or otherwise available for distribution, and accordingly
that such sum be set free for distribution amongst the members who would have been
entitled thereto if distributed by way of dividend and in the same proportions on
condition that the same be not paid in cash but be applied either in or towards paying
up any amounts for the time being unpaid on any shares held by such members
respectively or paying up in full unissued shares or debentures of the company to be
allotted and distributed credited as fully paid up to and amongst such members in the
proportion aforesaid, or partly in the one way and partly in the other, and the
directors shall give effect to such resolution:
Provided that a share premium account and a capital redemption reserve may, for
the purposes of this regulation, only be applied in the paying up of unissued shares to
be issued to members of the company as fully paid bonus shares:
Provided further that the directors may in giving effect to such resolution make
such provision by payment in cash or otherwise as they think fit for the case of
shares or debentures becoming distributable in fractions.
Notice 
81. A notice may be given by the company to any member either personally or
by sending it by post to him or to his registered address, or, if he has no registered
address in Malta, to the address, if any, in Malta supplied by him to the company for
the giving of notice to him. Where a notice is sent by post, service of the notice shall
be deemed to be effected by properly addressing, prepaying and posting a letter
containing the notice, and to have been effected in the case of a notice of a meeting
at the expiration of forty-eight hours after the letter containing the same is posted,
and in any other case at the time at which the letter would be delivered in the
ordinary course of post.
82. Notice of every general meeting shall be given in the manner hereinbefore
authorised to - 
( a ) every registered member except those members who, having no
registered address in Malta, have not supplied to the company an
address in Malta for the giving of notices to them; and
( b ) the auditor for the time being of the company.
No other person shall be entitled to receive notices of general meetings.
Indemnity 
83. Every managing director, director holding any other executive office or
other director, and every agent, auditor or company secretary and in general any
officer for the time being of the company shall be indemnified out of the assets of
the company against any liability incurred by him in defending any proceedings in
which judgment is given in his favour or in which he is acquitted.
COMPANIES [ CAP. 386.        253
PART II - REGULATIONS FOR THE MANAGEMENT OF A PRIVATE 
COMPANY 
1. The regulations contained in Part I of this Schedule  ( with the exception of
regulation 14 )  shall apply.
2. The company is a private company and accordingly -
( a ) the right to transfer shares is restricted in a manner hereinafter
prescribed; 
( b ) the number of members of the company is limited to fifty;
( c ) any invitation to the public to subscribe for any shares or debentures of
the company is prohibited; and
( d ) the company shall not have power to issue share warrants to bearer.
3. The directors may, in their absolute discretion and without assigning any
reason therefor, decline to register any transfer of any share, whether or not it is a
fully paid share.
4. The directors may at any time require any person whose name is entered in
the register of members of the company to furnish them with any information,
supported, if the directors so require, by an affidavit, which they may consider
necessary for the purposes of determining whether or not the company satisfies the
conditions of qualification as an exempt company mentioned in subarticle  ( 2 ) of
article  211 of the Act.
  254      CAP. 386. ]                   COMPANIES
MATTERS TO BE SPECIFIED IN A PROSPECTUS AND REPORTS TO BE 
SET OUT THEREIN
( Chapter III of Title I of Part V and Chapter II of Part XI of this Act )  
PART I - MATTERS TO BE SPECIFIED
General references
1. ( a ) References herein to the issuing company are to the company referred to
in article 89 or article 391 as the case may be;
( b ) References to debt securities shall include references to debentures and
to other securities similar in substance to debentures.
2. Where the prospectus relates to debt securities guaranteed by one or more
legal persons, the information required by this Schedule shall be produced both with
respect to the issuing company and with respect to the guarantor or guarantors.
Where the prospectus relates to convertible debt securities, exchangeable debt
securities or debt securities with warrants or to the warrants themselves, information
shall also be given with regard to the nature of the shares or debt securities to which
they confer entitlement and the conditions of and procedures for conversion,
exchange or subscription. Where the issuing company of the convertible securities or
warrants is not the issuing company of the securities into which they can be
converted, the information required by this Schedule shall be produced both with
respect to the company which issues the convertible securities or warrants and the
company which issues the securities into which they can be converted.
General principles
3. The prospectus shall contain the information which, according to the
particular nature of the issuer and of the transferable securities offered to the public,
is necessary to enable investors to make an informed assessment of the assets and
liabilities, financial position, profits and losses and prospects of the issuer and of the
rights attaching to the transferable securities.
4. Where certain information specified in this Schedule is found to be
inappropriate to the issuing company’s sphere of activity or its legal form or to the
transferable securities being offered, equivalent information shall be drawn up where
certain information specified in this Schedule is found to be inapplicable to the
specific issue or to the legal form or commercial nature of this issue, then the
information required need not be provided so long as the prospectus makes specific
reference to the particular issue, stating that the information is not being supplied
and amplifying on the reasons for so doing as appropriate.
5. If the period of existence of the issuing company is less than any period for
which information is required by this Schedule, the information need be provided
only for the period of the company’s existence.
Specific matters to be specified
6. Paragraphs 7 to 25 of this Part contain the specific matters to be specified in
Amended by:
IV. 2003.164. SECOND SCHEDULE ( Article 90 )
COMPANIES [ CAP. 386.        255
a prospectus.
The persons responsible for the prospectus
7. Names, functions and declarations by the persons responsible for the
prospectus that to the best of their knowledge the information contained in the
prospectus is in accordance with the facts and that the prospectus makes no omission
likely to affect its import.
The offer to the public
8. The following details of the offer, in so far as they are applicable to the type
of instrument on offer:
- the nature of the securities being offered; 
- the amount and purpose of the issue;
- the number of securities issued and the rights attaching to them; 
- the income tax withheld at source;
- the period during which the offer is open;
- the time of the opening of the subscription lists;
- the date on which entitlement to dividends or interest arises; 
- the persons underwriting or guaranteeing the offer;
- any restrictions on the free transferability of the securities being offered and
the markets on which they may be traded;
- the establishments serving as paying agents; 
- methods of payment;
- the procedure for the exercise of any right of pre-emption;
- the methods of and time-limits for delivery of the securities; and
- the system and dates for closing of the register of members or of debentures,
according to the case.
9. The amount or percentage value payable on application and allotment on
each share, and, in the case of a second or subsequent offer of shares the amount
offered for subscription on each previous allotment made within the two preceding
years, the amount actually allotted, and the amount, if any, paid on the shares so
allotted.
10. The number, description and amount of any shares in or debentures of the
company which any person has or is entitled to be given, an option to subscribe for,
together with the following particulars of the option, that is to say:
- the period during which it is exercisable;
- the amount or percentage value to be paid for shares or debentures
subscribed for under it;
- the consideration, if any, given or to be given for it or for the right to it;
- the names and addresses of the persons to whom it or the right to it was given
or, if given to existing shareholders or debenture holders as such, the
relevant shares or debentures.
Details of the issuing company
11. The following details of the issuing company: 
  256      CAP. 386. ]                   COMPANIES
- Name;
- Registered office and registration number; 
- Date of registration or incorporation;
- The company’s legal form;
- The company’s objects; 
- The company’s share capital: 
- amount of the issued share capital;
- the number and main particulars of the securities of which the share
capital consists and any part of the share capital still to be paid up; 
- the amount of any convertible debt securities, exchangeable debt
securities or debt securities with warrants and the procedures for
conversion, exchange or subscription;
- the number of founders or management or deferred shares, if any, and
the nature and extent of the interest of the holders in the property and
profits of the company;
- the amount of the authorised share capital and the duration of the
authorisation for the directors to allot such capital;
- Where appropriate, the group of undertakings to which the issuing company
belongs;
- In so far as they are known, indication of the shareholders who directly or
indirectly exercise or could exercise a determining role in the management of
the company.
12. The number and amount of shares and debentures which within the two
preceding years have been issued, or agreed to be issued, as fully or partly paid up
otherwise than in cash, and in the latter case the extent to which they are so paid up,
and in either case the consideration for which those shares or debentures have been
issued or are proposed or intended to be issued.
13. If the share capital of the company is divided into different classes of shares,
the right of voting at meetings of the company conferred by, and the rights in respect
of share capital and dividends attached to, the several classes of shares respectively.
The issuing company’s principal activities
14. Description of the company’s principal activities:
- where appropriate, any exceptional factors which have influenced the
company’s activities;
- any dependence on patents, licences or contracts if these are of fundamental
importance;
- information regarding investments in progress where they are significant; 
- any legal proceedings having an important effect on the issuing company’s
financial position.
The issuing company’s management
15. Names, addresses, functions and remuneration of directors.
16. The number of shares, if any, fixed by the articles as the qualification of a
director, and any provision in the articles as to remuneration of the directors.
COMPANIES [ CAP. 386.        257
The purpose of the offer and costs already incurred 
17. Particulars as to:
- the amount which, in the opinion of the directors, is to be raised by the issue
of the shares in order to provide the sums, or, if any part thereof is to be
defrayed in any other manner, the balance of the sums, required to be
provided in respect of each of the following matters:
- the purchase price of any property purchased or to be purchased which is to
be defrayed in whole or in part out of the proceeds of the issue;
- any preliminary expenses payable by the company and any commission so
payable to any person in consideration of his agreeing to subscribe for, or of
his procuring or agreeing to procure subscriptions for, any shares in the
company;
- the repayment of any moneys borrowed by the company in respect of any of
the foregoing matters;
- working capital; and
- the amounts to be provided in respect of the matters aforesaid otherwise than
out of the proceeds of the issue and the sources out of which those amounts
are to be provided.
18. In regard to any property purchased or acquired by the company or proposed
so to be purchased or acquired, which is to be paid for wholly or partly out of the
proceeds of the issue offered for subscription by the prospectus, the following
particulars, that is to say:
- the names and addresses of the vendors;
- the amount paid or payable in cash, shares or debentures to the vendor,
specifying the amount, if any, in respect of goodwill, and, where there is
more than one separate vendor, or the company is a sub-purchaser, the
amount so payable to each vendor;
- brief particulars of any transaction relating to the property completed within
the two preceding years in which any vendor of the property to the company
or any person who is, or was at the time of the transaction, a promoter or a
director of the company had any interest direct or indirect.
Every person shall for the purpose of this Schedule be deemed to be a
vendor who has entered into a contract, absolute or conditional, for the sale or
purchase, or for any option of purchase, of any property to be acquired by the
company, in any case where:
- the purchase money is not fully paid at the date of the issue of the
prospectus;
- the purchase money is to be paid or satisfied wholly or in part out of the
proceeds of the issue offered for subscription by the prospectus;
- the contract depends for its validity or fulfilment on the result of that issue.
In this paragraph the expression "vendor" includes a grantor on emphyteusis
and a lessor, the expression "sale" includes an emphyteutical grant and a lease, the
expression "purchase money" includes the consideration for the emphyteutical grant
or for the lease, and the expression "sub-purchaser" includes a sub-emphyteuta and a
sub-lessee.
19. In the case of a company which has been carrying on business, or of a
  258      CAP. 386. ]                   COMPANIES
business which has been carried on for less than three years, the length of time
during which the business of the company or the business to be acquired, as the case
may be, has been carried on.
Benefits for third parties and other expenditure
20. The amount, if any, paid within the two preceding years, or payable, as
commission, but not including commission to sub-underwriters for subscribing or
agreeing to subscribe, or procuring or agreeing to procure subscriptions, for any
shares in or debentures of the company, or the rate of any such commission.
21. The amount or estimated amount of preliminary expenses and the persons by
whom any of those expenses have been paid or are payable, and the amount or
estimated amount of the expenses of the issue and the persons by whom any of those
expenses have been paid or are payable.
22. Any amount or benefit paid or given within the two preceding years or
intended to be paid or given to any promoter, and the consideration for the payment
or the giving of the benefit.
23. The dates of, parties to, name of receiving notary, if any, and the general
nature of every material contract, not being a contract entered into in the ordinary
course of the business carried on or intended to be carried on by the company or a
contract entered into more than two years before the date of issue of the prospectus.
24. Full particulars of the nature and extent of the interests, if any, of any
director in the promotion of, or in the property proposed to be acquired by, the
company, or where the interest of such a director consists in being a partner in a
partnership or a joint owner of a firm or other undertaking not being a company, the
nature and extent of the interest of the partnership, firm or undertaking with a
statement of all sums paid or agreed to be paid to him or partnership, firm or
undertaking in cash or shares or otherwise by any person either to induce him to
become, or to qualify him as, a director, or otherwise for services rendered by him or
partnership, firm or undertaking in connection with the promotion or formation of
the company.
Other significant information
25. Other significant information to be provided includes:
- to the extent that such information would have a significant impact on any
assessment that might be made of the company, recent developments in its
business and prospects;
- the most significant recent trends concerning the development of the
company’s business since the end of the preceding accounting period;
- information on the company’s prospects for at least the current accounting
period.
PART II - REPORTS TO BE SET OUT
26. (1) The prospectus shall set out a report by the auditors of the company
with respect to - 
( a ) the profits and losses of the company in respect of each of the three
accounting periods, or where the company has been carrying on
business for less than three accounting periods, in respect of each of
such periods, immediately preceding the issue of the prospectus; and
COMPANIES [ CAP. 386.        259
( b ) the assets and liabilities of the company at the last date to which the
annual accounts of the company were made up; and
( c ) the rates of the dividends, if any, paid up by the company in respect of
each class of shares in respect of each of the three accounting periods,
or such less number of periods as aforesaid, immediately preceding the
issue of the prospectus, giving particulars of each such class of shares
on which such dividends have been paid and particulars of the cases in
which no dividends have been paid in respect of any class of shares in
respect of any of those periods,
and, if no annual accounts have been made up in respect of any part of the three
accounting periods or of such lesser periods as aforesaid, ending on a date three
months before the issue of the prospectus, containing a statement of that fact.
( 2 ) If the company has subsidiary undertakings, the reports shall - 
( a ) deal separately with the company’s profits or losses as provided by sub-
paragraph (1)  ( a )  of this paragraph, and in addition deal either - 
( i ) as a whole with the combined profits or losses of its subsidiary
undertakings, so far as they concern members of the company, or
( ii ) individually with the profits or losses of each of its subsidiary
undertakings, so far as they concern members of the company,
or, instead of dealing separately with the company’s profits or losses, deal as
a whole with the profits or losses of the company and, so far as they concern
members of the company, with the combined profits and losses of its
subsidiary undertakings; and
( b ) deal separately with the company’s assets and liabilities as provided by
sub-paragraph (1)  ( b )  of this paragraph, and in addition deal either - 
( i ) as a whole with the combined assets and liabilities of its
subsidiary undertakings, with or without the company’s assets
and liabilities, or
( ii ) individually with the assets and liabilities of each of its subsidiary
undertakings,
indicating, as respects the assets and liabilities of its subsidiary
undertakings, the allowance to be made for persons other than members of
the company.
27. If the proceeds of the issue of the shares or debentures are to be applied
directly or indirectly in the purchase of any business, or any part of the proceeds of
the issue is to be so applied, there shall be set out in the prospectus a report made by
an accountant upon - 
( a ) the profits or losses of the business in respect of each of the three
accounting periods, or where the business has been carried on for less
than three accounting periods, in respect of each of such periods,
immediately preceding the issue of the prospectus, and
( b ) the assets and liabilities of the business at the last date to which the
annual accounts of the business were made up.
28. (1) The provisions of sub-paragraphs  ( 2 )  and  ( 3 )  of this paragraph shall
apply- 
( a ) the proceeds of the issue are to be applied directly or indirectly in any
manner resulting in the acquisition by the company of shares in any
  260      CAP. 386. ]                   COMPANIES
other undertaking, or any part of the proceeds is to be so applied, and
( b ) by reason of that acquisition or anything to be done in consequence of,
or in connection with it, that undertaking will become a subsidiary
undertaking of the company.
( 2 ) There shall be set out in the prospectus a report made by an accountant
upon- 
( a ) the profits or losses of the other undertaking in respect of each of the
three accounting periods or where such other undertaking has been
carrying on business for less than three accounting periods, in respect of
each of such periods, immediately preceding the issue of the prospectus,
and
( b ) the assets and liabilities of the other undertaking at the last date to
which its annual accounts were made up.
( 3 ) The report shall - 
( a ) indicate how the profits or losses of the other undertaking would in
respect of the shares to be acquired have concerned members of the
company and what allowance would have fallen to be made, in relation
to assets and liabilities so dealt with, for holders of other shares, if the
company had at all material times held the shares to be acquired, and
( b ) where the other undertaking is a parent undertaking, deal with the
profits or losses and the assets and liabilities of the undertaking and its
subsidiary undertakings in the manner provided by sub-paragraph  ( 2 )  of
paragraph 26 of this Part in relation to the company and its subsidiary
undertakings.
29. The expression "accounting period" in this Part means the year in respect of
which the annual accounts of the company, the undertaking or the business, as the
case may be, are made up; and where by reason of any alteration of the date on
which the accounting period of the company, undertaking or business terminates the
annual accounts have been made up for a period greater or less than one year, that
greater or less period is for the purpose of this Part deemed to be an accounting
period.
30. Any report required by this Part shall either indicate by way of note any
adjustments as respects the figures of any profits or losses or assets and liabilities
dealt with by the report which appear to the persons making the report necessary, or
shall make those adjustments and indicate that adjustments have been made.
31. (1) A report required by paragraph 27 or 28 of this Part shall be made by an
accountant who:
( a ) is an individual who holds a warrant to act as accountant issued under
the Accountancy Profession Act, or is a partnership of accountants duly
registered under the said Act; and
( b ) is not disqualified in terms of paragraphs  ( a )   and   ( b ) of article  153.
( 2 ) The accountant making any report required for the purposes of paragraph 27
or 28 of this Part shall be named in the prospectus.
COMPANIES [ CAP. 386.        261
THIRD SCHEDULE 
( Article 167 )
FORM AND CONTENT OF INDIVIDUAL ACCOUNTS 
PART I - GENERAL RULES AND FORMATS
General rules
1. (1) Subject to the following provisions of this Schedule - 
( a ) every balance sheet of a company shall show the items listed in either of
the balance sheet formats set out immediately following paragraph 13 of
this Schedule: and
( b ) every profit and loss account of a company shall show the items listed
in any one of the profit and loss account formats set out immediately
following the balance sheet formats;
in either case in the order and under the headings and sub-headings given in the
format adopted. For this purpose the words in brackets against the headings, the sub-
headings and the items are explanatory and do not have to be reproduced in the
individual accounts.
( 2 ) Sub-paragraph (1) of this paragraph is not to be read as requiring any item,
or the heading or sub-heading for any item, to be distinguished by any letter or
number assigned thereto in the format adopted.
2. (1) Where in accordance with paragraph 1 of this Schedule a company’s
balance sheet or profit and loss account for any accounting period has been prepared
by reference to one of the formats set out herein, the directors of the company shall
adopt the same format in preparing the individual accounts for subsequent
accounting periods of the company unless in their opinion there are special reasons
for a change.
( 2 ) Particulars of any change in the format adopted in preparing a company’s
balance sheet or profit and loss account in accordance with paragraph 1 of this
Schedule shall be disclosed, and the reasons for the change shall be explained, in the
notes to the accounts drawn up when the new format is first adopted.
3. (1) Any item required in accordance with paragraph 1 of this Schedule to be
shown in a company’s balance sheet or profit and loss account may be shown in
greater detail than required by the format adopted.
( 2 ) A company's balance sheet or profit and loss account may include an item
representing or covering the amount of any asset or liability, income or expenditure
not otherwise covered by any of the items listed in the format adopted, but the
following shall not be treated as assets in a company’s balance sheet -
( a ) expenses of and commission on any issue of shares or debentures; and
( b ) costs of research.
Any additional items as aforesaid shall be included under either an existing
heading or sub-heading or under a new heading or sub-heading as appropriate.
( 3 ) The layout, nomenclature and terminology of items in the balance sheet and
  262      CAP. 386. ]                   COMPANIES
profit and loss account that are preceded by Arabic numerals shall be adapted where
the special nature of an undertaking so requires.
( 4 ) Items to which Arabic numbers are assigned in any of the formats set out
herein may be combined in a company's individual accounts for any accounting
period if either -
( a ) their individual amounts are not material to assessing the state of affairs
or profit or loss of the company for that accounting period; or
( b ) the combination facilitates that assessment;
but where paragraph  ( b )  of this sub-paragraph applies, the individual amounts of any
items so combined shall be disclosed in the notes to the accounts.
( 5 ) Save where there is a corresponding item for the preceding accounting
period, a balance sheet or profit and loss account item for which there is no amount
shall not be shown. In such case, the heading or subheading in respect of that item
shall also not be shown if that item is the only one under such heading of sub-
heading.
4. (1) In respect of every item shown in a company's balance sheet or profit
and loss account or in the notes to the accounts, there shall also be shown the
corresponding amount for the accounting period immediately preceding that to
which the individual accounts relate.
( 2 ) Where that corresponding amount is not comparable with the amount to be
shown for the item in question in respect of the accounting period to which the
individual accounts relate, the former amount shall be adjusted and particulars of the
adjustment and the reasons for it shall be disclosed in the notes to the accounts. Such
adjustments shall be made in accordance with generally accepted accounting
principles and practice.
5. Save as otherwise provided in this Schedule, or as may be permitted by
generally accepted accounting principles and practice, any set-off between asset and
liability items, or between income and expenditure items, shall be prohibited. 
6. (1) In determining whether particular assets are to be shown as fixed assets
or current assets reference shall be made to the purpose for which they are intended.
( 2 ) Fixed assets shall comprise those assets which are intended to be held on a
continuing basis in connection with the undertaking’s activities.
( 3 ) Where an asset or liability relates to more than one layout item, its
relationship to the other item or items shall be disclosed either under the item where
it appears or in the notes to the accounts, if such disclosure is essential to the
comprehension of the individual accounts.
( 4 ) Own shares and shares in group undertakings may be shown only under the
items prescribed for that purpose.
7. (1) "Provisions for liabilities or charges" are intended to cover losses or
debts the nature of which is clearly defined and which at the date of the balance
sheet are either likely to be incurred, or certain to be incurred but uncertain as to
amount or as to the date on which they will arise.
( 2 ) "Provisions for liabilities or charges" may not be used to adjust the values of
assets.
8. (1) "Associated undertaking" shall have the meaning assigned to it by
COMPANIES [ CAP. 386.        263
paragraph 21 of the Fourth Schedule to this Act.
( 2 ) "Turnover" shall comprise the amounts derived from the sale of products
and the provision of services falling within the company’s ordinary activities, after
deduction of sales rebates and taxes directly linked to the turnover.
9. (1) Income and charges that arise otherwise than in the course of the
company’s ordinary activities shall be shown under "Extraordinary Income" and
"Extraordinary Charges".
( 2 ) Unless the income and charges referred to in sub-paragraph (1) hereof are
immaterial for the assessment of the results, explanations of their amount and nature
shall be given in the notes to the accounts. The same shall apply to income and
charges relating to another accounting period.
10. (1) Every profit and loss account of a company shall show the amount of
the company’s profit or loss on ordinary activities before taxation.
( 2 ) Taxes on the profit or loss on ordinary activities and taxes on the
extraordinary profit or loss may be shown in total as one item in the profit and loss
account before "Other Taxes not shown under the above items". In such a case
"Profit or Loss on Ordinary Activities after Taxation" shall be omitted from the
profit and loss account layouts prescribed in this Schedule.
( 3 ) Where this derogation is applied there shall be disclosed in the notes to the
accounts the extent to which the taxes on the profit or loss affect the profit or loss on
ordinary activities and the extraordinary profit or loss.
11. Every profit and loss account of a company shall show separately as
additional items:
( a ) any amount set aside or proposed to be set aside to, or withdrawn or
proposed to be withdrawn from, reserves; and
( b ) the aggregate amounts of -
( i ) any dividends paid; and 
( ii ) any dividends proposed.
12. (1) The provisions of this Schedule shall be interpreted by reference to the
application of generally accepted accounting principles and practice to give a true
and fair view within the meaning of subarticle  ( 3 ) of article  167.
( 2 ) Amounts which in the particular context of any provision of this Schedule
are not material may be disregarded for the purposes of that provision.
Required formats for accounts
13. References in this Schedule to the items listed in any of the formats set out
below are to those items read together with any of the notes in the formats which
apply to any of those items, and the requirement imposed by paragraph 1 to show the
items listed in any such format in the order adopted in the format is subject to any
provision in those notes for alternative positions for any particular items.
BALANCE SHEET FORMATS - FORMAT 1
A. Called Up issued share capital not paid  ( may be shown in either of the two
positions herein )
B. Formation Expenses  ( may be shown as the first item under "Intangible
  264      CAP. 386. ]                   COMPANIES
Assets" )
C. Fixed Assets
I. Intangible Assets
1. Development costs
2. Concessions, patents, licences, trade marks and similar rights and
assets
( if these were acquired for valuable consideration and are not to be shown under
goodwill or these were created by the company itself )
3. Goodwill  ( only to the extent that this was acquired for valuable
consideration )
4. Payments on account 
II. Tangible Assets
1. Land and buildings  ( including all rights on immovable )  
2. Plant and machinery
3. Other fixtures, fittings, tools and equipment
4. Payments on account and tangible assets in the course of
construction 
III. Financial Assets
1. Shares in group undertakings 
2. Loans to group undertakings
3. Shares in associated undertakings 
4. Loans to associated undertakings 
5. Other investments other than loans 
6. Other loans
7. Own shares  ( the nominal value of the shares held shall be shown
separately in the notes to the accounts )
D. Current Assets 
I. Stocks
l. Raw materials and consumables 
2. Work in progress
3. Finished goods and goods for resale 
4. Payments on account
II. Debtors  ( The amount falling due after more than one year shall be shown
separately for each item included under debtors )
l. Trade debtors
2. Amounts owed by group undertakings
3. Amounts owed by associated undertakings 
4. Other debtors
5. Called up issued share capital not paid  ( may be shown in either of
the two positions herein )
6. Prepayments and accrued income  ( may be shown in either of the
two positions herein )
III. Investments
COMPANIES [ CAP. 386.        265
l. Shares in group undertakings
2. Own shares  ( the nominal value of the shares held shall be shown
separately in the notes to the accounts )
3. Other investments
IV. Cash at Bank and in Hand
E. Prepayments and Accrued Income  ( may be shown in either of the two
positions herein )
F. Creditors: Amounts falling due within One Year
1. Debenture loans  ( the amount of any convertible loans shall be
shown separately in the notes to the accounts )
2. Bank loans and overdrafts
3. Payments received on account  ( payments received on account of
orders shall be shown here in so far as they are not shown as
deductions from stocks )  
4. Trade creditors
5. Bills of exchange payable
6. Amounts owed to group undertakings
7. Amounts owed to associated undertakings
8. Other creditors including taxation and social security  ( the
amounts for creditors in respect of taxation and social security
shall be shown separately from the amount for other creditors )
9. Accruals and deferred income
G. Net Current Assets/Liabilities  ( in determining the amount to be shown for
this item any amounts shown under "prepayments and accrued income" shall be
taken into account wherever shown )
H. Total Assets less Current Liabilities
I. Creditors: Amounts Falling due after more than One Year
1. Debenture loans  ( the amount of any convertible loans shall be
shown separately in the notes to the accounts )
2. Bank loans and overdrafts
3. Payments received on account  ( payments received on account of
orders shall be shown here in so far as they are not shown as
deductions from stocks )
 4. Trade creditors
5. Bills of exchange payable
6. Amounts owed to group undertakings
7. Amounts owed to associated undertakings
8. Other creditors including taxation and social security  ( the
amounts for creditors in respect of taxation and social security
shall be shown separately from the amount for other creditors )
9. Accruals and deferred income
J. Provisions for Liabilities and Charges 
1. Pensions and similar obligations
2. Taxation, including deferred taxation 
3. Other provisions
  266      CAP. 386. ]                   COMPANIES
K. Capital and Reserves
I. Called Up Issued Share Capital  ( in addition, the amount of the issued share
capital and the amount of the called up issued share capital which has been paid up
shall be shown separately in the notes to the accounts )
II. Share Premium Account 
III. Revaluation Reserve
IV. Other Reserves
1. Capital redemption reserve 
2. Reserve for own shares
3. Reserves provided for by the articles of association 
4. Other reserves
V. Profit and Loss Account
BALANCE SHEET FORMATS - FORMAT 2 
ASSETS
A. Called Up Issued Share Capital not Paid  ( may be shown in either of the two
positions herein )
B. Formation Expenses  ( may be shown as the first item under "Intangible
Assets" )
C. Fixed Assets
I. Intangible Assets
1. Development costs
2. Concessions, patents, licences, trade marks and similar rights and
assets  ( if these were acquired for valuable consideration and are
not to be shown under goodwill or if these were created by the
company itself )
3. Goodwill  ( only to the extent that this was acquired for valuable
consideration )
4. Payments on account 
II. Tangible Assets
1. Land and buildings  ( including all rights on immovables )  
2. Plant and machinery
3. Other fixtures, fittings, tools and equipment
4. Payments on account and tangible assets in the course of
construction 
III. Financial Assets
1. Shares in group undertakings 
2. Loans to group undertakings
3. Shares in associated undertakings 
4. Loans to associated undertakings 
5. Other investments other than loans 
6. Other loans
COMPANIES [ CAP. 386.        267
7. Own shares  ( the nominal value of shares held shall be shown
separately )
D. Current Assets
I. Stocks
1. Raw materials and consumables 
2. Work in progress
3. Finished goods and goods for resale 
4. Payments on account
II. Debtors  ( the amount falling due after more than one year shall be shown
separately for each item included under debtors )
l. Trade debtors
2. Amounts owed by group undertakings
3. Amounts owed by associated undertakings 
4. Other debtors
5. Called up issued share capital not paid  ( may be shown in either of
the two positions herein )
6. Prepayments and accrued income  ( may be shown in either of the
two positions herein )
III. Investments
1. Shares in group undertakings
2. Own shares  ( the nominal value of the shares held shall be shown
separately )
3. Other investments
IV. Cash at Bank and in Hand
E. Prepayments and Accrued Income  ( may be shown in either of the two
positions herein )
LIABILITIES 
A. Capital and Reserves
I. Called Up Issued Share Capital  ( in addition, the amount of the issued share
capital and the amount of the called up issued share capital which has been paid up
shall be shown separately )
II. Share Premium Account 
III. Revaluation Reserve 
IV. Other Reserves
l. Capital redemption reserve 
2. Reserve for own shares
3. Reserves provided for by the articles of association 
4. Other reserves
V. Profit and Loss Account
B. Provisions for Liabilities and Charges 
1. Pensions and similar obligations
2. Taxation, including deferred taxation 
  268      CAP. 386. ]                   COMPANIES
3. Other provisions
C. Creditors  ( amounts falling due within one year and after one year shall be
shown separately for each of these items and their aggregate shall be shown
separately for all of these items in the notes to the accounts )
1. Debenture loans  ( the amounts of any convertible loans shall be
shown separately in the notes to the accounts )
2. Bank loans and overdrafts
3. Payments received on account  ( payments received on account of
orders shall be shown here in so far as they are not shown as
deductions from stocks )  
4. Trade creditors
5. Bills of exchange payable
6. Amounts owed to group undertakings
7. Amounts owed to associated undertakings
8. Other creditors including taxation and social security  ( the amount
for creditors in respect of taxation and social security shall be
shown separately from the amount for other creditors )
9. Accruals and deferred income  ( may be shown in either of the two
positions herein )
D. Accruals and Deferred Income  ( may be shown in either of the two positions
herein )
PROFIT AND LOSS ACCOUNT FORMATS - FORMAT 1 
1. Turnover
2. Cost of sales  ( after taking into account any necessary provisions
for depreciation or diminution in the value of assets )
3. Gross profit or loss
4. Distribution costs  ( after taking into account any necessary
provisions for depreciation or diminution in the value of assets )
5. Administrative expenses  ( after taking into account any necessary
provisions for depreciation or diminution in the value of assets )
6. Other operating income
7. Income from shares in group undertakings
8. Income from shares in associated undertakings
9. Income from other financial fixed assets  ( income, including
interest, derived from group undertakings shall be shown
separately from income derived from other sources )
10. Other interest receivable and similar income  ( interest and similar
income derived from group undertakings shall be shown
separately from that derived from other sources )
11. Amounts written off in respect of financial fixed assets and
investments held as current assets
12. Interest payable and similar charges  ( the amount payable to group
undertakings shall be shown separately )
13. Tax on profit or loss on ordinary activities
14. Profit or loss on ordinary activities after taxation 
COMPANIES [ CAP. 386.        269
15. Extraordinary income
16. Extraordinary charges
17. Extraordinary profit or loss
18. Tax on extraordinary profit or loss
19. Other taxes not shown under the above items 
20. Profit or loss for the accounting period
The amount of any provisions for depreciation and diminution in the value of
tangible and intangible fixed assets, including formation expenses, falling to be
shown under items 7 ( a )  and A. 4 ( a )   respectively in Formats 2 and 4 shall be
disclosed in the notes to the accounts in any case where the profit and loss account is
prepared by reference to this Format.
PROFIT AND LOSS ACCOUNT FORMATS - FORMAT 2 
1. Turnover
2. Change in stocks of finished goods and in work in progress 
3. Own work capitalised
4. Other operating income
5. ( a ) Raw materials and consumables 
( b ) Other external charges
6. Staff costs:
( a ) wages and salaries 
( b ) social security costs 
( c ) other pension costs
7. ( a ) Depreciation and other amounts written off tangible and
intangible fixed assets, including formation expenses
( b ) Exceptional amounts written off current assets 
8. Other operating charges
9. Income from shares in group undertakings
10. Income from shares in associated undertakings
11. Income from other financial fixed assets  ( income, including
interest, derived from group undertakings shall be shown
separately from income derived from other sources )
12. Other interest receivable and similar income  ( interest and similar
income derived from group undertakings shall be shown
separately from that derived from other sources )
13. Amounts written off in respect of financial fixed assets and
investments held as current assets
14. Interest payable and similar charges  ( the amount payable to group
undertakings shall be shown separately )
15. Tax on profit or loss on ordinary activities
16. Profit or loss on ordinary activities after taxation 
17. Extraordinary income
18. Extraordinary charges
19. Extraordinary profit or loss
20. Tax on extraordinary profit or loss
  270      CAP. 386. ]                   COMPANIES
21. Other taxes not shown under the above items 
22. Profit or loss for the accounting period
PROFIT AND LOSS ACCOUNT FORMATS - FORMAT 3 
A. Charges
1. Cost of sales  ( after taking into account any necessary provisions
for depreciation or diminution in the value of assets )
2. Distribution costs  ( after taking into account any necessary
provisions for depreciation or diminution in the value of assets )
3. Administrative expenses  ( after taking into account any necessary
provisions for depreciation or diminution in the value of assets )
4. Amounts written off in respect of financial fixed assets and
investments held as current assets
5. Interest payable and similar charges  ( the amount payable to group
undertakings shall be shown separately )
6. Tax on profit or loss on ordinary activities
7. Profit or loss on ordinary activities after taxation 
8. Extraordinary charges
9. Tax on extraordinary profit or loss
10. Other taxes not shown under the above items 
11. Profit or loss for the accounting period
B. Income
l. Turnover
2. Other operating income
3. Income from shares in group undertakings
4. Income from shares in associated undertakings
5. Income from other financial fixed assets  ( income, including
interest, derived from group undertakings shall be shown
separately from income derived from other sources )
6. Other interest receivable and similar income  ( interest and similar
income derived from group undertakings shall be shown
separately from that derived from other sources )
7. Profit or loss on ordinary activities after taxation
8. Extraordinary income
9. Profit or loss for the accounting period
The amount of any provisions for depreciation and diminution in the value of
tangible and intangible fixed assets, including formation expenses, falling to be
shown under items 7  ( a )  and A. 4 ( a )  respectively in Formats 2 and 4 shall be
disclosed in the notes to the accounts in any case where the profit and loss account is
prepared by reference to this Format.
PROFIT AND LOSS ACCOUNT FORMATS - FORMAT 4 
A. Charges
l. Reduction in stocks of finished goods and in work in progress 
COMPANIES [ CAP. 386.        271
2. ( a ) Raw materials and consumables
    ( b ) Other external charges 
3. Staff costs:
( a ) wages and salaries 
    ( b ) social security costs 
    ( c ) other pension costs
4 . ( a ) Depreciation and other amounts written off tangible and
intangible fixed assets, including formation expenses
     ( b ) Exceptional amounts written off current assets 
5. Other operating charges
6. Amounts written off in respect of financial fixed assets and
investments held as current assets
7. Interest payable and similar charges  ( the amount payable to group
undertakings shall be shown separately )
8. Tax on profit or loss on ordinary activities
9. Profit or loss on ordinary activities after taxation
10. Extraordinary charges
11. Tax on extraordinary profit or loss
12. Other taxes not shown under the above items 
13. Profit or loss for the accounting period
B. Income 
1. Turnover
2. Increase in stocks of finished goods and in work in progress 
3. Own work capitalised
4. Other operating income
5. Income from shares in group undertakings
6. Income from shares in associated undertakings
7. Income from other financial fixed assets  ( income, including
interest, derived from group undertakings shall be shown
separately from income derived from other sources )
8. Other interest receivable and similar income  ( interest and similar
income derived from group undertakings shall be shown
separately from that derived from other sources )
9. Profit or loss on ordinary activities after taxation 
10. Extraordinary income
11. Profit or loss for the accounting period
PART II - ACCOUNTING PRINCIPLES AND RULES 
Accounting principles
14. Items shown in the individual accounts shall be valued in accordance with
the following general principles - 
( a ) the company must be presumed to be carrying on its business as a going
concern;
( b ) the methods of valuation must be applied consistently from one
  272      CAP. 386. ]                   COMPANIES
accounting period to another;
( c ) valuation must be made on a prudent basis, and in particular:
( i ) only profits realised at the balance sheet date may be included in
the profit and loss account,
( ii ) account shall be taken of all foreseeable liabilities and potential
losses arising in the course of the accounting period concerned or
of a previous one, even if such liabilities or losses become
apparent only between the date of the balance sheet and the date
on which it is drawn up,
( iii ) account must be taken of all depreciation whether the result of the
accounting period is a loss or a profit;
( d ) account must be taken of income and charges relating to the accounting
period, irrespective of the date of receipt or payment of such income or
charges; 
( e ) the components of asset and liability items must be valued separately;
( f ) the opening balance sheet for each accounting period must correspond
to the closing balance sheet for the preceding accounting period.
Historical cost accounting rules
15. (1) Formation expenses shown as assets in the balance sheet shall be
written off within a maximum period of five years.
( 2 ) The amounts entered under "Formation Expenses" shall be explained in the
notes to the accounts.
16. (1) In the case of any fixed asset which has a limited useful economic life,
the amount of -
( a ) its purchase price or production cost; or
( b ) where it is estimated that any such asset will have a residual value at the
end of the period of its useful economic life, its purchase price or
production cost less that estimated residual value,
shall be reduced by provisions for depreciation calculated to write off that amount
systematically over the period of the asset’s useful economic life. Such provisions
shall be charged in the profit and loss account.
( 2 ) The purchase price of an asset shall be determined by adding to the actual
price paid any expenses incidental to its acquisition.
( 3 ) The production cost of an asset shall be determined by adding to the
purchase price of the raw materials and consumables used the amount of the costs
incurred by the company which are directly attributable to the production of that
asset.
( 4 ) In addition to the costs specified in sub paragraph  ( 3 )  of this paragraph there
may be included in the production cost of an asset - 
( a ) a reasonable proportion of the costs incurred by the company which are
only indirectly attributable to the production of that asset, but only to
the extent that they relate to the period of production; and
( b ) interest on capital borrowed to finance the production of that asset, to
the extent that it relates to the period of production. The inclusion of
such interest and the amount thereof shall be disclosed in the notes to
COMPANIES [ CAP. 386.        273
the accounts.
( 5 ) Fixed asset investments shall be accounted for in accordance with the
following rules: 
( a ) such investments shall be included in the company’s individual
accounts by using the cost method:
Provided that in the case of participating interests the equity method
may be used as embodied in paragraphs 20 and 21 of the Fourth
Schedule to this Act; 
( b ) the cost method referred to in sub-paragraph 5  ( a )   of this paragraph is a
method of accounting whereby the investment is recorded at cost. The
profit and loss account reflects income from the investment only to the
extent that distributions are received or are receivable by the investor
from accumulated net profits of the investment arising subsequent to the
date of acquisition;
( c ) when the equity method of accounting is used in the case of
participating interests the provisions of paragraph 21 of the Fourth
Schedule to this Act shall apply  mutatis mutandis  and references to
consolidated accounts, consolidated balance sheet, consolidated profit
and loss account and notes to the consolidated accounts shall be
construed accordingly;
( d ) where the proportion of the profit attributable to participating interests
exceeds the amount of dividends which are already received or the
payment of which can be claimed, the amount of the difference shall be
placed in a reserve which shall not be distributed to the shareholders.
17. (1) Where a financial fixed asset has diminished in value, provision for
diminution in value may be made in respect of it and the amount to be included in
respect of it may be reduced accordingly. Any such provisions shall be charged in
the profit and loss account and if not shown separately in the profit and loss account,
shall be disclosed  ( either separately or in aggregate )  in the notes to the accounts:
Provided that an investment company may, subject to full disclosure in the notes
to the accounts, set off such provisions for diminution in the value of investments
directly against capital and reserves. The amounts in question shall be shown
separately in the balance sheet:
Provided further that, in the case of an investment company with variable capital,
separate disclosure in the balance sheet as prescribed in the previous proviso need
not be made.
( 2 ) Provision for diminution in value shall be made in respect of any fixed asset
which has diminished in value if the reduction in its value is expected to be
permanent  ( whether its economic life is limited or not ) , and the amount to be
included in respect of it shall be reduced accordingly. Any such provision shall be
charged in the profit and loss account and if not shown separately in the profit and
loss account, shall be disclosed  ( either separately or in aggregate )  in the notes to the
accounts.
( 3 ) Where the reasons for which any provision was made in accordance with
sub-paragraph (1) or  ( 2 )  of this paragraph have ceased to apply to any extent, that
provision shall be written back to the extent that it is no longer necessary. Any
amounts written back in accordance with this sub-paragraph which are not shown
separately in the profit and loss account shall be disclosed  ( either separately or in
aggregate )  in the notes to the accounts.
  274      CAP. 386. ]                   COMPANIES
18. (1) Notwithstanding that an item in respect of "development costs" is
included under "fixed assets" in the balance sheet formats contained in this
Schedule, an amount may only be included in a company’s balance sheet in respect
of development costs in special circumstances.
( 2 ) If any amount is included in the company’s balance sheet in respect of
development costs the following information shall be given in the notes to the
accounts: 
( a ) the period over which the amount of those costs originally capitalised is
being or is to be written off; and
( b ) the reasons for capitalising the development costs in question.
19. (1) Where goodwill is treated as an asset the following provisions of this
paragraph shall apply.
( 2 ) Subject to sub-paragraphs  ( 3 )  and  ( 4 )  of this paragraph, the amount of the
consideration for any goodwill acquired by a company shall be reduced by
provisions for amortisation calculated to write off that amount systematically over a
period chosen by the directors of the company.
( 3 ) The period chosen shall not exceed the useful economic life of the goodwill
in question.
( 4 ) In any case where any goodwill acquired by a company is shown or included
as an asset in the company’s balance sheet the period chosen for writing off the
consideration for that goodwill and the reasons for choosing that period shall be
disclosed in the notes to the accounts.
20. (1) Subject to the following paragraph, assets which fall to be included -
( a ) amongst the fixed assets of a company under the item "tangible assets";
or
( b ) amongst the current assets of a company under the item "raw materials
and consumables",
may be included at a fixed quantity and value.
( 2 ) Sub-paragraph (1) of this paragraph applies to assets of a kind which are
constantly being replaced, where - 
( a ) their overall value is not material to assessing the company’s state of
affairs; and 
( b ) their quantity, value and composition are not subject to material
variation.
21. (1) Subject to sub-paragraphs  ( 2 )  and  ( 3 )  of this paragraph, the amount to be
included in respect of any current asset shall, insofar as it is applicable, be its
purchase price or production cost.
( 2 ) If the net realisable value of any current asset is lower than its purchase
price or production cost, the amount to be included in respect of that asset shall be
the net realisable value.
( 3 ) Where the reasons for which any provision for diminution in value made in
accordance with sub-paragraph  ( 2 )  of this paragraph have ceased to apply to any
extent, that provision shall be written back to the extent that it is no longer
necessary.
COMPANIES [ CAP. 386.        275
22. The method of determination of purchase price and the method of
determination of production cost given in paragraph 16 of this Schedule shall apply
for the purposes of paragraph 21 of this Schedule. Furthermore, distribution costs
may not be included in production costs.
23. (1) Subject to the qualification mentioned in sub-paragraph  ( 3 )  of this
paragraph, the purchase price or production cost of -
( a ) any assets which fall to be included under any item shown in a
company’s balance sheet under the sub-heading "stocks"; and
( b ) any assets which are fungible assets  ( including investments ) ,
shall be determined by the application of one of the methods mentioned in
sub paragraph  ( 2 )  of this paragraph in relation to any such assets of the same class.
( 2 ) The methods referred to in sub-paragraph (1) of this paragraph are -
( a ) the method known as "first in, first out"  ( FIFO ) ;
( b ) the weighted average price method; and
( c ) any other method similar to any of the methods mentioned above.
( 3 ) The method actually chosen for the purposes of this paragraph shall be the
one which appears to the directors to be appropriate in the circumstances of the
company.
( 4 ) Where in the case of any company - 
( a ) the purchase price or production cost of assets falling to be included
under any item shown in the company’s balance sheet has been
determined by the application of any method permitted by this
paragraph; and
( b ) the amount shown in respect of that item differs materially from the
relevant alternative amount given in sub-paragraph  ( 5 )  of this
paragraph,
the amount of that difference shall be disclosed in the notes to the accounts.
( 5 ) Subject to sub-paragraph  ( 6 )  of this paragraph, for the purposes of
sub paragraph  ( 4 )   ( b )  of this paragraph, the relevant alternative amount, in relation to
any item shown in a company’s balance sheet, is the amount which would have been
shown in respect of that item if assets of any class included under that item at an
amount determined by any method permitted by this paragraph had instead been
included at their replacement cost as at the balance sheet date.
( 6 ) The relevant alternative amount may be determined by reference to the most
recent actual purchase price or production cost before the balance sheet date of
assets of any class included under the item in question instead of by reference to
their replacement cost as at that date, but only if the former appears to the directors
of the company to constitute the more appropriate standard of comparison in the case
of assets of that class.
( 7 ) For the purpose of this paragraph, assets of any description shall be regarded
as fungible if assets of that description are substantially indistinguishable one from
another.
24. (1) Where the amount repayable on any debt owed by a company is greater
than the value of the consideration received in the transaction giving rise to the debt,
the amount of the difference may be treated as an asset.
  276      CAP. 386. ]                   COMPANIES
( 2 ) Where any amount as referred to in sub-paragraph (1) of this paragraph is
treated as an asset - 
( a ) it shall be written off by reasonable amounts each year;
( b ) it shall be completely written off before repayment of the debt; and 
( c ) if the current amount is not shown as a separate item in the company’s
balance sheet it shall be disclosed in the notes to the accounts.
25. (1) Provisions for liabilities and charges may not exceed in amount the
sums which are reasonably necessary.
( 2 ) Particulars shall be given of each provision included in the item "other
provisions" in the company’s balance sheet in any case where the amount of that
provision is material.
Alternative accounting rules
26. (1) Subject to paragraphs 28, 29 and 30 of this Schedule, the amounts to be
included in respect of assets of any description mentioned in paragraph 27 of this
Schedule shall be determined on any basis mentioned in that paragraph.
( 2 ) References in paragraphs 27 to 30 of this Schedule to "the depreciation
rules" are to the rules embodied in paragraphs 16, 17, 18, 20, 21 and 24 of this
Schedule.
27. (1) Tangible fixed assets may be included at a market value determined as
at the date of their last valuation.
( 2 ) Investments of any description falling to be included under either of the
balance sheet formats contained in Part I of this Schedule may be included either - 
( a ) at a market value determined as at the date of their last valuation; or
( b ) at a value determined on any basis which appears to the directors to be
appropriate in the circumstances of the company,
but in the latter case particulars of the method of valuation, etc., adopted and of the
reasons for adopting it shall be disclosed in the notes to the accounts.
( 3 ) Notwithstanding any other provision of this Schedule investments in which
investment companies have invested their funds shall be valued on the basis of their
market value determined as at the balance sheet date.
28. (1) Where the value of any asset of a company is determined on the basis
mentioned in paragraph 27 of this Schedule that value shall be the starting point for
determining the amount to be included in respect of that asset in the company’s
individual accounts, instead of its purchase price or production cost or any value
previously so determined for that asset; and the depreciation rules shall apply
accordingly in relation to any such asset with the substitution for any reference to its
purchase price or production cost by a reference to the value most recently
determined for that asset on any basis mentioned in paragraph 27 of this Schedule.
( 2 ) The amount of any provision for depreciation required in the case of any
fixed asset as it applies by virtue of sub-paragraph (1) of this paragraph is referred to
in sub-paragraph  ( 3 )  of this paragraph as the adjusted amount, and the amount of any
provision which would be required in respect of that asset according to the historical
cost accounting rules is referred to as the historical cost amount.
( 3 ) Where sub-paragraph (1) of this paragraph applies in the case of any fixed
COMPANIES [ CAP. 386.        277
asset, the amount of any provision for depreciation in respect of that asset -
( a ) included in any item shown in the profit and loss account in respect of
amounts written off against the assets of the description in question; or
( b ) taken into account in stating any item so shown which is required by the
explanatory notes in the profit and loss account formats contained in
Part I of this Schedule to be stated after taking into account any
necessary provisions for depreciation or diminution in the value of
assets included under it,
may be the historical cost amount instead of the adjusted amount, provided that the
amount of any difference between the two is accounted for in the profit and loss
account and disclosed separately therein or in the notes to the accounts.
29. (1) This paragraph applies where the amounts to be included in respect of
assets covered by any items shown in a company’s individual accounts have been
determined on any basis mentioned in paragraph 27 of this Schedule.
( 2 ) The items affected and the basis of valuation adopted in determining the
amounts of the assets in question in the case of each of such items shall be disclosed
in the notes to the accounts.
( 3 ) In the case of each balance sheet item which is affected - 
( a ) the comparable amounts determined according to the historical cost
accounting rules; or
( b ) the differences between those amounts and the corresponding amounts
actually shown in the balance sheet in respect of that item,
shall be shown separately in the balance sheet or in the notes to the accounts.
( 4 ) In sub-paragraph  ( 3 )  of this paragraph, references in relation to any item to
the comparable amounts determined as mentioned thereto are references to - 
( a ) the aggregate amount which would be required to be shown in respect of
that item if the amounts to be included in respect of all the assets
covered by that item were determined according to the historical cost
accounting rules; and
( b ) the aggregate amount of the cumulative provisions for depreciation or
diminution in value which would be permitted or required in
determining those amounts according to those rules.
30. (1) With respect to any determination of the value of an asset of a company
on any basis mentioned in paragraph 27 of this Schedule the amount of any profit or
loss arising from that determination shall be credited or, as the case may be, debited
to a separate reserve to be called "the revaluation reserve", after allowing, where
appropriate, for any provisions for depreciation or diminution in value made
otherwise than by reference to the value so determined and for any adjustments of
any such provisions made in the light of that determination.
( 2 ) The amount of the revaluation reserve shall be shown in the company’s
balance sheet under a separate sub-heading in the position given for the item
"revaluation reserve" in Format 1 or 2 of the balance sheet formats contained in this
Schedule, but need not be shown under that name.
( 3 ) The revaluation reserve shall be reduced to the extent that the amounts
standing to the credit of the reserve are in the opinion of the directors of the
company no longer necessary for the purpose of the accounting policies adopted by
  278      CAP. 386. ]                   COMPANIES
the company; but an amount may only be transferred from that reserve to the profit
and loss account if - 
( a ) the amount in question was previously charged to that account; or
( b ) it represents realised profit.
( 4 ) Any amounts transferred from the revaluation reserve to the profit and loss
account in accordance with the provisions of sub-paragraph  ( 3 )  of this paragraph
shall be shown separately in the profit and loss account.
( 5 ) Notwithstanding the provisions of sub-paragraph  ( 3 )  of this paragraph the
balance standing to the credit of the revaluation reserve may be capitalised in whole
or in part at any time.
( 6 ) The treatment for taxation purpose of amounts credited or debited to the
revaluation reserve shall be disclosed in the notes to the accounts.
PART III - THE NOTES TO THE ACCOUNTS
31. Any information required in the case of any company by the provisions of
this paragraph shall, if not given in the balance sheet or the profit and loss account,
be given by way of the notes to the accounts. The information in respect of the
following matters shall be provided as a minimum - 
( a ) The valuation methods applied to the various items in the individual
accounts, and the methods employed in calculating the provisions for
depreciation and diminution in value. For items included in the
individual accounts which are or were originally expressed in foreign
currency, the bases of translation used to express them in local currency
shall be disclosed;
( b ) The number and the nominal value of the shares subscribed during the
accounting period within the limits of the authorised capital;
( c ) Where there is more than one class of shares, the number and the
nominal value for each class, in respect of both the authorised and the
issued shares;
( d ) The existence of any participation certificates, convertible debentures
or similar securities or rights, with an indication of their number and the
rights they confer;
( e ) Information concerning the acquisition by a company of its own shares,
either itself or through a person acting in his own name but on the
company’s behalf, relating to -
( i ) the reasons for acquisitions made during the accounting period; 
( ii ) the number and nominal value of the shares acquired and disposed
of during the accounting period and the proportion of the issued
share capital which they represent;
( iii ) in the case of acquisition or disposal for a value, the consideration
for the shares;
( iv ) the number and nominal value of all the shares acquired and held
by the company and the proportion of the issued share capital
which they represent;
( f ) The name, registered office and the type of each of the partnerships of
which the company is a member with unlimited liability; provided that
this information may be omitted if it is not material;
COMPANIES [ CAP. 386.        279
( g ) Information in respect of each item which is or would but for
sub paragraph  ( 4 )   ( b )   of paragraph 3 of this Schedule be shown under
the general item "fixed assets" in the company’s balance sheet, relating
to - 
( i ) the amount of the purchase price or production cost, leaving out
therefrom the depreciation or diminution in value in respect of
that item, as at the date of the beginning of the accounting period
and as at the balance sheet date respectively;
( ii ) the effect on any amount shown in the balance sheet in respect of
that item of -
- any revision of the amount in respect of any assets included
under that item made during that period,
- acquisitions during that period of any assets, 
- disposals during that period of any assets, and
- any transfers of assets of the company to and from that item
during that period;
( h ) In respect of each item within indent  ( g )  of this paragraph - 
( i ) the cumulative amount of provisions for depreciation or
diminution in the value of assets included under that item as at
each date mentioned in indent  ( g )   ( i )  of this paragraph;
( ii ) the amount of any such provisions made in respect of the
accounting period;
( iii ) the amount of any adjustments made in respect of any such
provisions during the period in consequence of the disposal of any
assets; and
( iv ) the amount of any other adjustments made in respect of any such
provisions during the period;
( i ) The information required to be disclosed by virtue of indents  ( g )  and   ( h )
of this paragraph shall also be provided in the case of "Formation
Expenses" where this item is shown separately from "Fixed Assets" in
the balance sheet;
( j ) Amounts owed by the company and becoming due and payable after
more than five years as well as the company’s entire debts covered by
valuable security furnished by the company with an indication of the
nature and form of the security. This information shall be disclosed
separately for each creditor’s item, as provided for in the formats
described in Part I of this Schedule;
( k ) The total amount of any financial commitments that are not included in
the balance sheet, in so far as this information is of assistance in
assessing the financial position. Any commitments concerning pensions
and group undertakings shall be disclosed separately;
( l ) The turnover within the meaning of paragraph 8 of this Schedule,
broken down by categories of activity and into geographical market in
so far as, taking account of the manner in which the sale of products and
the provision of services falling within the company’s ordinary
activities are organised, these categories and markets differ
substantially from one another.
( m ) The average number of persons employed during the accounting period,
broken down by categories and, if they are not disclosed separately in
  280      CAP. 386. ]                   COMPANIES
the profit and loss account, the staff costs relating to the accounting
period broken down as otherwise required by Formats 2 and 4 of the
profit and loss account;
( n ) The difference between the tax charged for the accounting period and
for earlier accounting periods and the amount of tax payable in respect
of those periods, provided that this difference is material for purposes of
future taxation. This amount may also be disclosed in the balance sheet
as a cumulative amount under a separate item with an appropriate
heading;
( o ) (i) The aggregate amount of the emoluments granted in respect of the
accounting period to the directors of a company for their services
as directors of that company or for their services as directors of
any of its subsidiary undertakings, while acting as directors of
that company; and
( ii ) The aggregate amount of any other emoluments granted in respect
of the accounting period to the directors of a company for their
services in connection with the management of the affairs of the
company or any of its subsidiary undertakings, while acting as
directors of that company; and shown separately from the
aggregate amount of emoluments referred to in item  ( i )  above; and
( iii ) The fact that the company has during the accounting period
purchased or maintained any such insurance as is referred to in
subarticle  ( 2 ) of article  148 and the aggregate amount of premiums
paid in respect thereof.
In this indent emoluments shall include the remuneration for
the services of the directors referred to herein and all fees,
percentages, gifts, compensation for loss of office and other
similar payments; as well as any commitments arising or entered
into in respect of retirement pensions, superannuation allowances,
gratuities or other similar commitments in favour of former
directors of the company referred to herein.
The commitments arising or entered into in respect of
retirement pensions, superannuation allowances, gratuities or
other similar commitments in favour of former directors of the
company shall be shown separately from the other emoluments.
( p ) The amount of advances and credits granted to directors of a company
with indications of the interest rates, main conditions and any amounts
repaid; as well as commitments entered into on their behalf by way of
guarantees of any kind. The said commitments shall be shown
separately;
( q ) The name and registered office of the undertaking which draws up the
consolidated accounts of the largest body of undertakings of which the
company forms part as a subsidiary undertaking;
( r ) The name and the registered office of the undertaking which draws up
the consolidated accounts of the smallest body of undertakings of which
the company forms part as a subsidiary undertaking; and
( s ) Where the parent companies referred to in indents  ( q )  and  ( r )  of this
paragraph are not registered in Malta the place where copies of the
consolidated accounts referred to in these indents may be obtained,
provided that they are available to the public.
COMPANIES [ CAP. 386.        281
32. (1) If at the end of its accounting period, the company has one or more
subsidiary undertakings or participating interests in other undertakings the following
information shall, where applicable, be given with respect to each such undertaking - 
( a ) the kind, name and registered or principal office of each undertaking; 
( b ) in relation to the shares of each class of each undertaking held by the
company, the identity of each class and the proportion of the nominal
value of the issued shares of that class represented by the shares held as
at the end of the undertaking’s relevant accounting period; and
( c ) the aggregate amount of the capital and reserves of each undertaking as
at the end of its relevant accounting period, and its profit or loss for that
period.
( 2 ) For the purposes of sub-paragraph (1) of this paragraph the relevant
accounting period is - 
( a ) if the accounting period of the undertaking ends with that of the
company giving the information in its notes to the accounts, that
accounting period; and 
( b ) if not, the undertakings accounting period ending last before the end of
the accounting period of the company giving that information.
( 3 ) The provisions of sub-paragraph (1) of this paragraph are subject to the
exceptions and other provisions contained in paragraphs 33 and 34 of this Schedule. 
33. (1) The information otherwise required by sub-paragraph (1)  ( c )  of
paragraph 32 of this Schedule need not be given in respect of a subsidiary
undertaking of a company if either - 
( a ) the company is exempt from the requirement to prepare consolidated
accounts; or
( b ) the company prepares consolidated accounts and - 
( i ) the accounts of the subsidiary undertaking are included in the
consolidated accounts, or
( ii ) the investment of the company in the shares of the subsidiary
undertaking is included in the consolidated accounts, or in the
notes of the consolidated accounts, by way of the equity method
of accounting.
( 2 ) The information otherwise required by sub-paragraph (1)  ( c )  of paragraph 32
of this Schedule need not be given in respect of another undertaking in which the
company holds shares if the company’s investment in those shares is included in the
individual accounts, or in the notes to the accounts, by way of the equity method of
accounting.
( 3 ) The information otherwise required by sub-paragraph (1)  ( c )  of paragraph 32
of this Schedule need not be given in respect of any undertaking if -
( a ) the undertaking is not required by any provision of this Act to deliver a
copy of its balance sheet for its relevant accounting period mentioned in
paragraph 32 of this Schedule and does not otherwise publish that
balance sheet in Malta or elsewhere; and
( b ) the shares held by the company, either directly or indirectly, in that
undertaking amount to less than one half in nominal value of the
undertaking’s issued share capital.
  282      CAP. 386. ]                   COMPANIES
( 4 ) Information otherwise required by sub-paragraph (1) of paragraph 32 of this
Schedule need not be given if it is not material.
( 5 ) References in this paragraph and in paragraph 32 of this Schedule to shares
of undertakings shall include references to beneficial interests in undertakings where
the capital of such undertakings is not divided into shares.
34. (1) The information referred to in paragraphs 32 and 33 of this Schedule
may be disclosed in a separate statement which is to be filed with the Registrar
together with the individual accounts of the company in accordance with article 181.
( 2 ) Where the information referred to in sub-paragraph (1) of this paragraph is
disclosed in a separate statement this fact shall be disclosed in the notes to the
accounts.
( 3 ) The information referred to in indent (1) of paragraph 31 and in paragraphs
32 and 33 of this Schedule may be omitted when it appears to the directors that their
nature is such that they would be seriously prejudicial to any of the undertakings
affected by these provisions and the Registrar agrees that the information need not
be disclosed.
( 4 ) Where any information is omitted from the notes to the accounts by virtue of
the provisions of sub-paragraph  ( 3 )  of this paragraph that fact shall be disclosed in
the notes to the accounts.
35. (1) Particulars shall be given in the notes to the accounts of any charge on
the assets of the company to secure the liabilities of any other person including,
where practicable, the amount secured.
( 2 ) The following information shall be given with respect to any other
contingent liability not provided for other than where the possibility of a loss is
judged by the directors of the company to be remote - 
( a ) the amount or estimated amount of that liability; 
( b ) its legal nature; and
( c ) whether any valuable security has been provided by the company in
connection with that liability and if so, what valuable security has been
so provided.
( 3 ) There shall be stated, where practicable - 
( a ) the aggregate amount or estimated amount of contracts for capital
expenditure, so far as not provided for; and
( b ) the aggregate amount or estimated amount of capital expenditure
authorised by the directors which has not been contracted for.
( 4 ) Commitments within any of the preceding sub-paragraphs of this paragraph
undertaken on behalf of or for the benefit of a group undertaking shall be stated
separately from the other commitments within that sub-paragraph.
36. (1) Where any amount is transferred -
( a ) to or from any reserves; or
( b ) to any provision for liabilities or charges; or
( c ) from any provision for liabilities and charges otherwise than for the
purpose for which the provision was established,
and the reserves or provisions are shown as separate items in the company’s balance
COMPANIES [ CAP. 386.        283
sheet or in the notes to the accounts, the information mentioned in sub-paragraph  ( 2 )
of this paragraph shall be given in respect of the aggregate of reserves or provisions
included in the same item.
( 2 ) That information to which reference is made in sub-paragraph (1) of this
paragraph is - 
( a ) the amount of the reserves or provisions as at the date of the beginning
of the accounting period and as at the balance sheet date respectively;
( b ) any amounts transferred to or from the reserves or provisions during
that period; and
( c ) the source and application respectively of any amounts so transferred. 
PART IV - TRANSITIONAL ARRANGEMENT
37. (1) If, when individual accounts are drawn up in accordance with the
provisions of this Schedule for the first time, the purchase price or production cost of
a fixed asset cannot be determined without undue expense or delay, the net book
amount at the beginning of the accounting period may be treated as the purchase
price or production cost.
( 2 ) Any application of the sub-paragraph (1) of this paragraph shall be disclosed
in the notes to the accounts.
  284      CAP. 386. ]                   COMPANIES
FOURTH SCHEDULE 
( Article 171 )
FORM AND CONTENT OF CONSOLIDATED ACCOUNTS 
General rules
1. (1) Consolidated accounts shall comply so far as practicable with the
provisions of the Third Schedule as if the undertakings included in the consolidation
were a single company.
( 2 ) In particular, without prejudice to articles 168 and 169 and to the provisions
of this Schedule and taking account of the essential adjustments resulting from the
particular characteristics of consolidated accounts as compared with individual
accounts, the provisions of Part I of the Third Schedule shall apply in respect of the
layout of consolidated accounts.
( 3 ) Where the parent company is treated as an investment company with fixed
share capital for the purposes of the Third Schedule the group shall be similarly
treated.
2. The consolidated balance sheet and profit and loss account shall incorporate
in full the information contained in the individual accounts for the undertakings
included in the consolidation, subject to the adjustments if any, as may be
appropriate in accordance with generally accepted accounting principles or practice.
3. (1) Consolidated accounts shall be drawn up as at the same date as the
individual accounts of the parent company.
( 2 ) Notwithstanding the provisions of sub-paragraph (1) of this paragraph,
consolidated accounts may be drawn up on a date other than the date of the
individual accounts of the parent company where it appears to the directors of the
parent company that it is more appropriate to do so when taking account of the
balance sheet dates of the largest number and the most important of the subsidiary
undertakings included in the consolidation:
Provided that such other date is within three months of the date of the individual
accounts of the parent company.
( 3 ) Where consolidated accounts are drawn up on a date other than the date of
the individual accounts of the parent company in accordance with the provisions of
sub-paragraph  ( 2 )  of this paragraph that fact shall be disclosed in the notes to the
consolidated accounts together with the reasons therefor.
( 4 ) Account shall be taken of material matters, or disclosure made of important
events concerning the assets and liabilities, the financial position or the profit or loss
of an undertaking included in a consolidation which have occurred between the
undertaking’s balance sheet date and the consolidated balance sheet date.
( 5 ) Where a subsidiary undertaking’s balance sheet date precedes the
consolidated balance sheet date by more than three months, the undertaking shall be
consolidated on the basis of interim accounts drawn up as at the consolidated
balance sheet date.
4. (1) Assets and liabilities to be included in consolidated accounts shall be
valued according to uniform methods.
COMPANIES [ CAP. 386.        285
( 2 ) Where assets and liabilities to be included in the consolidated accounts have
been valued or otherwise determined by undertakings according to accounting rules
differing from those used for the consolidated accounts, the values or amounts shall
be adjusted so as to accord with the rules used for the consolidated accounts.
( 3 ) If it appears to the directors of the parent company that there are special
reasons for departing from sub-paragraph  ( 2 )  of this paragraph they may do so, but
particulars of any such departure, the reasons for it and its effect shall be given in the
notes to the consolidated accounts.
( 4 ) The adjustments referred to in sub-paragraph  ( 2 )  of this paragraph need not
be made if they are not material for the purpose of giving a true and fair view.
( 5 ) Any differences of accounting rules as between a parent company’s
individual accounts for an accounting period and its consolidated accounts shall be
disclosed in the notes to the consolidated accounts and the reasons for any such
differences given.
5. (1) The methods of consolidation shall be applied consistently from one
accounting period to another.
( 2 ) Derogations from the provisions of sub-paragraph (1) of this paragraph shall
be permitted in exceptional cases. Any such derogations shall be disclosed in the
notes to the consolidated accounts and the reasons for such derogations given
together with the effect thereof on the assets, liabilities, financial position and profit
or loss of the undertakings included in the consolidation taken as a whole.
( 3 ) Where the composition of the undertakings included in a consolidation has
changed significantly in the course of an accounting period, the consolidated
accounts shall include information which makes the comparison of successive sets of
consolidated accounts meaningful.
6. (1) The provisions of this Schedule shall be interpreted by reference to the
application of generally accepted accounting principles and practice to give a true
and fair view within the meaning of subarticle  ( 3 ) of article  171.
( 2 ) Amounts which in the particular context of any provision of this Schedule
are not material may be disregarded for the purposes of that provision.
Elimination of group transactions
7. (1) Consolidated accounts shall show the assets, liabilities, financial
positions and profits or losses of the undertakings included in a consolidation as if
the latter were a single undertaking.
( 2 ) Debts and claims between undertakings included in the consolidation, and
income and expenditure relating to transactions between such undertakings, shall be
eliminated in preparing the consolidated accounts.
( 3 ) Where profits and losses resulting from transactions between undertakings
included in the consolidation are included in the book value of assets, they will be
eliminated in preparing the consolidated accounts.
( 4 ) Sub-paragraphs  ( 2 )  and  ( 3 )  of this paragraph need not be complied with if
the amounts concerned are not material for the purposes of giving a true and fair
view.
Acquisition and merger accounting
8. The provisions of paragraphs 9 to 17 of this Schedule apply where an
  286      CAP. 386. ]                   COMPANIES
undertaking becomes a subsidiary undertaking of the parent company, which event is
referred to in those provisions as an "acquisition", and references to the "undertaking
acquired" shall be construed accordingly.
9. An acquisition shall be accounted for by the acquisition method of
accounting unless the conditions for accounting for it as a merger are met and the
merger method of accounting is adopted.
10. (1) The acquisition method of accounting is as detailed in this paragraph. 
( 2 ) The identifiable assets and liabilities of the undertaking acquired shall be
included in the consolidated balance sheet at their fair values as at the date of
acquisition.
In this paragraph the term "identifiable" assets or liabilities of the undertaking
acquired means the assets or liabilities which are capable of being disposed of or
discharged separately, without disposing of a business of the undertaking.
( 3 ) The income and expenditure of the undertaking acquired shall be brought
into the consolidated accounts only as from the date of the acquisition.
( 4 ) There shall be set off against the acquisition cost of the interest in the shares
of the undertaking held by the parent company and its subsidiary undertakings, the
interest of the parent company and its subsidiary undertakings in the adjusted capital
and reserves of the undertaking acquired.
For the purpose of this sub-paragraph -
"the acquisition cost" means the amount of any cash consideration and the fair
value of any other consideration, together with such amount, if any, in respect of fees
and other expenses of the acquisition as the company may determine, and "the
adjusted capital and reserves" of the undertaking acquired means its capital and
reserves at the date of the acquisition after adjusting the identifiable assets and
liabilities of the undertaking to fair values as at that date.
( 5 ) The amount resulting from the set off provided for in sub-paragraph  ( 4 )  of
this paragraph, if positive, shall be treated as goodwill and, if negative, as a negative
consolidation difference.
( 6 ) Goodwill shall be dealt with in accordance with the rules laid down in
paragraph 19 of the Third Schedule.
11. (1) The conditions for accounting for an acquisition as a merger are -
( a ) that at least ninety per cent of the nominal value of the relevant shares
in the undertaking acquired is held by or on behalf of the parent
company and its subsidiary undertakings;
( b ) that the proportion referred to in paragraph  ( a )  was attained pursuant to
an arrangement providing for the issue of equity shares by the parent
company or one or more of its subsidiary undertakings;
( c ) that the fair value of any consideration other than the issue of equity
shares given did not exceed ten per cent of the nominal value of the
equity shares issued.
( 2 ) The reference in sub-paragraph  ( a )  of paragraph (1) to the "relevant shares"
in an undertaking acquired is to those carrying unrestricted rights to participate both
in distributions and in sharing of assets by members in the event of the undertaking’s
winding up.
COMPANIES [ CAP. 386.        287
12. (1) The merger method of accounting shall be as specified in this
paragraph.
( 2 ) The assets and liabilities of the undertaking acquired shall be brought into
the consolidated accounts at the figures at which they stand in the undertaking’s
accounts, subject to any adjustment permitted or required by this Schedule.
( 3 ) The income and expenditure of the undertaking acquired shall be included in
the consolidated accounts for the entire accounting period, including the period
before the acquisition.
( 4 ) The consolidated accounts shall show corresponding amounts relating to the
previous accounting period as if the undertaking acquired had been included in the
consolidation throughout that accounting period.
( 5 ) There shall be set off against the aggregate of - 
( a ) the appropriate amount in respect of shares issued by the parent
company or its subsidiary undertakings in consideration for the
acquisition of shares in the undertaking acquired; and
( b ) the fair value of any other consideration for the acquisition of shares in
the undertaking acquired, determined as at the date when those shares
were acquired,
the nominal value of the issued share capital of the undertaking acquired held by the
parent company and its subsidiary undertakings.
( 6 ) The resulting amount shall be shown as an adjustment to the consolidated
reserves.
13. (1) Where a group is acquired, paragraphs 10 to 12 of this Schedule apply
with the adaptations set out in this paragraph.
( 2 ) References to shares of the undertaking acquired shall be construed as
references to shares of the parent undertaking of the group.
( 3 ) Other references to the undertaking acquired shall be construed as
references to the group; and references to the assets and liabilities, income and
expenditure and capital and reserves of the undertaking acquired shall be construed
as references to the assets and liabilities, income and expenditure and capital and
reserves of the group after making the set-offs and other adjustments required by this
Schedule in the case of consolidated accounts.
14. (1) The information detailed in this paragraph with respect to acquisitions
taking place in the accounting period shall be given in the notes to the consolidated
accounts.
( 2 ) There shall be stated - 
( a ) the name of the undertaking acquired or, where a group was acquired,
the name of the parent company of that group and the address of the
registered or principal office of such undertaking, and
( b ) the effective date of the acquisition for accounting purposes, and
( c ) whether the acquisition has been accounted for by the acquisition or the
merger method of accounting,
and in relation to an acquisition which significantly affects the figures shown in the
consolidated accounts, further information shall be given in accordance with
sub paragraph  ( 3 )  to  ( 7 )  of this paragraph.
  288      CAP. 386. ]                   COMPANIES
( 3 ) The composition and fair value of the consideration for the acquisition given
by the parent company and its subsidiary undertakings shall be stated.
( 4 ) Where the acquisition method of accounting has been adopted, the book
values immediately prior to the acquisition, and the fair values at the date of
acquisition, of each class of assets and liabilities of the undertaking or group
acquired shall be stated in tabular form, including a statement of the amount of any
goodwill or negative consolidation difference arising on the acquisition, together
with an explanation of any significant adjustments made and in the case of goodwill
the treatment thereof and the period of amortisation, where applicable.
( 5 ) Where the merger method of accounting has been adopted, an explanation
shall be given of any significant adjustments made in relation to the amounts of the
assets and liabilities of the undertaking or group acquired, together with a statement
of any resulting adjustment to the consolidated reserves, including the restatement of
the opening consolidated reserves.
( 6 ) Where the merger method of accounting has been adopted there shall be
stated details of the profit or loss of the undertaking or group acquired for the period
from the beginning of the accounting period of the undertaking or, as the case may
be, of the parent company of the group, up to the date of the acquisition and there
shall also be stated the date on which the said accounting period began.
( 7 ) In ascertaining for the purposes of sub-paragraphs  ( 4 ) ,  ( 5 )  and  ( 6 )  of this
paragraph, the profit or loss of a group, the book values and fair values of assets and
liabilities of a group or the amount of the assets and liabilities of a group, there shall
be made the set-offs and other adjustments required by this Schedule in the case of
consolidated accounts.
15. (1) There shall also be stated in the notes to the consolidated accounts the
cumulative amount of goodwill resulting from acquisitions in that and earlier
accounting periods which has been written off.
( 2 ) The figure required to be stated by sub-paragraph (1) of this paragraph shall
be shown net of any goodwill attributable to subsidiary undertakings or businesses
disposed of prior to the balance sheet date.
16. (1) Where during the accounting period there has been a disposal of an
undertaking or group which significantly affects the figures shown in the
consolidated accounts, there shall be stated in the notes to the consolidated accounts-
( a ) the name of that undertaking or, as the case may be, of the parent
company of that group, and
( b ) the extent to which the profit or loss shown in the consolidated accounts
is attributable to profit or loss of that undertaking or group.
17. The information required by paragraphs 14, 15 or 16 of this Schedule need
not be disclosed with respect to an undertaking which - 
( a ) is established under the law of a country outside Malta, or 
( b ) carries on business outside Malta,
if in the opinion of the directors of the parent company the disclosure would be
seriously prejudicial to the business of that undertaking or to the business of the
parent company or any of its subsidiary undertakings, and the Registrar agrees that
the information should not be disclosed.
COMPANIES [ CAP. 386.        289
Minority interests
18. (1) The amount attributable to shares in subsidiary undertakings included in
the consolidation held by persons other than the undertakings included in the
consolidation shall be shown in the consolidated balance sheet as a separate item
with an appropriate heading.
( 2 ) The amount of any profit or loss on ordinary activities attributable to shares
in subsidiary undertakings included in the consolidation held by persons other than
the undertakings included in the consolidation shall be shown in the consolidated
profit and loss account as a separate item with an appropriate heading.
( 3 ) The amount of any profit or loss on extraordinary activities attributable to
shares in subsidiary undertakings included in the consolidation held by persons other
than the undertaking included in the consolidation shall be shown in the consolidated
profit and loss account as a separate item with an appropriate heading.
Interest in subsidiary undertakings excluded from consolidation
19. The interest of the group in subsidiary undertakings excluded from
consolidation under subarticle  ( 5 ) of article  170 and the amount of profit or loss
attributable to such an interest, shall be shown in the consolidated balance sheet and
in the consolidated profit and loss account respectively by the equity method of
accounting.
Joint ventures
20. Where an undertaking included in the consolidation manages another
undertaking jointly with one or more undertakings not included in the consolidation,
that other undertaking  ( "the joint venture" )  may, if it is not a subsidiary undertaking
of the parent company and has not been treated as an associated undertaking within
the terms of paragraph 21 of this Schedule be included in the consolidated accounts
in proportion to the rights in its capital held by the undertaking included in the
consolidation  ( referred to as: proportional consolidation ) .
Associated undertakings
21. (1) Where an undertaking included in a consolidation exercises a
significant influence over the operating and financial policy of an undertaking not
included in the consolidation  ( an associated undertaking )  in which it holds a
participating interest, that participating interest shall be shown in the consolidated
balance sheet as a separate item with an appropriate heading.
( 2 ) An undertaking shall be presumed to exercise a significant influence over
another undertaking where it has twenty per cent or more of the shareholders’ or
members’ voting rights in the undertaking.
( 3 ) The provisions of the Ninth Schedule to this Act shall be taken into account
in determining for the purposes of this paragraph, whether an undertaking holds
twenty per cent or more of the voting rights in another undertaking.
( 4 ) The proportion of the profit or loss of the associated undertakings
attributable to such participating interests shall be shown in the consolidated profit
and loss account as a separate item under an appropriate heading.
( 5 ) The elimination referred to in sub-paragraph  ( 2 )  of paragraph 7 of this
Schedule shall be effected in so far as the facts are known or can be ascertained.
Such elimination need not be effected, however, where the amounts concerned are
not material for the purposes of providing a true and fair view.
  290      CAP. 386. ]                   COMPANIES
( 6 ) When the provisions of this paragraph are applied for the first time to a
participating interest covered by sub-paragraph (1) of this paragraph that
participating interest shall be shown in the consolidated balance sheet at its book
value calculated in accordance with the valuation rules laid down in the Third
Schedule to this Act. The difference between that value and the amount
corresponding to the proportion of capital and reserves represented by that
participating interest shall be disclosed separately in the consolidated balance sheet
or in the notes to the consolidated accounts. That difference may be calculated as at
the date at which that method is used for the first time or as set out in sub-paragraph
( 7 )  of this paragraph.
( 7 ) The difference referred to in sub-paragraph  ( 6 )  of this paragraph may be
calculated as at the date of acquisition of the shares or, where they were acquired in
two or more stages, as at the date on which the undertaking became an associated
undertaking.
( 8 ) Where an associated undertaking’s assets or liabilities have been valued by
methods other than those used for the consolidation, they shall for the purpose of
calculating the difference referred to in sub-paragraph  ( 6 )  of this paragraph, be
revalued by the methods used for consolidation:
Provided that the directors of a company to which article 170 applies may decide
not to carry out such revaluation in which case that fact shall be disclosed in the
notes to the consolidated accounts.
( 9 ) The book value referred to in sub-paragraph  ( 6 )  of this paragraph above
shall be increased or reduced by the amount of any variation which has taken place
during the accounting period in the proportion of the associated undertaking’s capital
and reserves represented by that participating interest; moreover it shall be reduced
by the amount of the dividends relating to that participating interest.
( 10 ) In so far as the positive difference referred to in sub-paragraph  ( 6 )  of this
paragraph cannot be related to any category of assets or liabilities it shall be dealt
with in accordance with the rules laid down for the item "goodwill" within the Third
Schedule to this Act. Such a positive difference may, however, if the directors of the
companies to which article 170 applies so determine, be immediately and clearly
deducted from reserves.
( 11 ) Where an associated undertaking draws up consolidated accounts, the
provisions of this paragraph shall apply to the capital and reserves shown in such
consolidated accounts.
( 12 ) The provisions of this paragraph need not be applied where the participating
interest in the capital of the associated undertaking is not material for the purposes
of giving a true and fair view.
Information by way of notes to the consolidated accounts
22. In addition to the information required under any other provisions of this
Schedule, the notes to the consolidated accounts shall, at least, set out information in
respect of the following matters: 
(1) The valuation methods applied to the various items in the consolidated
accounts, and the methods employed in calculating the value adjustments. For items
included in the consolidated accounts which are or were originally expressed in
foreign currency the basis of conversion used to express them in the currency in
which the consolidated accounts are drawn up shall be disclosed.
( 2 ) ( a ) The names and addresses of the registered or principal offices of the
undertakings included in the consolidation; the proportion of the capital
COMPANIES [ CAP. 386.        291
held in undertakings included in the consolidation, other than the parent
undertaking, by the undertakings included in the consolidation; which of
the conditions referred to in the definition of parent company, in
subarticle  ( 2 ) of article  2, has formed the basis on which the
consolidation has been carried out.
The latter disclosure may, however, be omitted where consolidation
has been carried out in the case of a subsidiary undertaking in which the
parent company has a majority of the shareholders’ or members’ voting
rights and where the proportion of the capital and the proportion of the
voting rights held are the same.
( b ) The information set out in paragraph  ( a )  of this sub-paragraph in so far
as it is applicable shall be given in respect of undertakings excluded
from a consolidation pursuant to the provisions of subarticles  ( 3 )  to  ( 7 )
of article  170 and an explanation must be given for the exclusion of the
undertakings referred to in subarticle  ( 5 )  of that article.
( 3 ) ( a ) The names and registered or principal offices of undertakings associated
with an undertaking included in the consolidation as described in
paragraph 21 of this Schedule and the proportion of their capital held by
undertakings included in the consolidation or by persons acting in their
own names but on behalf of those undertakings.
( b ) The information set out in paragraph  ( a )  of this sub-paragraph shall be
given in respect of the associated undertakings referred to in sub-
paragraph  ( 12 )  of paragraph 21 of this Schedule together with the
reasons for applying that provision.
( 4 ) The names and registered or principal offices of undertakings proportionally
consolidated pursuant to paragraph 20 of this Schedule, the factors on which joint
management is based, and the proportion of their capital held by the undertakings
included in the consolidation or by persons acting in their own names but on behalf
of those undertakings.
( 5 ) The names and registered or principal office of each of the undertakings,
other than those referred to in sub-paragraphs  ( 2 ) ,  ( 3 )  and  ( 4 )  of this paragraph, in
which undertakings included in the consolidation and those excluded pursuant to
subarticle  ( 5 ) of article  170, either themselves or through persons acting in their own
names but on behalf of those undertakings, hold at least twenty per cent of the
capital showing the proportion of the capital held, the amount of the capital and
reserves, and the profit or loss for the latest accounting period of the undertaking
concerned for which accounts have been adopted. Where this information is
considered by the directors of a company to which article 170 applies not to be
material for the purposes of giving a true and fair view it may be omitted. The
information concerning capital and reserves and the profit or loss may also be
omitted where the undertaking concerned does not publish its balance sheet and
where less than fifty per cent of its capital is held, directly or indirectly, by the above
mentioned undertakings.
( 6 ) The average number of persons employed during the accounting period by
undertakings to which paragraph 20 of this Schedule has been applied shall be
disclosed separately.
( 7 ) The amount of the emoluments paid in respect of the accounting period to
the members of the board of directors of the parent company by reason of their
responsibilities in the parent company and its subsidiary undertakings, and any
commitments arising or entered into under the same conditions in respect of
  292      CAP. 386. ]                   COMPANIES
retirement pensions for former members of those bodies, with an indication of the
total for each category.
( 8 ) The amount of advances and credits granted to the board of directors of the
parent company by that undertaking or by one of its subsidiary undertakings, with
indications of the interests rates, main conditions and any amounts repaid, as well as
commitments entered into on their behalf by way of guarantee of any kind with an
indication of the total for each category.
( 9 ) Sub-paragraphs  ( 7 )  and  ( 8 )  of this paragraph shall apply to the exclusion of
the corresponding provisions of the Third Schedule to this Act.
23. (1) The information contained in sub-paragraphs  ( 2 ) ,  ( 3 )  and  ( 4 )  of
paragraph 22 of this Schedule may be disclosed in a separate statement which is to
be filed with the Registrar together with the annual accounts of the parent company
in accordance with article 183.
( 2 ) Where this information is set out in a separate statement as provided in sub-
paragraph (1) of this paragraph this fact shall be disclosed in the notes to the
consolidated accounts.
24. (1) The information contained in sub-paragraphs  ( 2 ) ,  ( 3 )  and  ( 4 )  of
paragraph 22 of this Schedule may be omitted when it appears to the directors of a
company to which article 170 applies that the nature of the information is such that it
would be seriously prejudicial to any of the undertakings affected by these
provisions, and the Registrar agrees that the information should not be disclosed.
( 2 ) Where any information is omitted from the notes to the consolidated
accounts by virtue of the provisions of previous sub-paragraph (1) of this paragraph
this fact shall be disclosed in the said notes to the consolidated accounts.
COMPANIES [ CAP. 386.        293
INDIVIDUAL ACCOUNTS AND DIRECTORS’ REPORT OF AN 
INVESTMENT COMPANY WITH VARIABLE SHARE CAPITAL 
Without prejudice to any requirements laid down by the competent authority under
the Investment Services Act, the individual accounts of an investment company with
variable share capital shall disclose at least the information specified in the
following provisions of this Schedule.
1. A statement of assets and liabilities showing: 
- securities;
- debt instruments; 
- bank balances; 
- other assets;
- total assets; 
- liabilities;
- net asset value;
- details of accounting and valuation policies. 
2. The number of units in circulation.
3. The net asset value per unit or share.
4. The composition of the portfolio, distinguishing at least between:
( a ) transferable securities admitted to listing on a recognised investment
exchange;
( b ) transferable securities dealt in on any other regulated market;
( c ) recently issued transferable securities;
( d ) transferable securities not included in the above; 
( e ) debt instruments not included in the above;
( f ) other investments as applicable.
References in sub-paragraph  ( c )  of this paragraph to recently issued transferable
securities are to securities the terms of issue of which include an undertaking that an
application will be made for admission to listing on a recognised investment
exchange or for admission to any other regulated market.
The portfolio shall be analysed on the basis of economic, geographic, currency or
other appropriate criteria, having regard to the investment policy of the company.
Such analysis shall show the value of each category of investment as a percentage of
net assets and as a percentage of total assets of the company.
Any material changes in the composition of the investment portfolio made during
the accounting period shall be stated.
5. A statement or statements of the developments concerning the assets of the
company during the accounting period and including the following:
FIFTH SCHEDULE Amended by:IV. 2003.165.
( Article 169 )
  294      CAP. 386. ]                   COMPANIES
- income from investments; 
- other income;
- management charges; 
- depositary’s charges;
- other charges and taxes; 
- net income;
- distributions and income reinvested; 
- changes in capital account;
- appreciation or depreciation in value of investments;
- other changes affecting the value of the assets and liabilities of the
company.
6. A comparative table covering the last three accounting periods and
including, for each accounting period, at the end of such period, the total net asset
value of the company and the net asset value per unit or share.
During its first, second and third accounting periods, a company shall show the
above information for all accounting periods since its registration.
7. Details, by category of transaction, of the resulting amount of commitments.
References in this paragraph to commitments are to the commitments resulting
from the use of techniques and instruments for the purposes of efficient portfolio
management, including protection against exchange, interest rates and market risks.
COMPANIES [ CAP. 386.        295
CONTENTS OF DIRECTORS’ REPORT
1. The directors’ report shall contain -
( a ) particulars of any important events affecting the company or any of its
subsidiary undertakings which have occurred since the end of the
accounting period;
( b ) an indication of likely future developments in the business of the
company and of its subsidiary undertakings;
( c ) an indication of the activities, if any, of the company and of its
subsidiary undertakings in the field of research and development;
( d ) the amount, if any, which they recommend should be paid by way of
dividend and the amount, if any, which they propose to carry to
reserves; and
( e ) the existence of branches of the company.
2. The directors’ report shall disclose the information specified in paragraph 3
of this Schedule where in an accounting period shares in a company - 
( a ) are purchased by the company or are acquired by it by forfeiture or
surrender or the company otherwise acquires its own shares; or
( b ) are acquired by another person in circumstances where the acquisition is
by company’s nominee, or by another with the company financial
assistance, the company itself having a beneficial interest; or
( c ) are made subject to pledge or other privileges, to a hypothec or to any
other charge in favour of the company.
3. The information required to be disclosed in the directors’ report in
accordance with the provisions of paragraph 2 of this Schedule shall consist of the
following:
( a ) the reasons for such transactions or occurrences;
( b ) the number and nominal value of the shares so purchased, the aggregate
amount of the consideration paid by the company for such shares and
the reasons for their purchase;
( c ) the number and nominal value of the shares so acquired by the company
or acquired by another person in such circumstances and so charged
respectively during the accounting period;
( d ) the maximum number and nominal value of shares which, having been
so acquired by the company, acquired by another person in such
circumstances or so charged, whether or not during that period, are held
at any time by the company or that other person during that period;
( e ) the number and nominal value of the shares so acquired by the company,
acquired by another person in such circumstances or so charged,
whether or not during that period, which are disposed of by the
company or cancelled by the company during that period;
( f ) where the number and nominal value of the shares of any particular
SIXTH SCHEDULE Amended by:IV. 2003.166.
( Article 177 )
  296      CAP. 386. ]                   COMPANIES
description are stated in pursuance of any of the preceding sub-
paragraphs, the percentage of the called-up share capital which shares
of that description represent;
( g ) where any of the shares have been so charged the amount of the charge
in each case; and
( h ) where any of the shares have been disposed of by the company for the
person who acquired them in such circumstances for money or money’s
worth, the amount or value of the consideration in each case.
4. The director’s report shall also state the number and nominal value of all the
parent company’s shares held by that company itself or by subsidiary undertakings
of that company:
Provided that the particulars referred to in this paragraph need not be shown in the
directors’ report if they are included in the notes to the accounts.
COMPANIES [ CAP. 386.        297
Company No: ........................
CONTENTS AND FORM OF ANNUAL RETURN 
ANNUAL RETURN of .........................................................................................
........................................................................................  ( name of the company )
Date to which this return is made up: ...................................... 
( being the anniversary of the company’s date of registration )
1.  Address
( Address of the registered office of the company )  
This form must be completed in BOLD TYPE FORM
SEVENTH SCHEDULE Substituted by:IV. 2003.167.
( Article 184 )
  298      CAP. 386. ]                   COMPANIES
2.  Summary of Share Capital
All Maltese liri amounts are to be preceded by the symbol Lm. Symbols used for
other currencies are to be indicated  ( where applicable ) .
Currency  Symbol 
.........................................  ......................................... 
.........................................  ......................................... 
.........................................  ......................................... 
......................................... ......................................... 
(a) Nominal Share Capital
Nominal Share Capital ............................................................ divided into: 
(Insert number and class)  shares of ................................. each
...................... ........................ shares of ................................. each
...................... ........................ shares of ................................. each
...................... ........................ shares of ................................. each
(b) Issued Share Capital
Number Class
Number of shares of each class
taken up to the date of this return
(which number must agree with the
total shown on the list as held by
existing members). 
.......................
.......................
.......................
.......................
.......................
...................... shares
...................... shares
...................... shares
...................... shares
...................... shares
Number of shares of each class
issued as partly paid up and extent
to which each such share is so paid
up. 
issued as paid up to the extent of ..............
per share .................... ................... shares
issued as paid up to the extent of ..............
per share .................... ................... shares
issued as paid up to the extent of ..............
per share .................... ................... shares
issued as paid up to the extent of ..............
per share .................... ................... shares
Total number of shares of each 
class forfeited.
Number
......................
......................
......................
......................
Class
.................................. shares
.................................. shares
.................................. shares
.................................. shares
Total amount paid, if any, on 
shares forfeited. ........... .............. .........................................
COMPANIES [ CAP. 386.        299
      3. List of Past and Present Members
List of persons holding shares or stock in the company on the date to which this
return is made up, and of persons who have held shares or stock therein at any time
since the date of the last return, or in the case of the first return, of the registration
of the company.
Folio in
register ledger
containing    
particulars
Names
Addresses (in the 
case of a body 
corporate, its 
registered office
Account of Shares       Remarks
Number of 
shares held 
by existing     
members at 
the date of 
return*§ 
Particulars of shares
transferred or transmitted
causa mortis  since the
date of the last return, or,
in the case of the first
return, of the registration
of the company by  ( a )
persons who are still
members and  ( b )  persons
who have ceased to be
members**
Number
§
Date of 
registration   
or transfer 
( a ) ( b )
  300      CAP. 386. ]                   COMPANIES
3. List of Past and Present Members  ( cont. sheet )
* The aggregate number of shares held by each member shall be stated, and the aggregates
shall be added up so as to agree with the number of the shares stated in the Summary of
Share Capital and Debentures to have been taken up.
§ When the shares are divided into different classes these columns should be sub-divided
so that the number of each class held, transferred or transmitted  causa mortis , may be
shown separately. Where any shares have been converted into stock the amount of stock
held by each member shall be shown.
** The date of registration of each transfer or transmission  causa mortis  shall be given as
well as the number of shares transferred or transmitted  causa mortis  on each date. The
particulars shall be placed opposite the name of the transferor and not opposite that of
the transferee, but the name of the transferee may be inserted in the "Remarks" column
immediately opposite the particulars of each transfer.  ( The word "transferor" shall mean
the deceased and the word "transferee" shall mean the heir or legatee, in the case of
transmission  causa mortis ) .
COMPANIES [ CAP. 386.        301
4.  Particulars of Directors
Particulars of the persons who are directors of the company at the date of this return.
5.  Particulars of Company Secretary
Particulars of the person who is company secretary of the company at the date of this
return.
Signed ...................................
Director / Company Secretary
Name 
(in the case of an individual, 
name or names and surname. 
In the case of a body corpo-
rate, the corporate name)
Nationality Usual residential address
(in the case of a body 
corporate, the registered 
office)
Name 
( in the case of an individual, 
name or names and surname. 
In the case of a body 
corporate, the corporate 
name )
Nationality Usual residential address
( in the case of a body 
corporate, the registered or 
principal office )
  302      CAP. 386. ]                   COMPANIES
EIGHTH SCHEDULE 
( Article 186 )
CONVERSION RULES APPLICABLE ON A CHANGE IN THE CURRENCY 
IN WHICH THE SHARE CAPITAL OF A COMPANY IS EXPRESSED AND 
THE CORRESPONDING REPORTING CURRENCY 
Interpretation
1. In this Schedule, unless the context otherwise requires - 
"Reporting Currency" shall mean the currency used in presenting the annual
accounts in accordance with the provisions of article 187. On a change in the
reporting currency consequent to a change in the currency in which the share
capital of a company is expressed which is effected in accordance with the
provisions of article 186, the term "original reporting currency" shall refer to the
reporting currency in operation before the change; and the term "new reporting
currency" shall refer to the reporting currency applicable following the change,
and in the case of the change taking place in the first accounting period, to the
reporting currency which would have been used had such change not taken place.
"Foreign currency" means a currency other than the reporting currency.
"Exchange rate" means the ratio at which the currencies of two countries are
exchanged at a particular point in time.
"Spot rate" means the middle exchange rate on a particular day for the
exchange of currencies on that day.
"Closing rate" means the spot rate that exists at the balance sheet date which
immediately precedes the accounting period to which the change in reporting
currency applies.
"Monetary items" are money held and items to be received or paid in money.
All other assets and liabilities are "non-monetary items".
"Average annual exchange rate" means an average of the exchange rates that
existed during an accounting period. For the purpose of calculating this average
it shall be sufficient to take an average of the spot rates applicable on the last
working day of each week comprised within the said accounting period.
General rules
2. On a change in the reporting currency, the new reporting currency shall
become applicable from the first day of the accounting period to which the change in
reporting currency applies, which day is referred to as the "applicable date" in the
rest of this Schedule.
3. (1) The balance sheet items existing at the applicable date shall be
converted from the original reporting currency to the new reporting currency in
accordance with the rules set out in the remaining paragraphs of this Schedule.
( 2 ) Such conversion shall be deemed to take place before any transactions stand
to be accounted for within the accounting period to which the change in reporting
currency applies.
Conversion rules
4. (1) The paid-up share capital and the balance on the share premium account
COMPANIES [ CAP. 386.        303
shall be converted at the exchange rate or rates applicable on the respective date or
dates when the shares in question were issued by the company.
( 2 ) The amount which is still uncalled on any shares issued by the company
shall be converted at the exchange rate or rates applicable on the respective date or
dates when the shares in question were issued.
( 3 ) The nominal value per share in the new reporting currency shall be
calculated by taking the aggregate of the paid-up share capital converted as set out in
sub-paragraph (1) of this paragraph and the uncalled amount, if any, on any shares
issued by the company converted in accordance with sub-paragraph  ( 2 )  of this
paragraph, and dividing this aggregate amount  ( the issued share capital )  by the
number of shares in issue:
Provided that where there exists - 
( a ) preference shares or different classes of preference shares; or
( b ) different classes of ordinary shares and where the nominal value per
share varies between one class and the other,
the conversion of the nominal value per share to the new reporting currency shall be
carried out separately for the ordinary shares and the preference shares, or for each
class of ordinary shares in so far as the nominal value per share varies between one
class and the other, as the case may be.
( 4 ) The authorised share capital of the company shall be converted by taking the
aggregate of -
( a ) the aggregate amount referred to in sub-paragraph  ( 3 )  of this paragraph
( the converted issued share capital ) ; and
( b ) the amount of the authorised share capital, which has not yet been
issued, converted from the original share capital at the closing date.
5. (1) For the purposes of this paragraph, the terms "reserves created out of
profits" and "accumulated losses" shall be calculated for each accounting period by
taking the profits or losses for such period to the exclusion of any provisions for
exchange variations.
( 2 ) Reserves created out of profits, including retained profits, shall be converted
at the average annual exchange rate pertaining to the accounting period during which
the profits from which such reserves originated were earned.
( 3 ) For the purposes of determining the amount of profits pertaining to an
accounting period from which reserves were created the following rules shall apply - 
( a ) when dividends are paid out of profits and the accounting period to
which such profits relate has not been nominated, such dividends shall
be deemed to have been paid on a first in first out basis;
( b ) losses resulting during an accounting period shall not be netted off
against profits earned in other accounting periods, but shall be
converted at the average annual exchange rate for the accounting period
during which such losses were incurred.
( 4 ) Where at the date of conversion there is an amount representing
accumulated losses such amount shall be converted at the average annual exchange
rate for the accounting period or periods during which such losses were incurred.
( 5 ) For the purposes of sub-paragraph  ( 4 )  above, any profits earned during any
accounting period shall not be netted off against losses incurred in other accounting
  304      CAP. 386. ]                   COMPANIES
periods, but shall be converted at the average annual exchange rate for the
accounting period or periods during which such profits were earned.
( 6 ) Reserves which were not created out of profits shall be converted at the
exchange rate or rates applicable on the date or dates when such reserves were
created.
6. (1) All monetary items shall be converted at the closing rate.
( 2 ) Non-monetary items that are recorded in terms of past events  ( for example
historical cost ) , shall be converted at the average annual exchange rates for the
relevant accounting period.
( 3 ) Non-monetary items that are revalued shall be converted at the exchange
rates that existed on the dates of their revaluations.
( 4 ) Provisions for depreciation or for diminution in the value of non-monetary
assets shall be converted at the average annual exchange rate applied to convert the
cost or revalued amount of the relative assets in accordance with the provisions of
sub-paragraph  ( 2 )  or  ( 3 )  of this paragraph.
7. (1) Where following conversion to the new reporting currency the total
assets exceed the aggregate of total liabilities and the funds attributable to
shareholders, such excess shall be shown as a separate item within reserves under the
heading "Reporting currency conversion difference".
( 2 ) The reporting currency conversion difference shall not be distributed by way
of dividend.
( 3 ) Where following conversion to the new reporting currency the aggregate of
total liabilities and the funds attributable to shareholders exceeds total assets, such
excess shall be netted off against distributable reserves or added to accumulated
losses, as the case may be.
8. (1) In the annual accounts of the accounting period to which the change in
reporting currency applies, the amounts of the previous accounting period
corresponding to the items included in the balance sheet and, where applicable, in
the notes to the accounts, whether individual or consolidated, shall be stated at the
new reporting currency after applying the conversion rules set out in the previous
provisions of this Schedule.
( 2 ) In the annual accounts of the accounting period to which the change in
reporting currency applies, the amounts of the previous accounting period
corresponding to the items included in the profit and loss account and, where
applicable, in the notes to the accounts, whether individual or consolidated, shall be
converted to the new reporting currency at the average annual exchange rate
pertaining to the previous accounting period.
Disclosure 
9. In the first annual accounts following the conversion, the notes to the
accounts, whether individual or consolidated, shall include full details of the method
of conversion and the exchange rates used for each category of assets and liabilities
as categorised in this Schedule.
COMPANIES [ CAP. 386.        305
EXPLANATION OF EXPRESSIONS USED IN SUBARTICLE  ( 2 )  OF 
ARTICLE 2 OF THIS ACT AND PROVISIONS SUPPLEMENTARY 
THERETO
Voting rights in an undertaking
1. ( a ) References to voting rights in an undertaking are to the rights conferred
on shareholders in respect of their shares or, in the case of an
undertaking not having a share capital, on members, to vote at general
meetings of the undertaking on all, or substantially all, matters.
( b ) References to directors shall be taken to include references to persons
entrusted with the administration of undertakings not having directors
and references to the board of directors shall be taken to include the
equivalent body in such undertakings.
2. In relation to an undertaking which does not have general meetings at which
matters are decided by the exercise of voting rights, the references to holding a
majority of the voting rights in the undertaking shall be construed as references to
having the right under the constitution of the undertaking to direct overall policy of
the undertaking or to alter the terms of its constitution.
Rights to appoint or remove a majority of the directors
3. Reference to the right to appoint or remove a majority of the board of
directors is to the right to appoint or remove directors holding a majority of the
voting rights at meetings of the board on all, or substantially all, matters.
4. An undertaking shall be treated as having the right to appoint to a
directorship if-
( a ) a person’s appointment to it follows necessarily from his appointment as
director of the undertaking; or
( b ) the directorship is held by the undertaking itself.
5. The right to appoint or remove which is exercisable only with the consent or
concurrence of another person shall not be taken into account unless no other person
has a right to appoint or, as the case may be, to remove in relation to that
directorship.
Right to exercise dominant influence
6. An undertaking shall not be regarded as having the right to exercise a
dominant influence over another undertaking unless it has a right to give directions
with respect to the operating and financial policies of that other undertaking which
its directors are obliged to comply with, whether or not those directions are for the
benefit of that other undertaking.
Rights exercisable only in certain circumstances
7. Rights which are exercisable only in certain circumstances shall be taken
into account only - 
( a ) when the circumstances have arisen, and for so long as they continue to
NINTH SCHEDULE Amended by:IV. 2003.168.
( Article 2 )
  306      CAP. 386. ]                   COMPANIES
exist; or
( b ) when the circumstances are within the control of the person having the
rights.
8. Rights which are normally exercisable but which are temporarily incapable of
exercise shall continue to be taken into account.
Rights held by one person on behalf of another
9. Rights held by a person in a fiduciary capacity shall be treated as not held by
him.
10. Rights held by a person as nominee for another shall be treated as held by
the other.
11. Rights shall be regarded as held by a person as nominee for another if they
are exercisable on that other’s instructions or with his consent or concurrence.
Rights attributed to parent undertaking
12. Rights shall be treated as held by a parent undertaking if they are held by
any of its subsidiary undertakings.
Disregard of certain rights
13. The voting rights in an undertaking shall be reduced by any rights held by
the undertaking itself.
14. The voting rights in an undertaking shall be reduced by any rights attaching
to shares -
( a ) held by way of security, provided that the rights in question are
exercised in accordance with the instructions received; or
( b ) held in connection with the granting of loans as part of normal business
activities, provided that the voting rights are exercised in the interests of
the person providing the security.
COMPANIES [ CAP. 386.        307
Partnerships  en commandite   or Limited Partnerships
PART I - REGULATIONS FOR PARTNERSHIPS  EN COMMANDITE
OR LIMITED PARTNERSHIPS
Interpretation
1. ( a ) In this Schedule, unless the context otherwise requires -
"licence holder" means a person who holds an investment services
licence under article 6 of the Investment Services Act.
( b ) The provisions of this Schedule shall apply only to partnerships  en
commandite  or limited partnerships within the meaning of article 66A of
this Act.
Formation of Partnerships  en commandite  or Limited Partnerships
2. (1) A partnership  en commandite  or limited partnership may be formed by
two or more partners, operates under a partnership name and has its obligations
guaranteed by the unlimited joint and several liability of one or more partners, called
general partners, and by the liability, limited to the amount, if any, unpaid on the
contribution of one or more partners, called limited partners.
(2) A partnership  en commandite  or limited partnership shall have a legal
personality separate and distinct from that of its partners, and shall accordingly be
the subject of rights and obligations, be capable of owning and holding property
under any title at law and of suing and being sued, in its own name, and such legal
personality shall continue until such time as the name of the partnership shall be
struck off the register, whereupon the partnership shall cease to exist.
Constitution of Partnership  en commandite  or Limited Partnership
3. (1) A partnership  en commandite  or limited partnership shall consist of:
( a ) one or more general partners who shall be jointly and severally liable
for all debts of the partnership  en commandite  or limited partnership
without limitation and at least one of whom shall be a licence holder
licensed as a manager of a collective investment scheme within the
meaning of the Investment Services Act; and
(b) one or more limited partners who are admitted to the partnership as
limited partners in accordance with the deed of partnership, who upon
entering the partnership, contribute, or agree to contribute to the capital
thereof a specified sum; and save for any unpaid portion of their
contribution to the partnership shall not be liable for any debts of the
partnership.
(2) Any person may be a partner in a partnership  en commandite  or limited
partnership.
(3) The contribution of a limited partner may be satisfied by the provision of
cash or other property capable of economic assessment but may not consist of future
services or undertakings to perform work or supply services; and where property
other than cash is so provided, the value of the property shall be deemed to be its fair
market value at the time of its transfer to the partnership.
TENTH SCHEDULE Added by:IV. 2003.171.
( Article 66A )
  308      CAP. 386. ]                   COMPANIES
(4) The provisions of the proviso to article 51 of this Act shall not apply to
partnerships  en commandite  or limited partnerships.
Partnership name
4. (1) A partnership  en commandite  or limited partnership may be designated
by any name, but such name shall end with the words "Limited Partnership" or its
abbreviation "LP".
(2) No person carrying on any business in Malta, other than a partnership  en
commandite  or limited partnership or a partner therein, shall in any way or manner
describe itself or himself or so hold itself or himself out or reasonably be understood
to indicate, or use any name which indicates or may reasonably be understood to
indicate that it or he is, or is carrying on business as, a partnership  en commandite  or
limited partnership or, as the case may be, a partner therein.
(3) The name of a limited partner or a distinctive part thereof may not form part
of the partnership name.
(4) A limited partner who knowingly allows his name or a distinctive part
thereof to be used as the partnership name or a part of such partnership name shall be
liable as a general partner to any person who extends credit to the partnership
without knowledge that the limited partner was not a general partner.
(5) A person who contravenes the provisions of sub-paragraph (2) shall be liable
to a penalty, and for every day during which the default continues, to a further
penalty.
Contents of deed of partnership
5. (1) A partnership  en commandite  or limited partnership shall not be validly
constituted unless a deed of partnership is entered into and signed and a certificate of
registration is issued under this Schedule in respect thereof.
(2) The deed of partnership shall be in writing and shall set out the agreement of
the partners as to the affairs of the partnership and the conduct of its business.
(3) The deed of partnership shall be binding upon the partners and their assigns
and upon subsequent partners in the same manner as if those persons had themselves
executed it.
(4) The deed of partnership shall state:
( a ) the name and residence of each of the first partners specifying the first
general and the first limited partners;
( b ) the partnership name;
( c ) the registered office in Malta of the partnership;
( d ) subject to the provisions of article 66A(1) of this Act, the objects of the
partnership;
( e ) the contribution of each of the first partners to the partnership
specifying the value of the respective contribution and the amount paid
up in respect of such contribution;
( f ) the period, if any, fixed for the duration of the partnership.
(5) The deed of partnership shall be delivered for registration to the Registrar
who, being satisfied that it complies with the requirements of this Schedule, shall
register it.
COMPANIES [ CAP. 386.        309
(6) Where the deed of partnership is a public deed or a private writing enrolled
in the records of a notary public, an authentic copy thereof may be delivered in lieu
of the original.
(7) The aforesaid delivery shall be made by any one of the partners or his
authorised agent.
Duty of Registrar and effects of registration.
6. (1) On the registration of the deed of partnership and the payment of the
fees prescribed under article 66A(4)( e ) of this Act, the Registrar shall certify under
his hand that the partnership is registered and the partnership shall come into
existence and shall be authorised to commence business under the partnership name
as from the date of the certificate:
Provided that, if registration is obtained before the date fixed in the deed of
partnership for the commencement of the partnership, the certificate shall indicate
such date, and the partnership shall come into existence and shall be authorised to
commence business as from such later date.
(2) A certificate of registration given in respect of a partnership is conclusive
evidence that the requirements of this Schedule in respect of registration and of
matters precedent and incidental to it have been complied with and that the
partnership is duly registered under this Act.
Where certificate of registration is not issued
7. Unless and until a certificate of registration is issued under this Schedule in
respect of a partnership or until the date indicated in a certificate of registration as
the date on which a partnership shall come into existence -
( a ) any two or more persons carrying on business under a name falsely
implying the existence of a partnership shall have, as against one
another and limitedly to property acquired from such business, such
rights only as are by law conferred on joint owners;
( b ) any obligation contracted in favour of third parties in good faith under a
name falsely implying the existence of a partnership shall be jointly and
severally binding on those persons, who, if a certificate of registration
had been issued, would have been partners carrying on business under
that name.
Changes in deed of partnership
8. (1) Unless otherwise provided in the deed of partnership, any alteration or
addition thereto may only be made with the unanimous consent of the partners.
(2) It shall be the duty of the general partner vested with the administration or
representation of a partnership  en commandite  or limited partnership to deliver to the
Registrar for registration any instrument or a copy thereof altering or adding to the
deed of partnership within fourteen days from the date of the said alteration or
addition, together with a printed copy of the deed of partnership, as amended; and
any previous amended text of the deed of partnership may be discarded by the
Registrar when a subsequent amended text is delivered to him for registration:
Provided that in the event of a discrepancy between the text of any amended
deed of partnership and the text of the original registered deed of partnership, the
latter text together with any instruments registered in accordance with the provisions
of sub-paragraph (3), shall prevail.
  310      CAP. 386. ]                   COMPANIES
(3) Any alteration or addition to the deed of partnership of a partnership  en
commandite  or limited partnership shall not take effect, unless and until it is
registered as provided in sub-paragraph (2).
(4) If default is made in complying with the provisions of sub-paragraph (2),
every general partner who is in default shall be liable to a penalty, and, for every day
during which the default continues, to a further penalty.
(5) Where a partnership  en commandite  or limited partnership changes its name,
the general partner shall within fourteen days notify the Registrar of such change and
the Registrar shall enter the new name on the register and shall issue a certificate of
registration altered to meet the circumstances of the case.
(6) If default is made in complying with the provisions of sub-paragraph (5),
every general partner who is in default shall be liable to a penalty, and for every day
during which such default continues, to a further penalty.
General partners
9. The administration and representation of the partnership shall vest in the
general partners, and unless the deed of partnership otherwise provides, such
administration and representation shall vest in each of the general partners severally.
Limited partners
10. (1) A limited partner shall not participate in the conduct or management of
any business of the partnership and shall not transact the business of, sign, or
execute documents on behalf of the partnership.
(2) A limited partner who acts or purports to act in contravention of the
provisions of sub-paragraph (1) of this paragraph, shall be liable as if he were a
general partner in respect of all debts incurred while he so acts or purports to act.
(3) A limited partner shall not be deemed to have participated in the conduct or
management of the business of the partnership within the meaning of this paragraph
by reason only of any one or more of the following circumstances:
( a ) he is an employee, agent or contractor of the partnership or of a general
partner;
( b ) he acts as a general partner, officer, employee or shareholder of a
corporate general partner;
( c ) he consults with and advises a general partner as to the business of the
partnership  en commandite  or limited partnership;
( d ) he investigates, reviews, approves or is advised as to the accounts or
affairs of the partnership  en commandite  or limited partnership;
( e ) he exercises any right or power conferred on limited partners by this
Schedule;
( f ) he approves or disapproves an amendment to the partnership agreement;
( g ) he participates in or requests the appointment or removal of an auditor
of the partnership;
( h ) he votes as a limited partner in any meeting of the partners;
( i ) he acts as surety or guarantor of or provides security for the obligations
undertaken by the partnership  en commandite  or limited partnership;
( j ) he lends money to, borrows money from or enters into transaction with
the partnership  en commandite  or limited partnership.
COMPANIES [ CAP. 386.        311
(4) The provisions of the immediately preceding sub-paragraph shall not be
construed as meaning that, if a limited partner exercises any other right, power or
function, he has necessarily, by reason of that fact alone, participated in the conduct
of the business of the partnership  en commandite  or limited partnership within the
meaning of this paragraph.
When limited partner ceases to be a partner
11. (1) A person shall cease to be limited partner:
( a ) upon the valid and absolute assignment of the whole of his partnership
interest;
( b ) upon the return of the whole of his contribution (including if
appropriate, the discharge of all his obligations to make a contribution);
or
( c ) at such time or upon the occurrence of such event as may be specified in
that behalf in the deed of partnership:
Provided that, in each case his name is removed from the register of
partners.
(2) The fact that a person has ceased to be a limited partner shall not relieve him
of any liability arising under paragraph 4(4) and paragraph 10(2).
(3) The fact only that a person ceases to be a limited partner shall not constitute
a change or amendment to the deed of partnership.
When general partner ceases to be a partner
12. (1) A person shall cease to be a general partner upon the occurrence of any
of the following events:
( a ) his resignation, retirement or removal in accordance with the
requirements, if any, of the deed of partnership;
( b ) in the case of a natural person his bankruptcy, death or legal incapacity;
( c ) in the case of a corporate general partner, the dissolution thereof.
(2) A general partner shall within fourteen days of his ceasing to be a general
partner deliver to the Registrar for registration a notification in writing of such fact
and the Registrar shall cause that notification to be registered. A general partner
shall not be relieved of any obligation under this Schedule until such time as he
delivers to the Registrar for registration a notification in writing of such fact.
Records
13. (1) A partnership  en commandite  or limited partnership shall maintain the
following or a copy thereof at the registered office:
( a ) the deed of partnership and every amendment thereof;
( b ) a register of partners showing their full names and addresses together
with an indication of who is a general and who is a limited partner;
( c ) the capital account of each limited partner showing whichever of the
following is applicable in relation to such limited partner -
(i) the amounts and dates of his contributions;
(ii) the amounts agreed to be contributed and the times at which or
events upon which the contributions are to be made;
  312      CAP. 386. ]                   COMPANIES
(iii) the amounts and dates of any payments representing a return of
his contributions or any part thereof;
(iv) where an agreement to make a contribution is released in whole or
in part, the amount and the date of such release;
( d ) its accounting records;
( e ) the minutes of all meetings of the general partners;
( f ) all documents from time to time filed with the Registrar.
(2) All documents or copies of documents required by sub-paragraph (1) to be
kept at the registered office shall, subject to the provisions of the deed of
partnership, be available for inspection by any partner during normal business hours.
(3) The documents mentioned in sub-paragraph (1)( b ) and ( c ) shall constitute
prima facie  evidence of the matters specified therein.
(4) Notwithstanding the foregoing provisions of this paragraph the documents
described in sub-paragraph (1) may, provided that the deed of partnership so permits,
instead of being maintained at the registered office, be maintained at such other
place as the general partners consider appropriate, without prejudice to the right of
all partners to inspect such documents.
(5) In the event that such other place as is mentioned in sub-paragraph (4) is
outside Malta, copies of accounts, returns in respect of the business and copies of
minutes of meetings of general partners shall be sent to, and kept at, a place in
Malta, where they shall, subject to the provisions of the partnership agreement, be
available for inspection by any partner during normal business hours.
(6) The copies of accounts and returns mentioned in sub-paragraph (5) which
are to be sent to, and kept in Malta shall be such as to disclose with reasonable
accuracy the financial position of the business of the partnership at intervals not
exceeding six months.
(7) Any accounting records which a partnership  en commandite  or limited
partnership is required by this paragraph to keep shall be preserved by it for a period
of ten years from the date on which they are made and, if default is made in
complying with this sub-paragraph, the partnership and each general partner shall be
liable to a penalty.
(8) Any account, record or other document required by this Schedule to be kept
by a partnership may be kept either by making entries in books or in any other
manner, including without prejudice to the generality of the foregoing, computer or
other electronic forms.
(9) If any such account, record or other document is kept by making entries
other than in a book -
( a ) it shall be deemed for the purposes of this Schedule to be kept at the
place where access to it and written copies of it can be obtained; and
( b ) if the matters in question are recorded in non-legible form, the
recording thereof shall be capable of being reproduced in legible form.
(10) If in respect of a partnership  en commandite  or limited partnership there is a
contravention of any of the provisions of sub-paragraphs (1), (2), (5) or (6), the
partnership and each general partner shall be liable to a penalty and for any day
during which the default continues, to a further penalty.
(11) Any duty imposed by this Schedule to allow inspection of documents to be
kept by the partnership shall, irrespective of the medium in which such documents
COMPANIES [ CAP. 386.        313
are maintained, be construed as a duty to allow inspection of such documents in
legible form.
Accounts of a partnership  en commandite  or limited partnership
14. (1) Every partnership  en commandite  or limited partnership shall maintain
proper accounting records which shall be:
( a ) sufficient to show and explain the partnership’s transactions;
( b ) disclose with reasonable accuracy, at any time, the partnership’s
financial position at that time;
( c ) such as to enable the general partners to ensure that the partnership’s
balance sheet and profit and loss account are prepared properly and in
accordance with generally accepted accounting principles and practice
and in accordance with any relevant enactment for the time being in
force in Malta;
( d ) such as to contain day to day entries of all sums of money received and
expended by the partnership and the matters in respect of which the
receipt and expenditure takes place; and
( e ) a record of the assets and liabilities of the partnership.
(2) The general partners of every partnership  en commandite  or limited
partnership shall prepare for each accounting period individual accounts comprising
the balance sheet as at the last day of the accounting period to which they refer, the
profit and loss account for that period, the notes to the accounts and any other
financial statements which may be required by generally accepted accounting
principles and practice. These documents shall constitute a composite whole.
(3) The individual accounts shall be drawn up clearly and in accordance with
the provisions of this Act and with generally accepted accounting principles and
practice.
(4) The individual accounts shall give a true and fair view of the partnership’s
assets, liabilities, financial position and profit or loss.
(5) The individual accounts shall comply with the requirements of this Act and
with generally accepted accounting principles and practice as to the form and
content of the balance sheet and profit and loss account and as to additional
information to be provided by way of notes to the accounts.
(6) Where the application of the provisions of this Act would not be sufficient to
give a true and fair view within the meaning of sub-paragraph (4), additional
information shall be given.
(7) Where in exceptional cases the application of a provision of this Act is
incompatible with the obligation for the indivual accounts to give a true and fair
view, that provision shall be departed from in order to give a true and fair view. Any
such departure shall be disclosed in the notes to the accounts together with an
explanation of the reasons for it and a statement of its effect on the assets, liabilities,
financial position and profit or loss.
Application of Chapters IX and X of Part V of this Act
15. Save for what is stated in this Schedule, the provisions of Chapter IX and
Chapter X of Part V of this Act shall, so far as applicable and so far as they are not
inconsistent with the provisions of this Schedule, apply to partnership  en
commandite  or limited partnerships, with reference to "company" therein being
construed as a reference to partnership  en commandite  or limited partnership and
  314      CAP. 386. ]                   COMPANIES
reference to "directors" being construed as a reference to general partners.
Accounts to be sent to limited partners
16. At the end of each accounting period the balance sheet and profit and loss
account of the partnership together with the report of the general partners and the
report of the auditors shall be communicated to the limited partners.
Return of limited partner’s contribution
17. (1) A limited partner shall not, on dissolution or otherwise, receive from the
capital of the partnership any payment representing a return of any part of his
contribution to the partnership unless, at the time of and immediately following the
making of the payment, the partnership  en commandite  or limited partnership is
solvent.
(2) Where the partnership is insolvent at the time of or immediately following
the making of such payment, or in the event of insolvency of the partnership within a
period of six months immediately following the time of making such payment, the
payment shall, for a period of one year from the date of its receipt by the limited
partner, be repayable by him to the extent necessary to discharge any debt of the
partnership incurred at a time when his contribution formed part of the partnership
assets.
(3) Subject to the provisions of sub-paragraphs (1) and (2), a limited partner
may demand the return of his contribution -
( a ) on the dissolution of the partnership; or
( b ) at such time or upon the occurrence of such event or events as may be
specified in the deed of partnership.
(4) A limited partner may, notwithstanding the nature of his contribution, and
subject to the provisions of the deed of partnership, demand and receive either
money or, where the assets of the partnership are capable of division, such divided
part of the assets of the partnership as is equivalent to the value of his contribution.
(5) Any reference in this paragraph, however expressed, to the receipt by a
partner of a payment shall include a reference to the release of any debt owed by him
and forming part of the partnership assets (including any obligation on his part to
make a contribution to the capital of the partnership); and accordingly any reference
in sub-paragraph (2) to the making of a repayment by a partner shall be deemed to
include a reference to the due performance or discharge by him of the debt or
obligation.
(6) For the purposes of this Schedule the expression "solvent" means that the
partnership  en commandite  or limited partnership is able to pay its debts in full,
other than payment of the contributions to the partners, on a distribution of assets on
a dissolution of the partnership, as they fall due, out of the partnership assets without
recourse to the separate assets of the general partners not contributed to the
partnership; and the expression "insolvent" shall be construed accordingly.
(7) A distribution of any assets of a partnership  en commandite  or limited
partnership to a limited partner shall be deemed to be a return of contribution for the
purposes of the provisions of sub-paragraph (1), to the extent that the distribution
reduces the value of his share and interest in the partnership’s assets, calculated on
the basis of the value of the partnership’s net assets, below the value of the amount
contributed or agreed to be contributed by him.
COMPANIES [ CAP. 386.        315
Admission of additional limited partners
18. Subject to the provisions of the deed of partnership a partnership  en
commandite  or limited partnership shall allow any number of partners to become
limited partners in the partnership, provided that any such admission shall be made
by the execution of an agreement in writing and shall be evidenced by the entry of
the particulars of the new limited partners in the register of partners.
Assignment of interest of limited partner
19. (1) Subject to the provisions of the deed of partnership the interest of a
limited partner is assignable in whole or in part.
(2) An assignment by a limited partner of his interest in the partnership or any
part thereof:
( a ) shall not dissolve the partnership;
( b ) shall not be valid unless made in writing and in accordance with other
requirements, if any, of the deed of partnership;
( c ) shall not, unless and until the assignee is admitted to the partnership in
accordance with the provisions of paragraph 18, entitle the assignee to
become or to exercise any right or power of a limited partner;
( d ) shall upon the assignee being admitted to the partnership as a limited
partner in accordance with the provisions of paragraph 15, entitle the
assignee to the rights and powers and, subject to item ( e ), render him
subject to the restrictions and obligations (including any obligation to
make contributions to the capital of the partnership) to which the
assignor was entitled or subject in respect of the interest assigned
immediately before the assignment;
( e ) shall not relieve the assignor of any liability arising under paragraph
4(5) and paragraph 10(2).
(3) A limited partner, upon the valid and absolute assignment of the whole of
his interest in the partnership and his removal from the register of partners, shall
cease to be a limited partner and to be entitled to exercise any right or power of a
limited partner.
Causes of dissolution of partnerships  en commandite  or limited partnerships
20. (1) A partnership  en commandite  or limited partnership shall be dissolved
upon the occurrence of any of the following events:
( a ) upon the happening of any event specified in the deed of partnership;
( b ) upon the date fixed for its duration in the deed of partnership, if any;
( c ) upon the written agreement of all partners that the partnership shall be
dissolved and notice of that fact is given to the Registrar in accordance
with paragraph 22(8);
( d ) if there is no general partner for a period of six months;
( e ) if there is no limited partner for a period of six months.
(2) Where no general partner remains, the limited partners may, for the said
period of six months, appoint one of their number or any other person for the
performance of acts of ordinary administration and any limited partner or other
person appointed pursuant to the provisions of this sub-paragraph shall not incur any
liability which would otherwise be incurred under this Schedule for performing acts
  316      CAP. 386. ]                   COMPANIES
of ordinary administration during the said six month period.
(3) Subject to the provisions of the deed of partnership a partnership  en
commandite  or limited partnership shall not be dissolved by any change in the
limited partners, or by the bankruptcy, insolvency, death, retirement, removal,
resignation, incapacity or dissolution of any limited partner whether an individual,
partnership, company or other body corporate.
Dissolution by the Court
21. (1) The Court may order the dissolution of a partnership  en commandite  or
limited partnership on the application of any partner or creditor or on the application
of the Registrar if in its opinion:
( a ) the partnership is insolvent;
( b ) the business of the partnership has been suspended for an uninterrupted
period of twelve months;
( c ) the affairs of the partnership are being conducted in a manner which is
oppressive to any of the limited partners or prejudicial to their interests
as limited partners or is calculated to affect adversely the carrying on of
the partnership business;
( d ) the limited partners are not being provided with the information relating
to the affairs of the partnership as they might reasonably expect;
( e ) the affairs of the partnership are being conducted in such manner as to
defraud creditors or in an unlawful manner;
( f ) there has been persistent default by the partnership or by any general
partner thereof in complying with the requirements of this Schedule or
any regulation made under this Act;
( g ) there are grounds of sufficient gravity to warrant the dissolution.
(2) Upon the making of an order under sub-paragraph (1) for the dissolution of
the partnership or at any time thereafter, the Court may make such other orders in
relation to the dissolution as it thinks fit and proper in the circumstances, including
an order for the appointment of one or more liquidators to wind up the partnership’s
affairs and distribute its assets.
General provisions applicable to dissolutions
22. (1) Upon the dissolution of a partnership  en commandite  or limited
partnership its affairs shall, unless a liquidator has been appointed by the Court
under paragraph 21(2) or under sub-paragraph (3) of this paragraph, be wound up by
the general partners.
(2) Upon the dissolution of a partnership  en commandite  or limited partnership
no limited partner may, except in accordance with the provisions of paragraphs 17
and 24, withdraw any part of his contribution, or otherwise claim as a creditor of the
partnership.
(3) Upon the dissolution of a partnership  en commandite  or limited partnership
or at any time thereafter, the Court may, on application of any partner (including an
assignee thereof) or any creditor, make such orders in relation to the dissolution as it
thinks fit and proper, including one for the appointment of one or more liquidators to
wind up the partnership’s affairs and distribute its assets.
(4) On the appointment of a liquidator, whether under this paragraph or under
paragraph 21, all powers of the general partners shall cease; and any person who
COMPANIES [ CAP. 386.        317
purports to exercise any power of a general partner at a time when, pursuant to this
sub-paragraph those powers have ceased, shall be liable to a penalty.
(5) Upon the dissolution of a partnership  en commandite  or limited partnership
the partnership shall cease to carry on business except to the extent necessary for its
beneficial winding up; and where in relation to a partnership there is a contravention
of the provisions of this sub-paragraph, the partnership and each general partner
shall be liable to a penalty.
(6) All expenses properly incurred in the dissolution of a partnership  en
commandite  or limited partnership, including the liquidator’s remuneration, are
payable from the partnership’s assets in priority to all other debts.
(7) Upon the dissolution of a partnership  en commandite  or limited partnership,
notwithstanding the provisions of sub-paragraph (8) pursuant to which the certificate
of registration ceases to be valid, the persons winding up the partnership’s affairs, in
the name of and on behalf of the partnership -
( a ) may, to the extent necessary for the beneficial winding up of the
partnership, prosecute, defend or settle any civil or criminal action;
( b ) shall dispose of the partnership’s property and realise its assets; and
( c ) shall, in accordance with the provisions of paragraph 24 discharge the
partnership’s debts and distribute to the partners any remaining assets of
the partnership;
the whole without prejudice to the personal liability of the partners.
(8) Upon dissolution of a partnership  en commandite  or limited partnership,
notice of the fact shall, within a period of fourteen days from the date of dissolution,
be filed by the general partners with the Registrar who shall cause a notice of that
fact to be published in the Gazette.
(9) Where the general partners fail to give the notice of dissolution required by
the provisions of sub-paragraph (8), the general partners shall be liable to a penalty
and shall continue to incur liability as if they were the general partners of a
partnership  en commandite  or limited partnership which had not been dissolved.
(10) The dissolution of a partnership shall be deemed to have occurred upon the
earlier of the following:
( a ) the date of the occurrence of the event upon which, under the provisions
of this Schedule, the partnership is dissolved; or
( b ) the date of the order by the Court under this Schedule for its dissolution.
(11) As soon as a partnership  en commandite  or limited partnership’s affairs are
fully wound up, the persons who conducted the winding up shall:
( a ) prepare an account of the winding up, giving details of the conduct
thereof and the disposal of the partnership’s property, and stating
whether or not any state of affairs described in paragraph 23 has come
to their attention; and
(b) provide all partners with a copy of the said account; and
( c ) deliver to the Registrar a copy of the said account for registration.
(12) The persons conducting the winding up of a partnership  en commandite  or
limited partnership may, by application, seek the Court’s directions as to any matter
in relation to the winding up; and upon such application the Court may make such
order as it thinks fit and proper.
  318      CAP. 386. ]                   COMPANIES
(13) Upon the delivery to the Registrar of the winding-up account, the Registrar
shall thereupon register it and strike the name of the partnership off the register,
whereupon the partnership’s certificate of registration shall cease to be valid. The
Registrar shall forthwith publish a notice of completion of the winding up and of
such striking off.
Personal liability for certain defaults
23. (1) In any case where -
( a ) a partnership  en commandite  or limited partnership has been dissolved
and is unable to pay its debts; and
( b ) there has been in relation to the partnership a contravention of any
relevant provision which -
(i) has contributed to the inability of the partnership to pay its debts;
(ii) has materially misled or deceived any partner or creditor as to, or
has resulted in substantial uncertainty as to, the assets, liabilities,
client money or investment instruments of the partnership; or
(iii) has substantially impeded the orderly winding up of the
partnership’s affairs;
the Court may, on the application of any creditor or partner or of any person
conducting the winding up of the partnership, declare that any officer or former
officer of any general partner in the partnership who is responsible for the
contravention shall be personally liable, without limitation of liability, for the debts
of the partnership or such part thereof as may be specified by the Court.
(2) Where the Court makes a declaration under sub-paragraph (1) in relation to
any person, it may -
( a ) give such directions as it thinks fit and proper for the purpose of giving
effect to the declaration; and
( b ) direct that the liability of that person under the declaration shall be a
charge on -
(i) any debt due from the partnership to him, to any person on his
behalf, to any person claiming as assignee from or through him or
to any person acting on behalf of such an assignee; or
(ii) any charge on any partnership assets or any interest in any such
charge held by or vested in him or any such person;
and the Court may also from time to time make such further orders as it thinks fit for
the purpose of giving effect to any charge imposed under this sub-paragraph.
(3) In sub-paragraph (2) the expression "assignee" includes any person to whom
or in whose favour, by the directions of the person liable, the debt, charge or interest
was created, issued or transferred but does not include an assignee for valuable
consideration (other than consideration by way of marriage) given in good faith and
without notice of any of the grounds upon which the declaration might have been
made.
(4) The Court shall not make a declaration under sub-paragraph (1) in respect of
a person if it considers that -
( a ) he took all reasonable steps to secure compliance by the partnership  en
commandite  or limited partnership with the relevant provisions; or
( b ) he had reasonable grounds for believing and did believe that a
COMPANIES [ CAP. 386.        319
competent and reliable person, acting under the supervision or control
of or appointed by the general partners -
(i) was charged with the duty of ensuring that those provisions were
compiled with; and
(ii) was in a position to discharge that duty.
(5) The foregoing provisions of this paragraph are without prejudice to any
other penalty, remedy or proceedings, whether civil or criminal, in respect of the
contravention.
(6) In any case where -
( a ) a partnership  en commandite  or limited partnership has been dissolved
and is unable to pay its debts; and
( b ) there has been in relation to the partnership a contravention of any
relevant provision which -
(i) has contributed to the inability of the partnership to pay its debts;
(ii) has materially misled or deceived any partner or creditor as to, or
has resulted in substantial uncertainty as to, the assets, liabilities,
client money or investment instruments of the partnership; or
(iii) has substantially impeded the orderly winding up of the
partnership’s affairs;
any officer or former officer of any general partner in the partnership who is
responsible for the contravention shall, without prejudice to any civil liability, be
guilty of an offence.
(7) In a prosecution for an offence under this paragraph, it shall be a defence for
the person charged to show that -
( a ) he took all reasonable steps to secure compliance by the partnership  en
commandite  or limited partnership with the relevant provisions; or
( b ) he had reasonable grounds for believing and did believe that a
competent and reliable person, acting under the supervision or control
of or appointed by the general partners -
(i) was charged with the duty of ensuring that those provisions were
complied with; and
(ii) was in a position to discharge that duty.
(8) For the purposes of this paragraph -
( a ) the expression "officer", in relation to a general partner, means any
director, manager, member of any committee of management or other
controlling authority, secretary or other similar officer of the general
partner, any person in accordance with whose directions or instructions
any of the aforesaid are accustomed to act;
( b ) the expression "relevant provision" means any relevant provision of this
Schedule and any other provision for the time being prescribed by
regulations under this Act; and
( c ) a person shall be considered to be responsible for a contravention of a
relevant provision if the contravention -
(i) was committed with his consent or connivance; or
(ii) was attributable to or facilitated by any neglect on his part.
Distribution of assets upon dissolution
  320      CAP. 386. ]                   COMPANIES
24. Upon the dissolution of a partnership  en commandite  or limited partnership,
the assets shall be distributed in the following order -
( a ) firstly, to creditors other than partners, to the extent otherwise permitted
by law, in satisfaction of partnership debts;
( b ) secondly to limited partners who are creditors and who are not also
general partners, to the extent otherwise permitted by law, in
satisfaction of partnership debts other than debts described in sub-
paragraph ( c );
( c ) finally, subject to the provisions of the deed of partnership, to partners
as follows -
(i) firstly, to limited partners for the return of their contributions or,
where appropriate, for the release of their obligations to make
contributions;
(ii) secondly, to limited partners other than for capital and profits;
(iii) thirdly, to general partners in respect of capital;
(iv) finally, to general partners in respect of profits.
Division of capital into shares
25. (1) Without prejudice to the foregoing provisions of this Schedule, the
capital of a partnership  en commandite  or limited partnership may be divided into
shares.
(2) The provisions of this Act relating to shares in a company other than the
provisions of article 72 thereof shall apply to the shares in a partnership  en
commandite  or limited partnership in so far as they are not inconsistent with the
foregoing provisions of this Schedule.
(3) The provisions of articles 78, 137(4), (5) and (6) and 142(2) of this Act shall
apply to a partnership  en commandite  or limited partnership, the capital of which is
divided into shares, with the substitution of references to general partners vested
with administration or representation for references to directors, officials or the
board of directors; with the substitution of references to partnership  en commandite
or limited partnership, the capital of which is divided into shares, for references to
company; with the substitution of references to deed of partnership for references to
memorandum or memorandum and articles; with the substitution of references to
partners for references to shareholders; and, with regard to article 137(5) of this Act,
with the substitution of the term "a decision of the partners" for the term "any
resolution of the general meeting or from a decision of the board of directors".
(4) A partnership  en commandite  or limited partnership, the capital of which is
not divided into shares, may change its status to a partnership  en commandite  or
limited partnership the capital of which is divided into shares, by a decision taken in
accordance with the provisions of the deed of partnership, or, in the absence of any
such provision, with the consent of all the partners, both general and limited:
Provided that where one or more limited partners, holding in the aggregate
not more than one-fourth of the total contribution of the limited partners, have not
given their consent the partnership  en commandite  or limited partnership may
nevertheless proceed with the change of its status, but it shall be required, for the
purpose of such change, to liquidate and re-imburse to every partner who has not
given his consent, if he so requests, his interest in the partnership  en commandite  or
limited partnership on such terms as may be agreed, or as the Court, on a demand of
either the partnership or the limited partner, may deem fit to order.
COMPANIES [ CAP. 386.        321
(5) A partnership  en commandite  or limited partnership, the capital of which is
divided into shares, may change its status to a partnership  en commandite  or limited
partnership the capital of which is not divided into shares, by a decision taken in
accordance with the provisions of the deed of partnership or, in the absence of any
such provision, with the consent of all the partners, both general and limited:
Provided that where one or more limited partners, holding in the aggregate
not more than one-tenth of the share capital of the partnership, have not given their
consent, the partnership  en commandite  or limited partnership may nevertheless
proceed with the change of its status, but it shall be required, for the purpose of such
change, to redeem the shares held by every partner in the partnership  en commandite
or limited partnership who has not given his consent, if he so requests, on such terms
as may be agreed or as the court on a demand of either the partnership or of the
limited partner may deem fit to order.
(6) It shall be the duty of the general partner vested with the administration or
representation of a partnership  en commandite  or limited partnership, which has
decided to change its status in accordance with sub-paragraph (4) or sub-paragraph
(5), to deliver to the Registrar for registration the instrument or a copy thereof
altering or adding to the deed of partnership together with a printed copy of the deed
of partnership as amended in accordance with the provisions of paragraph 8(2).
(7) The change of status referred to in sub-paragraph (4) or in sub-paragraph (5)
shall not take effect unless and until it is registered as required by sub-paragraph (6).
(8) ( a ) The provisions of this paragraph shall only apply to a partnership  en
commandite  or limited partnership which qualifies as a collective
investment scheme duly licensed in terms of the Investment Services
Act.
( b ) For the purposes of this paragraph and unless the context otherwise
requires:
"base currency" means the currency in which a sub-class is
denominated;
"competent authority" means the competent authority under the
Investment Services Act;
"currency" means, in addition to the Maltese lira, any convertible
currency in terms of section 186 of this Act;
"fractional share" means a fraction of a whole share in any class of
shares issued by a partnership  en commandite  or limited partnership
with variable share capital;
"sub-class" means a distinct class of shares in a partnership  en
commandite  or limited partnership to which are allocated assets and
liabilities distinct from other assets and liabilities allocated to other
classes of shares in the same partnership and which may pursue
investment objectives and adhere to investment policies different from
those of other classes of shares in the same partnership.
( c ) A deed of partnership of a partnership  en commandite  or limited
partnership the capital of which is divided into shares may provide for
the constitution of the partnership as a partnership  en commandite  or
limited partnership with variable share capital and the provisions of
article 84(2) to (7) and (9) of this Act shall, in so far as applicable, apply
mutatis mutandis  and reference to the term "memorandum or articles"
shall be deemed to be a reference to a "deed of partnership" and
  322      CAP. 386. ]                   COMPANIES
reference to the terms "company" and "investment company" shall be
deemed to be references to a "partnership  en commandite  or limited
partnership" and reference to paragraph ( f ) of article 69 of this Act shall
be deemed to be a reference to paragraph ( e ) of article 14(1) of this Act.
( d ) A deed of partnership of a partnership  en commandite  or limited
partnership the capital of which is divided into shares may provide for
the constitution of the partnership as a partnership  en commandite  or
limited partnership in the form of an umbrella or multi-class
partnership, and provide for the constitution of sub-classes, and the
different classes of shares that may be issued by such partnership, where
each class of shares represents a distinct sub-class of the partnership and
denominated in such currency or currencies as may be provided in the
deed.
( e ) A partnership  en commandite  or limited partnership may only be validly
constituted as an umbrella or multi-class partnership if it is so licensed
by the competent authority.
( f ) A partnership  en commandite  or limited partnership duly licensed to be
constituted as an umbrella or multi-class partnership may, with the
approval of the competent authority, establish new sub-classes by the
creation and issue of new classes of shares.
( g ) Each class of shares representing a sub-class in any umbrella or multi-
class partnership may be designated in a different currency provided that
a class of shares may be designated only in one currency.
( h ) An umbrella or multi-class partnership having its share capital
denominated in different currencies shall draw up its annual accounts in
any one of such currencies, as may be approved by the competent
authority.
( i ) The general partner of an umbrella or multi-class partnership shall
maintain proper accounting records of the assets and liabilities of each
sub-class in the base currency of that sub-class.
( j ) The provisions of sub-paragraph ( h ) shall  mutatis mutandis  apply to the
drawing up of any other reports or financial statements which may be
required under this Act or by the competent authority.
( k ) For the purposes of sub-paragraphs ( h ) and ( j ), the conversion from the
base currency of a sub-class into the currency in which the annual
accounts of the umbrella or multi-class partnership are to be drawn up
shall be made by using the exchange rate between the former and latter
currencies on the balance sheet date, and such rate shall be the official
closing middle rate issued by the Central Bank of Malta. This note shall
be disclosed in the notes to the accounts.
( l ) A partnership  en commandite  or limited partnership constituted as an
umbrella or multi-class partnership may in its deed of partnership elect
to have the assets and liabilities of each sub-class comprised in that
partnership treated for all intents and purposes of law as a patrimony
separate from the assets and liabilities of each other sub-class of such
partnership. Where a partnership  en commandite  or limited partnership
constituted as an umbrella or multi-class partnership makes the election
aforementioned, the assets and liabilities of each sub-class of that
partnership shall, for all intents and purposes of law be deemed to
constitute a patrimony separate from the assets and liabilities of each
COMPANIES [ CAP. 386.        323
other sub-class of such a partnership.
( m ) Save for such proportion of the liabilities of a partnership  en
commandite  or limited partnership constituted as an umbrella or multi-
class partnership which by virtue of the deed of partnership or by virtue
of the terms of issue of the shares constituting a sub-class are, or are to
be attributable to, one or more sub-classes in the proportion established
therein, the liabilities incurred in respect of each sub-class shall be paid
out of the assets forming part of its patrimony and in the event that such
assets are insufficient to discharge the liabilities so incurred, the
creditors in respect thereof shall have no claim or right of action against
the other assets of the partnership, and the provisions of any law or
regulation in force regulating the insolvency of partnerships shall not
apply.
( n ) The general partner of a partnership  en commandite  or limited
partnership constituted as an umbrella or multi-class partnership shall
hold or cause to be held such separate records, accounts, statements and
other documents as may be necessary to evidence the liabilities and
assets of each sub-class as distinct and separate from the assets and
liabilities of other sub-classes in the same partnership.
( o ) The provisions of the Fifth Schedule to the Act shall apply  mutatis
mutandis  to a partnership  en commandite  or limited partnership with
variable share capital.
( p ) (i) A partnership  en commandite  or limited partnership may, if so
authorised by its deed of partnership, issue fractional shares up to
such number of decimal places, not being less than three, as shall
be specified in the deed of partnership, and under such terms and
conditions as may be stipulated therein.
(ii) Fractional shares shall be automatically consolidated into a whole
share of the same class when the fractional shares held by one
shareholder become equal to a whole share.
Administrative penalties in respect of partnerships  en commandite  or limited
partnerships
26. (1) Where any provision of this Schedule provides for the imposition of a
penalty, the amount of such penalty shall be determined by reference to Part II of this
Schedule, which specifies the maximum penalty that may be imposed by the
Registrar under any of the provisions of this Schedule.
(2) In Part II of this Schedule, the first column indicates the paragraph and sub-
paragraph of this Schedule which prescribes that a penalty shall be imposed, the
second column gives a general description of the infringement, which description
shall not be relied on in interpreting any provision of this Schedule, the third column
prescribes the maximum penalty and the fourth column prescribes the maximum
daily default penalty, if any. The penalty shall become due on the day on which the
default occurs and the daily default penalty shall be due for every day during which
the default continues and shall accrue from the day following that on which the
default occurs.
(3) Action by the Registrar for the recovery of a penalty under this Schedule
shall be prescribed by the lapse of five years from the day on which the default
occurs.
(4) In relation to penalties raised under this Schedule, the provisions of article
  324      CAP. 386. ]                   COMPANIES
401 of this Act shall apply  mutatis mutandis .
PART II – PENALTIES
Paragraph Default Penalty Daily Penalty
4(5) Person other than a partnership  en commandite  or
limited partnership or a partner therein falsely
indicating existence of partnership 200 liri 10 liri
8(4) Failure of any general partner, vested with
administration or representation, to deliver to the
Registrar for registration the instrument or a copy
thereof altering or adding to the deed of
partnership, within fourteen days from the
alteration or addition 200 liri 10 liri
8(6) Failure of any general partner, to notify the
Registrar of a change in the name, in any general
partner, in the registered office, in the objects or in
the period fixed for the duration of, the partnership,
within fourteen days of such change 200 liri 10 liri
 13(10) Failure by the partnership  en commandite  or
limited partnership to maintain the documents at
registered office, make them available at for
inspection, and failure in respect of documents
which are to be sent and kept in Malta 200 liri 10 liri
13(7) Failure to keep any of the accounting records
mentioned for a period of ten years from the date
when they were made 500 liri None
22(4) Exercise by any person of the powers pertaining to
the general partners after the appointment of the
liquidator 500 liri None
22(5) Exercise by any person of the business of the
partnership following its dissolution 500 liri None
22(9) Failure of the general partners to give notice of
dissolution as required by paragraph 22(8) 200 liri 10 liri
COMPANIES [ CAP. 386.        325
PENALTIES
ELEVENTH SCHEDULE Amended by:IV. 2003.170, 172.
( Article 427 )
Article Default Penalty Daily Penalty
6(8) Failure to indicate particulars concerning commercial
partnership on business letters, etc.; and officer of
commercial partnership failing to state capacity in
which he signs a document on behalf of the
commercial partnership 200 liri None
6(9) Liquidator failing to include statement on business
letters, etc., that commercial partnership is being
wound up or failing to include names of liquidators of
company being wound up 200 liri None
10 Any person including name of a non-partner or
fictitious person in partnership-name 1000 liri None
  19(4) Partners failing to give notice that a person has begun
or ceased to be a partner of a partnership 200 liri 10 liri
26(2) Partners failing to keep accounting records for ten
years 500 liri None
41 Failure of partners to give notice of dissolution of
partnership or failure of liquidator to give notice of his
appointment 200 liri 10 liri
50(2) Failure of partners to provide for custody of records/
documents after liquidation 200 liri None
50(3) Failure of liquidator or elected person to keep records/
documents of partnership for prescribed period 500 liri None
50(5) Failure of heirs of elected person to deliver records/
documents of partnership 200 liri None
66(6) Failure of partner vested with administration or
representation to deliver a copy of any instrument
altering or adding to the deed of partnership of a
partnership  en commandite  or limited partnership
the capital of which is divided into shares to the
Registrar or failure to deliver amended deed of
partnership 200 liri 10 liri
70(6) Trading or carrying on business under certain
prohibited names 200 liri 10 liri
74(2) Failure of company to deliver to Registrar report of
proposed acquisition of non-cash asset from
subscriber or member 500 liri None
79(4) Failure of officer to deliver a copy of any resolution
altering or adding to a company’s memorandum or
articles to the Registrar or failure to deliver amended
memorandum and articles 200 liri 10 liri
  326      CAP. 386. ]                   COMPANIES
85(4) Failure of officer to file copy of resolution increasing
share capital 200 liri 10 liri
88(11) Failure of officer of company to deliver to the
Registrar copy of resolution to restrict or withdraw
right of pre-emption 200 liri 10 liri
91 Contravention of articles 89 or 90 (1)  in respect of the
obligation to issue a prospectus 1000 liri None
92(2) Issue of prospectus in contravention of article 92 (1) 1000 liri None
93(2) Issue of a prospectus before registration thereof  1000 liri 20 liri
97(5) Failure of company and its officers to keep in a
separate account money received from applicants in
pursuance of a prospectus 1000 liri 20 liri
101(5) Failure of company and its officers to keep in a
separate account money received from applicants in
pursuance of a prospectus for listing 1000 liri 20 liri
103(2) Failure to make return as to allotments 200 liri 10 liri
104(3) Failure of directors to convene general meeting in case
of serious loss of capital 200 liri 10 liri
106(2) Failure of officers of company to provide Registrar
with copy of resolution for company to acquire its own
shares otherwise than by subscription 200 liri 10 liri
113(4) Failure of officer to disclose commissions, discounts,
etc, on issue of shares 200 liri 10 liri
115(6) Failure of officers to provide Registrar with notice of
redemption of preference shares 200 liri 10 liri
119(6) Failure of company to send notice to transferee of
refusal to register transfer of shares and debentures 200 liri 10 liri
120(4) Failure of officers of company to comply with
provisions as to issue of share certificates 200 liri 10 liri
123(4) Failure of officers of company to comply with
provisions as to register of members 200 liri 10 liri
124(4) Failure of officers of company to keep proper register
of debentures 200 liri 10 liri
128(3) Failure of officers of company to hold annual general
meeting 1000 liri 20 liri
133(3) Failure of officers of company to give notice to
members of right to vote by proxy at a meeting of the
company 200 liri None
133(5) Officer of company contravening further provisions as
to votes by proxy at meetings of the company 200 liri None
138(8) Failure to appoint a company secretary 200 liri 10 liri
145(2) Director failing to disclose interest in contract 1000 liri None
146(2) Officers of company failing to make return as to
change in directors or secretary 200 liri 10 liri
Article Default Penalty Daily Penalty
COMPANIES [ CAP. 386.        327
149(4) Officers of company failing to make minutes of general
meetings and to keep minute book at registered office 500 liri None
151(6) Officers of company failing to give notice to Registrar
of default in appointment of auditors 200 liri 10 liri
154(3) Officer and auditors of subsidiary undertaking failing
to give information to auditors of parent company 200 liri None
154(4) Officers of parent company failing to provide auditors
with information concerning oversea subsidiary 200 liri None
157(2) Officers of company failing to give notice to Registrar
of resolution removing an auditor 200 liri 10 liri
159(3) Officers of company failing to give notice to Registrar
of resignation of auditor 1000 liri 20 liri
160(5) Directors failing to take reasonable steps to convene a
meeting requisitioned by a resigning auditor 1000 liri None
162 (1) Auditor failing to comply with requirements of article
161 upon ceasing to hold office 500 liri 15 liri
162(3) Officers of company failing to comply with article 161
upon an auditor’s ceasing to hold office 500 liri 15 liri
163(7) Officers failing to keep accounting records for ten
years 500 liri None
176(4) Directors approving defective accounts 1000 liri None
176(5) Officers of company issuing or delivering to Registrar
accounts not duly signed 200 liri None
177(4) Directors failing to comply with requirements as to
Directors’ report 500 liri None
178(4) Officer circulating or filing unsigned directors’ report 500 liri None
179(7) Officers of company failing to state names of auditors
on auditors’ report 200 liri None
180(4) Company and its officers failing to send copies of
annual accounts to persons entitled 500 liri None
180(6) Officers of company failing to provide document on
demand by person entitled to it 200 liri 10 liri
181(3) Directors failing to lay annual accounts or laying
defective annual accounts before general meeting 1000 liri 20 liri
183(10) Directors failing to deliver or delivering defective
annual accounts, etc., to Registrar 1000 liri 20 liri
184(3) Officers of company failing to file annual return 1000 liri 20 liri
209(3) Officers of private company offering shares or
debentures for sale to the public 1000 liri None
212(6) Officers of company failing to deliver notice to
Registrar of becoming a single member company 200 liri 10 liri
212(9) Sole member failing to record in writing all agreements
between him and the company 500 liri None
Article Default Penalty Daily Penalty
  328      CAP. 386. ]                   COMPANIES
226(6) Persons infringing article 226 on preparation of
statement to  official receiver  as to affairs of company
in liquidation 1000 liri 20 liri
265(2) Officers of company failing to give to Registrar notice
of resolution for dissolution and voluntary winding up 200 liri 10 liri
270(4) Directors failing to summon general meeting or failing
to apply to the court for appointment of liquidator 1000 liri 20 liri
272(2) Liquidator failing to summon meeting of creditors
where company unable to pay debts 1000 liri None
273(2) Liquidator failing to hold general meeting where
winding up continues for more than twelve months 500 liri None
274(2) Liquidator failing to provide Registrar with copy of the
winding up account or a return of the general meeting
on members’ voluntary winding up 200 liri 10 liri
274(3) Liquidator failing to call final meeting in members’
voluntary winding up 200 liri None
278(6) Directors failing to comply with requirements as to
creditors meeting following resolution for dissolution
and voluntary winding up 1000 liri None
279(3) Failure of directors to apply to the court to appoint
liquidator 1000 liri 20 liri
283(2) Liquidator failing to convene meetings of company and
of creditors where winding up continues for more than
twelve months 200 liri None
284(2) Liquidator failing to provide Registrar with copy of
winding up account or a return of the company and
creditors’ meetings on a creditors’ voluntary winding
up 200 liri 10 liri
284(3) Liquidator failing to call general meeting or creditors’
meeting on creditors’ voluntary winding up 500 liri None
290(2) Liquidator failing to notify Registrar of appointment 200 liri 10 liri
322(2) Liquidator failing to comply with periodic reporting
requirements 500 liri 15 liri
324(3) Liquidator failing to keep books for specified period 500 liri None
327(4) Officer failing to annex to memorandum copy of court
order as to compromise with creditors 200 liri 10 liri
328(6) Company and officers failing to comply with the
requirements of article 328 1000 liri None
328(7) Director failing to give notice to company and
debenture holders of interests in relation to
compromise with creditors 1000 liri None
329(5) Failure to deliver copy of court order for the
sanctioning of a compromise or arrangement to the
Registrar 200 liri 10 liri
Article Default Penalty Daily Penalty
COMPANIES [ CAP. 386.        329
389 Officer or agent of oversea company failing to comply
with provisions as to registration or returns of oversea
company 200 liri 10 liri
397 (1) Person responsible for issuing, circulating or
distributing a prospectus, etc., for an oversea company
in contravention of articles 391 to 396 1000 liri None
399A (1) Liquidator, officer or agent of oversea company
failing to give notice to Registrar of winding-up of
oversea company or closure of branch or place of
business 200 liri 10 liri
399A (2) Liquidator of oversea company failing to notify
Registrar of appointment 200 liri 10 liri
Article Default Penalty Daily Penalty
  330      CAP. 386. ]                   COMPANIES
TABLE OF CONCORDANCE
1.  Short title.  1
2.  Interpretation.  2 to the extent
 that the 
 definitions are
contained therein
3.  Law governing commercial partnerships.  5
4.  Formation of partnership.  4
5.  Different kinds of partnerships.  4 (1) 
6.  Indication of particulars concerning
partnerships in business letters, etc.  6 
7.  Definition.  7 
8.  Agreement to pay share of profits.  8
9.  Partnership-name.  9, 18 
10.  Penalties for use of partnership-name
including name of fictitious person, etc. 10 
11.  Contributions deemed to be made in ownership.  11 
12.  Contribution of a debt owing to a partner.  12 
13.  Valuation of contribution.  14  ( e )  
14.  How partnership is constituted.  13 
15.  Contents of deed of partnership.  14 
16.  Registration of deeds of partnership.  15
17.  Duty of Registrar and effect of registration.  16 
18.  Where certificate of registration is not issued.  17 
19.  Changes in deed of partnership.  19 
20.  Where alteration consists in change of
partnership-name.  20 
21.  Reductions in contribution of a partner and
dissolution of a partnership before
period fixed for its duration.  21 
22.  Right of creditors of a partner to oppose
enlargement of duration of a partnership.  22 
23.  Duties of Registrar of Courts.  23 
24.  How deed of partnership may be altered.  24 
Amended by:
IV. 2003.169. TWELFTH SCHEDULE ( Article 3 )
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
COMPANIES [ CAP. 386.        331
25.  Administration and representation of a
partnership.  25 (1)
26.  How partnership may be bound.  25  ( 2 ) ,  ( 3 )  
27.  New partners.  27
28.  Distribution of profits.  28 
29.  How rights of creditors of a partner are
enforceable.  29 
30.  A partner may not compete with partnership.  30 
31.  Death of a partner.  31 
32.  Expulsion of a partner.  32 
33.  Cessation of membership.  33 
34.  Rights of persons ceasing to be partners.  34
35.  Dissolution of partnerships  en nom collectif .  35 
36.  Notice of dissolution.  36 
37.  How a partnership  en nom collectif  may be
wound up.  37 
38.  Power to remove liquidator.  38 
39.  Remuneration of liquidator.  39 
40.  Costs of winding up payable in priority to
other claims.  40 
41.  Penalty.  41 
42.  Powers until provision is made for winding up.  42 
43. Duties of partners vested with administration.  43 
44.  Powers of liquidators.  44 
45.  Liquidator not to distribute assets before 
paying debts.  45 
46.  Duty of liquidator to give information, to 
render account and prepare scheme of 
distribution.  46 
47. Rules applicable to distribution of assets.  47 
48.  Approval of accounts and scheme of distribution.  48 
49.  Striking of name of partnership off register.  49 
50.  Preservation of books of accounts, etc., after
dissolution.  50 
51.  Definition. 51 
52.  Applicability of provisions governing
partnerships  en nom collectif.   52
53.  Partnership-name.  53 
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
  332      CAP. 386. ]                   COMPANIES
54.  Contribution of limited partner not to include
personal services.  54 
55.  Contents of deed of partnership.  55 
56.  Rights of general partners.  56 
57.  Administration and representation.  57 
58.  Appointment of partners to administer and
represent partnership.  58 
59.  Limited partner cannot take part in 
management of partnerships.  59 
60.  Communication of yearly accounts to limited
partners.  60 
61.  Article 30 not to apply to limited partners.  61 
62.  Limited partner not bound to restore profits
received in good faith.  62 
63.  Assignment of interest by limited partner.  63 
64. Death of limited partner.  64 
65.  Dissolution of partnership  en commandite .  65 
66.  Division of capital into shares.  66 
67.  Definition.  67 
68.  How company is constituted.  68 
69.  Contents of memorandum.  69 
70.  Name of company.  70 
71. Objects of company.  71
72.  Minimum share capital.  72 
73. Articles of association.  75 
74.  Registration of memorandum and articles.  76 
75.  Duty of Registrar and effects of registration.  77 
76.  Where certificate of registration is not issued.  78 
77.  Alterations and additions to memorandum 
and articles.  79 
78.  Reduction of share capital.  83 
79.  Change of name of company.  80 
80.  Alterations in memorandum or articles
increasing liability to contribute to share 
capital not to bind existing members 
without consent.  81 
81.  Authentication of documents.  82
82. Issue of applications for shares in or 
debentures of a company to be made with
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
COMPANIES [ CAP. 386.        333
a prospectus.  89 
83.  Dating of prospectus and matters to be stated
therein.  90 
84.  Penalty.  91 
85.  Prospectus including a statement by experts.  92 
86.  Registration of prospectus.  93 
87.  Restriction on alteration of terms mentioned in
prospectus.  - 
88.  Civil liability for mis-statements in prospectus.  94 
89.  Document containing offer of shares or 
debentures for sale to be deemed prospectus.  95
90. Interpretation of provisions relating to prospectus.  96 
91.  No allotment of share capital unless seventy-five
per cent subscribed.  97 
92.  No allotment after lapse of three months from
issue of prospectus.  - 
93.  Time of the opening of the subscription lists.  99 
94.  Revocability of applications for shares or
debentures.  100 
95.  Return as to allotments.  103
96.  Company may not hold its own shares.  105, 106, 107,
108, 109,112 
97.  Company may not hold shares in its holding
company nor provide financial assistance for 
purchase of or subscription for its own, or its
holding company’s shares.  110
98. Conditions for payment of commissions,
discounts, etc.  113 
99.  Application of premium received on issue of
shares.  114 
100.  Redeemable preference shares.  115 
101.  Rights of holders of special classes of shares
and variations thereof.  116 
102. Numbering of shares.  117 
103.  Transfer of shares.  118 
104.  Registration of transfer at request of transferor.  119 
105.  Issue of certificates.  120
106.  Share warrants.  121 
107.  Register of members.  123 
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
  334      CAP. 386. ]                   COMPANIES
108.  Register of debentures.  124 
109.  Inspection of registers.  125 
110.  Power to close registers.  126 
111.  Statutory meeting.  - 
112.  Holding of annual general meeting.  128 
113.  Penalty.  128 ( 3 )  
114.  Convening of extraordinary general meeting
on requisition.  129 
115.  Length of notice for calling meetings.  130 
116.  General provisions as to meetings and votes.  131 
117.  Power of court to order meeting.  132 (1) 
118.  Proxies.  133 
119.  Right to demand a poll.  134 
120.  Extraordinary resolutions.  135 
121.  Directors.  137 
122.  Restrictions on appointment of director.  139
123.  Removal of directors.  140 (1) to  ( 5 )  
124.  Casual vacancy.  140  ( 6 )
125.  Disqualification for appointment as director.  142 
126.  Director may not compete with company.  143
127.  Prohibition of loans, etc., to directors.  144 
128.  Duty of director to disclose interest in a
contract with company.  145 
129.  Return as to changes among directors.  146 
130.  Joint and several liability of directors.  147 
131.  Provisions as to liability of officers and auditors.  148 
132.  Minutes of proceedings.  149 
133.  Keeping of books of account.  163
134.  Profit and loss account and balance sheet.  181, 182 
135.  General provisions as to contents and
form of accounts.  167 
136.  Signing of balance sheet.  176
137.  Directors’ report to be attached to balance sheet.  177, 181
138. Inspection of accounts. 180
139.  Penalty. Incorporated in
relevant articles 
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
COMPANIES [ CAP. 386.        335
140.  Appointment and remuneration of auditors.  151, 152, 156 
141.  Disqualification for appointment as auditor.  153
142.  Auditor’s report. 179,181
143. Right of access to books and to attend
at general meetings.  154, 155 
144.  Annual return.  184
145.  Documents to be annexed to annual return.  183
146.  Penalty.  Incorporated in 
relevant articles 
147.  Definition.  209
148.  Provisions not applicable to private companies.  Incorporated in 
relevant articles 
149.  Exemption of private company from
requirements of article 145, etc.  211 
150.  Dissolution of companies.  214 
151.  Notice of dissolution and calling of meeting for
appointment of liquidator.  265, 279 
152.  Appointment, removal and remuneration
of liquidator.  270, 278, 279, 
281, 289, 293 
153.  Notice of appointment of liquidator.  290
154.  Penalty.  Incorporated in 
relevant articles 
155.  Powers of directors and convening of
general meetings.  267, 295 
156.  Applicability of articles 43, 44 and subarticle
(1) of article 45.  287, 288 
157.  Calls for payment of unpaid share capital.  288
158.  Duties of liquidator where winding up continues
for more than one year.  273, 283 
159. Duties of liquidator when affairs have been
completely wound up.  274, 284 
160.  Approval of accounts and scheme of
distribution.  275, 285
161.  Name of company to be struck off the register.  275, 285, 324
162.  Conversion of partnerships.  330
163.  Amalgamation of partnerships.  337, 343, 357 
164.  Registration of the conversion or amalgamation
of partnerships.  331, 338, 350 
165.  Where partnership ceases to exist on
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
  336      CAP. 386. ]                   COMPANIES
conversion or amalgamation.  332, 339, 343  ( 4 )  
166. Partners with unlimited liability to remain
bound unless creditors consent to conversion.  333, 340 
167.  Rights of creditors to oppose conversion
or amalgamation.  334, 341, 351 
168.  Continuing or new partnership succeeds
partnership ceasing to exist.  335, 342, 354 (1) 
169.  Definition.  376
170.  Consent of associates required for admission
of other associates.  377 
171.  Relations of parties  vis-à-vis  third parties
and among themselves.  378 
172.  Only associating party acquires rights and
assumes obligations.  379 
173.  Rights of associating party and of associates.  380 
174.  Liability of associate.  381 
175.  Agreements allowed between parties.  382 
176.  No formalities required for association
en participation .  383 
177.  Application of articles 178 to 182.  384
178.  Documents, etc., to be delivered by oversea
companies carrying on business in Malta.  385 
179.  Return to be delivered by oversea company
where documents, etc., altered.  386 
180.  Accounts of oversea company.  387 
181.  Other obligations of oversea company.  388 
182.  Penalties.  389 
183.  Application of articles 184 to 187.  384 
184.  Documents, etc., to be delivered by oversea
partnerships carrying on business in Malta.  385 
185.  Return to be delivered by oversea partnerships
where documents, etc., altered.  386 
186.  Other obligations of oversea partnerships.  388 
187.  Penalties.  389 
188.  Dating of prospectus and particulars to be
contained therein.  391
189.  Application of articles 85, 86 and 88.  393, 396, 397 
190.  Interpretation of provisions as to prospectuses.  398
191.  Power of Prime Minister to appoint Registrar.  400 
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
COMPANIES [ CAP. 386.        337
192.  Additional duties of Registrar.  401 
193.  Powers of Registrar to investigate affairs of
partnership.  403 to 423 
194.  Inspection, etc., of documents kept by Registrar.  424
195. Power of Minister to make regulations  425
First Schedule  Regulations for management of a limited
liability company  First Schedule
Second Schedule  Matters to be set out in a prospectus and 
reports to be set out therein  Second Schedule
Third Schedule  General provisions as to balance sheet and
profit and loss account  168, Third Schedule
Fourth Schedule  Contents and form of annual return  Seventh Schedule
1  Short title  -
2  Other enactments -
3  Interpretation  2 
4  Investment Companies with variable
share capital  84
5 Name of company  70  ( 3 )  and  ( 6 )  
6  Accounts of investment company with
variable share capital  169 
7  Trustees and nominees  127
8  Share Capital in a convertible currency  186, 187 
9  Power to make regulations  -
Schedule - Accounts and Director’s report
of an investment company with
variable share capital  Fifth Schedule
Articles of 
Ordinance
Marginal note for the article in the Ordinance Articles of Act
Articles of 
Commercial 
Partnerships 
( Special 
Provisions )  
Act, 1994
Marginal note for the article in the Commercial 
Partnerships  ( Special Provisions )  Act, 1994
Articles of Act
