Category: Business

Companies Act – Register of Beneficial Owners

On the 1st January 2018, new regulations came into force setting up the register of beneficial owners within the Registry of Companies.  Companies must declare the identity of the ultimate beneficial owners (UBOs).  This applies for UBOs having a share or controlling interest of more than 25%. If there are none, then the company has to indicate who the senior administrators are.

The regulations exclude companies where:
  1. They are listed on a regulated market and disclosure of beneficial owners is already required under the appropriate regulations; or
  2. All shareholders are natural persons disclosed to the companies registrar.

The First Schedule of the regulations sets out a form which is to be delivered together with the M&As whenever a new company is being set up. Declarations must be submitted for each beneficial owner. The declarations must include name, date of birth and nationality, identification details and country of issue of the passport or identity document.  Failure to comply means that the Registrar will not register the company.

The regulations require the Registrar to keep a register for information on the beneficial owners.  The information is not available to the general public except under payment of a fee to download the documents.

Update – December 2023:

A recent European court judgement has confirmed that having this information accessible by the general public is not strictly necessary or proportionate in terms of human law rights and thus, the ability to access beneficial owners’ information has now been limited to licensed entities and subject persons.  Read the article here.

Companies must retain accurate, adequate and up to date information on all beneficial owners in compliance with the regulations.  They must hold this information in a beneficial owners register which they keep at the company’s registered office.

Shareholders and UBOs are bound to provide the information without delay, even upon any change in the beneficial ownership or interest held.  New shareholders shall not be registered unless they comply with this requirment.

Any changes in beneficial ownership must be notified to the registry within fourteen days.  Companies must use the prescribed Form including all the information necessary.  The same applies in the case of a transfer or transmission of shares, where this has entailed a change in beneficial ownership interest held.  Notices of changes must be signed by at least one director or the company secretary.

Power of Authorities

The registry is authorised to exchange the information with tax and other competent authorities as well as to subject persons carrying out CDD in terms of the applicable regulations.  Subject persons requesting such information may demonstrate their legitimate interest in obtaining such information, including on the basis of previous activities and proven track record.  (Note – this might cause problems for new start-ups).

In exceptional cases where the beneficial owner risks exposure to harm owing to  disclosure, such information should not be disclosed.  Subject persons cannot rely exclusively on the register for CDD purposes.  Furthermore, authorities across the EU will have the power to exchange information with each other.

Submission and Liability to fines for default

The rules subject access to information to online registration and a fee of EUR 5.00 for every access to the information on the beneficial owners of each company. Post 2022, this information is only accessible to subject (licensed) persons.

Default will expose every beneficial owner, shareholder, officer and the company jointly and severally to fines.  Officers can only escape this where they have used all due diligence in order to comply with the rules and was not at fault for the failure.

This information is to be provided at every anniversary of each company after the initial submission.  Notably, the rules also apply to commercial partnerships.

False or misleading statements can lead to hefty fines and / or imprisonment.  The rules make provision for electronic submission. This enables subject persons to submit documents on time.

The Second Schedule lists down the applicable administrative penalties for failure to submit on time.

Opinion: A Commercial Court for Malta ?

Update (2025): Since this article was first published, a Commercial Court has been established in Malta under the Code of Organisation and Civil Procedure. This opinion piece is retained for archival purposes, reflecting earlier commentary on the topic.

Earlier in 2017, the Ministry for Justice, Culture and Local Government held a public consultation, titled “Setting up of the Civil Court, First Hall, Commercial Section“.  The consultation was then concluded in July 2017.

Wide Range of Questions

Consultation questions included whether there should be a commercial section within the civil arm of the Maltese courts. The consultation also asked whether the remit should be limited to the Companies Act or wider.

Feedback Received

The feedback received applauded the initiative of introducing this section. In the past the Maltese courts included a Commercial Court section. The commercial court was eventually discontinued.

However, in the current litigation climate, both the Government and those participating in the consultation felt that the introduction of this section would increase in the efficiency of justice being delivered.  Naturally, it was considered imperative that the necessary human and other resources are provided.

During the consultation, the feedback mentioned that matters falling under the Commercial Code should also be included within the scope of this section’s jurisdiction. Others suggested that other laws such as the Trusts and Trustees Act and other codes that deal with matters of a commercial nature (e.g.  banks) should also fall under this court’s jurisdiction.

Existing Procedures and the New Court

The court’s general area of competence and procedure are still unclear.  Most procedural matters are generally regulated by the Code of Organisation and Civil Procedure. A new court would need to have its own rules of procedure, or somehow be regulated by this Code.  The Code regulates the procedure of all the civil courts in Malta.

The use of alternative dispute resolution mechanisms, including pre-trial conferences and/or arbitration or mediation were also considered an efficient means to resolve disputes.  They can provide direction in cases that are deemed to be high-risk or that are of a delicate nature.

The consultation respondents further referred to the implementation of online filing and payment of fees.  At the time of writing, only physical payment and filing of court cases is possible.   This renders the process inconvenient and unwieldy for most professionals and increases crowding in court.

Respondents additionally suggested other legislative amendments to be made alongside the setup of this new commercial court.  These amendments would ensure that the new Bill respects the current legal framework.

In late 2017, the Government published its response to the consultation. In the response, the Government stated that, subject to Parliamentary approval, it plans to enact the new legislation in early 2018. The plan is for the new Commercial Section  to commence operation in the second quarter of 2018.

Anti-Money Laundering – New Rules in Force

The Fourth Anti-Money Laundering Directive (AMLD 4) aims to strengthen the integrity of the EU’s financial system by combating money laundering and the financing of terrorism.  AMLD 4 relies on the principle that illicit financial flows can damage not just the Member State concerned, but the stability and reputation of the entire EU financial sector.

The evolution of financial crime

Financial crime has become more sophisticated over time, often involving international networks. This has made tighter controls and increased coordination across jurisdictions more important than ever. The EU’s approach aligns closely with international standards, including those set by the Financial Action Task Force (FATF).  

Key Objectives of AMLD 4

One of the core goals of AMLD 4 is to improve transparency by ensuring that the beneficial ownership of companies is identified and recorded. This means tracing the ownership structure to the individual who ultimately owns or controls the entity. The Directive mandates that this information must be accurate, up-to-date, and easily accessible to competent authorities  

Key Aims of Anti-Money Laundering Legislation

Identifying the beneficial owner is key to avoiding would-be criminals from hiding behind a corporate structure.  This is the raison-d’etre behind the due diligence and other obligations underlying the Directive.

The aim is to look for the individual (natural) person at the very end of the line. Information needs not only be adequate and accurate, but also up-to-date, which is why certain checks need to be repeated regularly.

Main changes in AMLD 4

  • Less Reliance on Simplified Due Diligence: Simplified Customer Due Diligence (CDD) is now only allowed in limited cases. Entities must demonstrate low risk before applying reduced checks—and must continue to monitor the relationship.

  • Enhanced Due Diligence (EDD): Required for high-risk clients, such as asset-holding vehicles, cash-intensive businesses, and transactions involving high-risk jurisdictions.

  • Wider Scope of Politically Exposed Persons (PEPs): The definition now includes individuals in domestic public positions, not just foreign ones. All PEPs are automatically subject to EDD.

  • Central Beneficial Ownership Registers: Companies must maintain beneficial ownership information in a register accessible to national authorities like the MFSA and FIAU in Malta.

  • Lower Transaction Thresholds: The threshold for triggering CDD for cash transactions has been reduced from €15,000 to €10,000. For high-risk gambling operations, the threshold is as low as €2,000.

  • Gambling Sector Inclusion: The entire gambling sector now falls under AMLD 4, not just specific areas, and subject persons must apply CDD when applicable.

  • Tax Crimes as Predicate Offences: Tax offences are now clearly predicate offences across all EU jurisdictions.  This harmonises definitions and enables Member States to better enforce the AMLD 4 rules.

  • Increased National Oversight: Member States must perform their own national risk assessments.  This could may lead to Member States introducing stricter national requirements.

Malta’s Implementation

On 20 December 2017, Malta adopted the Prevention of Money Laundering and Funding of Terrorism Regulations, 2017, in line with AMLD 4. These regulations repealed the 2008 rules and introduced risk-based CDD as the standard approach.

Although the FIAU is revising the Implementing Procedures (Part I), entities are advised that in case of conflict between this document and the regulations, the 2017 regulations will take precedence.

Final Thoughts

AMLD 4 marks a significant shift in the EU’s AML framework. By focusing on transparency, harmonisation, and a risk-based approach, AMLD 4 aims to make financial systems more resilient to abuse. Malta’s regulatory framework continues to evolve to meet these standards, reinforcing its commitment to compliance and integrity in financial services.

Google – EU competition law breach accusations

The European Commission sent a statement of objections to the tech firm, alleging that it has breached EU competition law.

Google is accused of placing onerous requirements on firms using Android and stifling competition.

Google has 12 weeks within which to reply and, if found to be abusing its dominant position, could face large fines and have to change its practices with respect to companies opting to obtain a licence to use its apps on their products (smartphones).

Read the BBC article here.

Article 102 of the Treaty on the Functioning of the European Unioni prohibits abuses of dominant positions as follows:

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

In particular, under established case law, a dominant position has been defined as:

[…] a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers.

In general a dominant position derives from a combination of several factors which, taken separately, are not necessarily determinative.

This definition has now been adopted widely as the concise definition on which dominance is assessed in case law.

The Court of Justice of the European Union publishes its case law here.