MALTESE SHIPPING ORGANISATIONS (PRIVATE, LIMITED LIABILITY)
Shipping Companies may be incorporated for a definite, or for an indefinite period of time. The latter option would be the norm. This information relates to private limited liability companies governed by the Merchant Shipping (Shipping Organizations – Private Companies) Regulations, 2004 (hereinafter referred to as the ‘Regulations’).
1.1 Which Shipping Companies may be incorporated?
Although companies normally require a minimum of two (2) shareholders, the Regulations make it possible for a single-member company to be incorporated, for instance, you could have a Maltese shipping company with one corporate shareholder registered in BVI. The shareholders may be individuals or even corporate bodies. Such documents are required for purposes of identification. A KYC and due diligence exercise would have to be undertaken in line with Maltese AML legislation. Shareholders may be non- resident, and there is no requirement for any Maltese resident participation in the share capital of shipping companies.
It is not the practice for shelf companies to be incorporated in Malta, but shipping companies may very expeditiously incorporated on the basis of a Power of Attorney from the subscriber(s) .The minimum issued share capital must be not less than one thousand and two hundred euro (1,200), which is invariably divided into 600 ordinary shares of EURO 2 each, which must be fully paid up on subscription. It is possible for such share capital to be denominated in any convertible currency, such as in USD. Shares in Maltese shipping companies may not be issued to bearer.
1.2 Memorandum of Association and Articles
Once such companies have the status of private companies, the Memorandum and Articles of Association must provide for a restriction on the free transfer of shares, usually in the form of pre-emption rights in favour of the other shareholders. The Regulations also allow for, and regulate, the pledging of shares in the company. Provided that a specific provision is inserted in the Memorandum or Articles of Association of the company allowing for the pledging of securities, the shares in a Shipping Company may be pledged by their holder in favour of any person as security for any obligation.
Notification of Pledge must be given to the Registrar of Companies on the appropriate form within fourteen (14) days of the granting of the pledge. Similar notification must be given upon the discharge of that pledge. The memorandum and articles of association are filed with the Registrar of Companies in the English language.
1.3 The role of the Shareholders and Directors
Matters relating to any amendment of the Memorandum or Articles of Association of the company, approval of accounts, appointment of auditors and changes amongst directors are reserved to the shareholders in general meeting. Shipping companies are usually managed by the Board of Directors.There is a minimum requirement for one (1) director. Such director may also be an individual or body corporate. There is no requirement for any Maltese resident director to be appointed to the board of directors of a shipping company. In the case of a single member company, the single member may also hold the post of director within the company.
These constitutive documents of the shipping company may provide that the directors are to have full powers of representation of the company; or they may be drafted in such a manner as to limit these powers in some shape or form, such as with regard to the disposal or mortgaging of the company’s assets. In the event that there is to be more than one director, then it would also be important to specify whether any one director may exercise the powers of representation of the company, or whether joint representation is to be provided for.
1.4 Statutory Compliance
Shipping Companies are required to file an annual return with the Registrar of Companies, as well as an annual income tax return / declaration in lieu of a tax return (as the case may be) with the Commissioner of Inland Revenue. The option to file a declaration in lieu of tax return with the Commissioner of Inland Revenue is available to shipping companies owning and / or operating a ‘Tonnage Tax Ship’; and also to shipping companies which do not yet, or which no longer, own / operate a ‘Tonnage Tax Ship’.There is no obligation to file audited accounts with such declaration. In all other cases where audited accounts are required to be filed with the Commissioner of Inland Revenue, these must be drawn up by a firm of Maltese auditors adopting international accounting standards.
In regards to the provisions relating to the filing of Accounts with the Registrar of Companies, the Regulations contain a transitory provision to the effect that such filing provisions shall only commence to apply in respect of such accounting periods as may be notified by the Minister of Shipping not being any earlier than five (5) years from the entering into force of the Regulations. To date no such notification has been made by the Minister. There is however a statutory requirement for the company to keep proper accounting records.