Закон «О коммерческих организациях» (Глава 386), Мальта

Chapter II - Changes to a company’s share capital

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 sworn application filed within the period of three months reckoned as aforesaid and satisfies the Court that due to the proposed reduction in the issued share capital the satisfaction of his claims would be prejudiced and that no adequate safeguards have been obtained from the company, 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 application 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 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

Reduction of issued share capital.

Amended by:

XXIV. 1995.362;

IV. 2003.46;

L.N.

181 of 2006;

L.N.

186 of 2006;

IX. 2008.7.

Investment companies withvariable share capital.

Amended by:

IV. 2003.47;

IX.

2003.84;

IX.

2008.8.

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.

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 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

(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 value of its shares as quoted on a regulated market or any equivalent market in a non-member State or non-EEA State 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 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.

(10)

The Minister, in consultation with the Minister responsible under the Investment Services Act, acting on the advice of the

Cap. 450.

Cap. 370.

Cap. 370.

Cap. 450.

Power to make regulations regarding cell companies.

Added by:

XVII. 1998.70. Amended by:

IV. 2003.48;

IX. 2008.9.

Cap. 403.

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;

(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.

(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 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.

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

(a)

"business of insurance" has the same meaning as assigned to it in article 2(1) of the Insurance Business Act and shall include the business of affiliated insurance as prescribed by regulations issued thereunder, the business of an insurance manager and the business of insurance broking under the Insurance Intermediaries Act;

(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

Cap. 403.

Cap. 487.

Application of article 84(10)(c) to collective investment schemes.

Added by:

IV. 2003.49.

Cap. 370.

Minister may make regulations relatingto securitisation vehicles.

Added by:

V. 2006.27.

Cap. 484.

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; and in relation to the business of insurance manager, as well as the business of insurance broking, reference to a "company" shall include reference to a partnership en commandite or similar or equivalent body corporate, the capital of which is divided into shares.

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.

84C. (1) The Minister, in consultation with the Minister responsible for finance and acting on the advice of the competent authority under the Securitisation Act, may make regulations which provide for the formation, constitution, authorisation and regulation of cell companies, and which make it possible for a securitisation vehicle to convert into a cell company and for all matters that may arise in connection therewith.

(2) For the better carrying out of the provisions of this section, and without prejudice to the generality of the foregoing, the Minister, acting as aforesaid, 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 and 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.

(3) For the purposes of this article, "securitisation vehicle" has the same meaning assigned to it in the Securitisation Act.

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 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.

1. 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.
2. Shares shall be paid up on allotment to at least twenty per cent of their nominal value in the case of a private company.
3. (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:

Cap. 484.

Increase in issued share capital and directors’ authority to issue shares.

Amended by:

IV. 2003.50.

Amount paid up onallotment of shares in a public company.

Amount paid up onallotment of shares in a private company.

Offering of shares on a pre-emptive basis on issue.

Amended by:

IV. 2003.51;

XIII. 2004.98.

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 or on a website maintained by the Registrar 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 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

89. 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, including the obligation to draw up a prospectus, shall not apply to a form of application issued -

(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 securities which do not constitute an "offer of securities to the public" within the meaning of article 2(3); or

(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; or

(d)

an offer where the shares are offered for no consideration and is made exclusively to existing shareholders, and dividends paid out in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer; or

(e)

an offer where shares are allotted to existing or former directors or employees by their employer which has shares already admitted to trading on a regulated market or by an affiliated undertaking, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer; or

(f)

shares issued on the redemption or reduction of shares of the same class already issued, if the issuing of such new shares does not involve any increase in the issued capital; or

Issue of applications for shares in or debentures of a public company to be made with a prospectus.

Amended by:

IV. 2003.52;

L.N. 391 of 2005;

IX. 2008.10.

Cap. 370.

Dating ofprospectus and matters to be stated therein.

Amended by:

L.N. 391 of 2005.

Penalty.

Amended by:

L.N. 391 of 2005.

Prospectusincluding astatement by experts.

Registration of prospectus.

Amended by:

L.N. 391 of 2005.

(g)

an offer made in connection with a take-over bid, provided that a document is available containing information which is regarded by the Registrar as being equivalent to that of the prospectus; or

(h)

an offer made in connection with or pursuant to a proposed merger, provided that a document is available containing information which is regarded by the Registrar as being equivalent to that of the prospectus.

90. (1) Every prospectus shall be dated and shall state the matters specified in Part A of the Second 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.

91. Any person 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 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.

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.

93. (1) No prospectus shall be issued unless, on or before the date of its publication as specified in article 99, a copy thereof, signed by every person named therein as a director of the company or his agent authorised in writing, has been delivered to the Registrar. Upon being satisfied that the requirements of this Chapter and Part A of the Second Schedule have been complied with, the Registrar shall register it. Such prospectus must have endorsed thereon or attached thereto any consent to the issue of the prospectus required by article 92 from any person as an expert.

(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.

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.

(3) No person shall be liable for statements made in the summary referred to in Part A of the Second Schedule to this Act, including the translation thereof, except when such statements are untrue when read together with the other parts of the prospectus.

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

Civil liability formisstatements in prospectus.

Amended by:

L.N. 391 of 2005.

Document containing offer ofshares or debentures for sale to be deemed prospectus.

Amended by:

IV. 2003.53.

Interpretation ofprovisions relating to prospectus.

Amended by:

L.N. 391 of 2005.

No allotment unless minimum subscriptionreceived.

respect of the shares or debentures had not been so 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.

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 or otherwise inaccurate or inconsistent; 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

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 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.

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 sworn application 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 sworn application within two years from the date of allotment.

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 sixth 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, indicating therein where the issuer or offeror has made available, free of charge, a paper copy of the full prospectus.

(2)

The beginning of the said sixth 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.

Effect of irregular allotment.

Amended by:

L.N.

181 of 2006;

L.N.

186 of 2006

Time of the opening of the subscription lists.

Amended by:

L.N. 391 of 2005.

Revocability of application for shares or debentures.

Allotment of shares, etc., to be dealt in on stock exchange.

Amended by:

IV. 2003.54;

IX. 2008.11.

1. 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 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.
2. (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 regulated market or on an equivalent market in a non-Member State or non-EEA State.

(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 by or on behalf of the regulated market or the equivalent market in a non-Member State or non-EEA State to the applicant for permission, within those twenty-one days.

(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.

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.

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

Operation of article 101 where prospectus offers shares for sale.

Return as to allotments.

Duty of directorson serious loss of capital.

Company may not subscribe for its own shares.

Conditions in which a company may acquire itsown shares.

Amended by:

IX. 2008.12.

Cap. 476.

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.

Chapter V - Maintenance of share capital and protection of class rights

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.

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.

106. (1) Without prejudice to the principle of equal treatment of the shareholders who enjoy the same rights in respect of the shares held by them and to any relevant provisions of the Prevention of Financial Markets Abuse Act, 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;

(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 called up 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

Acquisition of own shares by a company withoutapplication of article 106.

Amended by:

IV. 2003.55.

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.

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 repurchase 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.

(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.

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.

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.

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

Shares acquired or held in contravention of articles 106 and

107.

Conditions for acquisition by a company of its own shares where permitted by law.

Amended by:

IV. 2003.56.

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’sshares.

Amended by:

IV. 2003.57;

IX. 2008.13.

Effect of acceptance of a company’s own shares as security.

Forfeiture or surrender of shares.

Conditions for payment ofcommissions, discounts, etc.

Amended by:

IV. 2003.58

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 the amount specified in article 106(1)(e).

(4) The provisions of subarticle (1)(b) shall not apply if the company granting the financial assistance is a private company and the following requirements are fulfilled:

(a)

the Board of Directors has, after taking into account the financial position of the company and the obligations of the directors as set out in article 136A, resolved by the affirmative vote of a majority of all the directors forming the Board at the time of the particular resolution, to authorize the grant of financial assistance for a specific transaction;

(b)

an extraordinary resolution has been passed affirming the resolution taken pursuant to paragraph (a); and

(c)

a declaration in the prescribed form signed by two directors confirming that the requirements set out in paragraphs (a) and (b) have been satisfied is duly filed with the Registrar prior to the granting of the financial assistance, and the signature of one director shall suffice where the Board is composed of only one director.

1. 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.
2. (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.

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 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.

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

Application of premium received on issue of shares.

Groupreconstruction relief.

Added by:

XV. 2007.8.

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.

114A. (1) Where a company issues shares (the "issuing company") and the issuing company

(a)

is a qualifying subsidiary of another company ("the holding company"); and

(b)

allots shares

(i)

to the holding company; or

(ii)

to another qualifying subsidiary of the holding company,

in consideration for the transfer to the issuing company of non-cash assets of a company that is a member of the group of companies that comprises the holding company and all its qualifying subsidiaries (the "transferor company"),

the issuing company shall not be required in terms of article 114 to transfer any amount in excess of the minimum premium value to the share premium account.

(2)

For the purposes of this article the "minimum premium value" means the amount, if any, by which the base value of the consideration for the shares allotted exceeds the aggregate nominal value of the shares.

(3)

The base value of the consideration for the shares allotted is the amount by which the base value of the assets transferred exceeds the base value of any liabilities of the transferor company assumed by the issuing company as part of the consideration for the assets so transferred.

(4)

For the purposes of this article:

(a) the base value of assets transferred is taken as

(i)

the cost of those assets to the transferor company; or

(ii)

the amount at which those assets are stated in the transferor company’s accounting records immediately before the transfer; or

(iii) the fair market value of the assets,

whichever is less;

(b) the base value of the liabilities assumed is taken as the amount at which they are stated in the transferor company’s accounting records immediately before the transfer.

(5) For the purposes of this article the term "qualifying subsidiary" shall mean a company in which the holding company holds at least an eighty per cent equity holding. The term "eighty per cent equity holding" shall have the meaning assigned to it in article 114B(5).

114B. (1) The provisions of article 114 shall not apply when the company issuing shares ("the issuing company") has secured at least an eighty per cent equity holding in another company in pursuance of an arrangement providing for the allotment of equity securities in the issuing company on terms that the consideration for the shares allotted is to be provided:

(a)

by the issue or transfer to the issuing company of equity securities in the other company; or

(b)

by the cancellation of any such shares not held by the issuing company.

(2)

The provisions of article 114 shall not apply when the equity securities in the issuing company allotted in pursuance of the arrangement in consideration for the acquisition or cancellation of equity securities in the other company are issued at a premium.

(3)

The provisions of article 114 shall not apply where the arrangement also provides for the allotment of any shares in the issuing company on terms that the consideration for those shares is to be provided:

(a)

by the issue or transfer to the issuing company of non-equity securities in the other company; or

(b)

by the cancellation of any such shares in that company not held by the issuing company.

(4)

The provisions of this article shall not apply in cases falling under article 114A.

(5)

For the purposes of this article an "eighty per cent equity holding" means a holding of eighty per cent of the nominal value of the company’s issued equity securities:

Provided that in determining the existence of "eighty per cent equity holding" it shall be immaterial whether any of those securities were acquired in pursuance of the arrangement:

Provided further that shares held by the other company in itself shall be excluded in determining the nominal value of the company’s issued equity securities.

(6)

Where the issued share capital of the issuing company is divided into various classes of shares the requirement in subarticle

(5)

must subsist in relation to each of those classes of shares.

(7)

For the purpose of this article, shares held by a group company of the issuing company or their nominees shall be treated as if they were held by the issuing company itself.

114C. An amount corresponding to the amount representing the premiums, or part of the premiums, on shares issued by a company that by virtue of any relief under articles 114A or 114B is not included in the company’s share premium account may also be disregarded in determining the amount at which any shares or other

Takeover relief.

Added by:

XV. 2007.8.

Relief may be reflected in company’s balancesheet.

Added by:

XV. 2007.8.

Power to make further provisionsby regulations.

Added by:

XV. 2007.8.

Redeemable preference shares.

Amended by:

IV. 2003.59.

consideration provided for the shares issued is to be included in the company’s balance sheet.

114D. (1) The Minister may, by regulations published in the Gazette, make such provision as appears to him to be appropriate

(a)

for relieving companies from the requirements of article 114 in relation to premiums other than cash premiums;

(b)

for restricting or otherwise modifying any relief from those requirements provided for in this Chapter.

(2) The regulations referred to in subarticle (1) may make different provision for different cases or classes of cases and may contain such incidental and supplementary provisions as the Minister may think fit.

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 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.

(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.

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

Rights of holders of special classesof shares and changes orvariations thereof.

Amended by:

XXIV. 1995.362;

L.N.

181 of 2006;

L.N.

186 of 2006.

Numbering of shares.

Transfer of shares or debentures.

Cap. 364.

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 sworn application 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 sworn application filed under subarticle (1) and of any judgment given thereon to be served on the Registrar for registration, and the said sworn application shall, on pain of nullity, include a demand to that effect.

(4)

Article 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

1. Each share in a company shall be distinguished by its appropriate number:
2. 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 shares of the same class for the time being issued and fully paid up.
1. (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:

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.

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.

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 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

Registration oftransfer or transmission of shares or debentures.

Issue of certificates.

Share warrants.

Pledging ofsecurities.

Amended by:XXIV.1995.362;

IX. 1997.7;

IV. 2003.60;

IX. 2008.14.

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.

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.

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 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.

(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 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

Cap. 16.

Cap. 370.

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 a Maltese regulated market and in respect of which securities arrangements have been made for the maintenance by such Maltese regulated market 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 Maltese regulated market, 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 Maltese regulated market 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 (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 Maltese regulated market and the company, have the securities sold through a person duly licensed under the Investment Services Act. (b) In the case of a pledge of securities in a public company which are quoted on a regulated market other than a Maltese regulated market or on an equivalent market in a non-Member State or non-EEA State, 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 securities sold through a person duly authorised for this purpose.

(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.

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

Register of members.

Register ofdebentures.

Inspection ofregisters.

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.

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 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.

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.

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.

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.

(2)

Notwithstanding anything contained in this article, the persons beneficially entitled to a security shall be taken into account, and any nominee or any trust relationship shall be disregarded, for determining the status of the company for the purpose of Chapter XII of this Title:

Provided that the company shall not be obliged to obtain or to record any information on the number of beneficiaries and it shall be the sole duty of the trustee to inform the company of the number of beneficiaries if it appears to the trustee that, having regard to the number of beneficiaries, it may result in the aggregate number of persons interested exceeding fifty. The Registrar may at any time order any trustee to declare in writing to the company the number of beneficiaries and in such a case reference shall only be made to beneficiaries who enjoy a fixed interest in the shares under the trust.

(3)

Where a trustee holds shares in a company for the benefit of beneficiaries:

(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 they are signed only by the trustee when all the shares in the company are subscribed by the trustee;

(b)

the memorandum of association, the register of members, share certificates, returns of allotments and

Power to close registers.

Trustees and nominees.

Amended by:

XIII. 2004.99.

Cap. 364. Cap. 123.

Cap. 364. Cap. 123.

Cap. 364.

Cap. 331.

Holding of annual general meeting.

any annual return of a company may specify the number of shares held by the trustee on its own account, if any, and the amount of shares held under trusts or each trust if more than one, and the provisions of article 123(1)(a), (b) and (c) shall be construed accordingly;

(c) a resolution in writing pursuant to article 210 shall be deemed to be valid and effective if it is signed only by the trustee when all the shares in the company are subscribed by the trustee.

(4)

(a) Where a beneficial owner of shares in a company which are held by a trustee, 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 Transfer Act, and for the purposes of article 5(1) of the Income Tax Act.

(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.

(c)

For the purposes of article 49 of the Duty on Documents and Transfers Act, "transferor" and "transferee" in a transfer of shares inter vivos shall be deemed to include a trustee acting on behalf of either the transferor or the transferee of the beneficial ownership of such shares, or of both such transferor and transferee.

(5)

In this article:

"beneficial owner" means the person beneficially entitled to the shares under a trust or a fiduciary agreement;

"trustee" shall mean a person who may act as a trustee in accordance with the Trusts and Trustees Act and shall include any fiduciary holding shares on behalf of another person.

(6) 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.

Chapter VII - Meetings and Resolutions

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.

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.

(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.

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.

Convening ofextraordinary general meeting onrequisition.

Length of noticefor calling general meetings.

General provisionsas to meetings and votes.

Amended by:

L.N. 425 of 2007.

Powers of court to order meeting.

Proxies.

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 euro of stock held by him unless otherwise provided in the terms of issue of such shares or stock.

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.

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.

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; 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.

Right to demand apoll.

Extraordinary and ordinaryresolutions.

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.

(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

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.

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;

(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.

137. (1) Every public company shall have at least two directors.

(2) Every private company shall have at least one director, and

Power of company to borrow money,hypothecate or charge its undertaking, etc.

Amended by:

IV. 2003.62.

General duties of directors.

Added by:

IV. 2003.63.

Directors.

Amended by:

IV. 2003.64.

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 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.

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.

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 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

Company secretary.

Amended by:

IV. 2003.65.

Appointment of directors.

Removal of directors and casual vacancies.

Amended by:

IV. 2003.66.

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.

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 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 reelection, 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.

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.

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 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.

Representation ofthe company.

Disqualificationfor appointment as director or company secretary.

Amended by:

IV. 2003.67.

Directors competing with company.

Amended by:

IV. 2003.68.

Prohibition of loans, etc. to directors.

Duty of director to disclose interest in a contract with company.

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.

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.

(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.

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.

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.

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.

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 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.

Return as to changes among directors, company secretary and in representation of company.

Joint and several liability ofdirectors for breach of duty.

Provisions as to liability of officers and auditors.

Minutes of proceedings.

General duty of officers of a company.

Amended by:

IV. 2003.69.

Appointment of auditors.

(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.

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.

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

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 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.

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).

1. An auditor must at all times adhere to the rules on independence and professional ethics set out in the Code of Ethics and any other regulations, directives or guidelines issued from time to time in terms of the Accountancy Profession Act.
2. (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

Filling of casual vacancies.

Rules on auditor independence and professional ethics.

Substituted by:

IX. 2008.15.

Cap. 281.

Right toinformation.

Amended by:

L.N. 425 of 2007.

(b) is misleading, false or deceptive in a material particular;

shall be guilty of an offence and liable on conviction to a fine (multa) of not more than four thousand and six hundred and fifty- eight euro and seventy-five cents (4,658.75) 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 155. A company’s auditors shall be entitled company meetings.

(a)

to receive all notices of, and other communications 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.

Amended by:

IX. 2008.16;

III. 2009.22.

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)

There shall also be stated in the notes to the accounts separately the total fees charged by the auditor for:

(a)

other assurance services;

(b)

tax advisory services; and

(c)

other non-audit services.

(6) The provisions of subarticle (5) shall not apply:

(a)

where an undertaking is included within the consolidated accounts of another undertaking and the information required by subarticle (5) is provided in the notes to such consolidated accounts; or

(b)

to a company which on its balance sheet date does not exceed the limits of two out of the three criteria set out in article 185(1)(a). Notwithstanding the provisions of this paragraph, the Accountancy Board established in terms of the Accountancy Profession Act may request the information specified in subarticle (5) to be delivered to it within such period as it may establish for that purpose.

(7)

The provisions of subarticle (6) shall not apply to a public interest entity as defined in the Accountancy Profession Act.

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):

Provided that an auditor may only be removed from office as aforesaid if there is a proper ground for dismissal:

Provided further that divergence of opinions on accounting treatments or audit procedures shall not constitute a proper ground for dismissal.

(2) (a) 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. The company shall also, within the same period, deliver to the Board a statement by the company giving an adequate explanation of the reasons for the removal of the auditor. If a company fails to give the aforesaid notice to the Registrar or the aforesaid statement to the Board, every officer of the company who is in default shall be liable to a penalty in respect of each default, and for every day during which the default continues, to a further penalty.

(b) For the purposes of this subarticle, the Board shall have the meaning assigned to it by the Accountancy Profession Act.

Cap. 281.

Removal of auditors.

Amended by:

IX. 2008.17.

Cap. 281.

Rights of auditors who are removed or not reappointed.

Resignation ofauditor.

Amended by:

XV. 2007.9;

IX. 2008.18.

Cap. 281.

(3)

Nothing in this article shall be taken as depriving a person 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.

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 toolate forit 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.

159. (1) Without prejudice to the notification obligations in terms of article 17 of the Accountancy Profession Act, an auditor of a company may resign his office by depositing a notice in writing to that effect at the company’s registered office. The notice shall not be effective unless it is accompanied by the statement required by article 161.

(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 give notice thereof 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.

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.

Rights of resigningauditor.

Statement by person ceasing tohold office as auditor.

(7) An auditor who has resigned has, notwithstanding his 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.

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 -

(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.

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

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 subparagraph (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.

Failure to complywith article 161.

Keeping of accountingrecords.

Amended by:

L.N. 425 of 2007.

Cap. 13.

(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.

(5)

Notwithstanding the provisions of article 26 of the

Cap. 13. 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 eleven thousand and six hundred and forty-six euro and eighty-seven cents (11,646.87), 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 periodand accountingreference 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 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.

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

Alteration of accountingreference period.

Amended by:

IV. 2003.70.

Consequence ofgiving notice underarticle 165.

first occasion on which that date falls or fell after the 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.

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 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.

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 in accordance with generally accepted accounting principles and practice:

Provided that the disclosures prescribed in indents (m), (o) and (p) of paragraph 31 of Part III of the Third Schedule shall be complied with.

(3)

The individual accounts shall give a true and fair view of the company’s assets, liabilities, financial position and profit or loss.

(4)

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.

(5)

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.

168. (1) 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.

(2) Banks and financial institutions shall follow the Banking Rules and Financial Institutions Rules 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 and any other Rules issued by the competent

General provisions as to content and form of individual accounts.

Amended by:

IV. 2003.71;

IX. 2008.19.

Annual accounts of banks and financial institutions.

Amended by:

XVII. 1998.70;

IV. 2003.72;

IX. 2008.20.

Cap. 371.Cap. 376.Cap. 403.

Cap. 371.Cap. 376.

Cap. 403.

Accounts of investment company withvariable capital.

Amended by:

IV. 2003.73;

IX. 2008.21.

Duty to prepare consolidated accounts.

authority in this regard.

(3)

Insurance companies shall comply with regulations made under the Insurance Business Act in respect of the form and content of their annual accounts and any rules as may be issued by the competent authority from time to time.

(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.

169. (1) 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.

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 -

(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.

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) Without prejudice to articles 170 and 172 to 174, and to the provisions of article 2(2) and the Ninth Schedule in so far as may be relevant to articles 170 and 172 to 174, the consolidated accounts shall be drawn up in accordance with generally accepted accounting principles and practice:

Provided that the disclosure prescribed in indent (m) of paragraph 31 of Part III of the Third Schedule shall apply to the consolidated accounts as if the undertakings included in the consolidation were a single company and the disclosures prescribed in sub-paragraphs (7) and (8) of paragraph 22 of the Fourth Schedule shall apply to the consolidated accounts.

Form and content of consolidated accounts.

Amended by:

IV. 2003.74;

IX. 2008.22.

Financial holding companyexemption.

(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)

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.

(5)

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.

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,

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.

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(1)(a):

Provided that none of the undertakings to be consolidated is a company the securities of which have been admitted to official listing on a regulated market or on an equivalent market in a non-Member State or non-EEA State.

(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 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.

Consolidated accounts - size exemption.

Amended by:

IV. 2003.75;

IX. 2008.23.

Exemption for174. (1) A parent company shall be exempt from the parent companies

requirement to prepare consolidated accounts if it is itself a

included in

accounts of larger subsidiary company in the following cases - groups.

Amended by:(a) where the said parent company is a wholly-owned

IV. 2003.76; subsidiary company of an immediate parent company

IX. 2008.24.

formed and registered under the law of a Member State or an EEA State; or

(b) where more than fifty per cent 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 not less than ten per cent 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 a Member State or an EEA State, 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 a Member State or an EEA State;

(b)

that in the case of a parent company which is itself a subsidiary company of a parent undertaking not registered under the law of a Member State or an EEA State, 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 required 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 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 a regulated market or on an equivalent market in a non-Member State or non-EEA State.

(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).

175. (1) Individual accounts prepared in terms of article 167 shall, in the notes to the accounts, disclose the information required by generally accepted accounting principles and practice together with such other information required to be disclosed therein by this Act.

(2) Consolidated accounts prepared in terms of article 170 shall, in the notes to the accounts, disclose the information required by generally accepted accounting principles and practice together with such other information required to be disclosed therein by this Act.

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

Disclosure required in notes to accounts.

Substituted by:

III. 2009.23.

Approval andsigning of annual accounts.

Contents of the directors’ report.

Approval and signing ofdirectors’ report.

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.

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 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.

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.

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 generally accepted auditing standards 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, 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,

Auditors’ report.

Amended by:

IV. 2003.77;

IX. 2008.25.

Cap. 281.

Persons to whom a copy of the accounts of a company are to be sent.

Amended by:

IV. 2003.78.

where the office of auditor is held by an audit firm, to the signature of a principal authorised to sign on behalf of such audit firm.

(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 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 "audit firm", "generally accepted auditing standards" and "principal", shall have the meaning assigned to them in the Accountancy Profession Act or regulations issued in terms thereof.

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.

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.

(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.

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 business interests to

Directors to lay accounts before the general meeting.

Period for layingand approval of accounts.

Amended by:

XV. 2007.10.

Copies of accounts to be provided to Registrar.

Amended by:

IV. 2003.79;

IX. 2008.26.

the extent of more than ninety percent 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 for registration 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;

the period allowed in relation to that accounting period shall be eighteen months:

Provided that for the purpose of this subarticle, interests or holdings held in companies formed and registered in Malta or in companies referred to in article 384, and income derived therefrom, shall be ignored for the purpose of determining whether a company carries on business or has business interest outside Malta as aforesaid:

Provided further that for the purpose of article 387 the provisions of this subarticle shall apply only by reference to the oversea company’s operations in Malta as if such operations had been conducted by a separate company formed and registered in Malta under this Act.

(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

(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.

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, and without 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 and all the notes to the accounts relevant for the purposes of that balance sheet, and without a directors’ report and an 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 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)

Article 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

Annual return.

Substituted by:

IV. 2003.80. Amended by:XV. 2007.11.

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.

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 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. Where the annual return is forwarded to the Registrar by electronic means, in addition to the manner of signing laid down in this subarticle, such annual return may be signed by an individual specifically authorised for such purpose by the memorandum, or by a resolution of the board of directors, or by an extraordinary resolution of the company. The signature of such annual return shall be by means of an electronic signature duly recognised by the Registrar.

(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.

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: two million and five hundred and sixty-two thousand and three hundred and ten euro and seventy-four cents (2,562,310.74);

-turnover: five million and one hundred and twenty-four thousand and six hundred and twenty-one euro and forty-eight cents (5,124,621.48);

-average number of employees during the accounting period: fifty;

shall in this Chapter 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: forty-six thousand and five hundred and eighty-seven euro and forty-seven cents ( 46,587.47 );

-turnover: ninety-three thousand and one hundred and seventy-four euro and ninety-four cents (93,174.94);

-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 balance sheet:

Provided that a company may instead choose to present its resulting abridged balance sheet as determined in accordance with the aforesaid provisions of this subarticle using the terminology and

Exemptions for small companies.

Amended by:

IV. 2003.81;

L.N.

391 of 2005;

L.N.

425 of 2007;

IX. 2008.27.

layouts in accordance with generally accepted accounting principles and practice, and in such case the aforesaid provisions of this subarticle shall apply mutatis mutandis;

(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":

Provided that a company may instead choose to present its resulting abridged profit and loss account as determined in accordance with the aforesaid provisions of this subarticle using the terminology and layouts in accordance with generally accepted accounting principles and practice, and in such case the aforesaid provisions of this subarticle shall apply mutatis mutandis.

(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:

Provided that companies referred to in subarticle (1) may

instead draw up abridged notes to the accounts in accordance with

generally accepted accounting principles and practice by:

(i)

omitting, where relevant, any corresponding disclosures resulting from compliance with generally accepted accounting principles and practice equivalent to those set out in indents (d) and (g) to (o) of paragraph 31 of Part III of the Third Schedule; and

(ii)

if generally accepted accounting principles and practice require the disclosure of the information specified in indent (j) of paragraph 31 of Part III of the Third Schedule, disclosing in the notes to the accounts such information as specified in indent (j) of the said paragraph 31 as a 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: two million and five hundred and sixty-two thousand and three hundred and ten euro and seventy-four cents (2,562,310.74) net or three million and seventy-four thousand and seven hundred and seventy-two euro and eighty-nine cents ( 3,074,772.89 ) gross;

- aggregate turnover: five million and one hundred and twenty-four thousand and six hundred and twenty-one euro and forty-eight cents (5,124,621.48) net or six million and one hundred and forty-nine thousand and five hundred and forty-five euro and seventy-seven cents ( 6,149,545.77 ) 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.

(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.

Share capital in any convertible currency.

Amended by:

IV. 2003.82;

L.N. 425 of 2007.

(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.

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 euro shall be calculated on the basis of the euro 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.

187. (1) A company shall present its annual accounts in the same currency as that of its share capital.

(2)

Where the annual accounts of a company are presented in a currency other than euro, there shall be stated on the balance sheet of the company the exchange rate between the currency used and euro 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 euro 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 euro by using the exchange rate referred to in subarticle (2).

(4)

Annual accounts shall be published in the currency in which they are presented. They may also be published in both the currency in which they are presented 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 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.

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 present its annual accounts in a different currency from that of its share capital, regulate the

Accounts in any convertible currency.

Amended by:

IV. 2003.83;

L.N. 425 of 2007;

IX. 2008.28.

Power of Minister to make regulations altering accountingrequirements.

Amended by:

IV. 2003.84;

IX. 2008.29.

Consequentialprovisions toarticle 188.

Court order to make good failureto lay or deliver accounts.

Application toother commercial partnerships.

Amended by:

IV. 2003.85.

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 generally accepted accounting principles and practice or generally accepted auditing standards.

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.

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,

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.

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

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);

(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

Certain distributions prohibited.

Distributions by public companies.

Other distributions by investmentcompanies withfixed share capital.

Amended by:

IV. 2003.86.

IX.

2003.85;

IX.

2008.30.

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.

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

(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.

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 a regulated market; 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 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

(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

Cap. 450.

Extension of article 194 to other companies.

Treatment of development costs.

Distribution to be justified by reference to company’s accounts.

compliance with this Chapter, in respect of any accounting period, more than fifteen per cent of the income it derives from securities.

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.

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 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.

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.

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 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

Requirements for last annual accounts.

Requirements for interim accounts.

Amended by:

IV. 2003.87.

Requirements for initial accounts.

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.

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 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.

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)

Article 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.

1. 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.
2. 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 paragraph 28 of the said Third Schedule, shall be treated as a realised loss.
1. 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 -
1. for the purpose of determining the lawfulness of the distribution in accordance with this Chapter, whether before or after the distribution takes place; and
2. 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.
3. 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

Method of applying article 197 to successive distributions.

Treatment of assets in the relevant accounts.

Distributions in kind.

Consequence ofunlawful distribution.

Obligations imposed apart from article 204 not to be prejudiced.

Saving for provision inarticles operative before 1st January,1995.

Interpretations forthe purposes of thisChapter.

Saving for otherrestraints on distribution.

Definition.

Amended by:

IV. 2003.88.

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.

1. 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.
2. 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.
3. (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.

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

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.

1. 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:
2. 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.
1. (1) A private company shall have the status of an exempt company if the conditions mentioned in subarticle (2) are contained in its memorandum or articles.
1. The conditions required by subarticle (1) are
1. that the number of persons holding debentures of the company is not more than fifty; and
2. 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 determined by persons other than the directors, members or debenture holders thereof.
1. 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

Resolutions in writing.

Amended by:

IV. 2003.89.

Exempt company.

Single member companies.

Amended by:

IV. 2003.90.

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.

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 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.

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 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.

Change of status of company.

(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

(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.