The Companies (Amendment) Bill 2026: A New Nexus Test, Digital Share Registers and Wider Reform of Malta's Companies Act

Background

The Companies (Amendment) Bill (the 'Bill') was tabled before the Maltese Parliament as Bill No. 7 of the Fifteenth Legislature and debated at its first reading on 20 July 2026. The Bill would amend a wide range of provisions of the Companies Act (the 'Act'), including:

• the introduction of a nexus requirement;
• decentralised share registers;
• corporate directors on single member companies;
• extension of the simplified merger procedure to new case scenarios;
• simplified share buyback requirements for private companies;
• relaxation of capital maintenance requirements for private companies;
• stronger creditor protection against pre-dissolution fraudulent acts;
• a revision of the preventative restructuring provisions;
• an update to certain accounting rules, including the introduction of a methodology to value non-cash distributions to shareholders;
• the introduction of a new residential address register;
• the introduction of written resolutions in lieu of general meetings for public companies; and
• other minor changes.

A New Requirement: Nexus to Malta

The Rule

The Bill would require every company to satisfy at least one of the following conditions, both on incorporation and throughout its existence:

• at least one director is resident in an EU Member State;
• the company secretary is a licensed CSP;
• a Maltese warranted auditor is appointed to audit the company's financial statements;
• the company is incorporated and serviced by a licensed CSP;
• twenty-five per cent or more of the shares in the company are held by a fiduciary or mandatary authorised under the Trusts and Trustees Act;
• the company holds a bank account with a credit, payment or financial institution licensed by the MFSA;
• at least half of the beneficial owners are resident in Malta;
• the company holds a licence issued by a regulatory authority in Malta; or
• the company is a subsidiary or holding company of another company that satisfies the conditions set out above.

Most companies serviced from Malta will already meet at least one of them. The practical exposure lies with companies administered entirely from outside Malta, which will need to review their arrangements against the list.

Two Points Requiring Clarification

The Appointment of a Maltese Warranted Auditor

The timing of the auditor condition is unclear. It should be confirmed whether a company may be incorporated on the basis that it will appoint a Maltese warranted auditor as its first auditor, or whether the appointment must be in place before incorporation. If the latter is intended, the Bill should explain how that appointment is to be effected in practice, given that the company would not yet exist.

Reliance on a Subsidiary or Holding Company

The subsidiary and holding company limb is also ambiguous. It should be confirmed whether the related company must satisfy all of the preceding conditions or only one of them. If only one is required, the wording should be amended to refer to another company that satisfies 'any of' the conditions.

Transitional Arrangements

Companies already in existence when the Bill comes into force would be given six months to comply. A company that fails to do so within that period would be deemed not to be in operation, and the Registrar would strike its name off the register. Given that consequence, existing structures should be reviewed well before the six-month window closes rather than at the end of it.

Decentralised Share Registers: Bullet-Proofing the Oracle

Removal of the Register and Certificate Requirements

The Bill proposes to remove the obligation to maintain and update a share register and to issue share certificates where the shares concerned are held in book-entry form.

Book-entry form is defined as the recording of ownership and transfers of shares by way of entries in an electronic record maintained either by a central securities depository or by a distributed ledger.

What is a Distributed Ledger?

A distributed ledger is a shared record maintained simultaneously by a network of participants rather than by a single custodian. Entries are grouped and added sequentially, and each new entry is cryptographically linked to those before it, so the history cannot be altered without the change being apparent. Since every participant holds a synchronised copy, there is no single master version to be lost, mislaid or quietly rewritten. A blockchain is the best-known example of a distributed ledger.

A Welcome Development

The introduction of the distributed ledger register is a positive step.

The first benefit is administrative. Transfers are reflected in the register as they are executed, which removes a layer of manual updating and the discrepancies that follow from it.

The second, and more important, benefit is legal certainty. A share register is only as good as the confidence one can place in it. Where the register is maintained on a distributed ledger, the sequence of entries is fixed and verifiable, so the question of who owned what, and when, becomes a matter of record rather than reconstruction. That reduces the scope for disputes over title and simplifies the due diligence that precedes any transaction in the shares.

The advantages are most obvious for public companies, where ownership changes frequently and where the identity of the holder at a particular moment carries direct financial consequences. On a dividend record date, for example, an accurate real-time register makes it materially easier to establish who is entitled to payment and to avoid double payment.

Looking further ahead, the same infrastructure opens the door to the tokenisation of shares, where the entitlement itself is represented on the ledger.

Corporate Directors and Single-Member Companies

Body Corporate Directors of Exempt Companies

The Bill proposes amending the additional qualifying conditions for exempt companies, including single-member companies, to remove the restriction preventing a body corporate from acting as director. If the Bill passes, corporate entities will be eligible to sit on the boards of exempt and single-member companies.

Single-Member Companies: Greater Flexibility, Fewer Obligations

Three proposed changes work in the same direction.

First, the single-member form would no longer be limited to private exempt companies: all private companies, whether exempt or not, could have a sole shareholder.

Second, the requirement to notify the Registrar on becoming a single-member company would be removed.

Third, single-member companies would no longer be confined to natural person directors.

Merger Provisions Update

Cells Treated as Separate Companies for Mergers

For the purposes of amalgamations, each cell of a cell company, and the non-cellular part in which non-cellular assets are held, would be deemed a separate company with its own legal personality.

This is a significant clarification, because it confirms that two cells may amalgamate directly. At present, combining cells requires a transfer of cellular assets or a reorganisation or winding up of the cells concerned.

Wider Access to the Simplified Merger Procedure

The simplified merger procedure is currently available only where the acquiring company holds all the shares and all the securities carrying voting rights in the companies being acquired. The Bill would extend it to two further situations:

• Common Ultimate Beneficial Owner: where one person holds, directly or indirectly, all the shares and voting securities in both the acquiring company and the companies being acquired; and
• Identical Shareholdings: where the issued share capital of the acquiring company and of the companies being acquired is held by the same members in the same proportions.

Share Buyback Provisions Update

Removal of Net-Asset Test for Private Companies

Article 106 of the Act governs share buybacks. Sub-article (1) permits a company to acquire its own shares, otherwise than by subscription, only where:

• the memorandum and articles allow it;
• the shareholders have authorised the acquisition, and its terms, by resolution;
• the nominal value of the shares acquired and held by the company does not exceed 50% of the issued share capital;
• the buyback would not reduce the company's net assets below the aggregate of the issued share capital and undistributable reserves;
• the buyback is financed out of the proceeds of a fresh issue of shares or out of profits available for distribution;
• the shares acquired are fully paid up; and
• the buyback does not leave the company as the only holder of the ordinary shares.

The Bill proposed to confine the net-asset condition to public companies. Private companies would therefore no longer be required to test a buyback against the aggregate of issued share capital and undistributable reserves.

Shares Acquired for Distribution to Employees

The Act already exempts a company from the shareholder-authorisation condition where shares are acquired for distribution to employees, provided they are distributed within one year of acquisition.

The Bill proposes to clarify that where such shares are not distributed within one (1) year of their acquisition, the should be cancelled within six (6) months from the lapse of one (1) year by extraordinary resolution

Capital Maintenance Provisions Update

Additional Flexibility in Acquiring Shares in Parent Company for Employees

Currently, Article 110 prohibits a company from holding shares in its parent company and from providing financial assistance to any person for the acquisition of shares in the company or in its parent.

Sub-article (2) provides an exception to this rule where:

(i)   the transaction is effected with a view to acquire shares for the company’s employees; and

(ii) the transaction will not reduce the net assets below the issued share capital plus undistributable reserves of the company.

The Bill proposes to restrict the application of the second requirement to public companies only.

Reducing Restrictions on Private Companies Taking on Own Shares as Security

Article 111 currently provides that where a company accept its own shares by way of security, that security shall be treated as an acquisition by the company of its own shares and the relevant rules and restrictions are to apply.

The Bill proposes to restrict the application of Article 111 to public companies, effectively removing private companies from its scope and thus, reducing the restrictions on private companies accepting their own shares as security in transactions.

This relaxation deserves scrutiny. The net-asset and security-related conditions exist to protect creditors, and confining them to public companies leaves private company creditors relying on the general duties of directors and on the insolvency clawback provisions.

Dissolution

The Bill makes a number of amendments to the dissolution provisions. Two are of particular practical significance, and both strengthen creditor protection.

Longer Clawback for Transactions with Related Parties

Currently, the Act deems any transaction at an undervalue, or any preference given by a company within six months before the date of dissolution, to be a fraudulent preference and void, unless the beneficiary proves that they did not know the company was likely to be dissolved by reason of insolvency.

The Bill proposes extending that period to twenty-four months where the transaction or preference is in favour of a related person or related entity.

Removal of the Twelve-Month Limit on Officer Liability in Case of Fraudulent Transactions

Where an officer or adviser of the company has been party to fraudulent transactions within the twelve months preceding dissolution, the Act makes them liable on conviction to a fine of up to EUR 232,937, to imprisonment of up to five years, or to both.

The Bill proposes removing the twelve-month limitation, so that involvement in fraudulent transactions of the company could be prosecuted without reference to how long before dissolution it occurred.

Removal of the Company Recovery Procedure

The Bill also considers removing the Company Recovery Procedure under Article 329B of the Act from insolvency law. Preventive restructuring would instead follow the procedures set out in the Pre-Insolvency Act.

Accounting Rules Update

Updated Definitions

The Bill would amend the definitions of 'distribution', 'liabilities' and 'realised loss' so that they are interpreted in line with generally accepted accounting principles and practice, rather than by reference to the Third Schedule to the Act as at present.

Valuing Non-Cash Distributions

A new article would set out how the value of a distribution of a non-cash asset is to be determined. The methodology turns on the 'book value' of the asset, defined as the amount stated in the relevant accounts or, where no amount is stated, zero.

Where the company receives consideration for the transfer that is equal to or greater than book value, the deemed distribution is nil, and the company's profits available for distribution are instead increased by the excess.

Where the consideration is less than book value, or where no consideration is received, the deemed distribution is the amount by which book value exceeds the consideration.

Capitalisation of Undistributable Deserves

The Bill would allow a company to apply undistributable reserves in paying up unissued shares, to be allotted to shareholders as fully paid bonus shares.

Other Minor Changes

Maintaining Electronic Documentation

The Bill would introduce a general provision allowing any document that must currently be created and retained in physical form to be created and retained electronically instead.

A New Register: The Residential Addresses Register

The Bill proposes the introduction of a new register, requiring companies to keep a register of the residential addresses of its officers and shareholders, including their names, usual residential address and email address. Any change would have to be notified to the Registrar within fourteen days by submitting an updated copy of the register.

Importantly, the Bill clarifies that the Registrar shall store the register for regulatory purposes only and that it shall not be open to public inspection.

Public Companies: Written Resolutions in Lieu of General Meetings

For private companies, the Act already allows a unanimous written resolution to take effect as if it had been passed at a general meeting, including in the case of the annual general meeting. Where that route is used, the auditor's right to attend and be heard at the meeting does not apply.

The Bill proposes extending the same facility to public companies, subject to two safeguards. A written resolution could not be used to remove a director or auditor before the expiry of their term, nor where it would deprive the auditor of the right to attend and be heard on any business concerning them as auditor.

Transfer of Shares Causa Mortis on Listed Companies

The Companies Act requires companies to deliver notice of transfer causa mortis to the Registrar within fourteen (14) days from the date when the transfer is registered with the company. It then extends this deadline to ninety (90) days in the case of publicly listed companies.

The Bill proposes to completely exclude the requirement of publicly listed companies to notify the Registrar of any transfer causa mortis.

Change in Permitted Company Name Abbreviation

The Bill would change the permitted abbreviation from 'ltd.' to 'ltd', dropping the full stop.

Notification of an Auditor's Resignation

At present only the company may notify the Registrar that an auditor has resigned. The Bill would allow the auditor to give that notification directly, which removes the auditor's dependence on the company to place the resignation on the record.

Investigative Powers

Finally, the Bill proposes a number of amendments to the powers of investigation relating to the affairs of companies and to commercial partnerships.

Next Steps

The Bill has so far only had its first reading, and the two points flagged above, the timing of the auditor condition and the scope of the subsidiary or holding company limb, are the kind of drafting ambiguities typically addressed as a bill moves through the next stage.

Companies and their advisers should nonetheless begin reviewing existing structures against the nexus conditions now, given the consequence of removal from the register for those that fail to comply within the transitional period.

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