Empowering Malta’s Next Generation of Entrepreneurs: The Companies Act (Youth Enterprise) Regulations 2026

A New Beginning for Young Innovators

The Companies Act (Youth Enterprise) Regulations, 2026 (the “Regulations”) were published on 12 March 2026 through S.L. 56.2026. These Regulations introduce the concept of the ‘Youth Enterprise’, a new company structure designed specifically for young people eager to turn their ideas into reality by providing them with a practical and structured way to engage in business while maintaining appropriate safeguards and mentorship.

Setting Up a Youth Enterprise

Who Can Start One?

A Youth Enterprise can only be set up by individuals who meet all of the following criteria:

· Natural persons (not companies or partnerships)

· Aged 16 or 17

· Resident in Malta

· Acting in their own name

Step 1: Drafting the Memorandum of Association

The Youth Enterprise must begin with a Memorandum of Association, following the model found in Annex I of the Regulations.

(a) The Name

The name must include either the words “Youth Enterprise” or the abbreviation “YE”.

(b) The Registered Office and Email Address

The registered office address is the Youth Enterprise’s official address for receiving correspondence and notices. It’s essential that the company has real and reliable access to this address since official notifications, opportunities, and regulatory correspondence will be sent here. Missing important letters could lead to unnecessary complications, but maintaining access ensures smooth communication and compliance.

Likewise, the electronic mail address serves as the company’s official email for all digital correspondence. It should be regularly monitored since official communications or filing reminders may be sent electronically by the Malta Business Registry (MBR) or other authorities.

(c) The Objects of the Enterprise

This outlines the purpose and intended business activity, such as, for example, producing or selling a product, offering a service, or importing goods.

Youth Enterprises cannot be established as holding companies, meaning they may not exist solely to hold assets or investments.

(d) The Share Capital

One major benefit is the reduced capital requirement. The minimum share capital is just €100, compared to €1,165 for a standard private company.

The Memorandum must also outline the division of shares, their nominal value, and allocation to each member as specified below.

(e) The Members

The names of all founding members must be included in the Memorandum.

(f) The Mentor

Each Youth Enterprise must appoint a mentor whose details are listed in the Memorandum.

To qualify as a mentor, a person must:

· Be at least 25 years old

· Reside in Malta

· Have a minimum of five years’ experience in a commercial area (such as finance, sales, corporate, management, or legal work)

· Not be listed in the register under the Protection of Minors (Registration) Act; and

· Be approved by the MBR and registered in the official register of mentors.

Step 2: Submitting the Memorandum

To incorporate, the following documents must be submitted to the MBR:

· The signed Memorandum of Association

· Proof of paid-up share capital

· A parental declaration of consent for each minor member

· The mentor’s appointment form

· A return listing member and mentor details

· Proof of residence for members and guardians

· A declaration by members confirming they are not involved in any other competing company or Youth Enterprise

Step 3: Registration and Certification

Once the MBR reviews and registers the documentation, it will issue a Certificate of Registration, officially bringing the Youth Enterprise into existence.

Key Benefits

Reduced Share Capital Requirement: Ensuring Minimum Risk for Youths

Youth Enterprises benefit from a significantly reduced minimum share-capital requirement. Whilst the Companies Act mandates a minimum share capital of €1165

for standard private limited liability companies, the Regulations provide for a minimum share capital of just €100.

What does this Mean?

‘Limited liability’ means each member is only responsible for the company’s debts up to the amount they invested (here, up to €100). This creates a safe environment for young founders to learn entrepreneurship without significant personal financial risk.

(Note: This protection can be lifted only in extreme cases, such as fraud or wrongful trading, where the ‘corporate veil’ may be pierced.)

Maximum Share Capital

The maximum authorised share capital for a Youth Enterprises is capped at €20,000.

Simpler Account Procedures

Youth Enterprises enjoy simplified annual reporting obligations. Instead of preparing full statutory accounts, founders will be required to submit ‘basic accounts’ annually, following clear guidance from the MBR (which are yet to be published).

Lighter VAT Obligations

Youth Enterprises qualify as Small Enterprises under Article 11 of the VAT Act. This means they do not charge VAT on sales, but they also cannot reclaim VAT paid on purchases.

Importantly, these enterprises submit one simplified annual declaration instead of quarterly VAT returns, easing the administrative burden.

Registration Fee Exemptions

Registration and annual fees are waived unless the Youth Enterprise’s authorised share capital exceeds €1,000, making incorporation affordable.

The Mentor: Guidance without Control

Every Youth Enterprise must have a mentor who serves as a guide and advisor. The mentor provides

(a) Counsel on the strategic planning and operational execution of the business;

(b) Practical knowledge regarding fundamental business concepts;

(c) Assistance with the development of entrepreneurial and leadership skills;

(d) Monitoring of progress against business goals, plans and projections;

(e) Feedback on financial analysis and reporting;

(f) Advice on compliance with applicable laws and regulations;

(g) Assistance with identifying and resolving significant operational challenges;

(h) Motivation, construction criticism and ethical role modelling.

While the mentor provides important oversight, they do not take part in daily management, decision-making, or voting, except when needed to resolve a deadlock. Furthermore, the mentor is restricted from taking part in the equity of the Youth Enterprise by the model Memorandum of Association.

If a mentor steps down, the MBR must be notified within three (3) working days, either by the Youth Enterprise or, failing that, by the mentor themselves.

Duties and Restrictions

Mandatory Training

Each member involved in the Youth Enterprise must attend a minimum of twenty (20) hours of training per year on business, compliance or financial literacy. The training may be held physically or virtually.

The Training Return

The members must submit a Training Return every six (6) months to the Malta Business Registry.

Employment Restrictions

Youth Enterprises may not employ staff directly. This keeps the focus on learning and teamwork among founders.

Dividend Distribution

The Youth Enterprise may only distribute dividends following a recommendation by the mentor.

Conversion Upon Turning 18

Once all members reach 18, they must apply to convert the Youth Enterprise into a standard company or other commercial partnership regulated by the Companies Act.

If they fail to do so, the Registrar may inquire whether the business is still active. Continued inactivity or failure to respond could lead to the Youth Enterprise being struck off the register, with its assets reverting to the Government of Malta.

Shares and Governance

Voting Rights: Ensuring Teamwork and Inclusion

Unlike in standard private limited liability companies where voting rights are normally attached to the number of shares (with voting rights) held, each member in the Youth Enterprise has one equal vote, regardless of how many shares they hold. This ensures all voices are valued equally and encourages collaboration, a key principle of the Youth Enterprise framework.

Dividends and Other Rights

While voting rights are equal, other entitlements like dividends may still be determined based on the number of shares held or as agreed in the company’s Memorandum and Articles of Association.

Future Legal Considerations

The Regulations do not yet detail how the transition to an adult company will occur, or whether share allocations upon conversion should follow a pro-rata structure. Future guidelines may clarify these aspects.

How Zeta Can Help

At Zeta, we’re passionate about fostering the next generation of Maltese entrepreneurs. We offer free consultations to mentors and young founders of Youth Enterprises, helping them draft their documents, choose a business structure, and understand their legal obligations.

If you’re ready to launch your Youth Enterprise, reach out to us today for expert support and guidance.