Malta

On 27th May 2024, the First Hall Civil Court (Commercial Section) (the ‘Court’) delivered its judgement in the names of ‘Usta Holdings Inc. vs. Ir-Reġistratur tal-Kumpaniji’ whereby the plaintiff, as the sole shareholder of Usta Maritime Co. Ltd (C 43902) (the ‘Company’), requested the Malta Business Registry (the ‘Registrar’) to have the name of the Company restored and placed back on the register after it was previously struck off for failure to abide by its obligations. Facts of the Case The Company was struck off the register on 10th December 2020, by order of the Registrar by virtue of regulation 9(3) of Subsidiary Legislation 386.19, namely the Companies Act (Register of Beneficial Owners) Regulations (the ‘Regulations’). Said Regulations dictate that if a company fails to provide information on its beneficial ownership, the Registrar has the right to inform a company of its default by means of a letter as indicated under regulation 9(2). If said information is not provided to the Registrar within one month from said letter, the Registrar may inform the company and publish a notice in the Government Gazette that upon the expiration of three months from the date of the last publication of said notice, the company’s name shall, unless cause is shown to the contrary or the Registrar is satisfied that there are sufficient grounds not to proceed with the striking off, be struck off the register. Following the striking off of a company as described under regulation 9(3) of the Regulations, all assets held by the company will eventually devolve onto the Government of Malta. The main asset of the Company was a pleasure yacht named the ‘m.y. BEY’ (holder of official number 11767), valued at around eight hundred and twenty thousand Euros (€820,000). In order not to lose their main asset, the plaintiff lodged an application in Court to have the Company reinstated onto the register. The plaintiff admitted that the Company was not in compliance with the Regulations and that the Company had also been in default for a number of years, thus understanding the Registrar’s decision to have the Company struck off as defunct. Additionally, the plaintiff also held that these actions were not done in bad faith nor were they done in an attempt to deceive the Registrar, but these were merely a result of alienation by the corporate services provider as a result of miscommunication with the Company. By means of the plaintiff’s application, it was made clear that they had every interest to have the Company restored, to the point that it had already reached out to the defendant Registrar, its corporate services provider and other affected competent authorities to make the necessary amends. Naturally, the plaintiff wanted to retain the Company’s ownership of the yacht with the goal of having the latter managing it, rather than having it devolve onto the government. As a remedy to Company’s wrongdoing, the plaintiff requested the Court to restore the Company onto the register and that it continues its existence by virtue of regulation 9(4) of the Regulations. The plaintiff also requested the Court to order the Registrar to take all of the necessary actions as required by virtue of the laws linked with the reinstating of a company on the register. Regulation 9(4) of the Regulations, as referenced by the plaintiff in their application, states that if a shareholder or a creditor of a company (or any other interested third-party) feels ‘aggrieved’ by the striking off of the company in question, said shareholder, creditor or interested third-party may submit an application within five years from the date of publication of the striking-off notice. A successful action under regulation 9(4) would result in the company being restored onto the register as if it were never struck off in the first place. This would also apply to the officers of the company, in that they would be reappointed back in office as a result of this regulation. Upon the Court’s order, the Registrar shall then proceed to publish a notice in the Government Gazette or on the website maintained by the Registrar (i.e. the Malta Business Registry’s online portal) and in a daily newspaper circulating wholly or mainly in Malta that the name of the company has been restored to the register. In their reply, the Registrar informed the Court that the Company had never submitted information concerning its beneficial ownership throughout its entire lifetime. The Registrar’s first attempt at making amends vis-a-vis the Company, was in the form of a letter dated 27th July 2020. On 10th September 2020, the Company was one of several companies mentioned in a publication on a local newspaper that were to be struck off the register, subject to no objections being made within three months from said date. The Registrar also reminded the Court of the fact that over the years, the Company had accumulated considerable penalties amounting to over seven thousand Euros (precisely €7,013.50) and were left outstanding as at the time of striking off on 10th December 2020. In its reply, the Registrar stated that if the Company was to be restored back onto the register, it requested that all of the outstanding information and documents concerning beneficial ownership and annual returns, for the benefit of third parties. Considerations of the Court Prior to proceeding to pass its judgement, the Court was informed that the Company had already settled all its outstanding dues, both in terms of penalties and in terms of missing documents/information, as a sign of its good faith and in an attempt to rectify the situation as swiftly as possible. As a result of this, the Court ordered: • the Registrar to reinsert the Company’s name back onto the register within 15 days from judgement, on the basis that all of the requirements of regulation 9(4) of the Regulations were satisfied; • the Registrar to effect all the publications that need to be made in order to have the Company placed back onto the register; • the Registrar to restore the Company back onto the register; and • the Company to be held responsible to cover the expenses incurred by the Registrar in reinstating the Company back onto the register. The Court outlined that the adherence to the prescription period mentioned within regulation 9(4) of the Regulations and the plaintiff’s willingness to rectify the situation were the main drivers of its decision. Concluding Remarks The ability for a company to be revived following its striking off by virtue of regulation 9(4) as discussed above, provides an exception to the widespread understanding that the striking off of a company is considered to be the ‘death’ of a company, with no other form of recourse available. Whereas a company which liquidates itself voluntarily and is eventually struck off is considered to be final due to a lack of an ‘aggravation’ by the Registrar, a company which encounters a situation as described in the case above is given ‘one last chance’ to rectify its failure to abide by its obligations and reverse its striking off. Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgment being covered in this law report. This article was first published in ‘The Malta Independent’ on 29/01/2025. Author: Gabriel Debono

On the 27th January, 2025, the MFSA released a Circular (the “2025 MFSA Circular”) with an important clarification under Regulation (EU) 2022/2554 (the “DORA Regulation”) pertinent to firms operating within the crypto space. By way of background, on the 26th March, 2024, the MFSA issued a Circular (the “2024 MFSA Circular”) through which the MFSA laid to rest the conundrum which industry had faced in terms of identifying which regime shall be applicable to financial services operators as of the 17th January, 2025 (the DORA Regulation’s application date); you may wish to refer to this publication as a refresher. Annex 1 to the 2024 MFSA Circular included an exhaustive list of the MFSA Authorised Persons which were, and remain, subject to the MFSA’s Guidance on Technology Arrangements, ICT and Security Risk Management, and Outsourcing Arrangements (the “MFSA Guidance Document”), including, by way of example, company service providers and recognised fund administrators. The entities listed in Annex 1 to the 2024 MFSA Circular do not fall in scope of the DORA Regulation. However, the said Annex 1 made no mention of the fate of operators licensed by the MFSA as VFA service providers under the VFA Act (Chapter 590, Laws of Malta (the “VFA Act”)). Against this backdrop, Ganado Advocates sought a clarification on behalf of industry from the MFSA to confirm whether existing operators licensed by the MFSA as VFA service providers under the VFA Act shall or shall not fall in scope of the DORA Regulation between the 17th January, 2025 (the DORA Regulation’s application date), and: the date on which the operator is granted or refused an authorisation as a crypto-asset service provider under Article 63 of Regulation (EU) 2023/1114 (the “MiCA Regulation”); or the 1st July, 2026, being the end of the transitional period referred to in Article 58(3) of the MiCA Act (Chapter 647, Laws of Malta); • whichever occurs first. The 2025 MFSA Circular has now clarified the following: the DORA Regulation applies to, inter alia, crypto-asset service providers as authorised under the MiCA Regulation and issuers of asset-referenced tokens; a VFA service provider authorised under the VFA Act is required to continue following the guidelines set out in the MFSA Guidance Document until the 1st July, 2026, or until the operator is granted or refused an authorisation as a crypto-asset service provider under Article 63 of the MiCA Regulation; and a VFA service provider which receives authorisation from the MFSA as a crypto-asset service provider pursuant to Article 63 of the MiCA Regulation shall, with effect from the date of the receipt of such authorisation: (a) no longer be subject to the MFSA Guidance Document, and (b) qualify as a financial entity under, and become subject to, the DORA Regulation. Complying with the DORA Regulation is a rather complex task which is further compounded by the regulatory and implementing technical standards and guidance documents being released under the DORA Regulation. Ganado Advocates has a DORA-focused team of professionals who are readily available to assist with any queries relating to the application of, and requirements emanating from, the MFSA Guidance Document or the DORA Regulation as may be applicable to your firm. Author: Luigi Farrugia

On the 10th of January 2025, the European Union (EU) published the official text of Directive (EU) 2025/25 (hereinafter referred to as the ‘Directive’) in the Official Journal, which sets out various updates and amendments to Directive (EU) 2019/1151 and earlier frameworks on the use of digital tools and processes in company law. You can access this article by clicking here. The Directive introduces certain key features, such as a multilingual, authenticated EU Company Certificate and a standardised EU Power of Attorney, while also including stricter timelines for domestic company registers to process and publicly disclose company information. This publication aims to identify the main features of the Directive. Improved Company and Branch Incorporations through Digital Mechanisms The Directive introduces targeted updates to further modernize company formation and branch establishment across the EU. While companies can already be incorporated entirely online, the Directive now mandates improved security measures to prevent fraud and enhance reliability, such as advanced identity verification using audiovisual checks and trusted authentication services. In respect of branch registrations, the Directive requires that domestic company registers of Member States ensure that branch registration process can also be completed entirely online, while mandating that such registrations are to be finalised within ten business days, once all necessary documents and fees are submitted. Additionally, branch data should now be included within the EU’s interconnected company register system, which improves accessibility of information. Minimising Administrative Barriers for Cross-Border Transactions A key innovation introduced by the Directive, enshrined in its Article 16b, is the new EU Company Certificate – a standardised document aimed at facilitating cross-border recognition of company information. This electronic certificate shall constitute sufficient evidence, at the time of its issuance, of the incorporation and existence of the company, as well as certain essential company details, including its name, registered office, legal representatives, and other critical information. Such certificate may be obtained at least once per calendar year at no cost. Complementing the above is Article 16c, through which the Directive introduces the EU Power of Attorney – a digital mechanism intended to simplify cross-border representation of corporate entities. By way of a standardised European template, companies may authorise representatives for specific operations in other Member States, without the need to procure an apostille, translation or other similar formalities for authentication or validity. The standard template requires that an outline the scope and details of such representation are inserted, so as to ensure clarity and consistency. Facilitating Document Filing and Authentication The Directive also extends its focus beyond incorporation to the online filing of post-incorporation documents. By reducing the traditional reliance on physical filings, which often leads to delays in registration and increased costs. To meet the Directive’s aims of simplify processes, domestic company registrars are encouraged to adopt advanced electronic controls, such as remote identity verification systems, to minimise the need for in-person interventions. Notwithstanding this, certain robust oversight mechanisms have been included to prevent and combat instances of fraud and misuse. Firstly, all documents filed electronically are to be authenticated using advanced trust services to enhance the security, reliability, and validity of electronic transactions, as prescribed by Regulation (EU) No 910/2014 (the “eIDAS Regulation”). In addition, domestic registrars retain the authority to verify the identity and legal capacity of applicants. In exceptional cases (as may be required for reasons of public interest), such as suspected fraud or identity misuse, domestic registrars may even require the physical presence of applicants. The Maltese Position The Directive enters into force as of the 30th of January 2025, whereas Member States are required to domestically adopt and promulgate the rules set out in therein by 31 July 2027. Locally, the Malta Business Registry (MBR) has already made strides to comply with the standards set out in the Directive, primarily through the launching of its Business Automation Registry Online System (BAROS), wherein users may digitally submit company documentation through a company-linked authorised account on the BAROS website. Notably, it is now a mandatory requirement for Maltese companies to submit their annual accounts online, through BAROS. Additionally, the MBR now accepts company documentation executed via ‘Qualified Digital Signatures’ (QES), which are electronic signatures generated using cryptographic methods designed to be tamper-evident and uniquely associated with the signatory. This allows the MBR to identify the signatory with a high degree of confidence. In fact, QES’ hold the same legal authority and enforceability as handwritten signatures on physical documents. The MBR, through its BAROS platform, provides a QES service free of charge, allowing authorised signatories of company documentation to execute and submit such documentation electronically, provided that they have completed an identity verification process conducted by MBR personnel, in compliance with the standards outlined in the eIDAS Regulation. For further information, please feel free to reach out to Stuart Firman and Benjamin Farrugia who form part of the Corporate Finance and Tax team at Ganado. Authors: Stuart Firman, Benjamin Farrugia

Public procurement laws have been amended to increase the financial thresholds applicable to different procurement processes through Legal Notice 360 to Legal Notice 362 of 2024. These amendments primarily ensure that procurement opportunities of a certain monetary value fall under the comprehensive national regime that fully incorporates the directives. Subsidiarily, these amendments also affect when the Department of Contracts (“DOC”) becomes responsible for the publication of a tender process. Generally speaking, unless contracting authorities are listed in a specific schedule which entitles them to administer their own public procurement and save for tender processes with smaller estimated procurement values as explained in this note, contracting authorities must administer their procurement through the Sectoral Procurement Directorate and/or the DOC. By virtue of the new legal notices, contracting authorities may now issue public supply tenders independently without involving the DOC where the estimated procurement value does not exceed €143,000. For public works tenders and concessions, this figure is now €5,538,000 instead of the previously applicable €5,382,000. These amounts are always excluding VAT. These numbers differ for tenders in the water, energy, transport and postal services sectors. For public supply and service contracts, the threshold has been increased to €443,000 from €431,000. For works contracts, the threshold is now €5,538,000. Author: Clement Mifsud-Bonnici, Calvin Calleja, Krista Refalo