As economic engines of present day society, the traditional definition of a private limited liability company considers such corporation as an artificial entity established by two or more persons, distinct from both its shareholders and directors. A single-member company is therefore no different from any other private limited company other than the fact that its entire issued share capital is held by one single shareholder (hence the designation "single member company"), usually as the sole beneficial owner of the business, contributing towards the capital of such a legal unit, which in itself remains distinct and separate from its sole shareholder, with property of its own and contracts personal to itself. Consequently, the company's corporate rights and liabilities should not be confused with those of its sole shareholder, whose liability remains limited to the amount, if any, unpaid on the shares held in the company.

Article 72 of the Companies Act 1995 provides that the authorised share capital of a company has to be "subscribed by at least two persons" and therefore, it is generally the case that Maltese-registered companies have two shareholders. However, it is also possible for a single member company may also be registered under the Companies Act. More precisely, a single member company is a private limited liability company, which qualifies as a private exempt company. Its status as a single member company is brought into existence either upon incorporation or whenever the company's membership is reduced to one person after the entity's incorporation.

Following the entry into force of Act III of 2013, Article 211(2)(b) of the Companies Act was amended to the effect that the condition that a body corporate shall not be the" holder of, or has any interest in, any shares or debentures of the company" has been removed. By virtue of the above-mentioned amendment, Maltese Company law completely did away with the requirement that a private limited liability company could not be a private exempt company if it had a corporate entity as a shareholder (unless such a corporate entity was also a private exempt company).

Consequently, for the very first time, in terms of Article 212(1), a private exempt company having a corporate entity, whether resident or non-resident, as its sole shareholder, may be registered as a single-member company.

Accordingly, following the introduction of the amendment to Article 211 of the Maltese Companies Act, the only conditions which would need to subsist in order for a company to be registered as a private exempt company, whether being a single-member company or otherwise, comprise the following:

  • That no body corporate 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; and
  • That the number of persons holding debentures of the company is not more than fifty.

Such an amendment finally paves the way for an enrichment of Maltese Company law's legal framework – by effectively allowing private exempt companies, for the very first time, to be established by only one local or foreign corporate shareholder. This significantly assists in the expansion of the spectrum of local corporate vehicles which may be incorporated under Maltese law.

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