Continuation of Foreign Shipping Companies
The number of jurisdictions allowing for the continuation of corporate entities is on the increase. Malta already adopts this mechanism as seen in the Continuation of Companies (Subsidiary Legislation 386.05). However, by means Legal Notice 31 issued on the 21st of February 2020 this mechanism has been extended to the Merchant Shipping Act (Chapter 234 of the Laws of Malta).
The term 'continuation' refers to the relocation of a company's seat of incorporation or registration from one country to another, and therefore this mechanism ensures the continuing corporate existence of company.
As further explained in the below, the new provisions relate to: the Continuation in Malta of a Foreign Company, the Continuation outside Malta of Companies incorporated in Malta and amendments with relation to penalties.
Continuation in Malta of a Foreign Company
The new provisions in the Merchant Shipping Act (Chapter 234 of the Laws of Malta) allow for the possibility of a foreign company, which has been formed and incorporated or registered outside the jurisdiction of Malta, to be continued in Malta. The registration in question will render Malta as the place of incorporation, provided that the place of initial incorporation is an approved country (a country which has similar concept in nature to a company according to the Laws of Malta) and that such approved country allows for such continuation. The approval has to also be permitted in terms of the charter, statutes or memorandum and articles or any other similar instrument. In order for the foreign company to be continued in Malta as a shipping organization, it has to request for registration to the Registrar.
The request for registration shall be accompanied by a number of documents and subject to a registration fee as set out in the Companies Act (Fees) Regulations (SL 386.03).
A Provisional Certificate of Continuation shall be issued by the Registrar of Companies and the effects of registration shall commence from date of issuance of such certificate. The company shall continue to be a body corporate and shall be deemed as provisionally registered in Malta for all purposes of the law.
Within a period of six months from the date of issuance of the Provisional Certificate of Continuation, the foreign company shall submit documentary evidence to the Registrar certifying that it has ceased to be a company registered in the country where it had been previously formed and incorporated or registered. Failure by the foreign company to provide such documentary evidence shall grant the Registrar discretion to either strike the name of the company off the register or if reasonable cause is shown allow a further period of three months prior to striking the name of the company off the register.
The Registrar, upon the successful completion of the above, shall issue a Certificate of Continuation confirming that the company has been registered as continuing in Malta upon proof that the foreign company ceased to be a company registered in the country where it had been previously formed and incorporated.
There are a number of cases where a foreign company may not be registered for continuation in Malta, including but not limited to cases of dissolution or winding up.
It should also be noted that the registration of a foreign company shall not operate to create a new legal entity, prejudice the continuity of the company, affect the property of the company, render defective any legal proceedings instituted or to be instituted, by or against the company, or release or impair any conviction, judgment, ruling, order, debt, liability or obligation due or to become due or any cause existing against the company or against any member, director, officer or persons vested with the administration or the representation of the company.
Continuation outside Malta of companies incorporated in Malta
By virtue of the newly introduced provisions, a company registered in Malta may, where the laws of an approved country so allow, and upon obtaining the consent of the Registrar, shall apply to the relevant authority of such other country to have the company registered as a continued company as if it had been incorporated under their laws. From the date of the instrument of continuation, the Maltese incorporated company shall become a company under the laws of that other country and shall be subject to such laws as required by that other country.
The consent of the Registrar is required and shall be requested in the manner and form prescribed together with the relevant documents. However, not all companies may be able to make use of this new provision as there are a number of requirements which the company is subjected to including but not limited to no present proceedings for the dissolution of the company, insolvency proceedings, or any other analogous proceedings have been commenced by or against the company in Malta or elsewhere.
The consent of the Registrar is also subject to the publication in the Gazette or on a website maintained by the Registrar and in a daily newspaper circulating wholly or mainly in Malta, and this to allow any creditor debt which existed prior to the publication of the notice to object to such continuation. Only upon the lapse of three months from the date of the publication, may the Registrar give his consent.
Upon an instrument of continuation is issued from the other country, the company shall deliver to the Registrar a copy of such instrument of continuation and in turn, the Registrar shall strike the name of the company off the register.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.