Act No. XVIII of 2025, the Companies (Amendment) Act (the “Act”), was recently published on the 11th of July 2025, although its provisions are yet to come into force. The Act will introduce several notable and welcome changes to Maltese company law. One of the most significant provisions is the introduction of a “simplified dissolution procedure” for limited liability companies, through the proposed addition of a new Article 214A into the Companies Act (Chapter 386 of the Laws of Malta) (the “Companies Act”).

At present, Article 214 et seq. of the Companies Act outlines the grounds and procedures for dissolving and liquidating a Maltese company. Generally speaking, companies may be dissolved either by an extraordinary resolution of the shareholders or by a court order following a winding-up application which may be filed by various stakeholders depending on the grounds for dissolution.

Regardless of the method, all liquidations currently require the appointment of a liquidator either appointed by the court (typically the Official Receiver) or by the shareholders and/or creditors in voluntary liquidations. In the context of a liquidation, the liquidator assumes control of the company, manages its assets and ultimately steps into the shoes of the directors of the company, who are displaced upon appointment.

The Act envisages a simplified and hopefully more cost-effective alternative for certain companies to avoid long-winded liquidation procedures and proceed with a more efficient striking off. From a reading of the Act, it appears that the requirement to appoint a liquidator in the context of this simplified dissolution procedure has been done away with. This should reduce administrative burdens and costs, factors that often deter company officers from initiating formal dissolution and liquidation proceedings.

It should be noted that the Companies Act already provides for liquidation procedures without the need or requirement to appoint a liquidator in the case of partnerships en nom collectif and en commandite. The rationale behind this new procedure appears to be to extend similar flexibility to limited liability companies that have been inactive for some time and which are not public limited companies and regulated entities.

The notable absence of the requirement to appoint a liquidator is not the only distinction between the standard liquidation procedures in our Companies Act and the simplified dissolution procedure in terms of the Act. Once Article 214A is in force, directors of an inactive private limited liability company may apply to the Registrar of Companies (the “Registrar”) to have the company struck off the company register without undergoing a liquidation procedure as we know it – provided the following conditions are met. In the six months prior to the application, the company must not have:

1. Changed its name;
2. Carried on any business or trading activity;
3. Employed any individuals;
4. Had any outstanding filings, documents, or penalties due to the Registrar;
5. Had any of its shares pledged.

The application shall consist of a prescribed form which must be accompanied by a statutory Form B(1) as well as a declaration by the directors confirming that:

1. The company is not a regulated entity;
2. Has discharged any liabilities in full or that same have been written off by the relevant creditors;
3. There are no ongoing court proceedings involving the company;
4. The company holds no more than €5,000 in assets;
5. No deeds or contracts have been entered into in the last six months (other than contracts with service providers to the company); and
6. There are no outstanding dues owed by the company to any government authority.

Additionally, the directors must confirm that a shareholder resolution has been passed approving the company’s entry into the simplified dissolution procedure and that the company’s bank accounts are closed, nobody is employed with the company other than the officers and where applicable, an application to deregister the company for VAT purposes has been filed.

If these conditions are satisfied, the company may be struck off without undergoing the standard liquidation procedure in terms of the Companies Act and therefore, with the exclusion of certain requirements including the requirement to appoint a liquidator. This is deemed acceptable because the company is presumed to have no ongoing business, liabilities, or complex assets requiring formal liquidation to be controlled by a liquidator.

Despite this, the absence of a liquidator raises important concerns. Traditionally, a liquidator acts as an independent party, ensuring fair treatment of all stakeholders. Without one, these responsibilities seem to fall on the directors who may face conflicts of interest, since they would typically be involved in the company’s prior management. This may also create legal uncertainty, particularly in cases where undisclosed liabilities or disputes with the particular company, emerge later on. To tackle these risks, the Act caters for the restoration remedy available to any interested party after the striking off of the company’s name and provides that directors who make a false declaration in this regard, can be found liable on conviction to a fine (multa), imprisonment or both.

Despite the simplified process, directors are also obliged to retain records of the company’s beneficial owners and maintain all financial records as required by law. They, along with the company secretary as an officer of the company, remain responsible for the company until it is officially struck off the register.

The proposed Article 214A also retains the existing three-month notice period from the date of publication, during which objections to the dissolution may be submitted mirroring the current procedure.

The practical impact of the simplified dissolution procedure is yet to be seen, once it comes into force but this will depend on how it is eventually implemented and interpreted. Whilst it could offer a welcome reprieve for small and dormant companies which would otherwise continue to populate the register of companies, unnecessarily – only subject to the Registrar’s power and discretion to instigate the defunct procedure against them, its success will most likely hinge on clear guidance and robust safeguards to prevent unintended consequences.

Disclaimer │ The information provided in this article does not, and is not intended to, constitute legal advice. All information, content, and materials available are for general informational purposes only. This article may not constitute the most up-to-date legal or other information and you are advised to seek updated advice.