Cross-border conversion of limited liability companies

Part 1 of the FAQs introduces the CBC Regulations, Part 2 considers the procedure and implications involved in the cross-border conversion of a Maltese converting company, while this Part 3 shall consider the procedure and implications, and other relevant considerations, concerned with the cross-border conversion of a foreign converting company, i.e. when Malta is the “destination jurisdiction”.

What documentation is required to be submitted to the Registrar of Companies in Malta (the “Registrar”) for the purposes of effecting a cross-border conversion of a foreign converting company?

The foreign converting company shall submit to the Registrar:

• The draft terms of the crossborder conversion approved by the general meeting of the company;

• The pre-conversion certificate issued by the departure jurisdiction;

• The memorandum and articles of association of the company drawn up in accordance with the Maltese Companies Act;

Where the departure jurisdiction is not an EU Member State or an EEA State, a legal opinion by one or more practising advocates in the departure jurisdiction confirming that the proposed cross-border conversion is permitted by the laws of the departure jurisdiction; and

• Any other documents and information that may be required for the purposes of registering the foreign converting company as a Maltese company.

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Are there any additional requirements applicable to a licensed foreign converting company?

Yes. Where the foreign converting company carries on, in or from the departure jurisdiction, a business which, if conducted in or from within Malta, would require to be licensed or authorized in terms of any Maltese laws, and the foreign converting company is licensed or authorised by a competent authority in the departure jurisdiction, it shall be required to provide evidence that it has notified the relevant foreign competent authority of its intention to be registered in Malta in terms of the CBC Regulations, which notification must be provided to the Registrar in the English language or as a certified English translation.

Moreover, if the said company intends to carry on a licensable activity in or from Malta, it shall be required to obtain a licence or other authorization from the Maltese competent authority before commencing operations.

Are there any additional requirements applicable to a public foreign converting company?

Yes. Where the foreign converting company is a public company, the following additional documents are required, as applicable:

• evidence of the current membership of the foreign converting company, authenticated in such a manner as the Registrar may require;

• in the case that the foreign converting company has offered its shares or debentures to the public, the most recent prospectus (or equivalent document) is required; and

• in the case that the foreign converting company is quoted on a recognized stock exchange, evidence in the English language (or as a certified English translation) that the foreign converting company has notified the competent foreign authority of its intention to be registered in terms of the CBC Regulations is required.

Would a pledge over shares in a foreign converting company remain valid and effective under the laws of Malta following the company’s registration in Malta?

Yes – subject, however, to the following conditions: a) that the pledge has been validly created in writing as a right of security and preference over shares under the laws of the country or jurisdiction where the foreign converting company was originally formed and incorporated or registered; b) that the pledge is valid and effective as of the date of issue of the Certificate of Cross-Border Conversion; c) that the pledge shall continue to be regulated by the law chosen by the parties; d) that the pledge shall continue to be subject to any submission made by the parties to the jurisdiction of any foreign court or arbitration (which submission shall be valid and effective and shall remain fully in force); e) that a notice of consent from the pledgee is delivered to the Registrar together with all other relevant documents; f) that a true copy of the notice of consent from the pledgee is delivered to the other party to the pledge agreement within 14 days from the issuance of the Certificate of Cross-Border Conversion.

How long would it typically take for the Registrar to approve the cross-border conversion of a foreign converting company into Malta, and what does the process involve?

After verifying that the provisions of the CBC regulations and all other applicable provisions of the Companies Act have been complied with, the Registrar shall, not later than 10 working days from the submission of all relevant documents, approve the cross-border conversion and proceed to register the foreign converting company as a Maltese company in terms of the Companies Act.

The Registrar shall issue a Certificate of Cross-Border Conversion, which shall include the name, legal form and registration number of the converted company, a reference to the fact that the converted company has completed a cross-border conversion and the date on which the crossborder conversion takes effect, which certificate shall constitute conclusive evidence that the requirements of the CBC Regulations have been complied with.

The Registrar shall furthermore publish a statement confirming the completion of the cross-border conversion on the online portal of the Malta Business Registry, and shall notify, without delay, the registry of the departure jurisdiction that the crossborder conversion has taken effect, indicating the effective date of same.

These FAQs are the third part of a three-part series on the scope and application of the Companies Act (CrossBorder Conversions of Limited Liability Companies) Regulations 2023 (the “CBC Regulations”), governing the re-domiciliation (referred to therein as cross-border conversion) of companies into and out of Malta.

Sarah Fenech is a Senior Associate within the Commercial and Corporate Department of Fenech & Fenech Advocates

Should you require any further information or assistance on the matter, please do not hesitate to reach out to Sarah Fenech

personally on sarah.fenech@fenechlaw.com

Rowen Bonello

deputy Audit manager in February 2021. A highly-accomplished professional, she holds a Master’s in Accountancy and a Bachelor of Commerce degree with a specialisation in Accounting and Marketing from the University of Malta. Apart from her managerial responsibilities, Camilleri Abela plays an active role in training and mentoring audit staff, cultivating a culture of ongoing learning within the organisation. In her role of overseeing audit assignments, she assumes responsibility for a diverse

portfolio, encompassing both local and foreign clients. Her meticulous approach ensures a thorough examination of financial data and she consistently delivers valuable insights to stakeholders, fostering a comprehensive understanding of their financial standing.

PKF Malta is a leading financial services firm dedicated to providing comprehensive and tailored solutions to businesses. Backed by a team of experienced professionals, PKF Malta offers audit, tax, advisory and consulting services to clients across various industries, with an unwavering commitment to excellence and client success that sets it apart in the financial services industry.

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