Book Review
This review was co-authored with Ivan Vella
Companies are nothing but the product of a legal fiction, in that they only possess the ability to do business and enter into contractual arrangements because the law grants them the 'personality' to do so. Unlike human beings, companies are not persons in the physical sense of the word.
Yet, a good look around will show you that companies are central to the economic, business and social life of most developed societies. Malta is absolutely no exception to this reality and, although the concept of an individual 'sole trader' obstinately remains relevant, the vast majority of business in the world (including Malta) is conducted through limited liability companies. It is truly impressive to observe how far the notion of a company has come from its origins in the Dutch joint-stock companies set up in the early seventeenth century as a medium to raise money from the sale of shares to build ships intended to bring back Chinese, Indian and Indonesian goods.
Earlier this year, Prof. Andrew Muscat has published a Second Edition of his 'Principles of Maltese Company Law.' His first edition had been very well received nationally, by academic circles, practitioners and the Maltese Courts alike. It was not only a sell-out but had gone out of print, much to the dismay of those who had not yet managed to get hold of a copy. Prof. Muscat now returns with a Second Edition which comprises three volumes published by the Malta University Press (University of Malta).
One of the earliest books on Maltese commercial partnerships was 'The Law on Commercial Partnerships' by Prof. Feliċ Cremona in 1967 (with a number of re-prints along the years). At the time, the publication was concise but it provided good insights on the principles and laws underlying Maltese commercial partnerships. Perhaps as testament to the increased complexity of today's commercial world, Prof. Muscat produced a three-volume series on Maltese Company Law and in his own words 'this edition is not intended to be an exhaustive treatise on every branch of company law.' Indeed this work does not attempt to address an increasingly important aspect in the lifespan of Maltese companies: their dissolution and consequential winding up and related issues. Nor does it address conversions, mergers and divisions of companies and only peripherally touches upon company reconstructions.
Both authors of this review remember Prof. Muscat from our student days where, together with other very well respected members of the Commercial Law Department, including Dr. Richard Camilleri and Dr. David Fabri (the latter now head of the Department of Commercial Law), he inculcated in many of us a love for business and commercial law generally. Twenty years and more have passed since those salad years and Prof. Muscat remains very active both as a practitioner and academic.
As a matter of fact, 'Principles of Maltese Company Law' is of particular interest and usefulness to the Maltese legal and commercial worlds in that it combines the deep academic insight of Prof. Muscat together with the years of experience practising as a commercial lawyer. We truly have the best of both worlds encapsulated in this second edition. The writing reflects its author in being approachable, impartial, lucid and thorough.
In this revised three-volume series, Prof. Andrew Muscat broadly retains the basic structure and division of chapters as in the first edition published in 2007. Prof. Muscat now elaborates on a number of topics which either had not been addressed in the first edition or which were the subject of legislative or judicial developments which occurred in the interim.
In Chapter 1, the part that refers to amendments to the Companies Act after its enactment, now includes succinct descriptions of the Continuation of Companies Regulations, and the statutory requirement to register details of companies' beneficial owners. Interestingly, no mention appears to be made to the provisions of Legal Notice 415 of 2007 that deal with cross-border mergers of limited liability companies. Reference is also made to European Community forms of incorporation; a subject that is taken up again also in Chapter 2 where the Societas Europea is discussed. Chapter 2 now also covers the re-domiciliation of companies and the establishment of a branch of an oversea company in Malta.
Prof. Muscat clearly acknowledges the increased importance of corporate criminal liability in modern company law. This aspect is mainly addressed in relation to directors and their duties and liabilities (Chapters 6 and 7).
Chapter 5 that deals with the lifting of the corporate veil has undergone significant revision, as has Chapter 8 that addresses corporate governance. Other revisions were made to several other chapters, including Chapters 13, 16, 18, 19 and 20.
Prof. Muscat leaves no stone unturned in the topics he addresses and draws upon the Continental tradition of our laws (see for instance the section dealing with 'The Business Concern' "Azienda"), as well as the Anglo-Saxon influence on our company legislation (see for instance the section dealing with "Corporate Personality"). He then strings the two traditions together and elaborates on how the Maltese Courts have interpreted the various provisions of law, many a times even creating home-grown interpretations which are particular to Maltese law. His style is flowing, academic where necessary, but articulated by a seasoned practitioner.
This Second Edition of 'Principles of Maltese Company Law' will undoubtedly become a must-have for commercial lawyers and advisors generally, as well as for any company aficionado. Directors sitting on boards of Maltese companies are also encouraged to take a good look at some of the chapters, not least that dealing with 'Duties and Liabilities of Directors.' Being a director on a Maltese company carries immense responsibilities at law, even though locally we still see directors taking a rather cavalier attitude to the role.
The Maltese legal profession, as well as the business community generally, is very grateful to Prof. Muscat for his opus magnus on Maltese company law, setting the standard for researched, analytical and well-postulated arguments. As fellow practitioners we rhetorically ask whether the Maltese Courts would ever entertain any dissenting views on particular interpretations adopted by Prof. Muscat in the publication under review. Admittedly the publication marks the authoritative statement of the position at law on most of the matters it touches upon. Hopefully it does leave some room for discussion or debate, whether academic, speculative or practical, on a number of issues. As wishful part-time semi-academics the authors invite other lawyers to come forward with other studied publications on other aspects of company law, not least insolvency law on which there remains a dearth of local publications.
Dr. Portanier and Dr. Vella are both lawyers in private practice and visiting lecturers within the Faculty of Laws at the University of Malta.
This review was first published in the Sunday Times of Malta, 10 November 2019.
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