Maltese regulations binding Maltese companies to retain and disclose adequate, accurate and up-to-date information on their beneficial owners have been in place for almost three years. This space has developed so much that owners (direct or indirect, foreign or local) and officers of Maltese companies, who are not highly attuned to their obligations on this front, risk incurring hefty fines (and where there is intentional or reckless misleading, deception, or falsity – imprisonment).
Unless all shareholders of a company are natural persons acting in their own name and appearing on the Malta Business Registry's (MBR) records, or the Maltese company itself is listed on a regulated market as described at law, compliance is a must.
So, what's the latest on this?
Well, since June 2020, companies now also have an annual filing obligation to satisfy in addition to their existing ongoing obligations which hitherto included creating and keeping up-to-date records on their beneficial owners, as well as making filings to the MBR when changes take place.
Another change which took effect last June is that the maximum statutory penalties for default, which were not low to begin with, have skyrocketed. One hopes that these penalties will deter those who wish to mislead or deceive on this front.
However, with this deterrent also comes the exposure borne by habitually compliant owners, officers and professional corporate service providers should they suffer inadvertent oversights in this field. The cost could be prohibitive for large corporate service providers − multiple oversights on multiple companies could potentially break the bank.
Indeed, the maximum lump sum penalty for filing delays and for failure to keep proper records has jumped from €1,000 to €5,000.
The maximum daily penalty that runs for each day of delay until the default is remedied has now shot from €10 to €100. An inadvertent delay in the filing of one form for a fortnight might just cost a company up to €6,300.
There is then also the penalty that could be imposed by the Malta Registrar of Companies should he find a discrepancy between the records disclosed to him by a company and that company's internal records. The maximum for this penalty has leapt from €10,000 to a whopping €100,000.
Those companies that existed before these rules came into force (i.e. companies older than 2018), which did not comply with the new rules upon the lapse of the initial moratorium, and which are still non-compliant, are bearing a daily penalty of up to €500 on top of the lump sum maximum of €10,000.
These latter types of companies also risk being declared defunct by the registrar and having their assets devolve to the government of Malta.
Who wants to pay these penalties just because of an oversight? Who on earth wants to lose a business simply because they are not aware of their obligations in this sphere?
There is, therefore, an incentive, now more than ever, to ensure that company records are shipshape and that Malta Business Registry filings are made on time.
With even the most rigorous of corporate service providers and regulated companies contending with these ever-expanding obligations, others might find this especially challenging.
Those companies that might be accustomed to an 'unregulated' space, such as holding companies or smaller corporates whose activities are not licensable, will grapple with these rules especially if their ownership structure is complex. Similarly, those companies with largely manual systems not geared for ongoing and yearly compliance of this sort will also face difficulty.
If you are an owner or officer of a Maltese company or a corporate service provider in doubt as to your obligations in this field, seek advice.
This article was first published in the Times of Malta, 9 November 2020.
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.