09 Jul 2020

Amendments to the Rules for the Registration of beneficial owners in Malta

New obligations were introduced into the Malta Companies (Register of Beneficial Owners) Act of 2017

With the entry into force of Legal Notice 247 of 2020, new obligations were introduced into the Malta Companies (Register of Beneficial Owners) Act of 2017, entailing, in the event of non-compliance, large fines ranging from EUR 5,000 to EUR 100,000, plus additional daily penalties.

The purpose of these new obligations is to ensure that the Malta Business Registry (MBR) always has accurate and up-to-date information on beneficiaries.

The most relevant obligations and the consequences of non-compliance are highlighted below:

Companies must submit an annual declaration on the occasion of their anniversary of registration informing of any change in the details of their beneficial owners, such as name, country of residence or official identification document number, or confirming that no change has occurred in their details.Once completed, such declaration must be signed by at least one company director or the company secretary and delivered to the MBR for registration within forty-two days of the company's anniversary date.
In the event of any change in a company's senior managing officials*, that company must, within fourteen days of the date on which the change is registered with the company, notify the MBR of that change.
When, at any time, any change occurs in details of the beneficial owners, such as name, country of residence or official identification document number, the company may submit such information to the MBR for registration using the form established for that purpose. Where this change involves a change of name or official identification document number, the company must also submit a certified photocopy of the beneficial owner's identification document.
The MBR will now have extended powers in respect of matters relating to the commercial register. Thus, in order to ensure that it has accurate and up-to-date information, the MBR will be able to carry out on-site investigations to validate the information on the beneficial owners and to check that the information submitted to it is accurate and up to date. In cases where the MBR deems it necessary to update the information on the beneficial owners as a result of such investigation, every officer of the company shall be liable to a fine not exceeding one hundred thousand euros (100,000 euros).

In addition, the MBR may refuse to register any company document if the information on its beneficiaries has not been submitted or if it is not convinced that the company has provided accurate and up-to-date information on all the company's beneficial owners. It may also restrict the establishment of new companies by directors involved in other registered Maltese companies who have not submitted information on the beneficial owners and, before registering a new company or submitting a declaration, it may take any action and require any information or documentation it deems necessary to verify the accuracy of the information submitted to it regarding the beneficial owners of such company.

The administrative fines shall become those set out in the following table:

Regulation	Default	Penalty	Daily Penalty
5 (5)	Failure to keep record of beneficial owners	5,000 €	100 €
6 (5)	Failure to provide information to the Registrar about a change in beneficial ownership of a company	5,000 €	100 €
6A (2)	Failure to provide the Registrar with an annual confirmation of details	5,000 €	100 €
6A (3)	Failure to provide the information to the Registrar about a change in senior managing officials* of a company	5,000 €	100 €
8 (2)	Failure to comply with regulation 5 within six months from the coming into force of the regulations	10,000 €	500 €
8 (5)	Failure to provide the Registrar with a declaration containing information on the beneficial owners of the company	10,000 €	500 €

Taking into account the level of responsibility and the fines applicable in case of non-compliance, we ask our clients to always keep us previously informed of any change in the structure of beneficial owners or their details, such as name, country of residence or official identification document number.

* Senior managing official(s) are obliged to be identified as the beneficial owner(s) whenever a structure is of particular complexity or where the ownership and control interest are so diversified that no person(s) can be regarded as ultimately controlling that company. In such circumstances, it may not be possible to identify:

(a) a person(s) who directly or indirectly own(s) 25% plus one or more of the shares, or more than 25% of the voting rights or ownership interest within that company; and

(b) any natural person(s) who is/are controlling the company via other means.

The definition of “senior managing official(s)” is meant to capture those individual(s):

(a) who are responsible for taking strategic decisions that fundamentally effect the business operations or general direction of that company; and

(b) who exercise executive control over the daily or regular affairs of the company through a senior management position.

Paragraph (b) would typically include individuals who have executive functions or are otherwise responsible for the management of the company, such as executive directors, chief executive officers (CEOs) and chief financial officers (CFOs). Directors who do not have any executive function would fall under paragraph (a). Where there is more than one official who fulfils either criterion outlined above, and none is more senior than the other, all should be treated as senior managing officials.