Malta transposes directive on cross-border conversions, mergers and divisions

Pursuant to the adoption by the Council of the European Union (‘EU’) on the 27 November 2019, Malta has transposed Directive (EU) 2019/2121 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (‘Directive’) by way of Legal Notices 26, 27 and 28 of 2023 (‘Transposed Laws’). A further Legal Notice was published in order to repeal Malta’s previous regulation, on cross-border mergers of limited liability companies, albeit a transitory provision has been included for the purposes of any action, decision or proceeding, taken or commencing before the coming into force of the Cross-Border Mergers of Limited Liability Companies (Repeal) Regulations, 2023.

Scope

As of 31 January 2023, a new regime is applicable to conversions, divisions and mergers. The Transposed Laws harmonise the procedure between EU member states whilst strengthening the protection afforded to stakeholders such as employees, creditors and members. Whereas the Directive limits the reform to companies within the EU, Malta has extended the application of the Directive to mobility from and to third countries.

Malta has been at the forefront of regulating the movement of companies in and out of Malta to jurisdictions within and outside of the EU. Nonetheless, further requirements have been set in place and these include inter alia the introduction of a proposed indicative timetable to be prepared and included, as well as more attention given to transparency, where deadlines are set vis a vis the period of review afforded to the Registrar in various circumstances. Moreover, the Transposed Laws introduce the obligation on the Registrar to give notice to the Company in the event that it is deemed that the Registrar will not meet the stipulated 3-month deadline.

Deloitte's view

The Transposed Laws are a long-awaited regime that will provide a clear and certain legal framework which contributes to the removal of restrictions on the freedom of establishment between EU member states and in turn improving the functioning of the internal market for companies, whilst also making way for the continued possibility of mobility with other approved jurisdictions.