Analysing the interaction between the separate legal personality principle and family-owned businesses in Malta

Abstract

Family businesses are becoming more significant to the Maltese legal system due to their dominance in the Maltese economic sector. The objective of this dissertation is to analyse the interaction between the separate legal personality and family-owned business within the context of Maltese company law. A comparative approach is adopted to analyse the interaction and effects of the legal personality principle and family-owned businesses in the United Kingdom and Ireland to demonstrate whether any changes to the Maltese law are required. The separate legal personality principle is embedded at the core of Maltese, British and Irish company law. This dissertation addresses the gap in the literature by providing an in-depth analysis of the effects of the interaction between the legal personality principle and family-owned businesses. The doctrine of the lifting of the corporate veil is referred to as well, to better examine the interaction between the legal personality principle and family businesses. The findings establish that the family dynamics of the business may be a contributing factor to disregard the separate legal personality of the business, but it is not a determining factor. The interaction between the separate legal personality and the family-owned business cannot lead to the disregarding of the legal personality principle simply in the interest of the family. The findings show that the assets and obligations of the shareholders and/ or directors are separate from those of the business despite the interaction between the separate legal personality and family-owned businesses. The shareholder cannot hide behind the family business to evade his obligations as apparent from the findings. The family business retains its legal personality despite the interaction between the legal personality principle and the family business dynamics. This dissertation proposes certain recommendations such as that similar circumstances be decided in the same manner.