The legal challenges and method to convert Malta’s present registration of a limited liability company from a primarily manual system to substantially an electronic one

Abstract

Presently the Registry of Companies (Malta’s vehicle to register a limited liability company) registers over 5,500 companies per year, however only 10% of those are being registered online. Lawyers and corporate service providers have shied away from using the Registry of Companies Malta On-Line System (ROC Online System). In contrast, in the UK, we have an inverse situation whereby practically all the companies are registered online. This has led to a boom in incorporations in the UK and has thus made it one of the largest incorporation centres with one of the most developed financial centre in the world. This paper discusses the legal implication of introducing a similar structure of incorporation that incorporates the electronic signature for new companies acceptance (in Malta presently we have a digital signature). It will discuss the overall framework that needs to be in place for accepting registrations 24/7 – with particular emphasis for legislation that needs to be in place to accept electronic signatures, agreements with corporate service providers and users. The paper will also explore opening new unchartered avenues that can re-shape the whole industry, make Malta extremely competitive and expand potential collaboration with service providers by reducing the procedures and bureaucracy to register new companies and establish joint-collaborations with private regulated entities such as practitioners, corporate service providers, law firms and accountancy firms. It will also inform the reader of the pitfalls of introducing an automated system can lead to flaws in the system when combating criminals and raise money laundering concerns, still installing banned directors, or allowing bankrupt persons to establish new companies. Although the technology is still in its infancy it will also mention the futuristic possibility (in not such a distant time frame) that of putting the Registry of Companies Malta On-Line System on the blockchain and accept virtual currencies as the share capital in formation.