Small firms in Malta : a survey of accounting and legal compliance with the Companies Act 1995

Abstract

The Maltese trading community is mostly made up of a large number of small enterprises spread over a wide range of activities. Most of the older ones owe their origin to small family businesses, which were passed on from generation to generation. With the passing of lime, the trend in the type of business organisation used changed from that of sole traders to the use of companies. Many opted for this change in order to benefit from the lower tax rate applicable to companies, a benefit that today is no longer applicable. Other considerations were the advantages offered by the structure of a company, namely the investment of shareholders being evidenced by the number of shares allotted to each member; the limited liability aspect on the amount invested by each shareholder and the protection afforded to shareholders by Company Law itself. Other business people just formed companies to follow blindly in the footsteps of others, without actually knowing what the law requires of a company and its directors. This latter case is evident by the generally accepted opinion that a number of investors treat the assets and business of the company in which they are members as if their own.