Maltese legislation regulating the maintenance of capital of a limited liability company : a comparative study

Abstract

In Malta, limited liability companies are regulated by the Companies Act, 1995. This Act replaced the Commercial Partnership Ordinance, 1962, and became effective as from lst January, 1996. The first legislation to regulate commercial partnerships was the Commercial Code, 1857. This Code which was based on the Code Napoleon and on Italian law, contained few provisions regulating limited liability companies. In the post-war period, due to an expansion in commercial activity, the need was felt to draw up new legislation. The enactment of the CPO, based mainly on the UK Companies Act, 1948, was a response to this need. In the 1970s, the CPO was followed by several statutes that regulated specific sectors such as banking. However, the business sector is dynamic in nature and by the late 1980s, the CPO and the other laws had become outdated. This state of affairs, together with the Maltese government's intentions of promoting Malta as an international financial centre and of seeking E.U. membership, led to a major overhaul in business-related legislation. Important statutes such as the Malta Stock Exchange Act 1990. the Malta Financial Services Centre Act 1994 and the Banking Act 1994 were enacted. This process which included the enactment of the Companies Act 1995, was completed by the Insurance Business Act 1998. The Act follows the same basic principles of the CPO. However, it has enhanced several rules found in the old law, especially in regard of limited liability companies. It introduced in our legal system various modem company law concepts. The sources of the Act were principally the E.U. Company Law Harmonisation Directives.