The Republic of Malta is a comfortable place for doing business in all aspects. To start a business in Malta, it is important to first understand the basic legal requirements, so our today’s blog post will be useful for those who are planning to register a Maltese company.
If you need to establish a JV in Malta, please note that entrepreneurs often choose the private LLC form for this purpose.
If the parties have clearly agreed on how they want to cooperate and how management powers will be distributed among them, then the establishment of a JV in Malta can be relatively swift and easy.
Minimum capital for establishing a JV in Malta
Share capital requirement for a private LLC in Malta at the start is only € 1165 and a pleasant bonus is that only 20% of this amount needs to be paid. This cost efficiency allows the parties to focus their funds on improving the key aspects required to set up a business in Malta.
If you decide to start a business in Malta, please note that in an LLC, each party can contribute financially to the business equally. It is also allowed the situation when one party makes a financial contribution, and the other contributes IP.
Decision making issues
Typically, shareholders want to participate in the company’s decision-making processes. That is why, it is vital for those who have decided to establish a company in the Republic of Malta to make it clear from the beginning: the responsibilities of shareholders will not allow them to intervene in day-to-day operations of the company.
This way of running a business in Malta will provide the right balance between the necessary management of the board of directors on the one hand, and shareholder control over key issues on the other.
Company registration in Malta: Equal Rights
The business activities of the JV in Malta may be blocked in the event of a 50% / 50% situation. The distribution of shares 50 to 50 is in 99% of cases the path to corporate conflict. Despite the fact that initially it does not look like a corporate conflict. After all, legally - the owners are equal and none of them can make a decision without the other. And this is a deadlock.
As long as partners understand and respect each other, behave decently and honestly towards each other, this is not a problem, the problem begins after they stop negotiating.
It is essential to ensure that there are mechanisms for resolving such deadlocks in order to be able to resolve the dispute between shareholders.
In such a situation, an external resolution of the dispute in Malta is possible. A team of experts trusted by both parties can resolve the dispute within a set period of time. If you are faced with this kind of corporate conflict, the experts of our company are ready to provide the necessary assistance in resolving it with the least loss.
How the Malta JV Ratio Affects Decision Making
When the shares of the JV partners are not as evenly distributed as in the previous situation, management can be more variable. One of the simplest decision-making options is to grant voting rights proportional to the number of shares.
Additional safeguards may be provided in the founding documents of the JV to accurately reflect the agreement between the parties.
If you are planning to register a business in Malta, you may need the advice of a specialized specialist. It should be remembered that in each country, the optimal and profitable options may be different organizational and legal forms. Entrepreneurs who need help in choosing a form of business can order advice on registering a Maltese company by contacting our employees.
Exit Strategies
In case of liquidation of a JV in Malta, the most efficient way to calculate dividends or payments is by a simple mathematical ratio of shares. Dividend payouts may vary by class of stock, or profits may be tied to success or to a specific project. A flexible individual approach can be provided for in the constituent documents. To do this, again, it is best to order a specialist consultation in the field of business registration in Malta.
A JV exit strategy must be agreed upon at the start. If this is not agreed in advance, then the exit of the participant may damage the JV which continues its activities.
Final word
If you decide to set up a business in the Republic of Malta, the following factors should be considered:
- nuances of taxation in Malta;
- corporate regulation;
- ways of resolving disputes in Malta.
If you have any questions regarding the regulation of business activities in Malta, you can take advantage of the consulting services of our experienced experts. We are ready to provide additional information, as well as provide assistance to entrepreneurs who have decided to register a company in the EU. Contact us in a convenient way using the contacts listed on the site.
