On January 1, 2018, a new regulation concerning the Register of Beneficial Owners (Companies Act) Regulations came into force. This new regulation related to new companies with at least one shareholder that is a legal body owning a minimum of one share. Together with the incorporation M&A, the new regulation required all such companies to register a BO1 form in which the ultimate beneficial owners of the company, or the senior managing officials in relevant circumstances, had to be divulged.
For all companies that were already registered and operating before the coming into force of the new regulation, a new obligation arose. Together with their annual returns for between July 1, 2018, and June 30, 2019, these companies were requested to file a one-time, BO3 form to serve the same purpose as the BO1 form. For companies which remained in default until three months ago, the defunct procedure has been initiated by the Malta Business Registry (MBR) to strike the names of these companies off the register.
The only companies exempt from this obligation were:
• companies listed on a regulated market;
• companies whose registered shareholders are exclusively natural persons (not acting in a fiduciary capacity) who are disclosed in the public records at the Register of Commercial Partnerships maintained by the MBR.
On June 16, 2020, L.N. 247 of 2020 came into force. This brought new general obligations for companies registered in Malta. These new requirements are an extension of those which were released on January 1, 2018. With this latest reform and in all cases, when submitting a declaration containing information on the beneficial owners of a company, a certified true copy of the official identification document of every beneficial owner is to be submitted to the registrar. On pain of nullity, these certified true copies have to be:
• A government-issued document;
• Certified by a regulated warranted professional, like an auditor, notary, accountant or lawyer, who can also be a professional working in the CSP company that services the same company.
If the professional person is not an EU national, proof of their profession is required and certification needs to be apostilled.
One of the main obligations introduced is Regulation 6A, which stipulates that upon each anniversary – i.e. with every annual return from June 16, 2020 onwards – all companies are to submit a new annual confirmation form. In this case, the form has the same grace period as the annual return: 42 days. Upon failing to submit the form in time, penalties will be incurred.
These amendments have brought with them a meaningful extension to the registrar’s powers against companies who fall short of their duties and fail to file the necessary forms
In this form, the signing director or secretary must confirm whether there have been any changes in the details of the beneficial owners or senior managing officials that have not yet been divulged and registered with the Registrar of Companies. If a change has occurred, the evidentiary documents mentioned above must also be submitted. The submission of this form is in addition to the other forms (namely, form BO2) that must still be provided whenever a change takes place during the year.
Another form introduced with these amendments is the official form to change the details of beneficial owners and senior managing officials. This is the only form which is not burdened with penalties in the case of omission.
Thus, if during the year, a beneficial owner or senior managing official notifies the company of any change in his or her personal details, it is now advisable to immediately register this form with the Registrar of Companies. In this way, the register can always maintain up-to-date information on all of a company’s involved parties. If for any reason this is not done, the change must be registered in the annual confirmation form.
Regulation 6A(3) of the regulations further provides that where there is a change in the senior managing officials listed by the company (and in the absence of an identifiable beneficial owner), the company is obliged to submit a notice regarding the change to the Registrar of Companies within 14 days from the effective date of the change. The form will often need to be accompanied by form K, which is why a 14-day grace period is provided. This form can be registered on its own in cases where the company’s directors and senior managing officials are not the same persons.
With these amendments, the BO1 form still remains a requirement and is, therefore, still mandatory in the situations explained above. Nonetheless, apart from having to be signed by any of the proposed directors unless a natural person can be ultimately identified as holding 25 per cent plus one of the company’s shares, the company’s senior managing officials now always need to be identified.
And it is now mandatory to attach a letter signed by the same proposed director signing the BO1 form explaining the reasons for identifying the senior managing officials of the company as beneficial owners.
This also applies to form BO2, which has been retained under these amended regulations and in which case, unless an ultimate beneficial owner can be identified, the senior managing officials are to be divulged and a letter as explained above is also to be attached to this form.
All the above-mentioned forms can be found in the first schedule of the regulations and can also be downloaded from the MBR’s site.
Finally, these amendments have brought with them a meaningful extension to the registrar’s powers against companies who fall short of their duties and fail to file the necessary forms. The regulations provide that the registrar may:
• Refuse to register any document of a company if the beneficial ownership information has not been submitted or if the registrar is not satisfied that the company has provided accurate and up-to-date information on all the beneficial owners of the company;
• Restrict new incorporations for directors involved in other Maltese-registered companies that have failed to submit information on their beneficial owners;
• Before registering a new company or return, take such steps and require such information or documentation as may be deemed necessary to ascertain the correctness of the beneficial ownership information submitted to the MBR.
To ensure that all the above-mentioned processes are followed, the registrar has initiated physical on-site investigations to establish companies’ current beneficial ownership and to verify that the beneficial ownership information submitted to the MBR in respect of a commercial partnership is accurate and up to date. This right given to the registrar shall not be restricted, obstructed or precluded in any manner.
For the registrar to ensure timely reporting on beneficial owners, administrative penalties have to be imposed. In this context, penalties were recently increased to deter companies from failing to disclose their beneficial ownership information and for them to adhere to the time frames imposed by law.
Deandra Schembri is the senior manager within the Legal and Enforcement Unit at the Malta Business Registry.