Proposed Amendments to the Companies Act
by novolegal, on May 28, 2020 2:25:30 PM
Through Bill number 128, the Parliament of Malta issued a bill named “Companies (Amendment) Bill”. The Bill’s objects and reasons are quoted as being ones to “affect amendments to the Companies Act mainly related to the duties of directors, the filing for dissolution and wining up, and the company recovery procedure”. The salient proposed amendments are the following:
Amendments relating to disqualification of directors/company secretary:
A new ground upon which a director or company secretary may be disqualified is being proposed in that, if during the time a person has been director or a secretary of a company, he has breached the provisions of the Companies Act for the third consecutive time in a period of two (2) years from the first breach, such breach would be considered to be a valid ground for disqualification.
Disqualification on the basis of a positive conviction of a crime pertaining to public trust/fraud has now also been qualified vis a vis its validity, with it being valid:
- in perpetuity, if the punishment for the crime he has been convicted of is of imprisonment for life;
- for a period of fifteen (15) years if the punishment for the crime he has been convicted of is of imprisonment of twenty-five (25) to thirty (30) years;
- for a period of ten (10) years if the punishment for the crime he has been convicted of is of imprisonment between ten (10) to twenty-five (25) years;
- for a period of eight (8) years if the punishment for the crime he has been convicted of is of imprisonment between five (5) to ten (10) years;
- for a period of five (5) years if the punishment for the crime he has been convicted of is of imprisonment between four (4) to ten (10) years;
- for a period of three (3) years if the punishment for the crime he has been convicted of is less than four (4) years.
Amendments relating to the process of judicial winding up:
In terms of the proposed amendment, the Minister will have the power to issue regulations to suspend the right of any director/shareholder to file a winding up application with the relevant court if such regulations are “for the better carrying out of any of the provisions” of applicable law.
Amendments pertaining to applications on the basis of wrongful trading:
With respect to applications for wrongful trading, a new proviso is being proposed whereby the Minister may make regulations to the effect that a relevant application may be suspended (even retrospectively), if such regulations are issued against the backdrop of better application of the law.
Capacity to file an application pertaining to the issuance of disqualification order by a court:
The Official Receiver shall, in terms of the Bill, have, along with the AG and Registrar, the capacity to request a court to issue a disqualification order.