Contracts and company law essentials in Malta

A civil code with common law habits

Maltese contract law is set out in the Civil Code (Cap. 16), but commercial practice, drafting style and the Companies Act (Cap. 386) draw heavily on English law. Maltese and English are both official languages and commercial contracts and company filings are routinely in English. As an EU member state Malta applies the Rome I Regulation to choice of law and the Brussels I (recast) Regulation to jurisdiction, so a choice of Maltese, English or another law is respected subject to EU and Maltese mandatory rules. Consumer contracts follow the Consumer Affairs Act and the transposed EU directives.

Signing: eIDAS, private writings and public deeds

The EU eIDAS Regulation applies directly in Malta: a qualified electronic signature has the effect of a handwritten signature across the EU and other electronic signatures cannot be denied effect merely because they are electronic. The Electronic Commerce Act (Cap. 426) confirms that electronic contracts and documents have legal effect under Maltese law. Ordinary commercial, corporate and employment documents are private writings and are signed electronically. Transfers of immovable property, certain company and matrimonial instruments and wills must be made by public deed before a notary or follow their own formalities. Company documents are signed by directors or the company secretary as authorised; a seal is optional.

The EU General Data Protection Regulation applies directly, supplemented by the Data Protection Act (Cap. 586), and the Information and Data Protection Commissioner is the supervisory authority. Any Maltese entity acting as controller must put a processor agreement with the mandatory Article 28 content in place with its service providers, and transfers outside the EEA need an adequacy decision or standard contractual clauses. This is why the LegalMatrix data processing agreement for Malta is the EU form and why services agreements with a Maltese entity carry a GDPR schedule.

Companies Act: duties, approvals and the MBR

Article 136A of the Companies Act requires directors to act honestly and in good faith in the company's best interests and to exercise the care, diligence and skill reasonably expected of someone in their position; wrongful and fraudulent trading expose directors personally. There is no residency requirement, but substance expectations make a Malta-resident director and a registered office in Malta usual, and every company must have a company secretary.

Ordinary resolutions pass by a simple majority of voting rights present. Extraordinary resolutions require the majorities set in the Act and the memorandum: by default, members holding not less than 75 per cent in nominal value of the shares represented and entitled to vote at the meeting and at least 51 per cent of all shares entitled to vote, with the memorandum able to vary the percentages within limits; check the authority and the memorandum. Minority shareholders may seek relief from unfairly prejudicial conduct under article 402. A private company must restrict share transfers in its memorandum or articles; a transfer is made by written instrument, approved by the board, assessed for duty on documents and transfers (generally 2 per cent of the higher of consideration and real value, with a higher rate where the company holds immovable property and exemptions for certain holding structures; check the Commissioner for Tax and Customs), entered in the register and notified to the Malta Business Registry on the prescribed form within the statutory period. The Registry also maintains the beneficial ownership register.

EIRA: probation and notice

The Employment and Industrial Relations Act (Cap. 452) sets a default probation period of six months, extendable to up to one year for technical, executive, administrative or managerial posts above a salary threshold if agreed in writing. During probation either party may terminate without cause on one week's notice once service exceeds one month. After probation, notice for an indefinite contract scales with service: one week (over one to six months), two weeks (over six months to two years), four weeks (over two to four years), eight weeks (over four to seven years) and one further week per year to a maximum of twelve weeks; longer periods may be agreed for managerial and technical posts. Restrictive covenants are enforced only where reasonable and supported by a legitimate interest, and the transposed Transparent and Predictable Working Conditions Directive limits exclusivity clauses during employment. Share option benefits are taxed under the Fringe Benefits Rules on exercise; check the Commissioner for Tax and Customs.

National mark or EU trade mark

Malta's Trademarks Act (Cap. 597) transposes Directive (EU) 2015/2436 and is administered by the Industrial Property Registrations Directorate in the Commerce Department. The official fee is EUR 115 per class, each class treated as a separate application; registration takes approximately six to eight months without deficiencies or opposition; third parties have 90 days from publication to oppose; and registration lasts ten years from filing, renewable. Malta is not a party to the Madrid Protocol, so international reach comes through the EU trade mark: one application at EUIPO (EUR 850 for one class, EUR 50 for the second and EUR 150 for each further class) covers all member states, with a three-month opposition period and approximately four to six months to registration unopposed. Applicants outside the EEA appoint a professional representative before EUIPO. A brand used only in Malta files nationally; a brand used across Europe files at EUIPO, sometimes with a national mark in parallel. Check the authority.

Checklist

• Sign private writings electronically; use a notary for public deeds.
• Confirm the extraordinary resolution majority in the memorandum before relying on it.
• Budget duty on documents and transfers for any share transfer.
• Set probation at six months (or up to a year for senior posts, in writing).
• Decide national versus EU trade mark on where the brand will actually be used.

LegalMatrix products for Malta are signed off by an advocate holding a Maltese warrant.