The number of local and foreign companies being registered in Malta has continued to increase for the fourth consecutive year, with the current average standing at 25.5 registrations a day, according to Joseph Caruana, Registrar at the Registry of Companies Agency (RoC Malta).
The recent data points to a 15 per cent growth in company registrations per day since 2016. But while the average number of new firms remained consistent between that year (at 22.2 per day) and 2017 (at 22.7 per day), the figures started to spike in earnest from 2018, which reported 25.3 new company registrations per day, 99 per cent of these being private limited liability companies.
This surge was accompanied by a decrease in the rate of company dissolutions. A total of 1,232 companies were dissolved in 2018, down from 1,603 in 2016 – a difference of nearly one in four within the space of two years.
Moreover, the figures released by the Registrar confirmed that foreign-owned companies are now nearly on a par with Maltese-owned enterprises. At 26,762, the latter comprise only a slim majority of companies currently registered in Malta, compared to 23,405 foreign or partly-foreign owned firms, with at least one non-Maltese shareholder.
Malta Chamber of Commerce, Enterprise and Industry Deputy President David Xuereb said that the local legislative framework, which provides a ‘safe and competitive’ corporate climate, is the key to this surge in successful applications. “Maltese business legislation and regulatory environments are among the most proactive and business-friendly in Europe,” he said.
According to current regulations, firms interested in opening operations on the island can be established within two to three days, on application to the Malta Financial Services Authority (MFSA) and RoC Malta, provided that all the requirements, as established by the Company Act, have been satisfied.
The process is also inexpensive: a minimum share capital for private limited liability companies of €1,165 is decreed, of which only 20 per cent has to be paid up front. This can be denominated in any currency and there are no exchange control restrictions, thus encouraging the use of Maltese corporate vehicles for businesses trading internationally.
Indeed, the regulatory structure means that businesses coming from the European mainland will find a familiar system and legal framework they are able to operate in, according to Mr Xuereb, who noted that this has also encouraged a solid servicing and international corporate sector.
“The introduction of the financial services industry in the 1990s, as well as the ICT revolution in the new millennium, is now being followed by blockchain and AI, all of which are supported by the Companies Act,” Mr Xuereb said. In light of these new industries, and quoting the recent forecasts published by the European Commission and credit agencies, the Malta Chamber Deputy President said that he was optimistic that a healthy momentum will be retained.
“We might see emerging segments in the economy attracting new investments and companies to Malta, especially in the fields of fintech, blockchain and distributed ledger technologies (DLTs) and, eventually, artificial intelligence,” he said. “The motivation and energy seem to be coming from the services industry at this moment.”
Yet, he underlined the necessity of ensuring sustainable growth in this area, “while also strengthening our regulatory framework and institutions.” To this end, he sees the Malta Chamber’s role as central, in “its mission to be vigilant with Government and propose improvements to legislation in areas which are important to businesses.
This is the result of the Chamber’s strong links to the determinate sectors, through its wide membership,” he stressed.
This article originally appeared in The Malta Business Observer