L.S. 234.42 Regolamenti dwar Bastimenti Merkantili (Organizzazzjonijiet ta' Bastimenti - Kumpanniji Privati)

(2). Title and commencement Preliminary provisions General Provisions Formation of Companies Private Companies Formation of a Company Registration Changes to a company’s share capital Maintenance of share capital and protection of class rights Miscellaneous provisions about shares and debentures Meetings and Resolutions Management and Administration Accounts, Audit and Annual Return Auditors Distribution of Profits and Assets Defunct Companies Dissolution and Consequential Winding up of Companies Winding up by the court General Provisions Liquidators in a winding up by the court General powers of the court in a winding up by the court Voluntary Winding Up General Provisions Provisions applicable to a members’ voluntary winding up Provisions applicable to a creditors’ voluntary winding up Provisions applicable to every voluntary winding up. Distribution and payment of debts and other administrative matters Provisions Applicable to every Mode of Winding Up General Provisions Effect of appointment of liquidator and convening of meetings Proof and Ranking of Claims Regulations 1 2-3 4-5 6 - 97 6-9 10 - 16 17 - 23 24 - 25 26 - 32 33 - 42 43 - 50 51 - 63 64 - 82 83 - 94 95 - 97 98 99 - 163 100 - 125 100 - 106 107 - 116 117 - 125 126 - 151 126 - 135 136 - 139 140 - 148 149 - 151 152 - 163 152 153 - 158 159 - 163 2 [ S.L. 234.42 Part VI Part VIA Sub-Part I Sub-Part II Part VII Part VIII MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) Company Reconstructions, Conversions, Amalgamations 164 and Division of Companies Continuation of Companies 164A -164O Continuation in Malta of a Foreign Company 164A -164H Continuation outside Malta of companies incorporated in 164I - 164O Malta General 165 - 167 Transitory Provisions 168 - 170 SCHEDULES First Schedule Second Schedule Third Schedule Fourth Schedule Fifth Schedule Sixth Schedule Seventh Schedule Eighth Schedule Ninth Schedule Tenth Schedule Model Regulations for the management of a shipping company Form and content of individual accounts Form and content of consolidated accounts Contents of directors’ report Contents and form of annual return Explanation of expressions used in regulation 3 Forms Conversion rules applicable on a change in the currency in which the share capital of a company is expressed and the corresponding reporting currency Form relating to Notice to be governed by the Companies Act Penalties MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 1.

(1)The title of these regulations is the Merchant Shipping (Shipping Organisations - Private Companies) Regulations. 3 Title.

(2)These regulations shall come into effect on the 1st May 2004 except as hereunder provided.

(3)These regulations shall apply , with effect from the 1st August 2004, to shipping companies formed and registered under the Commercial P artnersh ips Ordinance , with the exception of regulation 37, which shall apply with effect from the 1st May 2004: Provided that should a shipping company elect to be governed by the Companies Act, it shall file a notice in accordance with the provisions of subregulation

(4)and these regulations shall not apply to such shipping companies.

(4)Shipping companies formed under the Commercial Partnerships Ordinance. Cap. 168. Cap. 386. Amended by: L.N. 31 of 2020. (

1. a)Any shipping company which is registered and existing as of the 30th April, 2004 which elects to be governed by the Companies Act shall file a notice to that effect in terms of the Ninth Schedule by not later than the 1st August, 2004. (
2. b)In such event, the company shall be bound to comply with the Companies Act within ninety days from the filing of the notice with the Registrar of Companies. (
3. c)In the event of the company failing to comply with the requirements of the Companies Act within the said time limit, the company shall be regulated by the regulations with effect from the 1st August, 2004 and the filing of the notice shall have no effect.

(5)For the purposes of sub-regulations

(3)and

(4)and of Part VIII, "shipping company" means a company whose objects are limited to the sole purpose of owning, managing, administering or operating ships and to transactions ancillary thereto formed and registered under the Commercial Partnerships Ordinance. PART I Cap.

1. PRELIMINARY PROVISIONS
2. These regulations shall apply to any organisation formed as a private limited liability company and qualifying as a shipping organisation in terms of article 84Z of the Merchant Shipping Act unless it ceases to so qualify. Purpose. Cap. 234 3.

(1)In these regulations, unless the context otherwise requires, the following expressions have the meaning hereby assigned to them - Interpretation. Amended by: L.N. 411 of 2007; L.N. 31 of 2020 "the Act" means the Merchant Shipping Act; Cap. 234. "appointed day" means the date appointed by the Minister for the coming into force of these regulations; "approved country or jurisdiction" means such country or jurisdiction as may be established from time to time by guidelines issued by the Registrar; "auditor" means a person who is an individual who holds a warrant to act as auditor issued under the Accountancy Profession Cap. 281. 4 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) Act or is a partnership of auditors duly registered under the said Act; "body corporate" means any entity having a legal personality distinct from that of its members, and includes a foreign body corporate; Cap. 386. "certificate of registration", when used in relation to a company, means a certificate of registration issued under these regulations and the Companies Act and the words "registration", "registered" and their derivatives shall be construed accordingly; "Companies Act" means Chapter 386 of the Laws of Malta; "company" means a company formed and registered under Part III of these regulations; "court" means the Civil Court; "debenture" includes debenture stock, bonds and any other debt securities of a company; "director" includes any person occupying the position of director of a company by whatever name he may be called carrying out substantially the same functions in relation to the direction of the company as those carried out by a director; "directors’ report" in relation to a company, means the directors’ report required by regulation 73; "euro" refers to the currency unit of the participating states in the European Monetary Union; "expert", except where otherwise specifically defined in these regulations, means an auditor whether Maltese or foreign and whether or not assisted by a specialist valuer; "extraordinary resolution" has the meaning given to it by regulation 50; "instrument of continuation" includes any document or certificate confirming that a company has been registered as continuing in an approved country or jurisdiction other than Malta; "in writing" includes any electronic representation except in so far as relates to documents delivered to the Registrar for registration; "member" means a shareholder of a company; "notice" shall mean a notice in writing of any kind; "officer" in relation to a company, means a director but does not include an auditor; "ordinary resolution" has the meaning given to it by regulation 50; "parent company" is a company which (

1. a)has a majority of the members’ voting rights in another undertaking (subsidiary undertaking); or (
2. b)has the right to appoint or remove a majority of the members of the board of directors or persons entrusted MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 with the administration of another undertaking (a subsidiary undertaking) and is at the same time a member of that undertaking; or (
3. c)has the right to exercise a dominant influence over an undertaking (a subsidiary undertaking) of which it is a member, pursuant to a contract entered into with that undertaking or to a provision in that undertaking’s memorandum or articles of association; or (
4. d)is a member of an undertaking and controls alone pursuant to an agreement with other members of that undertaking (a subsidiary undertaking), a majority of members’ voting rights in that undertaking; or (
5. e)holds a participating interest in another undertaking and actually exercises a dominant influence over the undertaking (a subsidiary undertaking) or manages the subsidiary undertaking on a unified basis together with it; and the term "parent undertaking" shall be construed accordingly; "participating interest" shall mean rights in the capital of other undertakings, whether or not represented by certificates, which, by creating a durable link with those undertakings, are intended to contribute to those undertakings’ activities. The holding of twenty per cent of the capital of another undertaking shall be presumed to constitute a participating interest unless the contrary is shown. An interest in shares includes an interest which is convertible into an interest in shares and an option to acquire an interest in shares. Interests in shares held by subsidiary undertakings or held by third parties on behalf of the company or its subsidiary undertakings shall be deemed to be held by the company; "private company" means a private company as defined in regulation 6; "Registrar" means the person appointed as Registrar of Companies under the Companies Act; Cap. 386. "security" includes a share, debenture or any other similar instrument issued by a company; "share" includes stock except where a distinction between stock and shares is express or implied; "shareholder" means a person entered in the register of members of a company pursuant to regulation 38; "true and fair view" in re la tion to a ccounts r efers to the requirements of regulation 66

(3).

(2)For the purposes of these regulations, where a document required to be delivered to the Registrar for registration is required to state the name and residence or address of a person, it shall be deemed to require further the official identification, by number or otherwise of such person, as may be applicable.

(3)Where a matter is not specifically dealt with under these regulations, reference shall be made to the provisions of the Companies Act on such matter including any relevant regulations Cap.

1. 5 6 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) issued under the Companies Act. PART II GENERAL PROVISIONS Legal personality.
2. A company to which these regulations apply has a legal personality distinct from that of its member or members, and such legal personality shall continue until the name of the company is struck off the register, whereupon the company ceases to exist. Indication of particulars in business letters, etc. 5.

(1)In all its business letters and order forms a company shall mention in legible characters its name, the fact that it is a limited liability company, its registered office and registration number.

(2)Where a company is being wound up, every letter, invoice or other document by or on behalf of the company, being a document on or in which the name of the company appears, shall in addition to the requirements of the preceding paragraph of this regulation, contain a statement that the company is being wound up and shall contain the names of the liquidators.

(3)If default is made in complying with the provisions of subregulations

(1)and

(2)every officer or liquidator, as the case may be, of the company who is in default shall be liable to a penalty. PART III FORMATION OF COMPANIES Chapter I - Private Companies Definition. 6.

(1)A private company is a company which, besides fulfilling the requirements of these regulations for it to hold the status of a private company, is one which, by its memorandum or articles (

1. a)restricts the right to transfer its shares; and (
2. b)limits the number of its members to fifty; and (
3. c)prohibits any invitation to the public to subscribe for any shares or debentures of the company.

(2)A private company shall not (

1. a)offer to the public, whether for cash or otherwise, any shares in or debentures of the company; or (
2. b)allot or agree to allot, whether for cash or otherwise, any shares in or debentures of the company with a view to all or any of those shares or debentures being offered for sale to the public; or (
3. c)have the power to issue share warrants to bearer.

(3)Where a private company contravenes the provisions of subregulation

(2), every officer thereof who is in default shall be liable to a penalty. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 7. Subject to the provisions of these regulations, a resolution in writing signed by all the members for the time being entitled to receive notice of and to attend and vote at the general meetings shall be as valid and effective as if the same had been passed at a general meeting of the company duly convened and held. Resolutions in writing. 8.

(1)Companies regulated by these regulations may be constituted by and have a single member notwithstanding any other provision of these regulations. Single member companies. Amended by: L.N. 31 of 2020.

(2)A company may have a single member upon registration or it may become a single member company through the acquisition of all its shares by one person inter vivos or causa mortis, in which case it shall file a notice to that effect within fourteen days in terms of the Seventh Schedule.

(3)The single member shall exercise the powers of the general meeting of the company and the decisions taken by him in this capacity shall be recorded as minutes of the general meeting and the provisions of these regulations regulating general meetings shall be construed accordingly. The decisions referred to in this paragraph shall be deemed to be resolutions of the company for the purposes of the application of the provisions of these regulations: Provided that the provisions of this paragraph shall not prejudice the rights of the auditors of the company under the provisions of regulation 87 of these regulations and the directors of the company under the provisions of regulation 52, and the rights granted to persons as are, by the articles of the company, entitled to receive notices of, attend and be heard at general meetings of the company.

(4)When a single member of a company is also the sole director of the company all provisions of these regulations and any memorandum and articles of association relating to general meetings shall be deemed to refer to the board of directors, and resolutions of the board of directors shall qualify as general meeting resolutions when the latter are required by law or the articles of the company.

(5)The single member shall record in writing all the agreements between him and the company as represented by him in a minute book kept by the company specifically for the purpose: Provided that current operations concluded under normal conditions need not be recorded in such minute book.

(6)When a company ceases to be a single member company, it shall within fourteen days, deliver to the Registrar for registration a notice specifying the fact that it is no longer a single member company and the provisions of this regulation shall not apply to such company from the date it has ceased to be a single member company.

(7)All decisions taken by the single member as aforesaid shall be considered as extraordinary resolutions for the purposes of these regulations.

(8)If default is made in complying with the provisions of subregulations

(2)and

(6)every officer of the company who is in 7 8 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) default shall be liable to a penalty and, for every day during which the default continues, to a further penalty. Change of status of company. Cap. 386. 9.

(1)A private company may change its status to a public company in terms of the Companies Act whereupon the company shall no longer be regulated by these regulations but shall be subject to the provisions of the Companies Act.

(2)A public company may change its status to a private company in terms of these regulations whereupon it shall no longer be regulated by the Companies Act but shall be subject to the provisions of these regulations. Chapter II - Formation of a Company Definition.

1. A company is formed by means of a capital divided into shares held by two or more members unless it is a single member company. The liability of each member is limited to the amount, if any, unpaid on the shares respectively held by each of them. How a company is constituted.
2. A company shall not be validly constituted under these regulations unless a memorandum of association is entered into and a certificate of registration is issued in respect thereof. Contents of memorandum and share capital in any convertible currency. Amended by: L.N. 411 of 2007; L.N. 31 of
3. 12.

(1)The memorandum of every company shall state: (

1. a)that it is a shipping organisation for the purposes of the Act; (
2. b)that the company is a private company; (
3. c)the name and residence of each of the subscribers thereto; (
4. d)the name of the company; (
5. e)the registered office in Malta of the company; (
6. f)the objects of the company which shall be limited to one or more of the activities referred to in sub-article

(1)of article 84Z of the Act; (

1. g)the amount of share capital with which the company proposes to be registered (hereinafter referred to as "the authorised capital"), the division thereof into shares of a fixed amount, the number of shares taken up by each of the subscribers and the amount paid up in respect of each share and, where the share capital is divided into different classes of shares, the rights attaching to the shares of each class; (
2. h)the number of the directors, the name and residence of the first directors and, where any of the directors is a body corporate, the name and registered or principal office of the body corporate; (
3. i)the manner in which the representation of the company is to be exercised, and the name of the first person or persons vested with such representation: Provided that the company may appoint other persons in addition to the said named representatives MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 9 to represent the company in a class or classes of cases by means of a clause in the memorandum or articles of association, by a resolution of the board of directors or by means of a power of attorney issued by such named representatives; (j)

(2)the period, if any, fixed for the duration of the company. (

1. a)The share capital of a company may be denominated in any currency which is a convertible currency within the meaning assigned to it by the Central Bank of Malta Act, and, for the purposes of these regulations, the euro, shall be a convertible currency. Cap. 204. (
2. b)A company may by extraordinary resolution change the currency in which its share capital is expressed, and for this purpose the conversion rules set out in the provisions of the Eighth Schedule shall apply in respect of any company regulated by these regulations. (
3. c)For the purposes of applying the provisions of these regulations relating to minimum share capital, share capital expressed in a currency other than euros shall be calculated on the basis of the euro equivalent at the date of (
4. i)the registration of the memorandum, in the case of formation of a company; or (
5. ii)the registration of the extraordinary resolution, in the case referred to in subregulation

(2)(b); or (iii) the registration of the extraordinary resolution effecting a reduction of the issued share capital, in the case where a company reduces its issued share capital.

(3)Without prejudice to the provisions of regulation 24, a copy of the extraordinary resolution referred to in subregulation

(2)(b) shall be delivered to the Registrar for registration and shall not be effective until it is so registered.

(4)The exchange rate to be used shall be the average of the buying and selling rates prevailing at the date of registration referred to in subregulation

(2), as the case may be. 13.

(1)A company may be designated by any name, but such name shall end with the words "private limited company" or the word "limited" or its abbreviation "ltd.".

(2)A company shall not be registered by a name which (

1. a)is the same as a name of another commercial partnership or so nearly similar as in the opinion of the Registrar it could create confusion; or (
2. b)is in the opinion of the Registrar offensive or otherwise undesirable; or (
3. c)has been reserved for registration for another commercial partnership by a notice in writing to the Name of company. Amended by: L.N. 31 of 2020. 10 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) Registrar given not more than three months before the date of the second request: Provided that the Registrar shall notify any refusal under this paragraph without delay to the person requesting the registration: Provided further that in applying paragraph (b), the Registrar shall have regard to the business or proposed business of the company, to the protection of the names of individuals who are not connected in any way with the company, and to the names of the members. Objects of company. Substituted by: L.N. 31 of 2020. Cap. 234. 14. The objects of a company registered shall be limited to one or more of the activities referred to in sub-article

(1)of article 84Z of the Act and to transactions ancillary thereto. Minimum share capital. Amended by: L.N. 411 of 2007. 15.

(1)The authorised share capital of a company shall be not less than one thousand and one hundred and sixty-four euros and sixty-nine cents (1,164.69).

(2)Where the authorised share capital is equal to the minimum aforesaid, it shall be fully subscribed in the memorandum, and where it exceeds such minimum, at least that minimum shall be subscribed in the memorandum.

(3)At least twenty per cent of the nominal value of each share taken up shall be paid up on the formation of the company.

(4)The ordinary shares of a company shall not be redeemable, and every company shall at all times have ordinary shares. Articles of Association. Substituted by: L.N. 31 of 2020. 16.

(1)There may be registered with the memorandum, articles of association (hereinafter referred to as "articles"), which shall b e sign ed by the subscribers t o the m em orandu m and prescribing regulations for the company.

(2)If articles are not registered, or, if articles are registered, in so far as the articles do not exclude or modify the model regulations contained in the First Schedule, such model regulations shall be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles: Provided that this provision shall not apply in relation to model regulation 22 of the First Schedule, unless that provision is expressly reproduced in the memorandum or articles of the company. Chapter III - Registration Registration of memorandum and articles. 17. The memorandum and articles, if any, shall be delivered for registration to the Registrar who, being satisfied that all the requirements of regulations 11 to 16 and of regulation 53 have been complied with, shall register them. Duty of Registrar and effects of registration. 18.

(1)On the registration of the memorandum and articles, if any, of a company, the Registrar shall certify under his hand that the company is registered as stated under these regulations, and the company shall come into existence and shall be authorised to MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 11 commence business as from the date of registration which date shall be indicated in the certificate.

(2)A certificate of registration given in respect of a company is conclusive evidence that the requirements of these regulations in respect of registration and of matters precedent and incidental to it have been complied with and that the company is duly registered as a private company under these regulations. 19.

(1)All persons carrying on business or entering into agreements in the name of or on behalf of a company in respect of which a certificate of registration has not been issued under these regulations and the Companies Act, in terms of these regulations shall, unless otherwise agreed, be personally and jointly and severally liable for their dealings with third parties entered into by them in the aforementioned capacity. Where certificate of registration is not issued. Cap. 386.

(2)Failing agreement to the contrary, the persons referred to in subregulation

(1)shall have, as against one another and in respect of the assets and liabilities arising out of the business carried on in the company’s name or on its behalf, the rights and obligations of joint owners.

(3)Notwithstanding the provisions of subregulation

(1), the dealings referred to in that subregulation shall, with respect to a third party who has dealt in good faith with persons purporting to act in the name of or on behalf of a company in respect of which a certificate of registration has not been issued with effect from the date on which the company shall come into existence, be treated as having been undertaken by the company: provided that in such an event the provisions of subregulation

(1)shall not apply. The company shall be entitled to be indemnified by the persons who had acted in its name or on its behalf in respect of its liability under this subregulation towards the said third party.

(4)When an agreement is entered into in the name of a company and it is expressly stated that the company is in formation, any such agreement shall be valid and binding on the parties thereto upon registration of the company and the preceding paragraphs of this regulation shall not apply. 20.

(1)A company may by extraordinary resolution alter or add to its memorandum or articles: Provided that it shall be permissible for the members without prejudice to the company remaining a shipping organization to authorise, and subject such authorisation to restrictions as they deem fit, the board of directors to alter or add to the memorandum and articles clauses which (

1. a)amend the name of the company; (
2. b)amend the registered address; (
3. c)amend the articles of the company relating to internal administration provided the rights of the members are not affected; and (
4. d)amend the objects and powers of the company so as to facilitate the carrying on of the business of the Alterations and additions to memorandum and articles. 12 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) company as a shipping organisation.

(2)It shall be the duty of the directors to deliver to the Registrar for registration a printed copy of any resolution as aforesaid within fourteen days after the date of the resolution, together with a revised and updated copy of the memorandum, and of the articles, if any, as amended by the said resolution and incorporating all the changes effected to date relating to the directors, the representation of the company or any transfer or transmission of shares or any allotment of shares. Any previous amended text of the memorandum and articles, if any, may be discarded by the Registrar when a subsequent amended text is delivered to him for registration: Provided that in the event of a discrepancy between the text of any amended memorandum and articles, if any, and the text of the original memorandum and articles, if any, registered in accordance with the provisions of regulation 17, the latter text together with resolutions registered in accordance with the provisions of subregulation

(2)shall prevail. Notwithstanding the provisions of subregulation

(2), where the alteration consists in a change in the registered office in Malta of the company, the directors shall send to the Registrar for registration a return of any change in the registered office, specifying the date of the change, together with the new registered office, within fourteen days from the happening thereof.

(3)Any alteration or addition to the memorandum or articles of a company shall not take effect vis-à-vis third parties, unless and until it is registered.

(4)If default is made in complying with the provisions of subregulation

(2), every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty.

(5)The responsibility for ensuring that any proposed amendments to the articles of association, if any, of a company, are correct, complete and in full compliance with these regulations and any other applicable law shall lie with the directors of the company. Change of name of company.

1. Where a company changes its name under the provisions of regulation 20, the Registrar shall enter the new name on the register in place of the former name and shall issue a certificate of registration altered to meet the circumstances of the case. Alteration in memorandum or articles increasing liability to contribute to share capital not to bind existing members without consent.
2. Notwithstanding anything in the memorandum or articles of a company no member shall be bound by any alteration made in the memorandum or articles after the date on which he became a member if and so far as the alteration requires him to subscribe for more shares than the number held by him at the date on which the alteration is made, or in any way increases his liability as at that date to contribute to the share capital of, or otherwise pay money to, the company: Provided that this regulation shall not apply in any case where the member agrees in writing, either before or after the MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 13 alteration is made, to be bound thereby. 23.

(1)A document or proceeding requiring authentication by a company may be signed by a director, or other authorised officer of the company or other person authorised in writing.

(2)All documents supplied to the Registrar authenticated in accordance with this regulation. shall Authentication of documents. be Chapter IV - Changes to a company’s share capital 24.

(1)Notwithstanding the provisions of regulation 20

(3), where the alteration consists in the reduction of the issued share capital, any such reduction shall not take effect until three months from the date of the publication of the statement to this effect in the Gazette or on a website maintained by the Registrar and in a daily newspaper showing the date at which the reduction was made and giving such details as are necessary to distinguish the company to which the statement relates: Provided that if a creditor of the company whose debt existed prior to the publication of the statement mentioned in this paragraph objects thereto by sworn application filed within the period of three months reckoned as aforesaid and shows good cause why it should not take effect, the court shall either uphold the objection or allow the reduction on sufficient security being given: Provided further that a reduction in share capital shall be void to the extent that it reduces the capital to less than the minimum prescribed by regulation 15 of these regulations.

(2)The Registrar of Courts shall without delay cause a copy of any sworn application filed under subregulation

(1)and of any judgment given thereon to be served on the Registrar for registration.

(3)The total or partial waiving of the unpaid part of the issued shares and the release of the holders of those shares from their obligation to pay up that unpaid part shall, notwithstanding anything contained in the memorandum or articles of a company, in all cases be considered as a reduction in share capital.

(4)Where there are different classes of shares the decision by the general meeting concerning a reduction in the issued share capital shall be subject to a separate vote for each class of shareholders whose rights are affected by the reduction, and for every separate vote taken the same majority shall be required as where the shares are not divided into different classes.

(5)An alteration consisting in the reduction of the issued share capital whose purpose is to offset losses incurred or to include sums of money in a reserve shall take effect immediately on the registration of the resolution concerning such a reduction and the provisions of subregulation

(1)relating to the rights granted to creditors of the company shall not apply: Provided that, following this operation, the amount of such reserve is not more than ten per cent of the reduced issued share capital: Reduction of issued share capital. Amended by: L.N. 181 of 2006; L.N. 186 of 2006; L.N. 31 of 2020. 14 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) Provided further that any such reserve shall be used only for offsetting losses incurred or for increasing the issued share capital by the capitalisation of such reserve.

(6)In the cases referred to in subregulation

(5)the amounts deriving from the reduction of the issued share capital may not be used for making payments or distributions to shareholders or to discharge shareholders from the obligation to pay calls on their shares: Provided that if the provisions of subregulations

(1)and

(2)relating to the rights granted to the creditors of the company are followed for the purpose of reducing any sum of money contained in any such reserve, as is referred to in subregulation

(5), the amounts deriving therefrom may be used for making payments or distributions to shareholders.

(7)The notice convening the general meeting at which the extraordinary resolution for the reduction of issued share capital is to be taken, shall, specify the purpose expressly and the way in which it is to be carried out. Increase in issued share capital and director’s authority to issue shares. 25.

(1)Any increase in the issued share capital of a company shall be decided upon by an ordinary resolution of the company, unless the memorandum or articles require a higher percentage than that required for an ordinary resolution.

(2)The memorandum or articles of a company may permit the board of directors to issue shares up to the authorised share capital as may be specified in the same memorandum and articles.

(3)Where there are several classes of shares, if resolution of the general meeting is required, in terms of subregulation

(1), it shall be subject to a separate vote for each class of shareholders whose rights are affected by that resolution and the provisions relating to the majority required for the resolution by virtue of subregulation

(1)shall apply for each class.

(4)A copy of any such ordinary or extraordinary resolution referred to in subregulations

(1)and

(3)shall be delivered to the Registrar for registration, within fourteen days after the date of the relative resolution, failing which every officer of the company who is in default shall be liable to a penalty, and for every day during which the default continues, to a further penalty.

(5)The provisions of subregulations

(1)to

(4)shall apply to the issue of all securities which are convertible into shares or which carry the right to subscribe for shares, but not to the conversion of such securities, nor to the exercise of the right to subscribe.

(6)Where an increase in the issued share capital is not fully taken up, the issued share capital shall be increased by the amount of subscriptions received only if the conditions of the issue so provide.

(7)Whenever a company makes any allotment of its shares, the company shall, within one month thereafter, deliver to the Registrar in accordance with the provisions of the Seventh Schedule for registration - MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 15 (

1. a)a return of the allotments stating the number and the nominal amount of the share comprised in the allotment, the names and addresses of the allottees and the amount paid and that due, and payable, on each share, whether on account of the nominal value of the share or by way of premiums; and (
2. b)in the case of shares allotted as fully or partly paid up otherwise than in cash, a contract in writing or, where the contract is not reduced to writing, a document containing the particulars of the contract, constituting the title of the allottee to the allotment, together with any contract of sale, or for services rendered to other consideration in respect of which the allotment was made, and a return stating the number and nominal value of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted. Chapter V - Maintenance of share capital and protection of class rights 26. It shall not be lawful for an undertaking (
3. a)to subscribe for, hold, acquire or otherwise deal in shares in a company which is its parent company; or (
4. b)except after notice has been given in the prescribed form in accordance with the Seventh Schedule, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, to give any financial assistance for the purpose of an acquisition or subscription made or to be made by any person of or for any shares in the company or its parent company. Undertaking may not subscribe for or acquire shares in its parent company or provide financial assistance for the purchase of, or subscription for, its own or its parent company’s shares. 27. The acceptance of a company’s own shares by way of pledge or other form of security shall be treated as an acquisition by the company of such shares. Effect of a company’s own shares as security. 28. Any share in a company may be forfeited from any shareholder in favour of the company and any shareholder may surrender any or all of his shares in a company in favour of that company if the shareholder fails to pay any call or instalment of a call on the day appointed for payment thereof and as long as provision to that effect is contained in the memorandum or articles of the company. Forfeiture or surrender of shares. 29.

(1)It shall be lawful for a company to pay a commission or make a discount or allowance to any person in consideration for his subscribing or agreeing to subscribe, whether absolutely or conditionally for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company: Conditions for payment of commissions, discounts, etc. Provided that (

1. a)authority therefor is given by the memorandum or articles; and 16 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) (
2. b)the commission, discount or allowance does not exceed ten per cent of the price at which the shares are issued or the amount authorised by the memorandum or articles, whichever is the less; and (
3. c)the amount or rate per cent of the commission, discount or allowance and the number of shares which persons have agreed in consideration thereof to subscribe absolutely shall be disclosed in any circular or notice whereby the shares are privately offered; and (
4. d)in no event may the value of such shares be reduced to below their nominal value as a result of the payment of such commission, discount or allowance.

(2)If shares are issued in contravention of the provisions of this regulation the holder thereof shall be bound to pay the company an amount equal to the amount of the commission, discount or allowance given in excess of that permitted by this regulation, with annual interest at the rate of two percentage points over the Central Bank of Malta minimum discount rate. Application of premium received on issue of shares. 30.

(1)Where a company issues shares at a premium whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be immediately paid in full and transferred to an account, to be called "the share premium account", and the provisions of these regulations relating to the reduction of the issued share capital of a company shall, except as provided in this regulation, apply as if the share premium account were paid up share capital of the company.

(2)The share premium account may, notwithstanding anything contained in the foregoing subregulation, be applied by the company (

1. a)in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares; or (
2. b)in writing off the preliminary expenses of the company or the expenses of or the commission paid or discount allowed on, any issue of shares or debentures of the company; or (
3. c)in providing for the premium payable on redemption of any redeemable preference shares or of any debentures of the company. Redeemable preference shares. 31.

(1)Where a company, duly authorised by its memorandum or articles, issues preference shares which are to be redeemed or are liable to be redeemed at the option of the company or the shareholder (a) no such shares shall be redeemed except out of the profits of the company which would otherwise be available for dividend or, in accordance with subregulation

(4), out of the proceeds of a fresh issue of shares made for the purpose of the redemption; MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 (

1. b)no such shares shall be issued unless the following conditions are satisfied as regards the terms and manner of redemption (
2. i)the date on or by which, or dates between which, the shares are to be or may be redeemed must be specified in the company’s memorandum or articles or, if the memorandum or articles so provide, fixed by the directors, and in the latter case the date or dates must be fixed before the shares are issued; (
3. ii)any other circumstances in which the shares are to be or may be redeemed must be specified in the company’s memorandum or articles; (iii) the amount payable on redemption must be specified in, or determined in accordance with, the company’s memorandum or articles, and in the latter case the memorandum or articles must not provide for the amount to be determined by reference to any person’s discretion or opinion; and (
4. iv)any other terms and conditions of redemption shall be specified in the company’s memorandum or articles; (
5. c)no such shares shall be redeemed unless they are fully paid up and the terms of redemption shall require full payment on redemption; (
6. d)the premium, if any, payable on redemption shall have been provided for out of the profits of the company or out of the company’s share premium account before the shares are redeemed; (
7. e)where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits, which would otherwise have been available for distribution as dividend, be transferred to a reserve to be called "the capital redemption reserve", a sum equal to the nominal amount of the shares redeemed, and the provisions of these regulations relating to the reduction of the issued share capital of a company shall, except as provided in this regulation, apply as if the capital redemption reserve were paid up share capital of the company.

(2)The capital redemption reserve may, notwithstanding anything contained in this regulation, be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

(3)Preference shares redeemed under this regulation shall be tr e a t e d a s c a n c e l l e d on r e d e m p ti o n , an d t h e a m ou n t of t h e company’s issued share capital shall be diminished by the nominal value of those shares accordingly: Provided that a redemption of preference shares by a c o m p a n y s h a l l n o t b e t ak en a s r e d u c i n g t h e a m o u n t o f t h e 17 18 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) company’s authorised share capital.

(4)Without prejudice to the provisions of subregulation

(3), where a company is about to redeem preference shares, it shall have the power to issue shares up to the nominal value of the preference shares to be redeemed as if those preference shares had never been issued.

(5)A notice of the redemption of preference shares referred to in the preceding paragraphs of this regulation shall be delivered by the company to the Registrar for registration, within fourteen days after the date of redemption.

(6)If default is made in complying with the provisions of subregulation

(5)every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty. Rights of holders of special classes of shares and changes or variations thereof. Amended by: L.N. 181 of 2006; L.N. 186 of 2006. 32.

(1)If, in the case of a company the share capital of which is divided into different classes of shares, provision is made by the memorandum or articles for authorising the change of any shares in the company from one class into another or for the variation of the rights attached to any class of shares in the company, subject to the consent of any specified proportion of the holders of the issued shares of that class and of any other class affected thereby or the sanction of a resolution passed at a separate meeting of the holders of those shares and of the holders of any other shares affected thereby, and in pursuance of the said provision the shares are changed from one class into another or the rights attached to any such class of shares are at any time varied, the holders of not less in the aggregate than fifteen per cent either of the issued shares of that class or of any other class affected thereby, being persons who did not consent to or vote in favour of the resolution for the change or variation, may by sworn application filed within twenty-one days of the consent or the resolution, demand that the change or variation shall not have effect.

(2)On any such demand the court, if it is satisfied, having regard to all circumstances of the case, that the change or variation would unfairly prejudice the holders of shares, the class of which is being changed or the rights of which are being varied, or the holders of any other class of shares affected thereby, shall disallow the change or variation.

(3)The Registrar of Courts shall without delay cause a copy of any sworn application filed under subregulation

(1)and of any judgment given thereon to be served on the Registrar for registration, and the said sworn application shall, on pain of nullity, include a demand to that effect.

(4)Regulation 20

(2)and

(4)shall apply in respect of any consent or resolution given or taken in terms of subregulation

(1).

(5)Where no provision is made by the memorandum or articles for authorising the change or variation referred to in subregulation

(1), no such change or variation may be made. Chapter VI - Miscellaneous provisions about shares and debentures MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 33. Each share in a company shall be distinguished by its appropriate number: 19 Numbering of shares. Provided that, if at any time all the issued shares in a company, or all the issued shares therein of a particular class, are fully paid up and rank pari passu for all purposes, none of those shares need thereafter have a distinguishing number so long as they remain fully paid up and rank pari passu for all purposes with all shares of the same class for the time being issued and fully paid up. 34.

(1)Notwithstanding any provisions contained in any other law, a transfer of shares in or debentures of a company may be made by private writing unless the memorandum and articles, if any, provide for another form. Transfer of shares or debentures.

(2)It shall not be lawful for a company to register a transfer of shares in or debentures of the company unless a proper instrument of transfer or an authentic copy thereof has been delivered to the company. 35.

(1)On the application of the transferor or of the transferee of any share in or debenture of a company, the company shall enter in its register of members or of debentures, as the case may be, the name and address of the transferee and where the application is made by the transferor the entry shall be made in the same manner and subject to the same conditions as if the application for the entry were made by the transferee. Registration of transfer or transmission of shares or debentures.

(2)If a company refuses to register a transfer of shares or debentures, it shall, within two months after the date on which the transfer was lodged, send to the transferee notice of the refusal.

(3)The directors of a company shall be obliged to register the transfer of any shares in the company in favour of any person who has acquired those shares as a result of any court sanctioned sale thereof.

(4)On the application of the person to whom the right to any share in or debentures of a company has been transmitted causa mortis, the company shall register in its register of members or debentures, as the case may be, the name and address of such person.

(5)If a company refuses to register a transmission as is referred to in subregulation

(4), it shall, within two months after the date on which the transmission is lodged, send to the person to whom the right to any shares or debentures of a company has been transmitted causa mortis, notice of the refusal.

(6)If default is made in complying with the provisions of subregulations

(2)or

(5), every officer of the company who is in default, shall be liable to a penalty, and, for every day during which the default continues, to a further penalty. 36.

(1)Every company shall, within two months after the allotment of any of its shares or debentures and within two months after the date on which a transfer of any such shares or debentures is registered with the company, and within one month from the date on which any such shares or debentures transmitted causa mortis Issue of certificates. 20 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) have been registered in the name of the person entitled to be registered as the holder thereof, deliver the certificates of all shares, debentures or debenture stock allotted, transferred or transmitted causa mortis to the persons entitled thereto, unless the conditions of issue of the shares or debentures otherwise provide.

(2)The expression "transfer" for the purposes of this regulation means a transfer on which the relevant duty, if any, has been paid and is otherwise valid, and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register.

(3)In the case of a transfer or of a transmission causa mortis of shares the company shall within fourteen days after the date on which a transfer of any such shares is registered with the company, and within one month from the date on which any such shares transmitted causa mortis have been registered in the name of the person entitled to be registered as the holder thereof, deliver to the Registrar for registration a notice of the transfer or the transmission causa mortis stating the names and addresses of the transferees or the names and addresses of the persons entitled to the shares transmitted causa mortis, as the case may be.

(4)If default is made in complying with any of the provisions of this regulation, every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty. Pledging of securities. Amended by: L.N. 31 of 2020. 37.

(1)Securities may, provided it is expressly permitted in the memorandum or articles of the company or under the conditions of issue of those securities, be pledged by their holder in favour of any person as security for any obligation. The pledge of securities shall be constituted by means of an instrument in writing entered into between the pledgor and the pledgee: Provided that in relation to transfers of shares, any restriction resulting from the Memorandum or Articles of the company shall, subject to the provisions of paragraph

(10)of this regulation, be deemed not to apply to transfers by the pledgee in terms of paragraph

(6)of this regulation or resulting from any judicial sale.

(2)Notice of the pledge shall be delivered by the pledgor or the pledgee to the Registrar for registration within fourteen days of the granting of the pledge. The company whose securities have been pledged, shall also be notified of the pledge in writing within the said period and the company shall record that fact in the register of holders of the respective securities.

(3)Failure to deliver notice of the pledge to the Registrar or the company within the time stated in the preceding sub-regulation shall not render invalid the pledge entered into between the parties; however the pledge of securities shall be effective in relation to a third party only after the registration by the Registrar of the notice.

(4)Saving the provisions of subregulation

(3), during the existence of a pledge of securities, any transfer or other assignment, made by the pledgor, whether by onerous or gratuitous title, of the pledged securities shall be null and void. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42

(5)Notwithstanding the provisions of subregulation

(4), any transfer or other assignment of securities made with the consent of the pledgee shall be valid and the securities to be transferred shall continue to be subject to the pledge.

(6)Without prejudice to the right of the pledgee to apply for the judicial sale of the securities and notwithstanding the provisions of the Civil Code or of the memorandum or articles of the company, in the event of a default under the agreement of pledge and upon giving notice by judicial act to the pledgor and the company, the pledgee shall be entitled to: (a) dispose of the securities which are pledged in his favour; or (b) appropriate and acquire the shares himself, in settlement of the debt due to him or of part thereof.

(7)For the purposes of subregulation

(6)the value of the securities may be established by agreement between the pledgor and the pledgee after notice of default has been given by the pledgee to the pledgor in terms of the said subregulation

(6), and no prior agreement thereon shall be valid: Provided that, in case of disagreement, the fair value for the sale or appropriation of the securities shall be determined by a certified public accountant or a certified public accountant and auditor appointed by the court on the application of the pledgee or in such other manner as the parties may agree in writing.

(8)For the purposes of subregulation

(7), the fair value of the securities shall be that obtaining on the date of the notice referred to in subregulation

(6).

(9)The pledgee shall, in selling the securities in accordance with the provisions of subregulation

(6), be obliged to seek the best p r i ce b e i n g n o t l e s s t h a n t h e i r f a i r v a l u e a s d e t e r m i n e d i n accordance with subregulation

(7). In the event that a buyer cannot be found for the securities at their fair value, the pledgee may apply to the court for the securities to be sold at less than their fair value as aforesaid subject to such conditions as the court may deem fit.

(10)The pledgee shall be obliged, prior to the exercise of the right granted by subregulation

(6), to offer the shares to other shareholders of the company in accordance with any pre-emption rights relating to the transfer of shares as laid down in the memorandum or articles of that company, and, in the absence of such preemptive rights, to all the other shareholders of the company in proportion to their holdings. In either case the shareholders shall be entitled to purchase the shares at the price determined in accordance with subregulation

(7). Such offer shall be kept open for at least ten working days.

(11)In the exercise of his rights under this regulation, the pledgee shall only sell or appropriate such number of securities as are needed to raise sufficient proceeds to repay the debt due. All remaining shares shall be released to the pledgor: Provided that it shall be lawful for a pledgee to sell all the shares pledged in the event that it is not possible to achieve a fair Cap. 16. 21 22 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) price for the sale of only part of the pledged shares and any excess in the proceeds shall be released to the pledgor.

(12)It shall be lawful for the parties to an agreement of pledge of securities to agree on the person or persons who shall exercise all the rights belonging to the holder of securities including voting rights and the right to receive dividends and interest payments: Provided that, should the agreement between the parties not make provision for such matters, all rights pertaining to a holder of securities shall, for the duration of the pledge, be exercised by the pledgor until such time as he defaults under the agreement of pledge or until the pledgee enforces his security; and in any such case, upon giving notice by a judicial act to the pledgor and the company, all the rights belonging to the pledgor shall immediately become exercisable by the pledgee: Provided further that, unless the pledgor and the pledgee have otherwise agreed in the pledge agreement and notice thereof has been given to the company, dividends or interest payments due on securities which are pledged shall, during such time as the pledge is registered in the register of holders of the respective securities, be paid by the company to the pledgee who shall appropriate any such amounts received to the interest due on the debt secured by the pledge, and, if there is an excess, to the capital.

(13)Notice of termination of the pledge shall be delivered by the pledgor or the pledgee to the Registrar for registration within fourteen days of the termination of the pledge. The company, securities in which have been pledged, shall also be notified in writing of the termination of the pledge within the said period and the company shall record that fact in the register of holders of the respective securities.

(14)In the event that the parties to a pledge agreement submit a ny di sp ut e t he re un d er t o a rb i tr a ti o n al l r ef er e nc es in th i s regulation to the court shall be deemed to refer to the arbitration tribunal. Register of members. 38.

(1)Every company shall keep a register of its members and shall enter therein the following particulars (

1. a)the names and addresses of the members and a statement of the shares held by each member, distinguishing each share by its number, so long as the share has a number, and of the amount paid or agreed to be considered as paid on the shares of each member; (
2. b)the date at which each person was entered in the register as a member; and (
3. c)the date at which any person ceased to be a member: Provided that where the company has converted any of its shares into stock and has registered the conversion with the Registrar, the register shall show the amount of stock held by each member instead of the amount of shares and the particulars relating to shares specified in paragraph (a). MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42

(2)Where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of these regulations, be treated as a single member; and, unless otherwise provided in the memorandum or articles, the name of only one of such persons shall be entered in the register of members. Such person shall be elected by the joint holders and shall for all intents and purposes be deemed in relation to the company to be the member of the company in respect of all the shares so held.

(3)The register of members shall be kept at the registered office of the company or at such other place as specified in the memorandum or articles and in such form as may be determined.

(4)If default is made in complying with any requirement of this regulation, every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty. 39.

(1)Every company shall keep a register of debentures and shall enter therein the names and addresses of the registered holders and particulars of the debentures held by them respectively. Register of debentures.

(2)The register of debentures shall be kept at the registered office of the company or at such other place as may be specified in the memorandum or articles and in such form as may be determined therein.

(3)Where two or more persons hold one or more debentures jointly, they shall for the purposes of these regulations be treated as a single debenture holder; and, unless otherwise provided in the memorandum or articles, the name of only one of such persons shall be entered in the register of debentures. Such person shall be elected by the joint holders and shall for all intents and purposes be deemed vis-à-vis the company to be the holder of all the debentures so held.

(4)If default is made in complying with any requirement of this regulation, every officer of the company who is in default shall be liable to a penalty and, for every day during which the default continues, to a further penalty. 40. Except when duly closed in accordance with the provisions of regulation 41, and subject to such reasonable restrictions as the company in general meeting may impose - Inspection of registers. (a) the register of members shall be open to the inspection of any member of the company without charge; and (b) the register of debentures shall be open to the inspection of any person without charge. 41.

(1)A company may, on giving notice to the members, close the register of members to inspection for any period or periods not exceeding in the whole thirty days in each year.

(2)The register of debentures may be closed to inspection in accordance with provisions contained in the memorandum or articles or in the debentures or, in the case of debenture stock, in the stock certificates, during such period or periods, not exceeding Power to close registers. 23 24 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) in the whole thirty days in any one year, as may be therein specified.

(3)The memorandum or articles may provide that, during such time as the register of members or the register of debentures is closed in accordance with the provisions of subregulations

(1)or

(2), no new particulars may be entered therein. Trustees and nominees. 42. Unless otherwise provided in its articles, a company formed and registered in Malta shall not recognise any nominee relationship or trust in respect of any security issued by it, and the company shall not recognise, even when having notice thereof, any interest or other right in such security, but shall only recognise the registered holder thereof. Chapter VII - Meetings and Resolutions Holding of annual general meeting. 43.

(1)Every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of the company and that of the next: Provided that so long as a company holds its first annual general meeting within eighteen months of its registration it need not hold it in the year of its registration or in the following year.

(2)Every general meeting other than an annual general meeting shall be an extraordinary general meeting.

(3)If default is made in complying with the provisions of subregulation

(1), every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty. Convening of extraordinary general meeting on requisition. 44.

(1)The directors of a company shall, on the requisition of a member or members of the company holding at the date of the deposit of the requisition not less than one-tenth of such of the paid up share capital of the company as at the date of the deposit carried the right of voting at general meetings of the company, forthwith proceed duly to convene an extraordinary general meeting of the company.

(2)The requisition shall state the objects of the meeting and shall be signed by the requisitionist or requisitionists and deposited at the registered office of the company and may consist of several documents in like form each signed by the requisitionist, or if there is more than one requisitionist in any one document by all of them.

(3)If the directors do not within twenty-one days from the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionist or requisitionists may convene a meeting in the same manner, as nearly as possible, as that in which meetings are to be convened by the directors, but a meeting so convened shall not be held after the expiration of three months from the date of the deposit of the requisition.

(4)Any reasonable expense incurred by the requisitionist or MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 25 requisitionists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisitionist or requisitionists by the company, and any sum so paid shall be due personally by the directors who were in default and may be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration in respect of their services to such of the directors as were in default.

1. A general meeting of a company shall be deemed not to have been duly convened unless at least fourteen days’ notice has been g iven in w rit ing , an d any provi si on i n t he com pany ’s memorandum or articles shall be construed as requiring fourteen days’ notice in writing in so far as it provides for the calling of a meeting of a company, other than an adjourned meeting, by a shorter notice: Length of notice for calling general meetings. Provided that a meeting of the company shall notwithstanding that it is called by a shorter notice, be deemed to have been duly convened if it is so agreed by all the members entitled to attend and vote thereat.
2. The following provisions shall have effect in so far as the articles of a company do not contain other provisions in that behalf: (a) notice of any general meeting of a company shall be given to every member of the company and shall be served at the address specified in the register of members in the manner in which notices are required to be served by the First Schedule; General provisions as to meetings and votes. Amended by: L.N. 411 of
3. (b) two members personally present shall be a quorum; (c) any member elected by the members present at a meeting may be chairman thereof; (d) every member shall have one vote in respect of each share or each euro or the equivalent of stock held by him unless otherwise provided in the terms of issue of such shares or stock; (e) service of notice at the last known address of the shareholder as appears in the register of members shall be deemed to be an effective service of notice. It is the duty of the shareholders to inform the company of any change of address. 47.

(1)If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of the company may be called, or to conduct the meetings of that company in the manner prescribed by the articles or these regulations, the court may, either on its own motion or on the demand of either of the parties to the proceedings during the course of such proceedings or, in the absence of any proceedings, on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the court thinks fit, and where any such order is made, may give such ancillary or consequential directions as it thinks expedient, including a Powers of court to order meeting. 26 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(2)The provisions of subregulation

(1)shall also apply to the calling of meetings of the board of directors of a company, if the court considers that the circumstances justify such course of action. Proxies. 48.

(1)Notwithstanding anything contained in the memorandum or articles of a company, any member entitled to attend and vote at a meeting of the company or at a meeting of any class of members of the company shall be entitled to appoint another person, whether a member or not, as his proxy to attend and vote instead of him, and a proxy so appointed shall have the same right as the member to speak at the meeting and to demand a poll.

(2)The appointment of a proxy shall be in writing.

(3)In every notice calling a meeting of a company there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy and that a proxy need not also be a member. If default is made in complying with this paragraph, every officer of the company who is in default shall be liable to a penalty.

(4)A provision in a company’s memorandum or articles shall be void in so far as it would have the effect of requiring an instrument appointing a proxy, or any other document necessary to show the validity of, or otherwise relating to, the appointment of a proxy, to be received by the company or any other person more than forty-eight hours before a meeting or adjourned meeting for that appointment to be effective.

(5)A company shall not issue at its own expense to some only of the members entitled to be sent a notice of a meeting and to vote thereat by proxy, invitations to appoint as proxy a person or one of a number of persons specified in the invitations. If default is made in complying with this paragraph, every officer of the company who is in default shall be liable to a penalty: Provided that an officer shall not be liable to a penalty by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy, or of a list of persons willing to act as proxy, if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

(6)The provisions of this regulation shall apply to meetings of any class of members of a company as they apply to general meetings of the company. Right to demand a poll. 49.

(1)Any provision contained in the memorandum or articles of a company shall be void in so far as it would have the effect either (

1. a)of excluding the right to demand a poll at a general meeting on any question other than the election of the chairman of the meeting or the adjournment of the meeting; or (
2. b)of making ineffective a demand for a poll on any such MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 27 question which is made either (
3. i)by not less than five members having the right to vote at the meeting; or (
4. ii)by a member or members representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (iii) by a member or members holding shares in the company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

(2)The instrument appointing a proxy to vote at a meeting of the company shall be deemed to confer authority to demand or join in demanding a poll; and for the purposes of subregulation

(1)a demand by a person as proxy for a member shall be the same as a demand by the member.

(3)On a poll taken at a meeting of a company or a meeting of any class of members of that company, a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way. 50.

(1)Unless otherwise provided in the memorandum, a resolution shall be an extraordinary resolution where it has been passed by more than fifty percent of the members having the right to attend and vote at any such meeting: Extraordinary and ordinary resolutions. Provided that an extraordinary resolution shall be taken at a general meeting of which notice specifying the intention to propose the text of the resolution as an extraordinary resolution and the principal purpose thereof has been duly given.

(2)Unless otherwise provided in the memorandum or articles, an ordinary resolution shall be passed by a member or members having the right to attend and vote at a meeting holding in the aggregate more than fifty per cent of the voting rights attached to shares represented and entitled to vote at the meeting. Chapter VIII - Management and Administration 51.

(1)In this regulation: "guarantee" shall mean the undertaking of any obligation by what ever name whereby the company agrees t o perform an obligation in the event of failure to do so by any other person; "corporate benefit" shall mean any financial, commercial, trading or reputational benefit to be derived by the company, its holding company, its subsidiaries or subsidiaries of its holding company, any related company or its subsidiaries, its trading partners or counterparts or its members but not only its officers.

(2)A company shall, unless otherwise provided in its memorandum or articles, have the power to borrow money and to guarantee the obligations of any third party and, for such purpose, Power of company to borrow money, hypothecate or charge its undertaking, etc. 28 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) to hypothecate or charge its undertaking, property and uncalled capital or any part thereof including as security for its direct obligations or for those of third parties, and to issue debentures, debenture stock and other securities whether outright or as security for its direct liabilities or obligations or for those of any third party: Provided that when the grant of a guarantee for the obligations of a third party by a company is made on a purely gratuitous basis, with no corporate benefit being derived therefrom by the company, unless the memorandum states otherwise, the issue of such guarantee shall require the consent of the members by extraordinary resolution: Provided further that nothing in this regulation shall render invalid any guarantee granted by any company which was entered into prior to the coming into force of these regulations. Directors. Amended by: L.N. 31 of 2020. 52.

(1)Every company shall have at least one director, and w h e r e a c o m p a n y h a s o n e d i r e c t o r, a l l r e f e r e n c e s i n t h e s e r e g u l a t i o n s t o t w o o r m o r e d ir e c t o r s s h a l l b e c o n s t r u e d a s references to such one director.

(2)The business of a company shall be managed by the directors who may exercise all such powers of the company, including those specified in regulation 51.

(3)Notwithstanding anything contained in the memorandum and articles of association relating to the names in which the representation of the company is to be exercised, anything done by the board of directors of a company which exceeds the limits of their authority or by any director which is beyond his powers, shall be binding on the company unless that act exceeds the powers granted to the board of directors or to a director, as the case may be by virtue of these regulations.

(4)Any limitation on the powers of the board of directors or of any director of the company shall not be relied on as against third parties, independently of whether that limitation, published or not, arises from the memorandum or articles or from any resolution of the general meeting or from a decision of the board of directors of the company.

(5)Where an act of the company falls outside the company’s objects, the company shall not be bound if it proves that, when the act was done, the third party knew that it was outside the company’s objects or the third party could not in view of the circumstances have been unaware thereof: Provided that the publication of the memorandum and articles of the company shall not in itself be sufficient to prove that the third party knew, or could not have been unaware, that the act was outside the company’s objects.

(6)When a vacancy arises in the board of directors the vacancy can be filled by a general meeting or equivalent resolution or in its absence a board of directors’ resolution. In the absence of either one any member may apply to the court to appoint a director until the next annual general meeting. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 29

(7)A person appointed by the court in accordance with the provisions of subregulation

(6)shall hold office until the next annual general meeting although he shall be eligible for re-election.

(8)The provisions of subregulation

(6)shall furthermore be without prejudice to the provisions of regulation 54

(1)to

(5)and of regulation 99

(2)(b)(iv) and to the right of the company to fill any such vacancy in general meeting. 53.

(1)Where a director is by the memorandum required to hold a specified share qualification, he shall either sign the memorandum for a number of shares not less than his qualification or sign and deliver to the Registrar for registration an undertaking in writing to take from the company and pay for his qualification shares: Appointment of directors. Provided that he shall vacate his office if he fails to obtain his qualification within two months after his appointment, or such shorter time as may be fixed by the memorandum or articles, or if at any time thereafter he ceases to hold his qualification; and he shall be incapable of being re-appointed director of the company until he has obtained his qualification.

(2)Unless otherwise provided in the memorandum or articles of a company, a director of a company other than the first directors shall be appointed by ordinary resolution of the company in general meeting.

(3)Where the holders of a particular class of shares have the right to appoint one or more directors, in terms of the memorandum and articles of the company, such appointment shall be made by a member or members holding in the aggregate more than fifty per cent in nominal value of the shares represented and entitled to vote at the meeting of the holders of the shares of that class. 54.

(1)A company may remove a director before the expiration of his period of office by a resolution taken at a general meeting of the company and passed by a member or members having the right to attend and vote, holding in the aggregate shares entitling the holder or holders thereof to more than fifty per cent of the voting rights attached to shares represented and entitled to vote at the meeting.

(2)The provisions of subregulation

(1)shall apply notwithstanding anything in the company’s memorandum or articles or in any agreement between it and the director.

(3)On receipt of a notice of an intended resolution to remove a director under this regulation the company shall forthwith send a copy thereof to the director concerned and the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting.

(4)A vacancy created by the removal of a director under this regulation, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.

(5)Nothing in this regulation shall be taken as - Removal of directors and casual vacancies. 30 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) (

1. a)depriving a person removed hereunder of compensation or damages payable to him in respect of the termination of his appointment as director or of any other appointment terminating with the termination of his appointment as director; or (
2. b)derogating from any power to remove a director which may exist apart from this regulation.

(6)(

1. a)Unless otherwise provided in the memorandum or articles of a company, a casual vacancy may be filled by the continuing director or directors, and without prejudice to the aforesaid powers of the directors, it may be filled by the company in general meeting. (
2. b)A person appointed by the directors to fill a casual vacancy shall hold office until the next following annual general meeting and shall be eligible for reelection, but shall not be taken into account in determining the directors who are to retire by rotation at that meeting. (
3. c)A person appointed to fill a casual vacancy by the company in general meeting shall be treated for the purpose of determining the time at which he or any other director is to retire, as if he had become director on the day on which the person in whose place he is appointed was last appointed director. Representation of the company. 55.

(1)Where for any reason the representation of a company ceases to be vested in any person or persons, the company shall appoint another person or persons to exercise such function. The appointment shall be made by ordinary resolution taken at a general meeting notice of which shall be issued within fourteen days from the date when the vacancy occurs.

(2)The company may by ordinary resolution replace any person or persons vested with the representation of the company.

(3)Where and for as long as, the representation of the company cannot be exercised in accordance with the memorandum of the company, any director shall represent the company in judicial proceedings against it. Disqualification for appointment as director. 56.

(1)A person shall not be qualified for appointment or to hold office as director of a company if (

1. a)he is interdicted or incapacitated or is an undischarged bankrupt; (
2. b)he has been convicted of any of the crimes affecting public trust or of theft or of fraud or of knowingly receiving property obtained by theft or fraud; (
3. c)he is a minor who has not been emancipated to trade; Cap. 386. (
4. d)he is subject to a disqualification order under article 320 of the Companies Act or equivalent legislation overseas. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42

(2)Notwithstanding the provisions of these regulations or of the memorandum and articles of a co mp any relat ing to th e formalities of the appointment of a director or other officer and to his qualification, any irregularity concerning the appointment of a director or other officer of a company raised after the completion of the publication of his appointment shall not be relied upon by the company as against third parties unless the company proves that such parties were aware of the irregularity at the relevant time.

(3)Third parties who were not aware of the irregularities referred to in subregulation

(2)at the relevant time may rely on that irregularity as against the company. 57.

(1)Unless authorised in the memorandum or articles of a company a director may not, in competition with the company and without the approval in writing of all the members of the company given at a general meeting, carry on business on his own account nor may he be a partner with unlimited liability in another partnership which is in competition with that company. Directors competing with company.

(2)Where a director acts in violation of the prohibition contained in this regulation, the company may, at its option, either take action for damages and interest against him or demand payment of any profits made by him in contravention of this regulation.

(3)The provisions of this regulation shall be without prejudice to any other remedy which a company may have against a director for breach of duty. 58. It shall not be lawful for a company (

1. a)to make a loan to any person who is its director or a director of its parent company, or to enter into any guarantee or provide any security in connection with a loan made to such a person as aforesaid by any other person: Provided that nothing in this paragraph shall apply either (
2. i)to anything done, with the approval of the company given at a general meeting, to provide any such person as aforesaid with funds to meet expenditure incurred or to be incurred by him for the purposes of the company or for the purpose of enabling him properly to perform his duties as an officer of the company; or (
3. ii)in the case of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business; (
4. b)to make to any director of the company any payment by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, without particulars with respect to the Prohibition of loans, etc., to directors. 31 32 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) proposed payment, including the amount thereof, being disclosed to members of the company and the proposal being approved by the company in general meeting. Duty of director to disclose interest in a contract with company. 59.

(1)It shall be the duty of a director of a company who is in any way, whether directly or indirectly, interested in his personal capacity in a contract or proposed contract with the company to declare the nature of his interest to the other directors either at the meeting of the directors at which the question of entering into the contract is first taken into consideration, or, if the director was not at the date of that meeting interested in the contract or proposed contract, at the next meeting of the directors held after he became so interested.

(2)Any director who fails to comply with the provisions of this regulation shall be liable to a penalty. Return as to changes among directors and in representation of company. Amended by: L.N. 31 of 2020. 60.

(1)Every company shall send to the Registrar for registration a return of any change among its directors or the person who is vested with the representation of the company, specifying the date of the change together with the name and residence of any new director, within fourteen days from the happening thereof in terms of the Seventh Schedule: Provided that the Registrar may, before registering the return, take such steps and require such information as he may deem necessary to ascertain the correctness of the return and to determine whether the provisions of these regulations have been complied with.

(2)Where the company has appointed a company secretary the directors shall send the return referred to in sub-regulation

(1). The return shall also be submitted in the case of any change in the company secretary.

(3)If default is made in complying with the provisions of subregulation

(1), every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty. Joint and several liability of directors for breach of duty. 61.

(1)The personal liability of the directors in damages for any breach of duty shall be joint and several: Provided that where a particular duty has been entrusted to one or more of the directors, only such director or directors shall be liable in damages.

(2)A director shall not be liable for the acts of his co-directors if he proves either (

1. a)that he did not know of the breach of duty before or at the time of its occurrence and that on becoming aware of it after its occurrence he signified forthwith to the co-directors his dissent in writing; or (
2. b)that, knowing that the co-directors intended to commit a breach of duty, he took all reasonable steps to prevent it. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 62. Any provision, whether contained in the memorandum or articles of a company or in any contract with a company or otherwise for exempting any officer of the company or any person engaged by the company as auditor from, or indemnifying him against, any liability which by virtue of any rule of law would in the absence thereof have been attached to him in respect of negligence, default or breach of duty or otherwise of which he may be guilty in relation to the company shall be void: 33 Provisions as to liability of officers and auditors. Provided that a company may, in pursuance of any such provision as aforesaid, indemnify any such officer or auditor against any liability incurred by him in defending any proceedings in w hich j udgm ent i s given in h is favo ur or i n wh ich he is acquitted. 63.

(1)Every company shall cause minutes of all proceedings of general meetings and all proceedings at meetings of its directors to be entered in books kept for that purpose. Minutes of proceedings.

(2)Any such minute, if purporting to be signed by the chairman of the meeting at which the proceedings were held, or by the chairman of the next succeeding meeting, shall be evidence of the proceedings.

(3)The books containing the minutes of proceedings of any general meeting of a company shall be kept at the registered office of the company, or at such other place, including a place outside Malta, as may be specified in the memorandum or articles, and shall, during business hours, subject to such reasonable restrictions as the company may by its articles or in general meeting impose, be open to the inspection of any member of the company without charge.

(4)If a company fails to comply with the requirements of subregulations

(1)or

(3), every officer of the company who is in default shall be liable to a penalty. Chapter IX - Accounts, Audit and Annual Return 64.

(1)The provisions of articles 163, 167, 170 to 183 and articles 185 to 187 of Part V, Title I, Chapter X and the Third and Sixth Schedule of the Companies Act shall apply mutatis mutandis to companies formed and registered under these regulations, provided that the balance sheet total and turnover mentioned in sub-article

(1)of article 185 of the Companies Act shall be read as follows: balance sheet total: six million euro (6,000,000); - turnover: twelve million euro (12,000,000); - and provided further that the aggregate balance sheet total and aggregate turnover mentioned in sub-article

(5)of article 185 of the Companies Act shall be read as follows: - aggregate balance sheet total: six million euro (6,000,000) net or seven million and two hundred thousand euro (7,200,000) gross; Annual Accounts Cap.

1. Substituted by: L.N. 31 of
2. Cap.
3. Cap.
4. 34 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 - Cap.
5. Cap.
6. Accounting periods. Amended by: L.N. 31 of
7. aggregate turnover: twelve million euro (12,000,000) net or fourteen million and four hundred thousand euro (14,400,000) gross: Provided further that companies which qualify as small companies shall also be entitled to the exemptions mentioned in sub-article

(2)of article 185 of the Companies Act and in the provisos to sub-article

(2)of article 183 of the Companies Act.

(2)The penalties in the Eleventh Schedule of the Companies Act which would be applicable to any default in terms of the articles mentioned in sub-regulation

(1)shall apply 65.

(1)A company’s accounting periods shall be of not more than one year except the first accounting period which may be of not less than 6 months and not more than eighteen months from the date of registration.

(2)Accounting periods shall be from and to such dates as are determined by the directors from time to time during an accounting period.

(3)In the case specified in subregulation

(2), the company shall within fourteen days file a notice with the Registrar for registration in terms of the Seventh Schedule. General provisions as to content and form of individual accounts.

1. Deleted by Legal Notice 31 of
2. Duty to prepare consolidated accounts.
3. Deleted by Legal Notice 31 of
4. Form and content of consolidated accounts.
5. Deleted by Legal Notice 31 of
6. Consolidated accounts - size exemption. Amended by: L.N. 411 of
8. Deleted by Legal Notice 31 of
9. Exemption for parent companies included in accounts of larger groups.
10. Deleted by Legal Notice 31 of
11. Disclosure required in notes to the accounts.
12. Deleted by Legal Notice 31 of
13. Approval and signing of annual accounts.
14. Deleted by Legal Notice 31 of
15. Contents of the directors’ report.
16. Deleted by Legal Notice 31 of
17. Approval and signing of directors’ report.
18. Deleted by Legal Notice 31 of
19. Auditor’s report.
20. Deleted by Legal Notice 31 of
21. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 35
22. Deleted by Legal Notice 31 of
23. Persons to whom a copy of the accounts of a company are to be sent.
24. Deleted by Legal Notice 31 of
25. Directors to lay accounts before the general meeting.
26. Deleted by Legal Notice 31 of
27. Period for laying of accounts.
28. Deleted by Legal Notice 31 of
29. Copies of accounts to be provided to Registrar. 80.

(1)Every company shall upon each anniversary of its registration, make a return in the form set out in the Fifth Schedule showing the matters therein specified and made up to the date of such anniversary: Annual return. Amended by: L.N. 31 of 2020. Provided that (

1. a)where a company was, immediately before the coming into force of these regulations in default with respect to the delivery of one or more annual returns, this regulation shall not affect the obligation of the company to make such a return or returns or the payment of any penalty arising from such a default; (
2. b)where a company has converted any of its shares into stock and registered the conversion as provided in regulation 20, the list of past and present members shown in Part 3 of the Fifth Schedule, shall state the amount of stock held by each of the existing members instead of the amount of shares and the particulars relating to shares required by that part.

(2)The annual return, duly completed, shall be signed by at least one director of the company and forwarded to the Registrar for registration within forty-two days after the date to which it is made up.

(3)If default is made in complying with the provisions of this regulation, every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty.

1. Deleted by Legal Notice 31 of
2. Exemptions for small companies. Amended by: L.N. 411 of
4. Deleted by Legal Notice 31 of
5. Accounts in any convertible currency. Amended by: L.N. 411 of
6. Chapter X - Auditors 83.

(1)A company shall, at each general meeting at which the annual accounts are laid, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next general meeting at which the accounts are laid. The company may appoint joint auditors and reference in these Appointment of auditors. Amended by: L.N. 31 of 2020. 36 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) regulations to auditor or auditors shall be deemed to include references to single or joint auditors as the case may be.

(2)The first auditors of the company may be appointed by the directors at any time before the first general meeting of the company at which the annual accounts are laid, and the auditors so appointed shall hold office until the conclusion of that meeting.

(3)If the directors fail to exercise their powers under subregulation

(2), the powers may be exercised by the company in general meeting.

(4)If no auditors are appointed or re-appointed as required by the foregoing subregulations, the court on an application made by any of the directors or by any member of the company or by the Registrar may appoint a person to fill the vacancy.

(5)In the case specified in subregulation

(4), the company shall within two weeks of the general meeting at which an auditor or auditors should have been appointed by virtue of subregulation

(1), give notice to the Registrar that his power to apply to the court has become exercisable.

(6)If a company fails to give the notice required by subregulation

(5), every officer of the company who is in default shall be liable to a penalty and, for every day during which the default continues, to a further penalty. Filling of casual vacancies. 84.

(1)The directors shall at any time before the general meeting of the company at which the annual accounts are laid fill a casual vacancy in the office of auditor: Provided that the company in general meeting may fill such a casual vacancy itself.

(2)While such a vacancy continues, any surviving or continuing auditor or auditors may continue to act.

(3)Where it is proposed (

1. a)to appoint an auditor to fill a casual vacancy in the office of auditor by resolution of the general meeting; or (
2. b)to re-appoint by resolution of the general meeting a retiring auditor who was appointed by the directors to fill a casual vacancy, as auditor, or to appoint a new auditor instead of that auditor, notice specifying in terms of the proposed resolution shall be given forthwith to the person proposed to be appointed and, if the casual vacancy was caused by the resignation of an auditor, to the auditor who resigned.

(4)Any director who fails to comply with the provisions of subregulation

(1)shall be liable to the same penalty as that provided for in regulation 83

(6). MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 85.

(1)A person shall be disqualified from appointment as auditor or from holding the office of auditor of a company if (

1. a)in the case of an individual, he has at any time during the previous three years been (
2. i)an officer or employee of the company; or (
3. ii)a partner, employer or employee of an officer of the company; or (iii) a partner or employee of an employee of the company; or (
4. iv)related by consanguinity or affinity in the direct line, or up to the third degree, in the collateral line, to any officer of the company.

(2)An auditor must at all times adhere to the rules on independence and professional ethics set out in the Code of Ethics and any other regulations, directives or guidelines issued from time to time in terms of the Accountancy Profession Act. 86.

(1)The auditors of a company shall have a right of access at all times to the company’s accounting records, accounts and vouchers, and shall be entitled to require from the company’s officers such information and explanations as they think necessary for the performance of their duties as auditors.

(2)An officer of a company who knowingly or recklessly makes to the company’s auditors a statement, whether written or oral which (

1. a)conveys or purports to convey any information or explanations which the auditors require, or are entitled to require, as auditors of the company; and (
2. b)is misleading, false or deceptive in a material particular; shall be guilty of an offence and liable on conviction to a fine (multa) of not more than four thousand and six hundred and fiftyeight euros and seventy-five cents (4,658.75) or to imprisonment for a term not exceeding six months or to both such fine and imprisonment.

(3)A subsidiary undertaking which is registered in Malta, and the auditors of such an undertaking, shall give to the auditors of any parent company of the subsidiary undertaking such information and explanations as they may reasonably require for the purposes of their duties as audit ors of th at com pany. If a subsidiary undertaking fails to comply with the provisions of this paragraph, every officer thereof who is in default shall be liable to a penalty; and if an auditor fails without reasonable cause to comply with this paragraph he shall be liable to a penalty.

(4)A parent company having a subsidiary undertaking which is not registered in Malta shall, if required by its auditors to do so, take all such steps as are reasonably open to it to obtain from the subsidiary undertaking such information and explanations as they may reasonably require for the purposes of their duties as auditors of that company. If a parent company fails to comply with the provisions of this subregulation, every officer of the company who 37 Disqualification from appointment as auditor. Amended by: L.N. 31 of

1. Cap.
2. Right to information. Amended by: L.N. 411 of
3. 38 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) is in default shall be liable to a penalty. Right to attend company meetings.
4. A company’s auditors shall be entitled (a) to receive all notices of, and other communications relating to, any general meeting which a member of the company is entitled to receive; (b) to attend any general meeting of the company; and (c) to be heard at any general meeting which they attend on any part of the business of the meeting which concerns them as auditors. Remuneration of auditors. 88.

(1)The remuneration of auditors appointed by the company in general meeting shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine. The remuneration of auditors appointed by the directors or the court shall be fixed by the directors or the court as the case may be.

(2)There shall be stated in the notes to the accounts the amount of the remuneration of the company’s auditors in their capacity as such; and where consolidated accounts are prepared, the notes to the consolidated accounts shall state the total remuneration paid to the auditors of the parent company in respect of all undertakings included in the consolidation, and also the total remuneration paid to all other auditors in respect of such undertakings.

(3)For the purposes of this article, "remuneration" includes sums paid in respect of expenses.

(4)The provisions of this regulation shall apply in relation to benefits in kind as to payments in cash, and in relation to any such benefit references to its amount are to its estimated money value. The nature of any such benefit shall also be disclosed. Removal of auditors. Amended by: L.N. 31 of 2020. 89.

(1)Notwithstanding anything in a company’s memorandum or articles or in any other agreement, the company may at any time remove an auditor from office in the same manner as that specified in regulation 54

(1).

(2)Where a resolution removing an auditor is passed at a general meeting of a company, the company shall within fourteen days give notice thereof to the Registrar for registration. If a company fails to give the notice required by this subregulation, every officer of the company who is in default shall be liable to a penalty and, for every day during which the default continues, to a further penalty.

(3)Nothing in this regulation shall be taken as depriving a person removed under its provisions of compensation for damages payable to him in respect of the termination of his appointment as auditor or of any appointment terminating with that of auditor.

(4)An auditor of a company who has been removed shall have, notwithstanding his removal, the rights conferred by regulation 87 in relation to any general meeting of the company (

1. a)at which his term of office would otherwise have MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 39 expired; or (
2. b)at which it is proposed to fill the vacancy caused by his removal. In such a case the references in that regulation to matters concerning the auditor as auditor shall be construed as references to matters concerning him as a former auditor. 90.

(1)Notice specifying the text of and reasons for a proposed resolution of a general meeting of a company whereby it is intended to - Rights of auditors who are removed and not appointed. (

1. a)remove an auditor before the expiration of his term of office; or (
2. b)appoint as auditor a person other than a retiring auditor; shall be sent forthwith by the company to the person proposed to be removed, to the person proposed to be appointed and to the retiring auditor, as the case may be.

(2)The auditor proposed to be removed or, as the case may be, the retiring au dito r m ay m ake wi th resp ect to the i ntended resolution representations in writing to the company not exceeding a reasonable length and request their notification to members of the company.

(3)The company shall, unless the representations are received by it too late for it to do so (

1. a)in any notice of the resolution given to members of the company, state the fact of the representations having been made; and (
2. b)send a copy of the representations to every member of the company to whom notice of the meeting is or has been sent.

(4)If a copy of any such representations is not sent out as required because it was received too late or because of the company’s default, the auditor may, without prejudice to his right to be heard orally, require that the representations be read out at the meeting. 91.

(1)An auditor of a company may resign his office by depositing a notice in writing to that effect at the company’s registered office and he shall so resign if he ceases to be qualified as an auditor or if he fails to satisfy the conditions of qualification provided in regulation 86. The notice shall not be effective unless it is accompanied by the statement required by regulation 93.

(2)An effective notice of resignation shall operate to bring the auditor’s term of office to an end as of the date on which the notice is deposited or on such later date as may be specified in it.

(3)The company shall within fourteen days of the deposit of a notice of resignation send a copy of the notice to the Registrar for registration. If default is made in complying with this subregulation, every officer of the company who is in default shall Resignation of auditor. Amended by: L.N. 31 of

1. 40 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) be liable to a penalty and, for every day during which the default continues, to a further penalty. Rights of resigning auditor. Amended by: L.N. 31 of
2. 92.

(1)The provisions of this regulation shall apply where an auditor’s notice of resignation is accompanied by a statement of circumstances which he considers should be brought to the attention of members or creditors of the company.

(2)The resigning auditor may deposit with the notice a signed requisition calling on the directors of the company forthwith duly to convene an extraordinary general meeting of the company for the purpose of receiving and considering such explanation of the circumstances connected with his resignation as he may wish to place before the meeting.

(3)The resigning auditor may request the company to circulate to its members (

1. a)before the meeting convened on his requisition; or (
2. b)before any general meeting at which his term of office would otherwise have expired or at which it is proposed to fill the vacancy caused by his resignation; a statement in writing of the circumstances connected with his resignation as referred to in subregulation

(1).

(4)The company shall, unless the statement is received too late for it to comply (

1. a)in any notice of the meeting given to members of the company, state the fact of the statement having been made; and (
2. b)send a copy of the statement to every member of the company to whom notice of the meting is or has been sent.

(5)If the directors do not within twenty-one days from the date of the deposit of a requisition under this regulation proceed duly to convene a meeting for a day not more than twenty-eight days after the date on which the notice convening the meeting is given, every director who failed to take all reasonable steps to secure that a meeting was convened as mentioned in subregulation

(2)shall be liable to a penalty.

(6)If a copy of the statement is not sent out as required because it was received too late or because of the company’s default, the auditor may, without prejudice to his right to be heard orally, require that the statement be read out at the meeting.

(7)An auditor who has resigned has, notwithstanding his resignation, the rights conferred by regulation 87 in relation to any such general meeting of the company as is mentioned in subregulation

(3)(a) or (b), and, in such a case, the references in that regulation to matters concerning the auditor as auditor shall be construed as references to matters concerning him as a former auditor. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 93.

(1)Where an auditor ceases for any reason to hold office, he shall deposit at the company’s registered office a statement of any circumstances connected with his ceasing to hold office which he considers should be brought to the attention of the members or creditors of the company or, if he considers that there are no such circumstances, a statement that there are none.

(2)In the case of resignation, the statement shall be deposited along with the notice of resignation; in the case of failure to seek re-appointment, the statement shall be deposited not less than fourteen days before the general meeting at which auditors are to be reappointed; in any other case, the statement shall be deposited not later than the end of the period of fourteen days beginning with the date on which the auditor ceases to hold office.

(3)Where the statement is of circumstances which the auditor requests to be brought to the attention of the members or creditors of the company, the company shall within fourteen days of the deposit of the statement either (

1. a)send a copy of it to every person who under regulation 76 is entitled to be sent copies of the annual accounts; or (
2. b)submit an application to the court for an order that there are grounds of sufficient gravity to warrant that the statement should not be circulated.

(4)Where the company submits an application to the court, the court shall notify the auditor of the application and shall hear both parties before making a decision on the company’s application.

(5)Unless the auditor receives notice of such an application before the end of the period of twenty-one days beginning with the day on which he deposited the statement, he shall within a further seven days send a copy of the statement to the Registrar.

(6)If the court is satisfied that the auditor is using the statement to secure needless publicity for defamatory matter (

1. a)it shall direct that copies of the statement need not be sent ou;[ and (
2. b)it may further order the company’s costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application; and the company shall within fourteen days of the court’s decision send to the persons mentioned in subregulation

(3)(a) a statement setting out the effect of the order.

(7)If the court is not so satisfied, the company shall within fourteen days of the court’s decision (a) send copies of the statement to the persons mentioned in subregulation

(3)(a); and (b) notify the auditor of the court’s decision, and the auditor shall within seven days of receiving such notice send a copy of the statement to the Registrar. 41 Statement by person ceasing to hold office as auditor. 42 [ S.L. 234.42 Failure to comply with regulation 93. Amended by: L.N. 31 of 2020. MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) 94.

(1)If a person ceasing to hold office as auditor fails without just cause to comply with the provisions of regulation 93 he shall be liable to a penalty and, for every day during which the default continues, to a further penalty.

(2)In proceedings for a default under subregulation

(1)it shall be a defence for the person against whom action is taken to show that he took all reasonable steps and exercised all due diligence to avoid that default.

(3)If a company makes default in complying with the provisions of regulation 93, every officer of the company who is in default shall be liable to a penalty and, for every day during which the default continues, to a further penalty. Chapter XI - Distribution of Profits and Assets Certain distributions prohibited. 95.

(1)A company shall not make a distribution except out of profits available for the purpose.

(2)For the purposes of this Chapter, "distribution" means every description of distribution of a company’s assets to its members, whether in cash or otherwise, except distribution by way of (

1. a)an issue of shares as fully or partly paid bonus shares; (
2. b)the redemption or purchase of any of the company’s own shares out of capital, including the proceeds of any fresh issue of shares, or out of undistributable reserves; (
3. c)the reduction of the issued share capital by extinguishing or reducing the liability of any of the members on any of the company’s shares in respect of issued share capital not paid up, or by paying off paid up issued share capital; and (
4. d)a distribution of assets to members of the company on its winding up.

(3)For the purposes of this Chapter, a company’s profits available for distribution shall be its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of issued share capital duly made.

(4)A company shall not apply an unrealised profit in paying up debentures, or any amounts unpaid on its issued share capital. Consequence of unlawful distribution. 96.

(1)When a distribution made by a company to any of its members is made in contravention of the preceding provision such members shall be bound to repay such sums to the company on a demand in writing of the company or any interested person: Provided that nothing in this paragraph shall prohibit a company from distributing interim dividends: Provided further that a decision to do so is based on a reasonable expectation that the amount distributed will form part of the distributable assets of the company at the end of the accounting MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) [ S.L. 234.42 43 period.

(2)The provisions of this regulation shall apply without prejudice to any obligation imposed apart from this regulation on a member of a company to repay a distribution unlawfully made to him. 97. The provisions of this chapter shall be without prejudice to any other provision of law, or any provision of the company’s memorandum or articles, restricting the sums out of which, or the cases in which, a distribution may be made. Saving for other restraints on distribution. PART IV DEFUNCT COMPANIES 98.

(1)Where the Registrar has reasonable cause to believe that a company is not carrying on business or is not in operation, he may send to the company by post a letter inquiring whether the company is carrying on business or is in operation.

(2)If the Registrar receives an answer to the effect that the company is not carrying on business or is not in operation, or does not within one month of sending the letter receive an answer thereto, he may send to the company by post and publish a notice in the Gazette or on a website maintained by the Registrar and in a daily newspaper circulating wholly or mainly in Malta that, at the expiration of three months from the date of the last publication of th e s a i d n ot i c e , th e c om p a n y ’s na m e sh a l l , u n l e s s c a u s e i s previously shown to the contrary or the Registrar is satisfied that there are sufficient grounds not to proceed with the striking off, be struck off the register; and the assets of the company shall devolve upon the Government of Malta.

(3)If, in any case where a company is being wound up voluntarily, the Registrar has reasonable cause to believe either that no liquidator is acting or that the affairs of the company are fully wound up, and the returns required to be made by the liquidator in terms of regulation 131 are overdue by six months or more, the Registrar may publish in the Gazette or on a website maintained by the Registrar and in a daily newspaper circulating wholly or mainly in Malta, a notice that at the expiration of three months from the date of the last publication of the said notice, the winding up of the company shall, unless cause is previously shown to the contrary, be deemed to be concluded and consequently that the company’s name be struck off the register. The Registrar shall also cause a copy of the said notice to be sent by post to the company and to the liquidator, if any. At the expiration of the aforesaid period of three months the winding up of the company shall, unless cause is previously shown to the contrary, be deemed to be concluded and the Registrar shall strike the name of the company off the register and the company’s assets shall devolve upon the Government of Malta.

(4)If any member or creditor of the company, or any other person who appears to the court to have an interest feels aggrieved by the fact that the name of the company has been struck off the Defunct companies. Amended by: L.N. 31 of 2020. 44 [ S.L. 234.42 MERCHANT SHIPPING (SHIPPING ORGANISATIONS - PRIVATE COMPANIES) register by virtue of this regulation, the court on an application made by the member or creditor or such other person before the expiration of five years from the publication of the notice of the striking off provided for in subregulations

(2)and

(3)may, if satisfied that it is proper that the name be restored to the register, order that such name be restored to the register, and upon an official copy of the order being delivered by the Registrar of Courts to the Registrar for registration, the company shall be deemed to have continued in existence as if its name had not been struck off; and the court may by its order give such directions and make such provisions as seem fit for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off. The Registrar shall forthwith proceed to publish a notice in the Gazette or on a website maintained by the Registrar and in a daily newspaper circulating wholly or mainly in Malta that the name of the company has been restored to the register.

(5)A notice to be sent under this regulation to a liquidator may be addressed to the liquidator at his last known place of business or address, and a letter or notice to be sent under this regulation to a company may be addressed to the company at its registered office. (