Malta’s Simplified Dissolution Procedure: a new era for dissolutions

Malta has strengthened its commitment to a more practical and business-friendly corporate legal framework through the introduction of the Simplified Dissolution Procedure (hereinafter the ‘Procedure’) for qualifying private limited liability companies constituted in Malta. By reducing administrative burdens, operational complexities, and associated costs, the procedure makes it easier for businesses to cease operations responsibly and contributes to Malta’s goal of maintaining a competitive and progressive business environment.

The Procedure was brought about through an amendment to the Companies Act (Cap. 386 of the Laws of Malta) (hereinafter the ‘Act’) introduced by Act No. XVIII of 2025 towards the end of 2025. Among the changes was the introduction of Article 214A of the Act, which establishes the Procedure for dormant private limited liability companies.

Under this new mechanism, eligible dormant companies that meet the prescribed requirements may be struck-off without having to undergo a full liquidation process or appoint a liquidator.

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Eligibility and prerequisites

Only private limited liability companies that meet specific eligibility requirements may avail themselves of the Procedure, which remains entirely voluntary in nature. To qualify, a company must satisfy the following conditions in the six-month period immediately preceding the submission of the application with the Malta Business Registry (hereinafter the ‘MBR’):

• The company has not changed its name;
• The company has not employed any individuals;
• No shares have been pledged during the six-month period;
• The company has not carried out any business or trading activity;
• The company must have been validly registered for at least six months;
• The company has no outstanding filings, documents, or penalties due to the MBR;
• No deeds or contracts have been entered into in the last six-months (other than contracts with service providers of the company); and
• Not a public limited company, or regulated entity.

When submitting the application, the director/s of the company also need to confirm that the company:

• Has no outstanding dues to any government authority (i.e. all tax and VAT returns need to be submitted and any liabilities or penalties must be settled);
• Does not have assets exceeding €5,000 and has no outstanding liabilities (except for certain dues);
• The company has no pending judicial proceedings in or outside of Malta;
• All bank accounts of the company have been closed (if any); and
• The company has been deregistered for VAT and employer purposes.

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Practical process

Following the submission of an application, the MBR is required to publish a notice in the Government Gazette, on the MBR website, as well as in a daily newspaper. This publication initiates a three-month notice period, after which the company may be struck-off, provided that no objections (typically by creditors) have been lodged. As a result, the company can be dissolved without the need to appoint a liquidator or undergo the full liquidation process.

As part of the application, the director/s must confirm that a shareholder/s’ resolution approving the Procedure has been validly adopted. Any false declaration made in this regard may give rise to criminal liability.

The director/s are also required to declare that the company’s beneficial ownership information and financial records will continue to be retained in accordance with applicable legal requirements. Alternatively, they may appoint a designated person responsible for maintaining such records and notify the MBR accordingly.

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Traditional dissolutions VS the procedure

The procedure eliminates the need to appoint a liquidator and prepare final liquidation accounts, thereby reducing costs, administrative formalities, and the delays commonly associated with the traditional winding-up process.

Prior to the enactment of Article 214A of the Act, companies seeking to voluntarily enter dissolution could only do so through a member/s’ voluntary winding-up or a court-ordered winding up, both of which required the appointment of a liquidator. Alternatively, dormant companies could be struck off the register at the discretion of the MBR pursuant to Article 325 of the Companies Act. However, it should be noted, if the MBR proceeds with the strike-off, the directors, officers, and members remain liable for the company’s obligations and, crucially, any assets are transferred to the Government of Malta

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Our two cents

By introducing Article 214A of the Act, a significant step towards modernising Malta’s corporate legal framework has been taken. It establishes a simplified, director-led procedure for dissolving dormant companies, offering a more efficient alternative to traditional winding-up mechanisms.

Prior to its introduction, the absence of a streamlined dissolution process often resulted in dormant entities remaining on the register despite having ceased all commercial activity. This not only contributed to administrative inefficiencies but also undermined the accuracy of the MBR.

In view of the fact that the Procedure is a direct result of amendments made to the Act, it only applies to companies registered under the Act. This means that companies constituted under the Merchant Shipping Regulations fall out of scope of the eligibility criteria of the Procedure.

Article 214A of the Act also addresses these concerns by providing a practical and proportionate mechanism for the removal of dormant companies, representing a positive development in the continuing evolution of Maltese company law.