Simplified Dissolution Of Dormant Companies Under Article 214A Of The Companies Act

As part of Malta's ongoing efforts to modernise its corporate regulatory framework, the 2025 amendments to the Companies Act (Chapter 386 of the Laws of Malta) have introduced a simplified procedure for the dissolution of dormant and inactive private limited liability companies. This new procedure was brought into force on 16 December 2025 by Legal Notice 286 of 2025 and is codified in Article 214A of the Companies Act.

The introduction of this mechanism supplements the existing dissolution framework by providing a more efficient and less administratively burdensome alternative for companies that have ceased operations. Importantly, the traditional methods of dissolution under Maltese law remain unchanged. Rather than replacing them, the simplified procedure offers an additional route aimed at facilitating the orderly winding up of qualifying companies whose continued existence no longer serves a commercial purpose.

Eligibility criteria for the simplified dissolution procedure

In order to qualify for the simplified dissolution procedure, a private limited liability company must have been validly registered for a minimum period of six (6) months. An application must be submitted to the Registrar of Companies, together with the prescribed statutory form and a declaration signed by all the directors of the company confirming that:

1. the company is not a regulated entity and does not carry out activities subject to the supervision of any regulatory authority;
2. all liabilities have been settled, other than fees due to current officers, corporate service providers and shareholder loans;
3. no court proceedings are pending against the company;
4. the value of the company's assets does not exceed €5,000;
5. no deeds or contracts have been entered into during the preceding six months, other than contracts with service providers; and
6. the company has no outstanding liabilities to any government authority or public body.

In addition, any director of the company must further confirm that:

1. a shareholders' resolution approving the simplified dissolution has been duly adopted;
2. all bank accounts held by the company have been closed;
3. where applicable, an online application for VAT de-registration in Malta has been submitted; and
4. the company does not employ any persons other than its officers.

Procedure

Upon submission of the application together with the requisite ancillary documentation, the Registrar shall publish a notice of the proposed dissolution in the Government Gazette, on the Registry's website, and in a daily newspaper, thereby ensuring public notice prior to the company being struck off the register.

The company shall be struck off the register three (3) months following such publication, unless an interested party raises an objection and applies to the court to prevent the company from being struck off within that period.

The legislator's intention appears clear: while the objective is to introduce an expedient dissolution process for inactive private limited liability companies, this is balanced by a series of procedural safeguards designed to protect creditors and other third parties who may have an interest in the company.

Exclusion from qualification for the simplified dissolution procedure

A company shall not be eligible to make use of the simplified dissolution procedure if, at any time during the six (6) months preceding the application, it has:

1. changed its name;
2. traded or otherwise carried out business activities;
3. employed any persons other than its officers;
4. had any outstanding filings, documents or penalties with the Registrar as at the date of the application; or
5. had any of its shares pledged or otherwise encumbered.

These exclusions are intended to ensure that the simplified procedure is available only to companies that are genuinely dormant and free from legal or financial complexity.

Directors' responsibilities

Unlike other methods of dissolution, the simplified procedure does not require the appointment of a liquidator. As a result, the directors remain responsible for overseeing the dissolution process until the company is formally struck off the register.

The directors and the company secretary retain their respective powers throughout this period until the company is struck off the register. The obligation to make the relevant confirmations to the Registrar, however, rests with the directors, who, in their personal capacity as the last appointed officers of the company, must confirm that the company's beneficial ownership and financial records will be retained by them, in accordance with applicable law, or alternatively notify the Registrar of the designated person responsible for the retention of such records.

Any false or misleading declaration may expose the directors to criminal liability, highlighting the seriousness of the obligations imposed under Article 214A.

Legal and practical considerations

While the simplified dissolution procedure offers a more expedient route for dormant private limited liability companies, certain legal and practical challenges arise. The €5,000 asset cap and the requirement of six (6) months of inactivity may exclude companies that are effectively dormant but retain minimal residual assets or engage in limited administrative activities.

A notable departure from traditional dissolution methods is the absence of a liquidator. In conventional procedures, liquidators act as independent parties responsible for safeguarding the interests of creditors and other stakeholders during the winding-up process. While this approach mirrors the long-standing practice for partnerships en nom collectif and en commandite, it represents a significant shift for private limited liability companies.

Under Article 214A, unregulated private limited liability companies that meet strict eligibility criteria may now dissolve voluntarily without the appointment of a liquidator. This streamlined process reduces administrative burdens but simultaneously places full responsibility on the directors to oversee the dissolution and ensure compliance with all statutory requirements.

To mitigate these risks, the legislation imposes detailed declaration requirements and criminal sanctions for false statements. While these measures may not entirely replace the protective function of a liquidator, they serve as important safeguards within the simplified framework.

Observations

The introduction of the simplified dissolution procedure represents a significant development under the 2025 amendments to the Companies Act. By providing an alternative route to traditional winding-up methods, the legislator has reduced administrative burdens and facilitated the efficient closure of dormant private limited liability companies. The extent to which this procedure will be adopted in practice remains to be seen, but it undoubtedly enhances the flexibility of Malta's corporate law framework.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.