Taking over a business in the case of partnerships and companies is regulated by the Companies Act (Chapter 386 - Laws of Malta). The Companies Act applies irrespective of whether the investor is Maltese or not. There might be additional identification documents required in the case of foreign investors.
Chapter 18 of the Listing Rules deals with takeover bids in the case when all or some of the securities of the offeree company are admitted to trading on a regulated market. Chapter 18 implements the relevant provisions of Directive 2004/25 on takeover bids.
Reference should also be made to the Income Tax Act to regulate any tax implications which may arise in the case of mergers and takeovers.
Types of takeover
Taking over a business may occur through amalgamation between two or more commercial partnerships or through amalgamation of companies.
Steps in the takeover process
The procedure applicable to a takeover process is outlined in the Companies Act.
The shareholders of each of the companies involved are entitled to inspect the following documents - the takeover shall not be effective pending the creditors' right to oppose these documents:
- draft terms of the Acquisition;
- annual accounts and directors' reports for the preceding three accounting periods;
- directors' report; on the amalgamation
- experts' report; on the amalgamation
Retiring business owners need to plan the transfer of their business in advance.
Some standard requirements to be completed when taking over a business are the same as when setting up a new business.
Listed below is an outline of the procedure, although legal advice should always be sought for such an operation:
- draft Terms of Acquisition must be signed by at least one director and the company secretary of each company involved;
- draft Terms of Acquisition must be filed with the Registrar of Companies;
- approval of the takeover by extraordinary resolution of each of the companies involved - extraordinary resolution must be adopted at least one month after the publication of the draft terms of the merger;
- filing and Registration of amended Memorandum and Articles of Association to reflect the takeover;
- compilation of Directors' report explaining the draft terms of the Acquisition and setting out the legal and economic grounds - the share exchange ratio and any valuation difficulties;
- compilation of written report by experts acting on behalf of each of the companies involved - examining the draft terms of the merger and to be handed over to the shareholders.
The Malta Financial Services Authority (MFSA) is the single regulator for financial services activities in Malta, supervising credit and financial institutions, investment, trust and insurance businesses, it also houses the country's Companies Registry.
The Legal-Malta website is an excellent tool for locating help and advice on legal matters, providing comprehensive Malta-related legal and business content.
The Malta trade directory lists all the information and contact details of individuals, businesses and institutions in Malta, such as solicitors, credit institutions, accountants and business advisors.
For specific support for small businesses within the framework of taking over a business, one should consult the work and business section on the Government of Malta website, from where you can access information and more importantly, contact details for trade services, the commerce division, small business unit, and VAT, etc.
A good starting point when looking for a business to buy are newspapers, which often carry adverts for businesses and for business premises for sale. Other good sources are trade journals and their associated websites.
The Commerce Division of the Ministry for Fair Competition, Small Business and Consumers promotes and cultivates a spirit of entrepreneurship within Malta, coordinating local entrepreneurship policy.