Malta · General meetings, directors, the secretary and the auditors

Appoint directors and a company secretary, and keep them within their duties

the Companies Act, Chapter 386 · articles 136A, 143, 144 and 145, articles 137, 141 and 142, article 138, articles 139, 140 and 146, and First Schedule, Part I, paragraphs 50, 52, 54, 55, 57, 58, 61, 62, 66, 68, 69 and 72

The duties in article 136A are stated as duties of the director personally, not of the board collectively, so each director is measured on his own conduct. The prohibition on competing with the company and the prohibition on loans to directors are absolute except in the cases the Act names.

The second trap is the paperwork of office. Every appointment, removal, resignation and casual vacancy has to be returned to the Registrar under article 146(1), a director must consent in the manner article 139(5) requires, and a company may not have its sole director as company secretary. Companies that change directors informally discover the gap when the Registrar's record is checked.

A director is bound to act honestly and in good faith in the best interests of the company (article 136A(1)), and the directors must promote the well-being of the company as article 136A(2) requires. In particular the duties listed in article 136A(3)(a) to (e) apply. A director may not compete with the company without the consent required by article 143(1). It is not lawful for a company to make a loan or to enter into the arrangements described in article 144(1)(a) and (b). It is the duty of a director who is in any way interested to declare that interest as article 145(1) requires.

Every public company must have at least two directors (article 137(1)), and every private company at least one, with the construction rule in article 137(2). The business of a company is managed by the directors, who may exercise the powers described in article 137(3). If the number of directors is reduced below two, article 137(7) applies. Where the representation of a company ceases to be vested as required, article 141(1) applies, and while representation cannot be exercised, article 141(3). A person is not qualified for appointment or to hold office as director in the cases listed in article 142(1), and article 142(2) applies notwithstanding the Act or the memorandum and articles.

Every company must have a company secretary (article 138(1)). No company may have as company secretary its sole director or the other persons excluded by article 138(2). It is the duty of the directors to take all reasonable steps required by article 138(3), to fill a vacancy in the post under article 138(4), and they have the power of removal in article 138(5). Anything required to be done by or to the company secretary is governed by article 138(6), and a provision authorising a thing to be done by or to a director and the company secretary is subject to article 138(7).

A person is not capable of being appointed director unless article 139(1) is satisfied, and where a director is a body corporate article 139(2) applies. Unless the memorandum or articles otherwise provide, article 139(3) applies to the term of office, and where a class of shares carries the right to appoint a director, article 139(4). On being appointed, a person must give the consent required by article 139(5). A company may remove a director before the expiration of his period of office under article 140(1), which applies notwithstanding anything in the articles (article 140(2)). On receipt of a notice of an intended resolution to remove a director, article 140(3) applies, a vacancy created by the removal is filled under article 140(4), and article 140(5) preserves the rights it names. A casual vacancy is filled under article 140(6)(a), and the term of the person appointed is set by article 140(6)(b) and (c). Every company must send to the Registrar a return of the changes described in article 146(1).

Under the model regulations, the remuneration of the directors is determined as First Schedule, Part I, paragraph 50 provides, and the directors exercise their powers subject to paragraph 52. A director may not vote on a matter in which he is interested as paragraph 54 provides, and the directors must cause minutes to be made under paragraph 55. Retirement by rotation is governed by paragraphs 57, 58 and 61, proceedings of directors by paragraphs 62 and 66, and executive appointments by paragraphs 68, 69 and 72.

Files 23 to 26 and File 74 of the MT-COMPANY pack cover the officers. File 23 asks how each director's conflicts are declared, what record exists of the declaration and whether any loan or quasi-loan has been made to a director, then tests each against articles 143, 144 and 145. File 24 counts your directors against the minimum in article 137 and checks the representation clause. File 25 checks that a company secretary is in place and that the person is not excluded by article 138(2). File 26 walks every appointment, removal, resignation and casual vacancy and asks for the date each was returned to the Registrar under article 146(1). File 74 applies the model regulations on remuneration, proceedings and rotation where your articles have not displaced them.

This situation is covered by these files from the pack MT-COMPANY

• File 23 · Directors' duties of honesty, care and loyalty, conflicts of interest and loans to directors
• File 24 · The board of directors: number, powers and representation of the company
• File 25 · The company secretary
• File 26 · Appointment, removal and vacancies of directors, and returns to the Registrar
• File 74 · Model regulations: the directors, their remuneration, powers, proceedings and retirement

ComplianceSME tracks the Companies Act and issues update files through the membership, so that you are never working from a superseded version. Membership

Back to the Maltese library →