On the 12th May 2020, the Companies Act (Company Reconstructions Fund) Regulations were enacted providing for the regulation of a fund financing part of the expenses to be undertaken in a company recovery procedure – a procedure provided at law to aid companies facing financial difficulties.
The funds may be used for the payment of the Special Controllers to be appointed under the company recovery procedure. This fund shall be financed by the Malta Business Registry in the amount of EUR 500,000 annually. The maximum cumulative amount that can be claimed from the fund in respect of each recovery procedure shall not exceed EUR 10,000 inclusive of Value Added Tax.
Malta Company Recovery Procedure
This procedure is provided for by the Companies Act and is aimed primarily at aiding companies undergoing financial difficulties whilst safeguarding stakeholders. The process requires a Court application to be filed by the company, by the directors or by the creditors of the company. Upon receipt of an application, the court shall accede to the application only if it is satisfied that the company is (or is likely to become) unable to pay its debts and if it considers that putting the company into recovery will result in the survival of the company as a viable going concern in part or in whole or the sanctioning of a compromise or arrangement between the company and any of its creditors or members.
Should the court accede to the request, it shall appoint an individual to act as a special controller, carrying out the functions and powers as the court may entrust to him. The special controller’s remuneration shall be fixed by the court – within the period established by the court, (which shall not exceed 10 working days from the making of the company recovery order), the company shall deposit a sum of money or offer a suitable guarantee, to cover the remuneration and charged of the special controller.
