Malta “The Blockchain Island”
Malta has established itself as one of the leading countries in blockchain, ICO and cryptocurrency. Malta’s new set of regulations have led major companies such as, Binance to re-locate its office to Malta.
The new rules look to offer legal certainty for blockchain companies to operate as well as provide safety for investors. These regulations are just some of the benefits to Malta company formations for blockchain and ICO companies.
Malta Blockchain Legislation
As of July 2018, Malta has three acts regulating cryptocurrency, blockchain and ICOs. The acts solidify Malta as the first country to positively regulate the blockchain platform. These three bills will allow the growth of blockchain technology with the reassurance of government regulation. The acts also define the required licenses needed for certain activities relating to blockchain activity.
The Malta Digital Innovation Authority Act (MDIA)
The Malta Digital Innovation Authority Act brings into fruition a new authority, the Malta Digital Innovation Authority (MDIA), its task is to oversee the certification of the blockchain platforms, as well as the functioning of ICOs. The MDIA will be the watchdog and regulator of companies operating on the Digital Ledger Technology (DLT) platform for the protection of the public. The authority will function as a consultative body that will be tasked with promoting the industry but also protecting the reputation of the jurisdiction. This authority will certify companies on the platform reassuring potential investors.
The Virtual Financial Assets Act (VFAA)
The Virtual Financial Assets Act (VFAA) provides a guide for the operation of ICOs and cryptocurrency exchanges, as well as, protecting investors. This act is truly unique and provides a safe environment for the market to continue its growth.
The VFAA provides information on many areas which are yet to be defined by competing countries these include; information which must be included in the ICOs whitepapers, due diligence requirements and how funds collected are to be used. The VFAA states companies who deceive or provide false information in their whitepapers will be liable for any investment losses due to this deceit.
The act also defines how tokens should be viewed in terms of assets. Determining token assets has caused many issues for ICOs across the globe, the VFAA provides a solid framework and definition. The VFAA establishes the Financial Instrument Test which is used to categorise blockchain assets into three categories; virtual financial assets, virtual tokens and financial instruments. Depending on which category the assets belong to will determine whether there is any tax or regulation on the assets.
The VFAA states how any company offering VFA services such as cryptocurrencies are required to appoint an VFA agent. The agent must be certified by the MDIA to monitor the VFA provider and report any illegal activity.
The Innovative Technology Arrangements and Services Act (ITAS)
This Innovative Technology Arrangements and Services Act looks to regulate companies using blockchain, Digital Ledger Technology (DLT) and smart contracts. The act looks to regulate companies both currently using blockchain technology, as well as, covering potential new technology which may arise in the future. The act defines the power of the MDIA to certify companies working as ITAs or ITSs’.
The certification that the MDIA provides will define the specific purpose of the ITA and its authorisation. This certificate will prove to potential investors that the company has been analysed carefully by the MDIA and they find it to be a reputable service provider.
In order to gain certification from the MDIA certain requirements must be met. The requirements are; the software due to be certified is reviewed by a registered system auditor, the ITA is fit for the purpose which it specifies to the MDIA, the ITA has a registered technical administrator to oversee the running of the company and that it continues to meet the standards it was initially authorised for.
Malta Company Formation Benefits
Malta is not only popular with tech companies, many other companies in a range of industries decide to incorporate in Malta. One of the main advantages of a company set up in Malta is its favourable tax system.
Taxation
Malta has no withholding taxes, stamp duties or exchange controls on profits from Maltese companies to non-resident shareholders. Malta has a corporate tax rate of 35% but 6/7 of this can be recovered if the shareholders are non-resident to Malta so the rate is only 5% once recovered.
Trust
Registering in a trusted EU state such as Malta benefits ICO’s as it reassures potential investors that the business will act within the regulations of EU law. Investors will view an ICO registered in the EU as less risky than one which is registered offshore due to transparency.
Commitment to Technology
Malta has proven with the passing of several technology-based regulations that is committed to bringing new innovation to the forefront of the Fintech industry.
Malta Company Formation Requirements
It is a simple process to incorporate a Malta limited liability company taking only 5-7 days with few legal requirements in order to incorporate. One legal factor is that all Maltese companies require a company secretary. This is a service that we can provide if required. Along with a company secretary, an initial share capital of €1,200 is required before incorporation can be completed.
Company Director
Only one director of any nationality is required to incorporate your Malta private limited company. A resident director is not required for company formation.
Company Shareholder
Your Malta private limited company must have at least one company shareholder. Company shareholders can be of any nationality and corporate shareholders are allowed.
Share Capital
A deposit of €1200 share capital must be placed into a Maltese bank account before the registration process is completed. The share capital can be deposited in any FIAT currency as long as it is equivalent to €1200.
Bank Account
A company bank account in Malta is required to hold the share capital of the company in order to complete the incorporation process. Through our partnership with Maltese banks, we can assist with a company bank account introduction.
Malta Registered Office and Agent
A requirement for the incorporation of a Maltese limited liability company is a registered office and registered agent within Malta. The registered office and agent acts as a point of contact for the Maltese company registry or government to send company documents such as compliance-related documents. We can provide this service with our incorporation package.
Company Secretary
A company secretary must be appointed to incorporate a Maltese company. A company secretary job is to maintain the statutory records of the company. We can provide this service alongside our incorporation package.
Malta Accounting and Audit Requirements
Malta companies are required by law to have their accounts audited at the end of each financial year. Each year a Maltese company is required to submit financial statements which include auditors report, balance sheet, profit and loss account, directors report.
After Malta Company Formation
We offer a company document package for recently launched blockchain or ICO companies. This package offers all documents required for any potential licenses or bank accounts. For further information regarding our Malta company documents please visit our page.
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Malta Business Registry purges data of tens of thousands of companies
The Malta Business Registry has erased the records of over 30,000 companies “Struck Off” from its online registry system.
The Economy Minister announced that the Malta Business Registry had removed around 10,000 dormant companies from the register. However, the number of companies affected by this purge are far more than those announced, with 30,000 being a conservative estimate
This is highly unusual, as countries normally allow a period of time in which records can be checked, for obvious reasons. In the UK, for example, which is also subject to EU data protection laws, full searches relating to dissolved companies are available online and fully searchable for at least six years after dissolution.
Malta went for instant removal of details after a company is struck off. With this latest development, the MBR did far more than merely strike off companies but literally purged any evidence of old companies and their past activities from the online system.
Anyone looking up companies could previously see the names of companies’ directors, shareholders, auditors and look at their accounts, consult financial records filed by such companies, including their liquidation accounts, as well as the individuals previously involved. It was also possible to search for directors’ involvements (not shareholders) in Maltese companies but this functionality was also removed by MBR, reportedly citing “data protection” reasons.
Following this purge of data, the online system only shows very basic information such as the name of the company, its company number and date of incorporation. The MBR still allows physical inspection of company documents, but this involves physically going to the MBR’s offices in Zejtun and more importantly, knowing exactly what information is being sought.
In 2018, the Maltese government rebranded Malta as “Blockchain Island”
While “Blockchain Island” has since fizzled out, the hype and incentives resulted in a veritable gold rush by Russians, Chinese and others setting up companies in Malta.
Two years later, not a single cryptocurrency operator has been licensed and hundreds have since been liquidated.
With this overnight purge, all that remains online is their often nondescript former name.