Bill 136 - Companies Act
On the 30th of June 2025, the Maltese Government published Bill 136, the Companies Act (Amendment) Bill. The Bill proposes significant amendments to partnerships in Malta and their functioning. This is the second part of two articles that will focus on such changes.
Partnerships
The proposed amendments affect changes to the laws regulating commercial partnerships – relaxing certain formalities when it comes to partnerships en commandite (limited partnerships). The Bill proposes amendments to Article 19 so that updated records are required upon the change of partners' contributions or if new partners join. For instance, if a partner increases his capital or a new partner joins, the managing partners would need to pass a resolution (within 3 months of year-end) and file it with the Registrar. Further to this, a partner's withdrawal or death, together with any new partner's appointment, must be notified within one month, with the persons involved being specified.
Article 21(1) is revised in such a manner that any reduction in a partner's contribution – except for non-monetary services – or certain dissolutions cannot take effect until three months after a public statement is filed, ensuring that partnership capital and membership changes are recorded, offering effective protection to creditors and co-partners.
With regard to limited partnerships specifically, some of the above-mentioned amendments are not applicable and formalities are relaxed to reflect the partners' limited liability. Changes involving limited partners do not trigger the same level of public disclosures required of general partners, and where a limited partner is appointed or resigns, a notice need not be published. The additional requirements added under Article 19(3) are also not applicable to limited partners in view of their limited liability.
Under the current Act, any transfer of partnership interest—whether partial or total—requires the written consent of all other partners, unless otherwise specified in the partnership deed. However, the Bill introduces a clearer distinction between inter vivos assignments (transfers made during a partner's lifetime) and assignments causa mortis (transfers upon death). Now, the written consent of the remaining partners is only necessary for inter vivos assignments. This clarification aims to reduce ambiguity and prevent potential disputes between surviving partners and heirs.
Additionally, the Bill revises how assignments of interests and reductions in partner contributions are handled. The reference to assignments previously found in Article 21 of the Act is removed. Instead, such assignments will now be governed by newly proposed provisions under Article 19(3), specifically addressing how and when they can occur.
One significant change introduced by the Bill is the removal of the three-month creditor protection period as a condition for the effectiveness of a complete assignment of a partner's interest. Previously, an assignment could not be effective until this protection period had lapsed. Under the new provisions, however, the court retains the authority to order the re-transfer of partnership interests if a creditor presents good cause, unless the partner in question is deceased. Alternatively, the court may approve the change in partners if adequate security is provided.
If the court orders the re-transfer of interests, any obligations the former partner had assumed on behalf of the partnership will remain binding on both the partnership and the other partners. This is especially important for partners with unlimited liability, as they will continue to be personally liable for obligations incurred during their time as a partner—even after they are no longer part of the partnership, in accordance with the court's order. This ensures that creditors' rights are protected, even if the partner status is retroactively altered.
By eliminating the mandatory protection period, the Bill facilitates a more efficient process for internal changes within the partnership, ensuring legal effectiveness without undue delays. This marks a departure from previous provisions in the Act, which required the creditor protection period to lapse before changes could take effect.
The changes proposed in the Bill with regard to creditor protections do not apply to partnerships en commandite. In these partnerships, the cessation of a limited partner or the appointment of a new limited partner will not trigger the creditor protections described earlier. Additionally, the Registrar of Companies will only publish notices of changes concerning general partners (those with unlimited liability), and will not require such notifications for limited partners. This aligns with the limited liability status of these partners and reduces the need for unnecessary administrative disclosures.
By streamlining the notification requirements for partnerships en commandite, the Bill ensures that the legal framework better reflects the nature of these partnerships, protecting both the interests of the partners and the rights of creditors in a more efficient manner.
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.
