Shipping companies now have the option to be established and operate under the Merchant Shipping Act instead of the Companies Act. The Merchant Shipping Regulations underwent an amendment on 21st February 2020, notably through Legal Notice 31 of the same year. Such companies are now required to submit audited financial statements to the Malta Business Registry within the stipulated period. In terms of these amendments, such requirements closely resemble and are almost identical to those applicable to private limited liability companies established under the Companies Act. These amendments also entail the imposition of penalties as outlined in the eleventh schedule of the Companies Act in cases of default.
Approval by management and submissions to the Malta Business Registry must be completed within 10months and 42 days from the conclusion of the period designated for the presentation of annual accounts as stipulated by Article 182 of the Companies Act. For the majority of the companies (those having a 31st December year end, this means that the audited financial statements have to be approved by not later than 31st October of the following year and filed with the Malta Business Registry by not later than 12th December.
Meanwhile, article 182(3) of the Companies Act stipulates that if a company’s first accounting period exceeds 12 months from its registration date, the timeframe for approving the company’s annual accounts in a general meeting shall be reduced by the period exceeding the twelve-month threshold. Nevertheless, this period cannot be reduced to less than 6 months after the conclusion of the accounting period.
For companies incorporated before 21st February, 2020, there’s no necessity to inform the Registrar of Companies if their accounting reference period does not end in December. These companies only need to ensure timely submission of their financial statements within the prescribed deadlines after the conclusion of their accounting periods.
Moreover, those companies established after February 21, 2020, with accounting reference periods not ending in December, are required to submit Form J. This form also applies to any changes in the accounting reference period.
In addition, the exemptions provided to companies under the Companies Act, such as the requirement for a directors’ report, also extend to companies regulated under the Merchant Shipping Act. Importantly, there is one exception concerning the thresholds defining a “small company” according to Article 185 of the Companies Act, which do not apply to MSA companies.
While the exemptions from the preparation of consolidated financial accounts also extend to Merchant Shipping Act companies, one should take note of the distinction vis-à-vis the qualification of a parent company under the Merchant Shipping Act as a small company. Specifically, a parent company established under the Merchant Shipping Act can be classified as a ‘small company’ only if the group to which it belongs qualifies as a small group. This qualification is principally based on a consolidation basis that does not exceed the limits of two of the three following criteria: (i) aggregate balance sheet total value of €6m (net), (ii) aggregate balance sheet total value of €6m gross, (iii) aggregate turnover of €12m (net) and (iv) aggregate turnover of €14m (gross).
At Borg Galea & Associates, within our capacity as a firm, we possess expertise in assisting companies registered under the Merchant Shipping Act to be audited. We specialize in ensuring that these companies meet all legal and regulatory requirements, offering a seamless and efficient audit process tailored to their specific needs.
