Articles 106 and 107 of the Companies Act (Chapter 386 of the Laws of Malta) (the “Act”), as amended by Act No. XVIII of 2024 and Act No. XVIII of 2025 (together, the “Amendments”), govern when a Maltese company may repurchase up to 50% of its issued share capital and cancel those shares. The Amendments clarified the scope of permissible buybacks, streamlined filings with the Malta Business Registry (the “MBR”), and reinforced protections for shareholders and creditors.
Article 106 – expedited buybacks with financial safeguards
Article 106 continues to provide a faster route by disapplying the standard three‑month creditor objection period under Article 83. This route remains available only where strict capital maintenance conditions are met. After the buyback and cancellation become effective, the company’s net assets must at least equal the aggregate of issued share capital and non‑distributable reserves, and sufficient distributable profits must exist to fund the transaction. Failure by officers to notify the MBR of cancellations within 14 days attracts an administrative penalty under Article 106(8).
Article 107 – expanded pathway for dissenting shareholder buybacks
The 2024 amendments expanded Article 107 to expressly allow buybacks from dissenting shareholders with subsequent cancellation of those shares, without following Article 106’s procedural requirements, when the buyback is carried out under statutory procedures or a court order. While Article 107 does not specify the approval threshold, Maltese law and most constitutions require shareholder authorisation for transactions affecting share capital. In practice, Article 107 now offers a clearer route for court‑ or statute‑driven buybacks that do not fit the Article 106 framework.
2025 amendments – cross-border transactions and technical refinements
Act XVIII of 2025 made further refinements to Article 107. Notably, Article 107(1)(b) was deleted, and Article 107(1)(d) was updated to align with the new Cross-border Divisions of Limited Liability Companies Regulations, Cross-border Conversions of Limited Liability Companies Regulations, and Cross-border Mergers of Limited Liability Companies Regulations. These changes ensure that shares acquired in cross-border restructuring procedures benefit from the Article 107 pathway.
Standardised filing
– Cancellation of Shares form
To simplify and harmonise MBR filings, the 2024 amendments introduced a unified Cancellation of Shares form, applicable to cancellations following buybacks under both Articles 106 and 107. This standardisation streamlined submissions and enhanced transparency around capital changes.
Practical implications
Together, Articles 106 and 107 continue to balance flexibility with protection. Article 106 remains the regulated, expedited path for capital‑reducing buybacks supported by distributable profits and robust safeguards. Post‑amendment, Article 107 provides a broadened mechanism for buybacks, particularly in dissent scenarios under statutory or judicial processes. However, shares acquired under Article 107(1)(b) to (f) that are not disposed of within thirty months must be cancelled by extraordinary resolution within six months thereafter, and Article 83’s reduction provisions apply to such cancellation (subject to certain provisos). The updated MBR form and the 14‑day notification requirement underscore heightened procedural discipline.
Conclusion
The 2024 and 2025 amendments chiefly:
(i) Expanded Article 107 to facilitate dissent‑related buybacks under statutory or court procedures without Article 106’s formalities.
(ii) Introduced a single Cancellation of Shares form to standardise MBR filings.
(iii) Aligned Article 107 with the new cross-border restructuring regulations.
These changes improved clarity, streamlined processes, and reinforced shareholder and creditor protections.
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