MALTA Law and Practice Contributed by: Dr Josef Cachia Fenech Gonzi and Cherise Abela Grech, GTG Legal
cally in place to prevent intellectual property misappropriation. The same scenario is appli - cable to the founding shareholders, so that they do not start competing enterprises to the detriment of the investors. • Damages and liability: the shareholders’ agreement often contains specific breach and indemnity provisions to protect the investors. In certain instances, the parties may agree on pre-liquidated damages provisions, although this is not very common due to the effect of such damages on the relationship. • Non-circumvention provisions: non-circum - vention provisions are also common in such agreements to avoid potential issues when related parties, such as family members or other entities, are utilised to circumvent obli - gations, especially those related to restricted covenants. Malta offers several government and quasi-gov - ernment programmes designed to incentivise equity financing in growth-oriented companies. These initiatives aim to support start-ups and SMEs through various forms of financial assis - tance and tax incentives. These programmes include the following. • Start-Up Finance Scheme: administered by Malta Enterprise, this scheme provides financial support to small start-up undertak - ings with specific innovative activities. Eligible start-ups can receive a re-payable advance of up to EUR500,000, which may increase to EUR1 million for innovative enterprises. For those operating in designated assisted areas, the support can reach EUR750,000, doubling to EUR1.5 million for innovative start-ups. 4. Government Inducements 4.1 Subsidy Programmes
The funds can be utilised for payroll expens - es, procurement of tangible and intangible assets, specialised services, and establishing operations in Malta. • Seed Investment Scheme: this scheme was re-introduced in 2024 and offers tax incen - tives to individual investors who provide equity financing to qualifying start-ups. Inves - tors can benefit from a tax credit amounting to 35% of their investment, up to a maximum of EUR250,000 per annum. A qualifying com - pany can raise up to EUR750,000 through this scheme. To be eligible, companies must be incorporated in Malta, unlisted on any recognised stock exchange, have fewer than ten employees, possess gross assets under EUR250,000, and have been in operation for less than three years. • SME Guarantee Scheme: managed by the Malta Development Bank, this scheme facilitates access to bank financing for SMEs by offering an 80% loan guarantee through authorised financial intermediaries. Family businesses and other SMEs can obtain loans ranging from EUR10,000 to EUR750,000, with repayment terms of up to ten years and an optional 12-month moratorium. This support is particularly beneficial for businesses lack - ing sufficient collateral or credit history. • Micro Invest Scheme: offered by Malta Enter - prise, the Micro Invest Scheme encourages SMEs to invest in innovation and expansion. The scheme provides tax credits on eligible expenditures such as infrastructure improve - ments and wage costs. Businesses can receive tax credits of up to EUR70,000 over a three-year period, which can be used to offset their tax liabilities. • Business Development Scheme: the scheme targets new business ventures, expansions and transformation activities that foster new opportunities, create skilled employment,
345 CHAMBERS.COM
Powered by FlippingBook