Limited Liability, Unlimited Differences: A Comparative Look at the U.S. LLC and the Maltese Ltd
<p data-pm-slice="1 1 []"></p>
<p data-pm-slice="1 1 []"></p>
<p data-pm-slice="1 1 []"></p>
<p data-pm-slice="1 1 []">This below article was written by Alexia Bonnici from our Maltese member firm David Zahra & Associates Advocates. Alexia participated in the ABL Secondment Programme in Washington DC, spending her placement at member firm Ruddy Gregory PLLC. Her experience working directly with U.S. corporate procedures shaped this comparative analysis between the American LLC and the Maltese Ltd.</p>
<hr />
<p data-pm-slice="1 1 []"></p>
<h2 align="center" style="text-align: center;"><b>Limited Liability, Unlimited Differences: A Comparative Look at the U.S. LLC and the Maltese Ltd</b></h2>
<h2 align="center" style="text-align: center;"><b><br /></b></h2>
<p>During my secondment in Washington, I assisted in the incorporation of a Limited Liability Company (“LLC”) for a client based in Virginia and was intrigued by how different the process was compared to Malta.</p>
<p>The filing was completed online within minutes, with minimal information required and no pre-approval or supporting documentation. The U.S. system emphasizes accessibility and speed, while Malta’s approach - though more formal and structured - has traditionally placed greater focus on regulatory diligence and legal certainty from the outset. In recent years, Malta has increasingly integrated digital tools into its company formation process, streamlining submissions and improving efficiency.</p>
<p>That being said, Malta’s company law framework, largely modeled on the UK Companies Act, adopts a common law–inspired approach that balances accessibility with sound governance. Like the UK, Malta’s process is far less rigid than that of many continental European jurisdictions, where company formation often requires notarial deeds and lengthy formalities.</p>
<p>It is particularly interesting to explore how two entities sharing the same name - a “Limited Liability Company” - can operate under such distinct formation processes and requirements, reflecting the different legal and regulatory philosophies that underpin each system.</p>
<p> </p>
<p><b>The U.S. Model: Administrative Simplicity and Contractual Freedom</b></p>
<p>In the United States, company formation is handled at the state level, and the process is designed to be quick and accessible. Under the Virginia Limited Liability Company Act, an LLC is created by submitting a simple online filing that includes only the company’s name, registered agent, and principal address, along with a nominal fee.</p>
<p>The company’s internal rules are set out in an LLC Agreement, which is not required to be filed with the state. There is no requirement to appoint a company secretary or directors, no disclosure of beneficial owners, and no minimum capital requirement. Once the online filing is submitted and accepted, the LLC is incorporated almost instantly, with the certificate of formation immediately available for download.</p>
<p>This reflects the U.S. philosophy that business owners should have maximum freedom to structure their affairs by agreement. The state’s role is limited to recording the company’s existence, not regulating how it operates. This efficiency and flexibility have made the U.S. an attractive environment for entrepreneurs, particularly those seeking a fast and straightforward path to starting a business.</p>
<p>In the United States, the LLC derives its legal personality from statute but functions primarily as a product of private ordering. Incorporation is an administrative act rather than a grant of status.</p>
<p> </p>
<p><b>The Maltese Model: A Regulated and Governance-Focused Framework</b></p>
<p>In Malta, incorporating a company is a regulated process carried out through the Malta Business Registry (MBR) in line with the Companies Act (Cap. 386 of the Laws of Malta).</p>
<p>To register a private limited liability company (“<b>Ltd</b>”), the incorporation process requires the submission of various documents and declarations to the Malta Business Registry, such as:</p>
<ol start="1">
<li>a Memorandum and Articles of Association, setting out the company’s share capital, structure, objects and governance;</li>
<li>a covering letter with directors’ contact details;</li>
<li>a registered office consent letter;</li>
<li>Form K(1)s appointing the directors and company secretary; and</li>
<li>Form BO1, which identifies the company’s beneficial owners.</li>
<li>Proof of the deposit of the initial share capital in a bank account</li>
</ol>
<p>A private limited liability company must appoint at least one director and one company secretary, both of whom have defined legal responsibilities. The beneficial owners must also be disclosed at incorporation and kept up to date.</p>
<p>A Maltese Ltd must have an authorized share capital of at least €1,164.69, with at least 20 per cent paid up on formation. The company must be formed by at least two members, unless incorporated as a single-member company, in which case it must comply with the additional obligations that apply to such structures.</p>
<p>The MBR undertakes a thorough due-diligence review on all persons involved in the incorporation from its end. Once satisfied that all requirements have been met, the Registry issues the certificate of incorporation, generally within a couple of working days, provided the submission is complete and free of issues. Thereafter, the company must maintain records - such as a register of members and share certificates - all of which must remain current.</p>
<p>Malta’s approach prioritizes reliability, investor protection, and the integrity of the financial system. The checks performed by the Malta Business Registry are not hurdles but safeguards - designed to ensure that every company formed in Malta meets high standards of transparency and due diligence. This thorough yet efficient process gives confidence to investors, financial institutions, and international partners that Maltese companies are credible and well-regulated.</p>
<p>Malta’s framework provides a structured and dependable environment where legitimate enterprise can thrive with clarity and certainty. Its balance between accessibility and oversight has helped establish Malta as a trusted and internationally respected jurisdiction - one that combines efficiency with the assurance of strong governance and reputational integrity.</p>
<p> </p>
<p><b>Different Structures, Different Purposes</b></p>
<p>Both the U.S. LLC and the Maltese Ltd provide limited liability but serve distinct functions within their systems.</p>
<p>In the United States, the LLC was developed to bridge the gap between partnerships and corporations - combining the flexibility of the former with the liability protection of the latter. As U.S. law provides a wide range of entity types - including corporations, S-corporations, limited partnerships, and professional corporations - the LLC occupies the least formal and most flexible position in that spectrum. It is intended for private ownership and small enterprises, with minimal statutory formality and freedom of contract at its core.</p>
<p>In Malta, the Ltd serves as the default corporate structure for most commercial and holding activities, from small family-owned businesses to larger groups. It coexists with the Plc, which faces higher capital and disclosure thresholds due to its public role.</p>
<div>
<p>As Malta’s corporate framework is modeled on the UK’s system, it offers a pragmatic balance between structure and flexibility - a middle ground between the highly liberal U.S. approach and the more formal, notarial processes typical of continental Europe. Malta’s model ensures that incorporation remains simple, yet its built-in compliance checks protect legitimate operators and preserve Malta’s reputation as a safe and transparent jurisdiction for doing business.</p>
<p>Since Malta’s corporate framework offers fewer entity types, both the Ltd and the Plc carry broader regulatory and economic responsibilities than their U.S. counterparts. Even at the private-company level, Maltese law embeds greater formality into the formation process.</p>
<p>In both systems, limited liability derives from the principle of separate legal personality, but the route to achieving that status differs. In Malta, a company comes into existence only once the MBR has reviewed and approved the incorporation documents and issued the certificate of registration. In the U.S., the LLC is formed almost instantly upon filing a short online notice with minimal details. This highlights how U.S. law treats incorporation as an administrative right, whereas Maltese law treats it as a regulated privilege.</p>
<p>Tax treatment also shows how the two systems differ. In the United States, an LLC is usually taxed on a “pass-through” basis, meaning profits are taxed in the hands of its members unless it chooses to be taxed as a corporation. In Malta, a limited liability company is taxed separately from its owners. This shows that the U.S. LLC shares features of both partnerships and companies, while the Maltese company operates as a distinct legal and tax entity.</p>
<p>Although both systems enshrine limited liability, protection is not absolute. In Malta, the corporate veil may be lifted in cases of fraud or abuse; in the U.S., courts may pierce the LLC veil when members misuse the entity. The shared rationale - that limited liability is a privilege contingent on good faith - unites the two despite their procedural divergence.</p>
<p>Ultimately, the LLC is a contract-based instrument of flexibility, while the Maltese Ltd - and, at a higher level, the plc - are statutory vehicles of accountability. Each reflects its jurisdiction’s broader legal culture: one grounded in private ordering, the other in regulatory assurance.</p>
<p> </p>
</div>
<p>The comparison between the U.S. LLC and the Maltese Ltd shows how the same legal concept can take very different forms across jurisdictions. Each reflects the legal and commercial priorities of its own system while ultimately pursuing the same goal - enabling enterprise through limited liability. It is fascinating to see how two entities sharing the same name can operate so differently in practice, from how they are formed to how they are regulated and governed.</p>
<p>Experiencing these contrasts firsthand also highlights how Malta’s model - rooted in UK legal tradition yet modern, transparent, and internationally aligned - offers an effective balance between ease of doing business and the credibility that comes with strong regulatory standards.</p>
