Authors: Lara Savona, Joseph F. Borg - WH Partners

Malta’s company law framework may be taking an important step towards accommodating the infrastructure of digital capital markets.

Bill No. 7 – Companies (Amendment) Bill was presented for first reading before the Maltese Parliament on 20 July 2026. While the Bill proposes amendments across several areas of the Companies Act (Cap. 386), one development is particularly relevant for companies and market participants considering the use of distributed ledger technology (“DLT”): the proposed recognition of dematerialised and book-entry forms of shareholding, including records maintained through a central securities depository or on a distributed ledger.

The proposal is significant not because it changes the fundamental concept of share ownership, but because it seeks to update the legal infrastructure through which that ownership is recorded.

Recognising digital forms of share ownership

The register of members has long been a cornerstone of company law. It provides the legal record of who holds shares in a company and, consequently, who is entitled to exercise the rights attaching to those shares.

The proposed amendments to Article 123 of the Companies Act would recognise that such records need not necessarily be maintained only through traditional means. The proposed Article 123(3A) would allow a company to make arrangements for some or all of its shares to be maintained in book-entry form, including through a central securities depository or on a distributed ledger. A parallel amendment to Article 124 extends the same recognition to debentures, meaning the reform is not limited to equity but encompasses debt securities held in book-entry form as well.

The proposal is therefore better understood as a modernisation of the legal concept of the register rather than a departure from it. The technology used to maintain the record may change, but the underlying legal significance of the record remains.

The Bill adopts the concept of a “distributed ledger” used in the EU’s Markets in Crypto-Assets Regulation (“MiCA”), which defines a distributed ledger as an information repository recording transactions that is shared and synchronised across DLT network nodes through a consensus mechanism. The use of an established EU definition is a welcome feature, reducing the risk of Malta developing an isolated terminology for a technology that is inherently cross-border.

Beyond recognition: disapplying paper-era formalities and building new infrastructure

The Bill expands recognition of digital records by removing the obligation to issue share and debenture certificates for securities in book-entry form, including eliminating paper certificates and certain transfer-notice requirements for listed securities.

It introduces a pledge mechanism for dematerialised securities, detailing procedures for perfecting and enforcing security interests through amendments to Article 122, including requirements for pledge agreements, notifications, third-party effectiveness, and enforcement by licensed persons. By recognising legal challenges in tokenisation, this statutory collateralisation pathway enhances DLT ownership recognition.

The Bill also establishes a general validity rule for electronic documents via Article 82A, allowing electronic documents with a Qualified Electronic Signature to suffice for requirements traditionally in physical form, ensuring legal effect, validity, and enforceability in the digital lifecycle of corporate documentation.

Why tokenisation and DLT matter now

The proposed amendment comes at a time when DLT and tokenisation are are increasingly moving beyond experimentation and becoming part of the financial market infrastructure.

At EU level, the European Commission has proposed extending the duration and scope of the DLT Pilot Regime as part of its broader Market Integration and Supervision Package, with the stated objective of supporting the scaling of DLT and tokenisation in European capital markets.

The Eurosystem is similarly developing infrastructure to facilitate the settlement of DLT-based wholesale transactions in central bank money. The ECB has indicated that this functionality is expected to become possible from September 2026, while its wider work under the Pontes and Appia initiatives considers how DLT-based market infrastructures can interact with existing financial infrastructure.

Against this backdrop, the proposed Maltese amendments are timely. As financial instruments are increasingly issued, recorded, transferred, and settled digitally, the corporate law framework must recognise the underlying ownership records.

A further step in Malta’s digital-assets framework

The proposal also sits within Malta’s broader evolution as a jurisdiction for digital finance. The MFSA’s recent consultation on the tokenisation of financial instruments and real-world assets expressly considers issues including ownership rights, settlement finality, token registries, custody, interoperability and the legal and regulatory infrastructure required to support tokenised markets.

The proposed Companies Act amendments are a key part of this legal framework. Issues related to the issuance, transfer, and settlement of tokenised financial instruments depend on first establishing how share ownership is legally recorded.

In this respect, Bill 7 can be viewed as laying part of the corporate-law foundation for tokenisation, rather than attempting to create a complete tokenisation regime within the Companies Act itself.

Technology changes the record, not accountability

Perhaps the most important aspect of the proposal is that technological innovation does not appear to displace the company’s legal responsibilities. Although the relevant shares may be recorded through a central securities depository or distributed ledger, the company remains responsible for the accuracy and integrity of the relevant records and must retain continuous access to them.

This is an important principle. While DLT may provide a different means of creating, maintaining and accessing ownership records, it does not remove the need for clear legal accountability, governance and oversight.

For companies considering digital share structures, the practical question will therefore not simply be whether DLT can technically record ownership, but whether the chosen infrastructure can operate within the company’s legal and governance obligations.

What should businesses be considering?

Bill 7 is not yet law. Nevertheless, companies and investors involved in tokenisation, digital securities, DLT-based infrastructure or innovative capital-market structures should monitor its progress closely.

If enacted in its proposed form, the amendments would provide greater legal certainty around the use of digital infrastructure for maintaining share ownership records. They would bring Malta’s company law framework closer to the realities of emerging digital capital markets.

The broader message is therefore one of continuity rather than disruption. The underlying legal principle remains the same: ownership must be recorded with certainty. However, the Companies Act is being adapted to recognise that the ledger itself may now be digital, distributed and technologically sophisticated.