Companies Act (Youth Enterprise) Regulations, 2026

The Companies Act (Youth Enterprise) Regulations, 2026 create an entirely new type of company in Malta known as a Youth Enterprise (YE). This framework is designed specifically for 16‑ and 17‑year‑olds who wish to start their own business but are legally restricted from forming a company under the standard Companies Act. The regulations establish a controlled, educational, and protective environment in which minors can learn entrepreneurship, develop financial literacy, and gain leadership experience while ensuring that they do not face legal or financial exposure beyond what is appropriate for their age.

The purpose of the Youth Enterprise structure is to bridge the gap between the strong interest many youths have in entrepreneurship and the legal limitations that previously prevented them from participating in the business world. Young people today are increasingly exposed to business concepts, technology, and innovation, and many attempt to launch start-ups or online businesses before turning 18. However, existing law did not provide a mechanism for them to incorporate a business unless they went through a cumbersome court process to become emancipated. The new regulations remove this barrier while introducing appropriate safeguards.

A Youth Enterprise is classified as a private limited liability company. This means that it has a separate legal personality, can enter into contracts in its own name, and grants its members limited liability protection. In other words, young members are not personally responsible for the company’s debts. This encourages entrepreneurship while preventing minors from being exposed to risks beyond their capacity.

To form a Youth Enterprise, all members must be either 16 or 17 years old and must be resident in Malta. They must act in their own name and must obtain formal permission from their parents, legal guardians, or tutors, submitted through official declarations. This guarantees full transparency and ensures that the adults responsible for the minors understand and approve of their participation. Additionally, members must declare that they are not involved in another Youth Enterprise or any competing business, helping prevent conflicts of interest.

The share capital structure of a Youth Enterprise is intentionally simple and limited. The authorised share capital must be at least €100 and no more than €20,000. Each member must contribute €100 in fully paid-up capital at the formation stage. Regardless of how much capital each member contributes or how many shares they hold, all members are granted equal voting rights. This promotes equality among minors and reduces the likelihood of disputes or power imbalances.

A key safeguard within the YE framework is the mandatory appointment of a mentor. The mentor must be at least 25 years old, resident in Malta, possess a minimum of five years of work experience in a relevant commercial field, and must not be listed in the register established under the Protection of Minors (Registration) Act. They must also be approved by the Malta Business Registry (MBR) and listed in the Register of Mentors.

The mentor’s role is strictly supervisory and educational. They must guide members on strategic decisions, financial management, operational planning, and compliance. They review accounts, monitor progress every three months, and help resolve challenges. However, mentors are explicitly prohibited from holding executive authority or making decisions on behalf of the company. They also cannot vote in members’ meetings except in the limited circumstance where they may cast a deciding vote if a deadlock occurs. Mentors are protected from personal liability provided they act in good faith.

The process of incorporating a Youth Enterprise involves submitting a series of documents to the Registrar of Companies. These include the memorandum and articles of association (which must follow the format provided in Annex I), proof of paid-up capital, mentor declarations, parental or guardian permissions, detailed personal information of all relevant parties, and declarations confirming the absence of conflicts of interest. The Registrar reviews these documents and, if satisfied, registers the company. Once registered, the Youth Enterprise is legally established and authorised to begin business activities.

Youth Enterprises must also comply with VAT requirements. They must qualify as a small undertaking under the VAT Act and register under Article 11. This keeps financial and tax obligations simple and appropriate for minors.

Management and control of the company rest entirely with the youth members. They act jointly as the legal and judicial representatives of the enterprise. Important decisions should be taken by consensus where possible, though a simple majority vote may be used. Meetings must be minuted, and certain financial decisions—particularly those involving more than €200—require unanimous approval and mentor acknowledgment.

To ensure that the Youth Enterprise remains an educational experience, the regulations impose mandatory training requirements. Each member must complete at least 20 hours of training per year in areas such as business, finance, and compliance. These training sessions must be supervised by the mentor or the governing entity and must be reported every six months using the prescribed official forms.

Youth Enterprises are prohibited from employing workers. This restriction keeps the scale of operations manageable and prevents minors from assuming employment law obligations. Members themselves are not considered employees and remain eligible for student maintenance grants.

There are also limits on what business activities a Youth Enterprise may conduct. If an activity requires a licence or permit that minors cannot legally hold, the YE cannot engage in that activity until all members reach 18. They may, however, carry out preparatory work for future applications.

The regulations also address the dissolution and striking off of Youth Enterprises. Members may unanimously choose to dissolve the company using a simplified procedure. If all members reach 18 and do not convert the YE into a standard commercial partnership, the Registrar may strike it off the register. Similarly, if the Registrar believes the enterprise is inactive, they may initiate a strike-off process with proper notice. During the final three-month strike-off period, the YE may not trade.

Conversion into a standard commercial partnership is allowed once all members turn 18. If this step is not taken, all original members become automatically disqualified and must resign immediately. This reflects that the Youth Enterprise structure is intended solely for minors and must transition to normal corporate structures as its members become adults.

The law also includes transparency requirements. Certain basic information—such as the company name, registered office, email address, mentor details, and share capital—is publicly accessible. More detailed documentation may be disclosed to authorities responsible for taxation, anti-money laundering, and related regulatory functions.

Finally, the regulations outline the applicable fees and provide a collection of official forms in the annexes to assist with incorporation, training reporting, dissolution, and other administrative processes.

In summary, the Companies Act (Youth Enterprise) Regulations, 2026 establish a robust, protective framework allowing 16‑ and 17‑year‑olds in Malta to experience entrepreneurship in a realistic yet safeguarded manner. With strong oversight, strict limits, educational obligations, and clear legal boundaries, the Youth Enterprise structure provides minors with a valuable opportunity to learn and grow while preparing them for full commercial participation once they reach adulthood.

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