The Companies Act (Youth Enterprise) Regulations come into force, allowing young persons aged 16 and 17 to establish and operate their own private limited liability company before turning 18.

 

1. Purpose of the Regulations

The Companies Act (Youth Enterprise) Regulations, 2026 introduce a new legal structure enabling 16- and 17‑year‑olds who have completed compulsory education to formally incorporate and operate a company in Malta, known as a Youth Enterprise (YE). The aim is to remove the legal barriers that previously prevented minors from forming companies and to bridge the “entrepreneurial gap” between education and real‑world business experience.

2. Core Concept

A Youth Enterprise functions as a private limited liability company with its own legal personality, but is adapted for minors through safeguards, supervision, and restrictions to ensure safe participation in commerce. This structure creates a controlled learning environment in which young entrepreneurs can develop financial literacy, corporate responsibility, and leadership skills.

3. Eligibility & Formation

• Only 16–17-year-old residents of Malta may establish a Youth Enterprise.
• Parental or guardian written consent is required.
• The enterprise’s name must include “Youth Enterprise” or “YE”.
• Youth Enterprises must have €100–€20,000 in share capital, with at least €100 paid up by each member; all members hold equal voting rights, irrespective of the amount of share capital contributed.

4. Oversight & Safeguards

To ensure responsible operation:

• A mandatory mentor must be appointed to supervise, advise and review financial records; mentors cannot perform day-to-day management.
• The Malta Business Registry (MBR) supervises compliance and registration.
• Members must complete at least 20 hours of annual training in business management, finance, and compliance.

These safeguards promote regulated, educational engagement and help minors learn business skills while avoiding misuse of the structure.

5. Business Restrictions

Youth Enterprises face specific limitations to protect young entrepreneurs:

• Cannot hire employees, and the members themselves cannot be employees of the YE.
• Cannot engage in activities requiring licences unless such licences may legally be issued to minors.
• Cannot transfer shares to third parties.
• Must qualify as a small enterprise for VAT purposes.

These constraints ensure the Youth Enterprise remains small‑scale, manageable, and aligned with minors’ capacity.

6. Transition at Age 18

The Youth Enterprise structure is designed as a stepping stone to adult entrepreneurship.
Once all members reach 18, they may convert the Youth Enterprise into a standard commercial partnership. If conversion does not occur, the minors must step down and the entity may be struck off the register.

7. Policy Rationale

The reform reflects Malta’s wider strategy to empower young people, strengthen entrepreneurial education, and modernise corporate law to reflect youth capabilities.

Whether assistance is needed to guide through the formalities leading to the establishment of a Youth Enterprise or through mentorship during the course of its operations, the team at Phoenix Wise Solutions is available every step of the journey.  Let us help your business aspirations take flight.

 

Dr. Stephan Gauci

Founder & Managing Director