Although shareholders’ agreements are widely used in Maltese corporate structures, conflicts between these agreements and a company’s Memorandum and Articles of Association are not uncommon. When this happens, the legal consequences may be less intuitive than many shareholders expect.
Under Maltese law, even where a company is itself a party to a shareholders’ agreement, the validity of corporate acts continues to be assessed primarily by reference to the Memorandum and Articles of Association. This means that a corporate decision taken in accordance with the Memorandum and Articles remains valid, even if it breaches the shareholders’ agreement. In such cases, the affected party’s remedy lies in contract, not in challenging the validity of the corporate act itself.
